Kompella Yegnanarayana Somayajulu and Others vs Akella Subbarayudu

Alfred Henry Lionel Leach, C.J.—The question which is raised in this reference is whether the judgment of the Federal Court in Bank of

Commerce, Ltd., Khulna v. Kunja Behari Kar (1945) 1 M.L.J. 24 : (1944) F. 151 has overruled the decision of the Full Bench of this Court in

Nagaratnam, v.Seshayya (1939) 1 M.L.J. 272 : ILR (1939) Mad. 151 in so far as it relates to negotiable instruments. The Full Bench held that the

Madras Agriculturists'' Relief Act, 1938, was infra vires the Provincial Legislature in all respects. The main attack on the Act was that its scaling

down provisions were repugnant to the Negotiable Instruments Act, and that legislation on matters affecting negotiable instruments was confined to

the Federal Legislature. It was held that as the Act was intended for the relief of agriculturists over-burdened with debt and that as money-lending

and agriculture were Provincial subjects, the Provincial Legislature had th6 power to pass the Act, notwithstanding that in some respects it

trenched on a subject confined to the Federal Legislature. It was pointed out that the only effect of the Act, so far as such instruments were

concerned, was to reduce liability where the maker or indorser was an agriculturist.

There was no appeal from this judgment, but in another case, M. Lakshmana Aiyar and Another Vs. Aiyasami Chettiar and Another, the

question of the validity of the Act was considered by the Federal Court. In that case, an agriculturist had given a promissory note in respect of

money lent to him and the lender had obtained a decree on it before the commencement of the Act. The Federal Court, without deciding whether

the Madras Agriculturists'' Relief Act was ultra vires in so far as it affected negotiable instruments, held that in all other respects it was intra vires

and that the argument that it affected negotiable instruments did not arise there, because the negotiable instrument had ripened into a decree of

Court before the Act was passed. The question whether it was ultra vires in so far as it affected moneys due under negotiable instruments which

had not ripened into decrees was left entirely open

The question left open fell for decision in the Bank of Commerce, Ltd., Khulna v. Kunja Behari Kar (1945) 1 M.L.J. 24 which raised the

question whether the Bengal Money-Lenders Act, 1940, was intra vires the Bengal Legislature. That Act provided for the scaling down of all

debts. The Madras Act was confined merely to debts due by agriculturists. The Federal Court held that the Bengal Act was intra vires the

Provincial Legislature except in so far as it affected negotiable instruments. To that extent it was ultra vires because it ran counter to Sections 32,

79 and 80 of the Negotiable Instruments Act. The contention that the rules enacted in these sections were among the essentials of the law relating

to promissory notes and that Sections 30, 36, and 38 of the Bengal Act affected them so substantially that it would be impossible to regard them

as merely incidental encroachments on the law relating to promissory notes, was accepted.

If Sections 7, 8, 9 and 13 of the Madras Act offend against Sections 32, 79 and 80 of the Negotiable Instruments Act, we must in view of the

judgment of the Federal Court in the Bank of Commerce, Ltd., Khulna v. Kunja Behari Kar (1945) 1 M.L.J. 24 hold that the Act is ultra vires to

that extent. It is obvious that these sections of the Madras Act do run counter to the sections of the Negotiable Instruments Act enumerated and

therefore we feel constrained to hold that the latest decision of the Federal Court governs the matter. That is the answer which we give to the

question referred.

The Federal Court gave leave to appeal to the Privy Council. It has been suggested that in these circumstances we should defer answering the

question until the Judicial Committee has given its decision, but we cannot agree to this course. The granting of leave to appeal does not necessarily

mean that an appeal will follow. In any event, it will be considerable time before the decision of the Privy Council is given and there are many cases

pending before the Courts of this Province, in which the question now before us is raised. Following the judgment of the Federal Court, as we feel

bound to do, does not mean that those who are affected by our decision are left without any course open to them. They can take steps to

safeguard themselves in the event of the Privy Council taking a different view from that taken by the Federal Court.

The costs of this reference will be made costs in the appeal.