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C.S Ramier v. B.N Srinivasiah
Factual and Procedural Background
This petition arises under S. 19 of Madras Act IV of 1938 concerning a decree on a mortgage executed in 1916 by the deceased father-in-law of the 1st defendant. The applicant was the second defendant in the original suit and had taken an usufructuary mortgage over the same properties on 22 May 1920, undertaking to discharge the prior mortgage. The District Board (third defendant) acquired the equity of redemption of certain items. On 15 January 1936 the applicant consented to a preliminary decree on the prior mortgage and on 6 March 1937 a final decree was passed. The applicant’s puisne mortgage right was sub-mortgaged to Appoji Naidu, who deposited Rs. 2,700 to the credit of the decree; the plaintiff contended that this deposit satisfied the decree, a contention rejected by the lower Court. The lower Court nevertheless held that the applicant was not entitled to benefits under the Act because scaling down the decree in his favour would benefit other defendants who are not agriculturists. The present petition challenges that outcome.
Legal Issues Presented
- Whether a judgment-debtor who is an agriculturist (the puisne/usufructuary mortgagee here) is entitled to have the decree scaled down under S. 7 and S. 19 of Madras Act IV of 1938 when other judgment-debtors in respect of the same mortgage are non-agriculturists.
- Whether the sub-mortgage of the agriculturist’s interest to a non-agriculturist or the acquisition of the equity of redemption by a non-agriculturist prevents the agriculturist from obtaining the benefit of scaling down under the Act.
Arguments of the Parties
Plaintiff's Argument
- That the deposit of Rs. 2,700 by Appoji Naidu to the credit of the decree satisfied the decree, leaving no decree to be scaled down (contention made in the lower Court).
Decree-holder's Argument (Mr. Ramaswami Ayyangar)
- That the right of an agriculturist judgment-debtor to scale down a decree should not be allowed to enure for the benefit of a non-agriculturist judgment-debtor; and that because the mortgage is one and indivisible it is wrong in theory and difficult in practice to scale down the decree as regards the agriculturist but leave it unamended as against non-agriculturists.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| C.R.P 653 of 1939 | Held that the representative of a puisne mortgagee who was a judgment-debtor was to be regarded as a debtor under S. 7 and entitled to scale down the decree under S. 19. | The Court relied on this prior decision to support the conclusion that the applicant was a judgment-debtor whose debt was payable by him and thus subject to scaling down under the Act. |
| S. Narayanachari v. T.V.A.K.T. Annamalai Chettiar (1) | Decision of Newsam J. from which this Court dissented in the cited earlier case. | The Court noted its dissent from Newsam J.'s decision in that case and observed that that case lacked the complication of a non-agriculturist owner of the equity of redemption. |
Court's Reasoning and Analysis
The Court distinguished the roles of S. 19 and S. 7: S. 19 is machinery while S. 7 contains the substantive provision that "all debts payable by an agriculturist at the commencement of this Act, shall be scaled down." Having regard to earlier decisions, the Court held that the applicant is a judgment-debtor and that the decree debt is payable by him; therefore the debt is to be scaled down notwithstanding the decree and general mortgage law. The Court rejected the contention that a debt payable by an agriculturist falls outside the Act merely because it is also payable by a non-agriculturist, and held that a sub-mortgage to a non-agriculturist does not deprive the agriculturist of benefits under the Act.
To meet practical difficulties arising from the indivisibility of the mortgage, the Court prescribed a modified form of decree: it should recite separately the amount payable by the puisne mortgagee and declare that payment of that amount by him will protect his interest from sale or foreclosure and that the hypotheca will be sold only subject to that interest; conversely, failure by the puisne mortgagee to pay within the time allowed will render the whole mortgaged property, including his interest, liable to sale for the full amount of the decree. This procedure, the Court held, gives the agriculturist the full relief under the Act while safeguarding the decree-holder's rights against non-entitled judgment-debtors.
Holding and Implications
PETITION ALLOWED
Direct effect: The petition is allowed with costs and the application is remitted to the lower Court for disposal in accordance with this judgment; the decree is to be modified in the manner described so that the agriculturist judgment-debtor's debt is scaled down while protecting the rights of non-agriculturist judgment-debtors and the decree-holder.
(Delivered by Wadsworth, J.)
This petition raises questions under S. 19 of Madras Act IV of 1938. The decree in question was passed on a mortgage executed in 1916 by the deceased father-in-law of the 1st defendant, who has not been proved to be an agriculturist. The applicant (petitioner here) was the second defendant in the suit, he having taken an usufructuary mortgage over the same properties on 22nd May, 1920, undertaking to discharge the prior mortgage. Third defendant (the District Board) has acquired the equity of redemption of certain items and is quite clearly not an agriculturist. On 15th January 1936, the applicant consented to the passing of a preliminary decree on the prior mortgage and on 6th March, 1937 a final decree was passed. The puisne mortgage right of the applicant has been sub-mortgaged to one Appoji Naidu, who has deposited Rs. 2,700 to the credit of the decree and it was contended in the lower Court by the plaintiff that this deposit satisfied the decree and that there was no longer any decree to be scaled down. This contention was repelled by the lower Court and it has not been contended before us that this view was wrong. The lower Court held, however, that the applicant was not entitled to the benefits of the Act because the scaling down of the decree in his favour would result in a benefit to other defendants who are not agriculturists.
We have already held in C.R.P 653 of 1939 that the representative of a puisne mortgagee who was a judgment-debtor was entitled to be regarded as a debtor under S. 7 and to scale down the decree under S. 19 of the Act and we dissented from the decision of Newsam J. in S. Narayanachari v. T.V.A.K.T. Annamalai Chettiar (1). But that was a case in which there was not the complication of the owner of the equity of redemption being a non-agriculturist, so that the decree could be scaled down as a whole. It is argued by Mr. Ramaswami Ayyangar for the decree-holder that the right of an agriculturist judgment-debtor to scale down a decree should not be allowed to enure for the benefit of a non-agriculturist judgment-debtor, a proposition with which we are in agreement. But we find it difficult to accede to the further contention that, the mortgage being one and indivisible, it is wrong in theory and difficult in practice to scale down the decree against the agriculturist judgment-debtor, while leaving it unamended as against the non-agriculturist judgment-debtors. The theoretical argument is based on the absence from S. 19 of any words excluding the application of the general law governing mortgages. But S. 19 is only the machinery section. The substantive provisions are contained in S. 7 which says
“notwithstanding any law,………or decree of Court to the contrary, all debts payable by an agriculturist at the commencement of this Act, shall be scaled down……”
Having regard to our previous decisions, we must hold that the applicant is a judgment-debtor and that the decree debt is payable by him. It follows that this debt is to be scaled down, notwithstanding the decree and notwithstanding the provisions of the general law which prevent the person who acquires a partial interest in the hypotheca from denying the liability of his interest to satisfy the whole of the mortgage debt. We are unable to accept the contention that a debt which is payable by an agriculturist falls outside the purview of the Act merely because it is also payable by a non-agriculturist and it seems to us obvious that the mere fact that the applicant has sub-mortgaged his interest to a non-agriculturist will not deprive the applicant of any benefits to which he may be entitled under the Act as a person liable to satisfy the decree. The practical difficulties on which Mr. Ramaswami Ayyangar has laid emphasis, seem to us to be more apparent than real. It will, of course, be necessary to modify the form of decree, reciting separately the amount payable by the puisne mortgagee and declaring that on payment of this amount by him, the interest of the puisne mortgagee will not be liable to be sold or foreclosed and the hypotheca will be sold only subject to that interest; and that on failure of the puisne mortgagee to pay the amount declared to be due from him within the time allowed, the whole of the mortgaged property including the interest of the puisne mortgagee will be liable to be sold for the full amount of the decree. This procedure will give to the agriculturist judgment-debtor the full benefit of the relief to which he is entitled under the Act and will safeguard the rights of the decree-holder as against those judgment-debtors who are not entitled to the benefits of the Act.
The petition is therefore allowed with costs and the application is remitted to the lower Court for disposal in the light of this judgment.
Petition allowed.
N.R.R
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