K.A. Kaliappa Mudaliar vs Dasappa Naidu and Others

Happell, J.—The appellant in this second appeal obtained a decree in O.S. No. 698 of 1940 in the Court of the District Munsiff of

Tirupathur against the first defendant personally and the joint family properties in the hands of the 2nd to 7th defendants, and by the District Munsiff

he was given his costs and interest at the contract rate until the date of suit. On appeal the first appellate Court deprived the plaintiff of his costs

and granted him only interest at 6 per cent. from 31st August, 1940, on the ground that on that date a certificate had been issued to the debtor, the

first defendant, u/s 18(1) of the Debt Conciliation Act. Section 18(1) of the Debt Conciliation Act empowers a Debt Conciliation Board where it is

of opinion that the debtor has made a creditor a fair offer which the creditor ought reasonably to accept, to grant a certificate to the debtor, and u/s

18(2), where such certificate has been granted, the creditor suing in a Civil Court shall not be allowed his costs or any interest on the debt after the

date of the certificate in excess of simple interest at 6 per cent. per annum. On the face of it, therefore, the decision of the learned District Judge in

first appeal would appear clearly to have been correct. It is argued, however, for the appellant that the certificate itself must be regarded as a nullity

because it was issued more than one year from the date of the application for conciliation of the debts. Whatever might be the case in other

circumstances, this argument is entirely without force in the circumstances of this case because the certificate was in effect granted within twelve

months from the date of the application. The order signed by the Chairman of the Debt Conciliation Board dismissing the application on 3rd

August, 1940 (the application was filed on 4th August, 1939) incorporates a direction that certificates u/s 18(1) would be issued in respect of the

debts due to creditors 1 and 2. The order directing the issue of these certificates was therefore made within twelve months from the date of the

application and it is clearly immaterial whether the certificates were or were not actually issued after the expiry of twelve months The second

argument advanced on behalf of the appellant is that although the provisions of Sections 18(1) and (2) will preclude the recovery of costs from

defendants 1 and 2 or interest from the date of the certificate at a higher rate than 6 per cent., this provision will not apply to defendants 3 to 7, the

sons of the first defendant, since they were not parties to the application to the Debt Conciliation Board. There is, in my opinion, no substance in

this contention. Section 18(2) merely says that where the creditor sues for the recovery of a debt in respect of which a certificate has been granted

under Sub-section (1) the Court shall disallow costs and interest in excess of 6 per cent. from the date of the certificate. In this case, the

promissory notes on which the suit was based were all executed by the first defendant, and defendants 3 to 7 are only liable because the debt was

incurred for purposes of the joint family. It is manifest that defendants 3 to 7 can be liable only for the amount for which the first defendant is liable,

and that they must be exempt from the payment of costs and interest which cannot be recovered from the first defendant.