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Judgment
Patanjali Sastri, J.—These revision petitions arise out of applications made by defendants 1 and 2 (judgment-debtors and respondents in
C.R.P. No. 691 of 1939) u/s 19 of the Madras Agriculturists'' Relief Act for scaling down the compromise decree in O.S. No. 1 of 1936 on the
file of the lower Court. The suit was brought on a mortgage bond executed on 16th July, 1923, for the payment of Rs. 9,000 in eighteen
instalments of Rs. 500 each payable every eight months commencing from 7th February, 1924. Trie decree-holder (the petitioner in C.R.P. No.
691 of 1939) started a kurichit as stake-holder with twenty subscribers each contributing Rs. 10,000 in twenty equal instalments on the terms and
conditions set out a what is called the kurivari. According to these terms, the amounts collected from the subscribers in respect of each instalment
was to be put up for auction among them and allotted to the bidder who offered the highest discount, such discount being distributed among the
subscribers as ''profits''. The defendants 1 and 2 who had together subscribed for one ''ticket'' in the. kurichit on behalf of their forward were the
successful bidders at the second auction held on 7th June, 1923, and they were paid Rs. 5,800 being the balance after deducting the discount of
Rs. 4,200 offered by them. Having already paid two instalments, they executed the mortgage bond (Ex. I) according to the stipulation in the
kurivari for the due payment of the remaining eighteen instalments, amounting to Rs. 9,000. The respondents thereafter paid ten instalments but
failed to pay the remaining eight instalments, and O.S. No. 1 of 1936 was brought for the recovery of these instalments with interest amounting in
all to Rs. 7,640. The defendants 1 and 2 admitted the execution of the bond and pleaded that the interest claimed was penal while the other
members of the tarwad who got themselves impleaded as defendants 3 to 6 contested the liability of the tarwad for the debt. The suit was
eventually compromised the plaintiff agreeing to accept payment of a smaller sum in five instalments in full satisfaction of the claim and defendants 3
to 6 withdrawing their opposition and agreeing to pay the sum personally, and the decree now sought to be scaled down was passed on 14th
April, 1936, in accordance with the compromise.
Various contentions were raised on either side in the Court below on a consideration of which the Court held that (1) the applicants for relief
were agriculturists'' as defined in the Act; (2) that Section 4(f) of the Act had no application as the judgment-debtors could not, in any view, be
regarded as trustees;(3) that the provisions of the Act were applicable to compromise decrees also; and (4) that for purposes of scaling down the
decree the liability of the debtors must be taken to have accrued on the several dates fixed for payment oEx. I, On these findings, he learned Judge directed the decree to be scaled down in accordance with Section 8 of the Act in respect ;of the
instalments which fell due prior to the 1st October, 1932, and in accordance with Section 9 in respect of the instalments which fell due
subsequently. From this decision, the decree-holder has preferred C.R.P. No. 691 of 1939 contending that the compromise decree cannot
properly be regarded as a renewal of the liability under Ex. I, and the first defendant has preferred C.R.P. No. 257 of 1939 raising the contention
that in respect of the entire amount decreed, the liability of the debtors must be held to have been incurred on the date of the security bond and not
on the dates fixed for payment of the. instalments thereunder, and that the entire debt has therefore to be scaled down u/s 8 of the Act.
As regards C.R.P. No. 691 of 1939, we have already held in Budiredla Ramamurti Vs. Matta Sitaramayya, that the mere fact that a decree is
based on a compromise does not exempt it from the operation of Act IV of 1938, that to the extent to which the compromise can be said to be a
renewal of the debt upon which the suit was laid, it is liable to be scaled down with reference to the principal sums originally or subsequently
advanced. Learned Counsel for the decree-holder, however, laid stress on the observation at p. 296:
It is not necessary for the purpose of this case to decide what would be the position in a more complicated case when the compromise j& the
result of mutual concessions and advantages which together make up an agreement from which it would be extremely difficult to disentangle that
part which is a renewal of the original debt,
and urged that having regard to the concessions made on either side under the compromise here in question, the liability thereunder could not be
regarded as a renewal in whole or in part of the liability under the security bond. We are unable to agree with this contention. The observation
relied on had reference to cases like the one now before us involving an abatement of a portion of the claim by one side and the withdrawal of
opposition and offer of additional security for the due payment of the reduced claim by the other, but envisaged cases, where, for instance, by
some property being offered and accepted in,, full or part satisfaction of the claim, it becomes impossible to regard the transaction in any sense as
a renewal of the original debt. No such difficulty arises here, and the decision referred to above applies equally to the facts of the present case.
Learned Counsel next urged that, in any case, the liability of the defendants 3 to 6 who did not join in the execution of Ex. I could be taken to
have arisen only on the date of the compromise decree, namely, 14th April, 1936, and should accordingly be scaled down u/s 9 of the Act. It is
true that these defendants disputed the liability of their shares in the tartoad properties mortgaged under Ex. I, but the compromise obviously
proceeds on the basis that Ex. I was binding on the entire properties mortgaged there under as contended by the decree-holder. In such
circumstances, the correct view, it seems to us, is to regard the compromise as acknowledging and defining the antecedent liability of these
defendants in respect of their shares of the properties mortgaged under Ex. I - see Khunni Lal v. Gobind Krishna Narain (1911) 21 M.L.J. 645 :
L.R. 38 IndAp 87 : ILR 33 All. 356 . In this view, the liability of these defendants was, according to the decision in Perianna Goundan Vs.
Sellappa Goundan and Others, , a debt liable to be scaled down under the Act and must further be regarded as renewed or at all events, included
in a fresh document, under the compromise on which the decree was based--see our decision in Doraikannu Odayar Vs. Veerasami Padayachi
alias Veerasami Chatrakondar, .
Turning now to C.R.P. No. 257 of 1939, the only question we have to decide relates to the date on which the liability of the judgment-debtors
can properly be said to have been incurred. The contention for the decree-holder is that the security bond (Ex. I) only affirmed the pre-existing
liability of the judgment-debtors as subscribers to the kurichit to pay their subscriptions according to the instalments fixed in the kurivari, and did
not change the character of such liability, that the liability to pay the future instalments of subscription could not be deemed to have been incurred
before such instalments fell due, and that the position under the security bond was in no way different. Learned Counsel for the judgment-debtors,
on the other hand, contends that whatever might be the position with regard to the liability of, a subscriber to pay the instalments of his subscription
to the kuri before he bids for and receives the amount at an auction, he can thereafter be regarded only as a borrower of the sum received less the
instalments already paid by him, undertaking to repay the loan in instalments that still remain to be paid, and the liability under the security bond
which he executes for the due payment of such instalments is a debitum in praesenti solvendum in futuro, incurred on the date of, the bond itself.
The question is one of some difficulty not the least part of which arises from the somewhat conflicting decisions dealing with these peculiar kuri
transactions which are so common in some parts of this Presidency. On the whole, however we are of opinion that the judgment-debtor''s
contention is supported by a, preponderance of authority and. must be accepted. It will be observed that the kurivari makes a distinction between
the"" liability of a subscriber who has bid for and received the amount at an auction and the liability of one who has not yet been thus benefited. In
the latter case, para. 5 provides that if the instalment is not paid on the date fixed for an auction, the subscriber will have no right to participate in
the discount realised from the successful bidder at the auction, and, further, if it remains unpaid even after one month from the date of the auction,
the stake-holder shall be at liberty to remove the name of the subscriber and admit another in his place, while, in the former, if the benefited
subscriber commits default hi paying any instalment remaining due. it is provided that ""the money due for such instalment or the entire amount due
for all the future instalments till the termination of the chit fund shall be realised by the stake-holder together with profit at eight annas per day from
the date of default"", a provision which also finds a place in the security bond Ex. I. It is thus clear that the liability of a successful bidder at an
auction held under the kuri is placed on a different footing from that of an ordinary subscriber, and it will not therefore be correct to say that the
security bond merely affirmed the pre-existing liability to Say the instalments of the contribution to the kuri fund.
It has been, repeatedly held by this Court - and it must now be taken as settled - that a provision in a kuri entitling the stake-holder to recover
from the benefited subscriber the amount of all the instalments immediately on default in the payment of any one Of them is not penal and is
enforceable, although there has been some difference of opinion as to the ground oft which such decision is to be based. In Vaidyanatha Aiyar v.
Govindasami Odayar (1921) 42 M.L.J. 551, the learned Judges seem to have viewed the advance to the successful bidder"" at an auction as a loan
to him, for they observed:
The subscription at each of these intermediate instalments was available for loan to the successful bidder at the auction, which was held every six
months, the successful bidder being the bidder who offered to accept the lowest proportion of the total subscription.
7 Relying upon this and the earlier decisions of. This Court, Ananthakrishna Aiyar, J. held in Kunju Nair v. Narayanan Nair (1932) 65 M.L.J. 29,
that the transaction was in essence ,a loan of a common fund to one member and that it was ""a debt in praesenti to be paid, by particular
instalments if certain conditions be duly observed, but otherwise to be paid up at once irrespective of the benefit of time and instalments.
The learned Judge pointed out that it had been so viewed in this'' Presidency since Kamakshi Achari v. Appavu Pillai (1863) 1 M.H.C.R. 448.
In Subbiah Pillai Vs. Shanmugam Pillai and Others, Srinivasa Aiyangar, J., held'' that a provision for acceleration of payment of the future
instalments was penal and unenforceable as there, was, no debitum in praesenti in such cases, but this decision was reversed on appeal '' in
Subbiah Pillai Vs. Muthiah Pillai and Others, .
In Raghavan Pattqr v. Arumugham (1934) 68 M.L.J. 283, another Bench took the view that the successful bidder at an auction was a
purchaser of the sum, and the contract thus being one of sale, and not of borrowing, no question of penalty could arise. They approved the
decision of Ananthakrishna Aiyar, J., in Kunju Nair v. Narayanan Nair (1932) 65 M.L.J. 29, though it was based on a different ground. It is,
however, worthy of note that even in this view the liability for the ''purchase money'' must be held to have been incurred on the date of the security
bond taken from the ''purchaser.''
The decree-holder strongly relied upon the decision in Marudakonar and Another Vs. Veerammal and Others, , as showing that there is no
present debt in such cases until the instalments actually fall due. That was a case where the stake-holder assigned to the plaintiff the security bond
executed by a successful bidder who had received the kuri fund at an auction. The kuri, however, had to be closed down owing to the inability of
the subscribers to pay their subscriptions. In rejecting the contention of the plaintiff''s counsel before this'' Court that the plaintiff was entitled to
recover the amount due under the security bond as the assignee thereof, unaffected by the discontinuance of the kuri, as payments under the bond
were not conditioned on its continuance, Varadachariar, J., observed:
It seems to me only reasonable to hold that in cases like the present the security bond must be interpreted in the light of the rules, and the obligation
undertaken by it is not repayment of the benefit already received - as if it were a debt- -but the payment of future subscriptions. Whether the
continuance of the chit was a condition ""precedent or riot, will not depend merely on the terms of the bond but must be decided with reference to
the surrounding circumstances, including: the rules of the chit fund.
Though this passage strikes a somewhat different note as to the nature of the obligation undertaken by a successful bidder at an auction under a
kuri chit, it cannot he said that the learned Judge was making a definite pronouncement on the question whether or not such obligation was a
debitum in praesenti solvendum in futuro, as that question did not arise for consideration. All that. the learned Judge had to consider was whether
such a bond could be enforced without reference to the obligation of the stake-holder under the rules of the kuri to continue it to the end. Mockett,
J., the other learned Judge who took ''part in the decision made no reference to this aspect.
We are therefore of opinion that in view of the several decisions of this Court referred to above, the liability of the judgment-debtors must be
considered to have been incurred on the date of the mortgage bond, namely, July 16, 1923, and the decree must be scaled down u/s 8 of the Act.
The same view was taken by one of us in C.R.P. No. 1483 of 1939.
In the result, C.R.P. No. 257 of 1939 is allowed and the order of the Court below will be modified accordingly. The r petitioner will have the
costs of this revision petition. C.R.P. No. 691 of 1939 is dismissed with costs. The case will be remanded to the Court below for disposal in the
light of this judgment.