Dharba Sooryanarayana and Another vs Meduri Ramamma

Wadsworth, J.—These two petitions raise a question u/s 21 of Act IV of 1938. In each of the petitions the petitioners are purchasers of

parts of the hypotheca and defendants in the suit on the mortgage which has been decreed. The mortgage was one of 1922. The original mortgagor

became an insolvent in 1929 and it is said that a dividend was declared before the commencement of Madras Act IV of 1938. The purchases by

the petitioners in C.R.P. No. 1178 of 1939 were long after the adjudication. The purchase by the petitioner in C.R.P. No. 1179 of 1939 was after

the presentation of the insolvency petition and before the adjudication. The Court below has held that by reason of the insolvency of the original

mortgagor, Section 21 of Madras Act IV of 1938 applies to the decree debt as a whole and none of the judgment-debtors can have the benefit of

the Act. It would appear that the original mortgagor was an agriculturist, but now that he has become an insolvent he is clearly disentitled to the

benefits of the Act. It has been held by the Bench which decided Perianna Goundan Vs. Sellappa Goundan and Others, , that purchasers of the

hypotheca in possession are debtors under the mortgage entitled to the benefits of the Act. That was a case in which the mortgagor himself was

admittedly an agriculturist; but it seems to me that this does not affect the decision, for by the definition of ''debt'' any liability, whether secured or

unsecured, due from an agriculturist, is included and surely a debt secured on the land of an alienee will be a debt due from that alienee even

though his liability is limited to his interest in the land. In T.P. Vasantha Rao Sahib Bhonsle Vs. O.A. Narayanaswami Aiyar (Receiver), , Pandrang

Row, J., held that the exclusion of the debts of an insolvent from the benefits of the Act u/s 21 was limited to those debts in so far as they were due

from the insolvent himself and that the son of the insolvent liable to pay the same debts was, if an agriculturist, entitled to claim that the debts be

scaled down. That, decision seems to me precisely to apply to the facts of this case; and I respectfully agree with the reasoning upon which the

decision is based. Clearly the object of Section 21 is to prevent a double scaling down of the debt of an individual. If that debt has been subjected

to the scaling down process of the insolvency law and dividends have been paid on the basis of that scaling down, it should not be subject to a

fresh scaling down at the instance of the same person who has already had the benefit of one process of reduction. There is no reason to refuse

these benefits to an entirely different person who has not had the benefit of the insolvency law and who is an agriculturist otherwise entitled to have

his debts scaled down. Neither under the wording of Section 21 nor under what I conceive to be the object of the section can it be said that the

exclusion of the debts of the insolvent should be extended to the same debts when due by another person who is not an insolvent.

It. has been contended for the respondent by Mr. Soma-sundaram that this is not a matter for interference in revision, that the Court below had

jurisdiction to decide whether or not the petitioners were agriculturists entitled to the benefits of the Act and that having so decided, the decision is

a mere decision of law and not a refusal to exercise jurisdiction. It seems to me that this question is covered by authority. Apart from the decision

of Pandrang Row, J., just referred to, which was itself a decision in revision, I may cite the decision of the Full Bench in Sundaram v. Mausa

Mavuthar (1921) 40 M.L.J. 197 : ILR 44 Mad. 554 , where it was held that when the Court below dismissed an application under Order 21,

Rule 89, Civil Procedure Code, on the ground that the person who applied was not entitled to apply, the decision of the lower Court consisted in

fact in a refusal to deal with the petition and to exercise its jurisdiction and it was not a mere conclusion of law in which the question of jurisdiction

was not involved. The same reasoning seems to me to apply to the present case. The Court below has held that these petitioners are not

competent to apply for the benefits of the Act. In effect the lower Court has refused to exercise the jurisdiction which they invoked, and in my

opinion has wrongly refused to exercise that jurisdiction.

The petitions are therefore allowed and the matter will be remitted to the trial Court for disposal in the light of this judgment. The petitioners are

entitled to their costs (one set).