Putti Hanumayya Vs Kondaviti Nayudamma

Subba Rao, J.@mdashThe petitioner executed a promissory note, Exhibit A-1, dated 28th June, 1930, in favour of the respondent''s father representing the joint family. Subsequent to Exhibit A-1 there was a partition in the family and the suit debt was allotted to the respondent. The petitioner executed another promissory note Exhibit A-3, dated 20th June, 1942, in favour of the respondent alone. Subsequently it was renewed in his favour under Exhibit A-4, dated 19th June, 1945. The suit was filed by the respondent to enforce the promissory note Exhibit A-4. The petitioner, inter alia, raised the plea that he was an agriculturist and that the debt should be scaled down under the provisions of the Madras Agriculturists Relief Act. The learned Principal Judge of Small Causes scaled down the suit debt but traced it back to Exhibit A-3, the first promissory note executed in favour of the respondent alone. The defendant has preferred the above Revision Petition.

2. Explanation III to Section 8 of the Madras Agriculturists Relief Act as amended by Act XXIII of 1948 reads as follows:

Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same or a different debtor and whether in favour of the same or a different creditor, the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.

After the enactment of Act XXIII of 1948 the scope of Explanation III to Section 8 was considered by a Bench of this Court in Ramaswami Pillai v. Sankara Mudaliar (1950) 1 M.L.J. 224, of which I happened to be a member. It was laid down there that Explanation III to Section 8 added by Act XXIII of 1948 to the Madras Agriculturists Relief Act has no application to a case where money was borrowed from one creditor for the discharge of debts due to other creditors and is intended to cover a case where a fresh document was executed in favour of a third party with the consent of the old parties concerned. At page 213 we gave the following three instances when a document may be executed in favour of another:

(1) A executes a promissory note in favour of B and later on executes a renewed promissory note in favour of B for the amount due under the earlier promissory note. (2) A may execute a promissory note in favour of B and later on with the consent of B, A may execute another promissory note in discharge of the earlier one in favour of a nominee of B. (3) Thirdly, A may execute a promissory note in favour of B and later on execute in favour of C another promissory note and discharge the earlier promissory note either paying the amount directly or by directing the second promisee to pay the amount to the first promisee.

In another Bench decision of this Court in Anumolu Tirupatirayolu (died) and Others Vs. Kaluri Venkata Subba Rao and Others, , Horwill and Balakrishna Aiyar, JJ., held that Explanation III has no application to a case where a debt is split up and the debtor executes separate promissory notes for their respective portions of the debt as the continuity of the debt is lost and the position is in no way affected by the new Explanation III added to Section 8 of the Madras Agriculturists Relief Act by the amending Act XXIII of 1948. Presumably in view of the aforesaid two decisions the Legislature amended Section 8 of the Madras Agriculturists Relief Act by the Madras Agriculturists Relief (Amendment) Act of XXIV of 1950. Under that Act, Explanation III was amended and Explanation IV was added to the Madras Agriculturists Relief Act. Explanation III as amended reads as follows:

Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same debtor or by his heirs, legal representatives or assigns or by any other person acting on his behalf or in his interest and whether in favour of the same creditor or of any other person acting on his behalf or in his interest, the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.

3. Explanation IV reads as follows:

Where a debt has been split up whether before or after the commencement of the Act, among the heirs, legal representatives or assigns of a debtor or of a creditor and fresh documents have been executed in respect of the different petions of such debt, the provisions of this section shall continue to apply in respect of each of the different portions.

The intention of the Legislature in amending the Act is obvious. Explanation IV was introduced to bring in the classes of cases covered by the judgment reported in Anumolu Tirupatirayolu (died) and Others Vs. Kaluri Venkata Subba Rao and Others, , within the scope of Section 8. The Legislature also accepted the reasoning of the judgment in Ramaswami Pillai v. Sankara Mudaliar (1950) 1 M.L.J. 224 and amended Explanation III suitably. But in amending Explanation III and in introducing Explanation IV they have omitted an obvious case. Under Explanation IV though a debt has been split up and allotted to the shares of the different members of erstwhile joint family it can be traced back to its origin. But if a debt has not been split up so as to come within the provisions of Explanation IV but only has been assigned to one of the brothers at the time of the partition such a debt is not covered by Explanation III. Under Explanation III the debt should be renewed in favour of a creditor or of any other person acting on his behalf or in his interests. Can it be said that a promissory note, executed in favour of a person who separated himself from the rest of the family, was executed in favour of the same creditor that is the family or in favour of a person acting on behalf of the family or in the interests of the family. Such a person does not come under any one of the three categories of persons particularised in Explanation III. I have aleady stated that Explanation IV in terms does not apply to such a case. The result is unfortunate. There is a clear lacuna in the amendment carried out by Act XXIV of 1950. I therefore hold that the promissory note executed in favour of the respondent by the petitioner cannot be traced back to the earlier debt owed to the family.

4. In the result, the petition is dismissed. But I make no order as to costs.