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P.S.L Ramanathan Chettiarand Others v. O.R.M.P.R M. Ramanathan Chettiar .
Factual and Procedural Background
The respondent’s father deposited Rs 5,000 with the appellants’ father in 1926, repayable with interest at the Rangoon Nadappu rate. Upon demand in 1944, a suit (OS No. 33 of 1945) was filed and decreed in 1946 for Rs 11,459-14-0. During the appeal to the Madras High Court, the appellants’ father deposited Rs 3,500 on 16-4-1947 and subsequently Rs 11,098-10-2 to obtain a stay of execution. The High Court affirmed the decree on 14-9-1951.
After execution proceedings commenced, the judgment-debtors applied under Section 19(2) of the Madras Agriculturists Relief Act, 1938 (“the 1938 Act”) to scale down the decree. The Subordinate Judge granted relief, but the Madras High Court, by order dated 8-8-1959, reversed that decision, holding that the deposit was not a “debt” payable at the commencement of the 1938 Act. The present appeal, by special leave, challenges the High Court’s reversal.
Legal Issues Presented
- Whether the money deposited with the appellants’ father constituted a “debt” within the meaning of Section 3(iii) of the 1938 Act, making Section 19(2) applicable for scaling down the decree.
- Whether the decree had already been satisfied by the appellants’ deposit in court, thereby attracting Section 16(iii) of the Madras Act 23 of 1948 and preventing further relief.
- Whether interest on the decree amount ceased to accrue after the deposit was made in court pending appeal.
Arguments of the Parties
Respondent's Arguments
- The term “debt” in the 1938 Act implies a pre-existing loan and therefore does not cover a deposit; consequently, Section 19(2) could not be invoked.
- The decree stood satisfied because the full decretal amount had been deposited in court before 1948; hence the judgment-debtors were barred by Section 16(iii) of the 1948 Amending Act from seeking scaling down.
- At minimum, no interest should accrue after the date of deposit because the money was already available in court.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| S. Pl. Narayanan Chettiar v. M. Ar. Annamalai Chettiar, (1959) Supp SCR 237 | Judgment-debtors may invoke Section 19(2) of the 1938 Act even after a decree if Section 16 of the 1948 Amending Act applies. | Used to affirm that post-decree applications for scaling down are maintainable. |
| Kesoram Industries v. Commissioner of Wealth Tax, (1966) 2 SCR 688 | Defines “debt” broadly as a liability to pay an ascertainable sum, payable either in praesenti or in futuro. | Cited to hold that a deposit creates a present liability, so the money is a “debt” within Section 3(iii). |
| Chowthmull Maganmull v. Calcutta Wheat and Seeds Association, ILR 51 Cal 1010 | Nature of money deposited in court for stay of execution; belongs to the party ultimately entitled. | Distinguished; Court held that mere deposit does not satisfy the decree unless the decree-holder actually withdraws it. |
| Keshavlal v. Chandulal (Bombay High Court) | Deposit for stay is security, not payment; title does not pass to decree-holder until decree is satisfied. | Followed to conclude that the deposit did not amount to satisfaction of the decree. |
Court's Reasoning and Analysis
1. Statutory Construction: The Court examined Section 3(iii) of the 1938 Act and emphasised its broad wording—“any liability in cash or kind…due from an agriculturist.” Nothing in the section confines “debt” to loans alone; exclusions are expressly listed in Section 4.
2. Liability on a Deposit: Relying on Kesoram Industries, the Court reasoned that upon a deposit being made, the depositee incurs a present liability to repay, although the cause of action arises on demand. Therefore, the sum deposited in 1926 was a “debt” existing at the commencement of the Act, bringing Section 19(2) into play.
3. Effect of Court Deposit: The Court rejected the respondent’s contention that depositing the decretal amount satisfied the decree. A stay-conditional deposit merely places the money beyond both parties’ reach; title does not pass to the decree-holder unless he withdraws it. The analogy in Chowthmull was distinguished; the Bombay view in Keshavlal was preferred.
4. Applicability of Section 16(iii) of the 1948 Act: Because the decree had not been executed or satisfied in full—the deposit being conditional security—Section 16(iii) did not bar the appellants’ application for scaling down.
5. Interest Claim: Since the deposit was not unconditional payment under Order 21 Rule 1 CPC, interest did not stop accruing merely by reason of the deposit.
6. Result: The High Court’s reasoning—that the liability arose only on demand in 1944—was incorrect; the liability existed from 1926. Consequently, the Subordinate Judge had jurisdiction to scale down the decree under Section 19(2).
Holding and Implications
Appeal Allowed; High Court order dated 8-8-1959 set aside; order of the Subordinate Judge restoring scaled-down decree reinstated. The respondent (decree-holder) shall pay the costs of the appeal.
Implications: The decision clarifies that (i) deposits create present liabilities qualifying as “debts” under the 1938 Act, (ii) conditional deposits in court do not constitute satisfaction of a decree, and (iii) judgment-debtors may seek statutory relief post-decree where the decree remains unsatisfied. No new precedent was set beyond the reaffirmation of these principles.
Mitter, J.— This is an appeal by special leave against an order of the High Court of Madras dated August 8, 1959 reversing an order of the Subordinate Judge, Devakottai scaling down the decree passed in OS No. 33 of 1945.
2. The facts necessary for the disposal of the appeal are as follows. The respondent's father made a deposit of Rs 5000 with the appellants' father in 1926 repayable with interest at Rangoon Nadappu rate. A demand was made for repayment on 1944 and a suit for recovery of the amount was fixed on March 16, 1945. The trial court decreed the suit in the year 1946 for Rs 11,459-14-0. The appellants' father preferred an appeal therefrom to the High Court and pending disposal of the same deposited Rs 3500 in court on April 16, 1947. The High Court confirmed the decree on September 14, 1951. There is some dispute about the actual date but there is no contest that the appellants' father deposited Rs 11,098-10-2 to obtain stay of execution of the decree. On August 20, 1947 the court passed an order to the effect that the decree-holder would be allowed to draw out the amount on furnishing security. Although an Act styled The Madras Agriculturists Relief Act, 1938 was passed on 22nd of March of that year wherein provision was made for giving relief to agriculturist debtors, inter alia, by scaling down decrees passed against them, no attempt was made by the defendants to take advantage thereof either in the trial court or before the court of appeal. On execution proceedings being commenced, the judgment-debtors filed an application under the aforesaid Act for scaling down the decree under Section 19(2) thereof. The decree-holder raised various objections thereto. The Subordinate Judge who heard the application in the first instance turned down the contentions of the decree-holder and modified the decree. An appeal therefrom was preferred by the decree-holder to the Madras High Court. There being conflicting decisions in the High Court as to whether a judgment debtor who had not claimed relief under the Act before the passing of the decree, could do so subsequently thereto, the appeal was directed to be heard by a Full Bench. An appeal from another decision of the same High Court embracing the identical question was disposed of by this Court in Narayanan Chettiar v. Annamalai Chettiar (1959) Supp SCR 237. Thereafter referring to the Act of 1938 as also to Section 16 of Madras Act 23 of 1948 amending the Act of 1938, it was held that “the appellant was entitled to the benefit of Section 19(2) of the Act read with Section 16 clause (ii), of the Amending Act”.
3. The Full Bench of the Madras High Court constituted for the purpose of hearing the appeal from the order of the Subordinate Judge held that the lower court was competent to give relief under Section 19(2) of the Act by way of scaling down the decree passed by the High Court, and referred the matter back for decision by a Bench. The Bench decided inter alia that the application was properly presented before the Subordinate Judge i.e the court which passed the decree. It refused to go into the question as to whether the plaintiff was an agriculturist in view of the concession before the Full Bench. It further negatived the plea that the decree had become satisfied by payment of money into court on July 24, 1947. It however reversed the order of the Subordinate Judge by holding that the money entrusted to the plaintiff's father being a deposit with a banker was not payable until there was a demand for it: the money became payable only on 2nd October, 1944 i.e after the coming into force of Act 4 of 1938 and consequently the provisions of Section 19(2) of the Act were not applicable and that the decree was not liable to be scaled down. The present appeal is against this order.
4. Section 19 of the Act which we have to consider is set forth below:
“(1) Where before the commencement of this Act, a court has passed a decree for the repayment of a debt, it shall, on the application of any judgment debtor who is an agriculturist or in respect of a Hindu joint family debt, on the application of any member of the family whether or not he is the judgment-debtor or on the application of the decree-holder, apply the provisions of this Act to such decree and shall, notwithstanding anything contained in the Code of Civil Procedure, 1908, amend the decree accordingly or enter satisfaction, as the case may be:
Provided that all payments made or amounts recovered, whether before or after the commencement of this Act, in respect of any such decree shall first be applied in payment of all costs as originally decreed to the creditor.
(2)The provisions of sub-section (1) shall also apply to cases where, after the commencement of this Act, a court has passed a decree for the repayment of a debt payable at such commencement.”
5. “Debt” has been defined in Section 3(iii) of the Act as meaning “any liability in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or revenue court or otherwise, but does not include rent as defined in clause (iv), or “kanartham” as defined in Section 3(1)(1) of the Malabar Tenancy Act, 1929”.
6. It will be noted that the definition is of a very wide import and would include any liability due from an agriculturist with the exceptions specified. Section 4 takes out of the ambit of the definition various liabilities and impositions on the agriculturist expressly specified therein. If therefore there is a liability of an agriculturist not in terms excepted by Section 3(iii) or Section 4 of the Act it would be a “debt” within the meaning of the definition given in Section 3(iii).
7. In Kesoram Industries v. Commissioner of Wealth Tax (1966) 2 SCR 688 this Court had to consider the meaning of the expression “debts owed by the assessee” which had to be taken into account in computing his net wealth in terms of Section 2(m) of the Wealth Tax Act. One of the questions there raised was, whether the amount of the provision for payment of income tax and super- tax in respect of a particular year of account was a debt owed within the meaning of Section 2(m) and as such deductible in computing the net wealth of the assessee. It was held by this Court that even though the Finance Act may be passed later “the tax liability at the latest will arise on the last day of the accounting year”. The Court went elaborately into the question as to the meaning of the word “debt” and held that it could be defined as a liability to pay in prasenti or in futuro an ascertainable sum of money. As regards the meaning of the word “owed” it was observed that “it did not really add to the meaning of the word “debt”.”
8. In the light of this decision there can be no doubt that on a deposit being made, the depositee incurred a liability although the time for repayment would come only when a demand was made and the cause of action for the suit would arise on such a demand.
9. On behalf of the respondent, it was argued that the word “debt” implied a pre-existing loan and as such it could not apply to a deposit. The definition in Section 3(iii) clearly negatives such a proposition. If loans alone were meant to be covered by the use of the word “debt”, there was no reason to exclude rent from the purview of the expression. In that case there would have been no need to mention expressly revenue tax or cess or liability arising out of a breach of trust or in respect of “maintenance under a decree of court or otherwise” in Section 4.
10. The plea of the decree-holder which succeeded before the High Court cannot therefore be accepted.
11. It was however argued that the decree had been satisfied already and as such Section 16 clause (iii) of Madras Act 23 of 1948 was applicable. That section for our purpose runs as follows:
“The amendments made by this Act shall apply to the following suits and proceedings, namely:
(i)-(ii) * * *
(iii) all suits and proceedings in which the decree or order passed has not been executed or satisfied in full before the commencement of this Act:
* * *”.
It was argued that as the full amount of the decree had been put in court before 1948, the judgment-debtors could not apply for scaling down thereafter. In this connection, reliance was placed on a decision of the Calcutta High Court in Chowthmull Maganmull v. Calcutta Wheat and Seeds Association ILR 51 Cal 1010. There the defendant-appellant had appealed from a decree for Rs 21,850 with interest and costs passed against it and on the respondents taking steps to execute the decree had obtained an order for stay of execution thereof on depositing the said sum in court as security to the credit of the suit. Thereafter an order was made adjudicating the appellants as insolvents. The Official Assignee did not proceed with the appeal and the respondent applied for the appeal being dismissed and the money being paid over to them. The Official Assignee claimed the money as belonging to the insolvents' estate and for the benefit of the general body of creditors. It was held that the effect of the order of August 29, 1923 directing stay of execution on terms of a deposit being made was that “the money was paid into court to give security to the plaintiff that in the event of their succeeding in the appeal they should obtain the fruits of their success,” and the “money which was paid into court belonged to the party who might be eventually found entitled to the sum”. On the other hand, there is a decision of the Bombay High Court in Keshavlal v. Chandulal where a judgment-debtor had obtained an order for stay of execution of the decree on his depositing the decretal amount in court. Later on the application of the judgment-debtor the deposit was invested in Government promissory notes which appreciated in value by the time the appeal was heard. The appeal resulted in a small sum being disallowed from the decree whereupon the judgment-debtor applied for a return of the investment to him on his paying into court the amount due under the decree. But the decree-holder claimed the securities which represented the decretal amount at the time the deposit was made. On behalf of the decree-holder reference was made to the above judgment of the Calcutta High Court. There distinguishing the Calcutta judgment, Macklin, J. said that the amount in court “was primarily a deposit of security rather than a deposit of the decretal debt, and the decree-holder cannot claim it as his own unless the judgment-debtor fails to satisfy the decree by the payment of the money due under the decree”.
12. On principle, it appears to us that the facts of a judgment-debtor's depositing a sum in court to purchase peace by way of stay of execution of the decree on terms that the decree-holder can draw it out on furnishing security, does not pass title to the money to the decree-holder. He can if he likes take the money out in terms of the order; but so long as he does not do it, there is nothing to prevent the judgment debtor from taking it out by furnishing other security, say, of immovable property, if the court allows him to do so and on his losing the appeal putting the decretal amount in court in terms of Order 21 Rule 1 CPC in satisfaction of the decree.
13. The real effect of deposit of money in court as was done in this case is to put the money beyond the reach of the parties pending the disposal of the appeal. The decree-holder could only take it out on furnishing security which means that the payment was not in satisfaction of the decree and the security could be proceeded against by the judgment-debtor in case of his success in the appeal. Pending The determination of the same, it was beyond the reach of the judgment-debtor.
14. The observations in Chowthmull case ILR 51 Cal 1010 do not help the respondent. In that case, the appeal was not proceeded with by the Official Assignee. Consequently, the decree-holder could not be deprived of the money which had been put into court to obtain stay of execution of the decree as but for the order, the decree-holder could have levied execution and obtained satisfaction of the decree even before the disposal of the appeal.
15. The last contention raised on behalf of the respondent was that at any rate the decree-holder cannot claim any amount by way of interest after the deposit of the money in court. There is no substance in this point because the deposit in this case was not unconditional and the decree-holder was not free to withdraw it whenever he liked even before the disposal of the appeal. In case he wanted to do so, he had to give security in terms of the order. The deposit was not in terms of Order 21 Rule 1 CPC and as such, there is no question of the stoppage of interest after the deposit.
16. In the result, the appeal is allowed, the order of the High Court set aside and that of the Subordinate Judge restored. The respondent will pay the costs of this appeal.
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