Raman Nayar, J.@mdashThe question, for answering which this case has come up before us, is whether an agriculturist debtor who has committed six consecutive defaults of the installments speeded in sub-sections (2) and (3) of section 4 of Act 31 of 1958 forfeits the benefits of sub-section (1) of Section 5 of the Act, or the sub-section as we shall hereafter call it. Or rather, since this has already been answered in the negative by a full bench of this court in Harihara Iyer v. Joseph 1965 K. L J = 1964 K.L. T 789 (F.B.) (approving the decisions in Mannanda v. Mathai 1963 K.L. T. 390 = 1963 K.L. J. 1116, Varkey v Mathew 1963 K.L. T. 1044 and Antony v. Krishnan Nair 1963 K.L. T. 1047, the last of these of a division bench) whether that decision requires reconsideration. Doubt has been cast on the correctness of this full bench decision on the score that it does not pay due heed to the words, "for the purpose of payment under this Act" appearing in the sub-section. The contention is that it is only for the purpose of a payment specified by some provision or other of the Act that relief under the sub-section is available. A debtor who defaults the payments specified in sub-sections (2) and (3) of Section 4 has failed to comply with the provisions of the Act. Any payment: he might make cannot properly be described as a payment under the Act, and therefore he is not entitled to the benefit of the sub-section. So runs the argument. But it does not impress us-at any rate it does not so impress us as to persuade us to unsettle what must now be regarded as well settled. Even if the underlying assumption that the benefit of the sub-section is available only for making a payment specified by the Act were correct, is would not be difficult to meet the argument. For, the proviso to sub-section (5) of Section 4 of the Act says that the whole debt due from the hexadic defaulter (if we may call him so) "shall be forthwith payable" so that any payment towards the debt would be a payment specified by and therefore as much a payment under the Act as a payment under sub-sections (2) and (3) of the section. But, it seems to us that the assumption is wrong and we are afraid it stems from a mistaken reading of the sub section. Were it well-founded it would lead to the absurd result pointed out by Joseph J. in Antony v. Krishnan Nair that a debtor who chooses to pay his debt in lump without availing himself of the benefit of the installments provided by Section 4 would not get the benefit of the sub-section unless his payment is to be regarded as an advance payment of the installments. He would have to pay the debt in the 17 equal half yearly installments specified in sub-sections (2) and (3) of section 4 to get the benefit: and, what of a post-Act determination u/s 7 or section 8 or section 10, which we suppose must necessarily calculate interest (and principal) in accordance with the sub-section. Does the determination stand vacated if repayment is not made "under the Act"? If that be so, and the creditor becomes entitled to the entire contract debt, how is he to obtain a decree for this? And does not sub-section (i) of section 6, which says that payments already made shall be applied towards interest as recalculated u/s 5 before being applied towards principal clearly indicate that recalculation u/s 5 is by no means confined to cases where payments specified by the Act are made? Again, what of a debt in which, by reason of renewals or otherwise, interest has been added to the principal from time to time and which, because of the large repayments made, stands discharged if interest and principal scaled down in accordance with the sub-section and if the appropriations enjoined by section 6 are made? There is here no payment under the Act. Is it then to be denied the benefit of the sub-section as a reward for the usurious lender and a penalty for the honest debtor Will the latter have to pay the entire contract debt outstanding in lump while, if he had repaid nothing, he would have had to pay much less (being entitled to a scaling down of both interest and principal u/s 5(1) on the basis of the original principal) and that in installments; Surely no law could so penalize honesty and reward dishonesty although most statutes which relieve persons from contracts regarded as unconscionable confine the relief to those who have defaulted, denying it to those who have kept their word and fulfilled the contract. And how is a debtor coming within the body of sub-section (5) of Section 4 to be given the benefit of having to pay only the original principal in the case of a renewed debt as undoubtedly he must? He would be in a worse case than the debtor we are here considering, namely, a debtor coming within the proviso, since any payment made by hi can in no sense be regarded as a "payment under, the Act." True, the benefits of section 4 are expressly preserved for him but that, at best, is only the benefit of paying in installments and of paying interest at the rate specified in sub-section (1) of section 5 on the principal debt outstanding at the time of each payment. Now is he to be given the benefit of that part of the sub-section which says that only the outstanding interest as calculated thereunder together with the outstanding (original) principal shall be payable since any payment by him would not be a payment under the Act?
2. Having regard to the purpose of the Act, namely, the relief of indebted agriculturists, we can think of no conceivable reason why the benefits of sub-section (1) of Section 5 should be confined to those debtors who make payments specified by the Act and should be denied to those who make payments not so specified. And we are inclined to the view that the words, "under this Act" occurring in the sub-section really qualify the word, "debt" rather than the word, "payment" so that all that is meant is that, for the purpose of paying a debt falling under the Act (as distinguished from liabilities of the kind referred to in sub-section (2) of the section which are not debts within the meaning of the Act) the amount of the debt shall be determined by calculating interest as provided by the sub-section. Indeed the words, "for the purpose of payment'''' serve no special purpose and seem to have found place in the sub-section only because the form in which the Act gives relief to the debtor is not so much by reducing the debt itself as by providing for its discharge on payment of a reduced sum and by allowing payment of that sum in installments. But that is a mere matter of form. In substance the debt itself is, for all practical purposes, reduced.
3. As we understand the scheme of the Act, it provides two distinct and separate reliefs in the matter of the repayment of a debt by an agriculturist. Section 5-provides a ceiling on the interest and thus scales down the debt where the interest which would otherwise be payable is above ceiling. It also scales down the principal to what we have called the original principal incases where interest has been added to the principal. Section 4, which should logically come after and not before Section 5, provides that, even the debt as so scaled down can be paid in installments. If default short of six consecutive installments is committed, then under sub-section (5) of section 4 the defaulted installments can be recovered from the debtor, but the debtor is still entitled to the benefits of the section. But, if the default extend to six consecutive installments, then the proviso to sub-section (5) lays down that the debtor forfeits the benefits of sub-sections (2) and (3) of the section but it says nothing whatsoever about his forfeiting the benefit of sub-section (1) of section 5. If, as we think, sub-section (1) of Section 5 is an independent provision and not a mere adjunct of sub-section (2) of section 4, forfeiture of the benefits of the latter would not entail forfeiture of the benefits of the former merely because for the purposes of the latter interest has to be calculated in accordance with the former. That does not preclude the former being applied for other purposes. Nor do we think that the proviso to sub-section (5) of section 4 which says that the whole debt together with such interest as may have accrued thereon shall be payable, rules out the application of section 5 merely because it does not say that the interest shall be calculated u/s 5. As we have said, the application of section5 does not depend on section 4. If it did there would be no provision in the Act for scaling down interest accrued due before the Act-sub-section (2) of Section 4 refers only to the rate of interest payable after the Act-or restricting the principal payable to the original principal.
4. We are in respectful agreement with the view expressed in Harihara Iyer v Joseph 1965 K.L.J. 1 = 1964 KLT 789 (F.B.) and do not think that that decision requires reconsideration.
5. We have answered the question-not without reluctance-only because it was for that purpose that the case was placed before us. For, we must say that the question does not really arise in this case. The debt here is a decree debt and the question is whether the appellant judgment debtor is entitled to the benefits of the Act. The decree was for money due on a promissory note and the lower appellate court has found that the promissory note was executed for the price of goods purchased for purpose of trade. That was the view taken by the first court as well although it did not enter a definite finding on the point. If that be so, it seems to us clear that the debt (whether it be the liability under the decree or under the promissory note that we are considering) would fall within the exclusion in clause (vi) of Section 2(c) of the Act. It would not be a debt within the meaning of the Act and no question of applying the provisions of the Act would arise. The argument that found favor with the first court in allowing the judgment-debtor the benefits of the Act was that the liability on account of the price of goods purchased for purpose of trade was discharged by the promissory note and that the decree is for the money due under the promissory note, not for the price of the goods. Before us the argument has been carried a step further and it is said that the liability now extent is only that under the decree, not under the promissory note, nor for the price of the goods. This argument fails to take note of the very wide wording of the excluding clause "any debt which represents the price of goods purchased for purpose of trade". If the promissory note was executed for the price of goods purchased for the purpose of trade and the decree was passed on the foot of that promissory note, we think it would be quite right to say that the promissory note, and, in turn, the decree, represent the price of goods purchased for the purpose of trade. That was the view taken in the case reported in 15 T.L.T. 741 and by a division bench of this court in Mariakutty v Lonan 1960 K.L. T. 525 = I960 K.L. J 681., and, with great respect we think that these cases were correctly decided. As pointed out in the latter decision, the decision in
6. It is not urged that the finding of the lower appellate court that the promissory note was executed for the price of goods purchased for the purpose of trade is wrong in law. The evidence of the decree-holder, as also the agreement, Ex. D.1, which the judgment-debtor entered into with him when purchasing his stock in trade, shows that the purchase was for the purpose of carrying on the trade. It is not therefore open to the appellant judgment-debtor to challenge that finding in second appeal.
7. In this view of the matter, namely, that the debt in question was not a debt within the meaning of the Act, the lower appellate court was quite right in denying the judgment debtor the benefits of the Act although we must observe that the courts below were wrong in thinking that section 9 of the Act had any bearing on the case. In the result, we dismiss this appeal with costs.
