Ananthasiva Iyer v. Ouseph Ouseph — 1959 DIGILAW 26 (KER)

Judgment :- 1. These six appeals arise out of proceedings in respect of three hypothecation bounds executed by three brothers to the appellant. A.S. Nos. 105,106 and 107 are from orders passed on applications filed by the three debtors in the District Court of Kottayam for settlement and discharge of the debts under S.8, 9 and 15 of the Act. The other three appeals are from decrees dismissing three suits filed by the creditor for recovery of the debts on the allegation that the debtor had forfeited the benefits available under the Act. All the appeals were heard together. The early history of the proceedings under the Debt Relief Act has been summarised in the judgment in A.S. Nos. 51, 52 and 53 of 1125 of the Travancore-Cochin High Court and the same is extracted below: "Three brothers Isaac, Thomas and Joseph had executed three separate hypothecation bonds to the respondent. The amount secured by each bond was a certain sum of money and a certain quantity of paddy. These documents are Exts. I, II and III. After the Debt Relief Act was promulgated the brothers filed three petitions D.R.P. Nos. 3,5 and 7 of 1118 for discharge of the money portion of the debt and D.R.P. Nos. 4, 6 and 8 of 1118 for discharge of the paddy portion. They deposited not less than 6 per cent of the admitted amount on account of instalments 1 and 2. Then on 31. ~~ ~~~~ each of them deposited 70 per cent of the money portion of the debt and applied for an order that the moneys due under the three bonds do stand discharged. They were depositing thereafter the instalments on account of the paddy portion. Their petitions to enter satisfaction were heard and disposed of by the learned District Judge. In that it was declared that the money portion of the debt was discharged, that the paddy portion could be discharged only by deposit in instalments and that the price of paddy was to be calculated, not at the Nirak rate prevailing on the dale of the petition but at the Nirak rate as and when the instalments fell due. Against this, the debtors filed A.S. No. 435 of 1122 in the High Court. The creditor also filed A.S. Nos. 461 to 466 of 1122. All these appeals were heard together by the High Court. Against this, the debtors filed A.S. No. 435 of 1122 in the High Court. The creditor also filed A.S. Nos. 461 to 466 of 1122. All these appeals were heard together by the High Court. It was held that the debts, both the money portion and the paddy portion covered by Exts. I to III should be considered to be one composite debt which in law was liable to be discharged only as a whole, that there was no justification for seeking discharge of a part without reference to the discharge of the remaining part, that the order entering satisfaction of the money portion was therefore wrong and should be set aside and that the nirak rate of paddy on account of the quantity of paddy due for successive instalments should be that prevailing in the Ambalapuzha taluk where the creditor lived. The direction therefore was to dismiss the debtors' appeals and to allow in part the creditors' appeals. It was directed that the deposits made by the respective debtors would be adjusted towards the 6 per cent due for each instalment commencing from the third, paddy being valued at the nirak rate prevailing on each of the instalment dates. If the amounts deposited till then were found sufficient to effect a complete discharge of the debt due under the respective hypothecation deeds, the discharge order would be made as on the dates when the last adjustment was made. If on adjustment, the payments made till then were found to be insufficient to satisfy the requirements of any one of the three sub divisions of S.9 of the Debt Relief Act, the debtors were under that order allowed the liberty to make payments of the balance subject to the provisions of the Act and then apply for an order of discharge. This order was passed on 32.12.1123. After the records were sent back to the lower court, steps were taken to make a calculation of the amount due from the debtors to the creditor. 2. There was admittedly a deposit of over Rs. 4 000/- in each of the three cases by the debtors on 31-1-1118. The lower court directed that this amount was to be kept with the creditor who had drawn the same from court and then utilised for payment of the instalments commencing from the 3rd as and when they fell due. There was admittedly a deposit of over Rs. 4 000/- in each of the three cases by the debtors on 31-1-1118. The lower court directed that this amount was to be kept with the creditor who had drawn the same from court and then utilised for payment of the instalments commencing from the 3rd as and when they fell due. He was however directed to pay 4 per cent interest on the amounts that would be found due with him after the appropriation for each instalment. The Nirak rate of paddy was directed to be with reference to that prevailing on the dates as and when the instalments "fell due." It was also directed that the 80 per cent of the debt found due on 31-1-1116 was to be taken into account in making the calculation. The appeals are by the debtors against the orders passed in the three petitions. The creditor has filed memoranda of objections in the three appeals by the debtors. The direction to take 80 per cent of the amount due on 31-1-1116 was contended to be wrong besides the direction to pay interest on the amount deposited by the debtors in 1118." 2. In disposing of appeals Nos. 51 to 53, it was held that the sum of Rs. 4000 deposited by each debtor on 31-1-1118 was to be applied towards discharge of the instalment which was in arrear on that date as well as future instalments, that the creditor was not liable to pay interest on the sum of Rs. 4000 and that if the amount deposited was less than 80 per cent of the debt, the debtors were to be allowed reasonable time to make good the deficiency so as to enable them to have the benefit under the Debt Relief Act. The records were sent down to the District Court to decide whether the debts could be deemed to have been discharged in the light of the appellate judgment and to give an opportunity to the debtors to make good any deficiency. 3. Alter receipt of the records the District Court considered the matter again and passed orders on 17th November 1954 from which A. S. Nos. 105,106 and 107 of 1955 are filed. These orders were passed in the light of statements prepared by the office and the objections of the parties thereto. 3. Alter receipt of the records the District Court considered the matter again and passed orders on 17th November 1954 from which A. S. Nos. 105,106 and 107 of 1955 are filed. These orders were passed in the light of statements prepared by the office and the objections of the parties thereto. The trial court held that paddy was to be valued at the rates fixed by the Government of Travancore for the whole State during the relevant period and not at the rate for Ambalapuzha Taluk, that the creditor was not liable to pay any interest on the excess amounts deposited in advance by the debtors, that there was no consecutive default of three instalments as contemplated by S.9 of the Act and that the debtors had not forfeited the benefits available to them under the Act. It was also held that the amounts paid by the debtors were sufficient to discharge the debts and that any payment in excess of 80 per cent would be refunded to the debtors. The creditor has preferred A. S. Nos. 105, 106 and 107 from these orders and the respondents have filed memoranda of cross objections regarding certain directions in the orders. 4. The creditor who maintained that the debtors had forfeited the right to discharge debts under the Debt Relief Act by three consecutive defaults filed three suits for recovery of the amounts under the hypothecation bonds after giving credit to the sums deposited in the Debt Relief proceedings. Suits against Isaac and Ouseph were O.S. Nos. 192 and 191 respectively of 1124 of the District Court of Kottayam while that against Thomas was O. S. No. 203 of 1124, of the District Court of Alleppey. The three suits were dismissed holding that the debts had been discharged under the Debt Relief Act. A.S. Nos. 210, 211 and 333 have been preferred by the creditor from the decrees in the three suits. In two suits, i. e., O.S. Nos. 191 and 192 of the District Court of Kottayam the defendants were disallowed costs and they have preferred memoranda of cross objections in A. S. Nos. 210 and 211 of 1955 claiming costs incurred by them in the lower court. 5. The decision of the three appeals A.S. Nos. In two suits, i. e., O.S. Nos. 191 and 192 of the District Court of Kottayam the defendants were disallowed costs and they have preferred memoranda of cross objections in A. S. Nos. 210 and 211 of 1955 claiming costs incurred by them in the lower court. 5. The decision of the three appeals A.S. Nos. 210, 211 and 333 depends on the decision in the other three appeals since the suits must be dismissed if it is found that the debts are discharged under the Debt Relief Act. The main question for decision therefore is whether the debtors have discharged the debts under S.8 and 9 of the Debt Relief Act or whether they have forfeited the benefits under the Act by default in payment of three consecutive instalments. Certain other questions also arise which will be considered later. 6. Coming to the main question both sides have filed statements in this court showing the various amounts deposited by the debtors and the method of appropriation of the same towards the several instalments which fell due. It has to be considered whether there is default in payment of the 15th, 16th and 17th instalments as contended by the appellant. 7. In considering this question it may be stated that A.S. Nos. 51 to 53 of 1125 were disposed of by the High Court after the expiry of the full term of 9 years provided by the Act for payment of 80 per cent of the debt. In fact the orders which gave rise to those appeals were also passed after the expiry of 9 years from the date of commencement of the Act. The three consecutive defaults now alleged by the creditor were in respect of instalments 15 to 17 which fell due long before the date on which the said appeals were decided. If there were three consecutive defaults as now alleged this was a matter to be raised when those appeals were heard. The lower court held that the former decision which allowed the debtors to obtain full discharge of the debts would operate as res judicata so far as this contention was concerned. This view is correct. It was open for the creditor to raise this point at that stage and he ought to have done so. The lower court held that the former decision which allowed the debtors to obtain full discharge of the debts would operate as res judicata so far as this contention was concerned. This view is correct. It was open for the creditor to raise this point at that stage and he ought to have done so. Both the trial court as well as the appellate court held that it was open for the debtors to obtain discharge by payment of 80 per cent of the debt. In fact the appellate court gave a specific direction that an opportunity should be given to the debtors to make good deficiency, if any, in the amount deposited. This means that the court treated the debtors as not having forfeited the benefit of the Act. It is therefore clear that the former decision operates as res judicata. Apart from this, the objection now raised is not sustainable on the merits. All that the debtor has to do in order to obtain the benefits under the Act is to pay 80 per cent of the debt with interest thereon in 9 years without three consecutive defaults and to see that the payment for each instalment is not less than 6 per cent of the debt as it existed on 31-1-1116. A debtor who paid for 14 instalments would thus have paid 84 per cent of the debt. So far as this case is concerned, it is admitted that 14 instalments have been duly paid. It is true that there was no payment on the date of the 14th instalment, but this has been made good by the amount paid on the date of the 15th instalment and this operates as payment for the 14th instalment. The debtors have therefore paid more than 80 percent of the debt as it existed on 31-1-1116 and such payments have been made before the expiry of 9 years from the date of the Act. Any balance which might remain due after the payment for the 14th instalment would be 4 per cent interest on 80 per cent of the debt or such portion thereof as remained due after each payment. This no doubt, has to be paid on or before the date of the last instalment and it is seen that the debtors have made lump payments in each case on that date. This no doubt, has to be paid on or before the date of the last instalment and it is seen that the debtors have made lump payments in each case on that date. It is not disputed that the total amount paid including the payment on the date of the 18th instalment is sufficient to cover interest also. It is therefore clear that even if no payment was made on the dates of the 15th, 16th and 17th instalments, such defaults do not constitute three consecutive defaults as contemplated by the Act, as 80 per cent of the debt had already been paid. There is thus no substance in the contention that three consecutive defaults were made by the debtors. 8. Another point raised by the appellant relates to the commutation rate of paddy. The appellant relies on the direction in the judgments in A. S. Nos. 435 to 437 and 461 to 466 of 1122 in support of the argument that the commutation rate for paddy should be the rate prevailing in Ambalapuzha Taluk. The court below held that State wide control of the price of paddy was introduced by the Government of Travancore on 11-3-1118, that such control remained in force long after the date of the last instalment and that price of paddy to be taken into account was therefore that fixed by the Government from time to time. When the cases went up in appeal for the first time the High Court had to give such a direction as the period under review covered two years before such fixation of such prices. There could not be a separate approved price for Ambalapuzha after the price of paddy was fixed for the whole State We therefore uphold the finding of the court below that the prices fixed by Government from time to time should be followed as the commutation rate. 9. Another question to be decided is whether the creditor is entitled to interest on the sum which represents 80 per cent of the debt. The Debt Relief Act allows interest on such amount and there is no reason to disallow the same in these cases. This is not disputed by the respondents. In computing the amount if any due to the debtors as excess payment, interest which they were liable to pay under the Act will also be taken into account. The Debt Relief Act allows interest on such amount and there is no reason to disallow the same in these cases. This is not disputed by the respondents. In computing the amount if any due to the debtors as excess payment, interest which they were liable to pay under the Act will also be taken into account. However, we are unable to grant the appellant's prayer that interest should have been allowed up to the respective dates of the instalments on which amounts have been credited. It was open for the debtor to pay future instalments in advance and it is seen that notice of such deposits was given to the creditor promptly. The mere fact that the lump sums deposited on 31-1-1118 were drawn only later does not entitle the creditor to claim interest on the amounts payable for those instalments which were satisfied by such lump payments. It was also pointed out on behalf of the appellant that in the statement prepared by the office the creditor was made liable for interest on payments towards instalments which had not fallen due on the dates of payment and that this was not warranted. This is conceded by the respondents. 10. Memoranda of cross objections have been filed in each of these appeals raising identical contentions. The first is that the price of paddy on the date of the bond was to be adopted as the commutation rate of paddy as held in the decision reported in 1954 K. L. T. 463. So far as this case is concerned the earlier decisions bind the parties and it is not open for the respondents to raise this plea at this stage 11. Another point raised is that the court below went wrong in holding that the creditor was entitled to get amounts calculated as counter interest. This ground appears to have been raised on a misconception of what the lower court has actually decided. The order as we understand it, means that the creditor is not to be made liable for interest on amounts lying in court. No modification is called for on this ground. 12. The last point is that it should have been held that the debtors were entitled to get refund of higher amounts than the amounts as per the statement prepared by the office. No modification is called for on this ground. 12. The last point is that it should have been held that the debtors were entitled to get refund of higher amounts than the amounts as per the statement prepared by the office. The question of excess payments is one which the lower court can decide in the light of our decision. The cross objections must therefore be dismissed. 13. As stated earlier, the decision of appeals 210, 211 and 333 depends on the view we take in the other appeals. We have come to the conclusion that the debtors had not forfeited the benefit available under the Debt Relief Act to obtain complete discharge by payment of 80 percent of the debt. It follows that the suits filed on the assumption that there has been such forfeiture must fail. The memoranda of cross objections filed by the respective respondents in A.S. Nos. 210 and 211 raise the question whether the court below was justified in disallowing costs in O.S. Nos. 192 and 191 of 1124. It may be observed that in the other suit, namely, O.S. No. 202 of 1124, the District Court of Alleppey allowed costs to the defendant. We do not see any reason why the successful defendants in O.S. Nos. 192 and 191 of 1124 should be denied their costs. The memorandum of cross objections in A.S. Nos. 210 and 211 must therefore be allowed. 14. In the result, A.S. Nos. 105,106 and 107 of 1955 are dismissed with costs subject to the direction that in computing the amount, interest should be allowed on 80 per cent or the balance thereof at such rates as are provided by the Debt Relief Act. The memoranda of cross objection in these appeals are also dismissed. A.S. Nos. 210, 211 and 333 of 1955 are also dismissed with costs. The memoranda of cross objection in A.S. Nos. 210 and 211 are allowed with costs and the respective respondents will get their costs in the court below also.