PULAVARTHI VENKATA SUBBA RAO v. VALLURI JAGA.NNADHA RAO & Ors.

Held also, that although the conduct of the respondents in omitting to press the claim for reduction of the amount of first occasion was si~nificant> yet that did not the claim on the constitute res judicata, either statutory or constructive. The compromise decree was not a decision by the Court. It was the acceptance by the Court of something to which the parties had agreed. The compromise decree merely set the seal of the court on the agreement between the parties and the court did not decide anything. A decision of the court \Vas not implicit in the co1npromise. On~y a decision by the court c·Juld be res judicata, whether it be statutory under s. 11 of the Code of Civil Procedure or constructive as a matter of public policy on whir.h the entire doctrine re .ts. 1,,1e earlier derision could not strictly be rc~arded as a matter which was "heard and finally decided". The decree might have created ~n estoppel by conduct between the parties but that had not been pleaded and tried at any time. Held also, that the Act of 1938 as amended in 1948 conferred up<m the petty agriculturists the right to get their 1963 Pu/ova, thi Vnrkata Subba Rao v. VtJ//uri Jagannadha Hao llidll,)atullah J. 312 SUPREME COURT REPORTS [1964] VOL. debts scaled down in order to save them from loans taken at usurious rates of interest, the oppressive Arunachala Mudaliar v. C. A. Muruganatha ltfurlaliar, 11954] S. C.R. 243 and Venakataratnam v. Seshamma, I. L. R. (1952) Mad. 492, referred to. CIVIL ArPEJ,LATE JURISDICTION Civil Appeal No. 17 of 1959. Appeal from the judgment and order dated April 6, 1955, of the High Court of Andhra Pradesh at Guntur in C.R. P. No. 6f>6 of 1950. N. Narsaraju, Advocate-General, Andhra Pradesh and T. V. R. 1'atachari, for the appellants. 'l'. Satyanarayan, for the respondents.

#1963. 11arch 13. The Judgment of the Court was delivered by 1-!IDAYATULLAH .J.-This appeal on certificate granted by the High Court of Andhra Pradesh. directed against iL~ judgment dated April 6, HJ:i5, dismissing Civil Revision Petition Ko. 656 of 1950. The High Court held that the respondents were agriculturists within the Madras :\grieulturists Relief Act, l!l38 (called for brevity "the Act") anrl were entitled O. S. No. G2of1941, dated August 27, l!l45. The decree-holders are the appellants before us. \Ve will now give the facts relevant to the present appeal. scaling down of the decree to a The respondents were members of an undividecj - 2 S.C.R. SUPREM:E COURT REPORTS 313 Hindu family and the following geneology is useful in foll owing the facts : - Valluri J agannadha Rao I I 1963 Pulavarthi V1nkala Suhba Rao •• Valluri Jagannadh'J Rso Hidayatulloh J. Srivatsank~a Rao Narasimha Rao ,----t . Satyanarayanamurth1 Jagannadha Rao II (Ist respondent) I (2nd respondent) SrivatsaJkara Rao (5th respondent) I N arasimha Rao (3rd respondent) Subba Rao (4th respondent) N arasimha Rao had taken loans on promissory notes from the ancestors of the present appellants, and a suit was filed for Rs. 50,000 odd in 1941 against the family. That suit was 0. S. No. 52 of 1941. In that suit, an application was made by the respon dents, claiming to be agriculturists, for the scaling the case down of the amount. The plaintiffs denied that the defendants were agriculturists. The suit, however, ended in a compromise decree for Rs. 37,000/- on August 23, 1945, as against the claim for Rs. 50,964-1-9. It appears that some pay ments were also made towards this decretal amount. On February 21, 1949, the judgment-debtors made another application in the suit (Interim Application No. 279 of 1919) for scaling down the decretal amount on the ground that they were agriculturists entitled to the benefits of the Act, as amended in 1948. The defences, (i) that the Amending Act was not appli cable in view of the provisions of s. 16 (ii) of the the compromise decree hact ;\mending Act decree-holders have raised 1963 Pu/avarlhi · V mkata Suhbd Raa •• l'allu1i JagoMIU/ha RO<I Hidoyotullalt J. 314 SUPREME COURT REPORTS [1964] VOL. the earlier compromise "become final" (ii) that decree operated as res judicata, and (iii) that the judgment-debtors were not agriculturists as they were a joint Hindu family owning an estate for which a peshka8h of more than Rs. ~00/ · was payable. The Subordinate Judge, Narsapur, before whom the application was made, framed two issues as follows : - (I) Whether the petitioners arc agriculturists entitled to' the benefits of the Act, and (::') Whether the present petition is barred under s. 16 (ii) of the Amendin~ Act Madras Agriculturists Relief (Amendment) Act (No. XXIII), l!l48. revision (C. R. P. No. 656 of The learned Subordinate .Judge first considered the second issue which was one of law and by his order dated March 15, 1950 held that the decree was I iable to be scaled down in view of the provisions of the Amending Act. He then set down the first issue for trial and posted the case for evidence on the question judgment·debtors were agriculturists. whether the The decree.holders meanwhile filed an application I 950) on April 28, l!l50. The High Court heard this applica tion on August 20, W52, and decided to call for a a finding from the Subordinate Judge whether the judgment-debtors were agriculturists. A preliminary order was made by the High Court dirrcting the Subordinate Judges to take evidence and to submit his finding on this point and the parties were to be given an opportunity to object to the finding after it was received. The Subordinate .Judge, after record December 17, I 952. He held that the judgment debtors constituted a family which owned an estate for which a peshkash of more than submitted his joint Hindu evidence, finding - 2 S.C.R. SUPREME COURT REPORTS 315 Rs. 500/- was agriculturists. payable and were 1963 Pulavarthi Venkata Subba Roo v. Valluri Jogannadha Rao Hidayatullah J, When this finding was received in the High Court, the revision applicatio~ was taken up for consideration. The High Court agreed with the Subordinate Judge that the provisions of the amen ding Act were applicable, that the compromise decree could not be regarded as final for purposes of cl. (ii) of s. 16 of the Amending Act, and that the principle of res judicata did not apply. The High Court endorsed the opinion of the Subordinate Judge that the judgment-debtors were entitled in law to have the decree scaled down, provided they were agri culturists. The High Court then considered the second question, and differing from the Subordinate Jurlge, came to the conclusion that the judgment debtors were agriculturists and entitled to have the decree-holders have decree appealed. scaled down. The Before dealing with the questions that arise in this case, a few more facts relevant to the question whether the judgment-debtors can be considered to be agriculturists or noc, may be stated. The family, it is admitted, owned two villages, namely, Kalagam pudi and Pedamamidipalli, which were an estate as the Madras Estates Land Act. The defined villages belonged to Valluri Jagannadha Rao I, the original holder, and were his self-acquired properties. Jagannadha Rao I executed a will in respect of these and other properties on March 20, 1902 (exh. A 17). By that Will, he gave a life-estate in the two villages to his two sons-Valluri Srivatsankara Rao and Valluri Narasimha Rao-and an absolute estate to such of the sons of these two as might be living at the termination of each of the life estates, respecti vely. The will provided further that if any of his sons left no son, the sons of his other son would be absolutety entitled to the properties at the end of 1963 Pufacorlhi J'enkata Sub611 R1J •• l'a/luri Jagannadho Rao Hiiq)'atullah J. 3IG SUPREME COURT REPORTS [1964] VOL. life estate. It was also provided that if his two sons wished to divide the property, the cider son Srivatsankara Rao was to take Kalagampudi and the younger son, the other village. The two sons divided the properties in which they were given life estates, vide, exhibit BI dated June 14, 191 l. Srivatsankara Rao took Kalagampudi and l\arasimha Rao Pedamamidipalli. Srivatsankara Rao died on December 15, 1936, without leaving a son, and Jagannadha Rao II and Satyanarayanamurthi, the two sons of Narasimha Rao, became a1.JSolutely entitled shares. On February 18, 1!!41, Narasimha Rao executed a sale-deed (cxh. A 5i) in respect of two·fifth share in Pedamamidipalli village in favour of Subhadradevi, his daughter. Narasimha Rao died on May 17, 1943, and .Jagannadha Rao II and Satyanarayana murthi became entitled to a half share each in the three-fifth share addition to the half share in Kalagampudi. The judgment-debtors claimed that there was a partition between the two sons of Narasimha Rao in l!l4tl. in Pedamamidipalli village to Kalagampudi in equal the two villages were The 7ieshkash, which was payable for the in the name of they were two villages when Jagannadha Rao I, was Rs. 979-3-0 (iidc cxh. I A dated tl I0.18i9J. After the death of Shrivatsankara Rao in l !136, separately registered in the Registered. PedamamidipaMi was name of Nara imha Rao and Kalagampudi in the name of his sons. The peshkash was then apportio ned between the two villages and Rs. 483-12-IO was fixed as pesh/,;ash for Pedamamidipalli village and Rs. -tfl.5-6-2, for Kalagampudi village. This is stated in the proceedings of the Collector, West Godavari, (exh. A 4), dated April 24, l!HO. To decide whether the conclusion of the Subor dinate Judge or of the High Court is right, it is necessary at this stage to read a few provisions of 1968 Pulauarlhi Ve11k11ta Subba Rao v. Valluri Jazannadha Rao Hidayalultah J. 2 s.c.R. SUPREME COURT REPORTS 317 the Act. the Act and are as follows : - 'Agriculturist' is defined by s. 3 (ii} of the relevant parts of the definition - - "(ii) 'agriculturist' means a person who- or horticultural (a) has a saleable interest in any agri· cultural in the State of Madras, not being land situated within a municipality or cantonment, which is assessed by the State Government to land revenue (which shall be deemed to include peshkash is held free of tax and quit-rent}, or which under a grant made, confirmed or recog nized by Government ; or (b) holds an interest in such under a landholder under the Madras Estates Land Act, 1908, as tenant, ryot or under tenure holder ; or x x x x x x x Provided that a deemed to be an 'agriculturist' if he- person shall not be (D) is a landholder of an estate under the Madras Estates Land Act, 1908, or of a share or portion thereof, whether separately registered respect of which estate, share or or not, in portion any sum exceeding five hundred rupees is payable as peshkash, or any sum exceeding is payable under one one hundred rupees or more of the following heads, namely, quit rent, jodi, kattubadi, poruppu or other due of a like nature, or is a janmi under the Malabar Tenancy Act, 1929, who is liable as such janmi to pay to . the State Government any some exceeding hundred revenue.'' rupees The word 'person' is defined by cl. (i) of s. 3 as including an undivided Hindu family. 1963 Pu/a;·nrthi J',,iJ,.,,-7 ~u 1•b1J Uu.1 ' VaUun _/ a_~annnd~a l<ao fiidayatullah J The contention of the Will as ancestral properties, and 31s sui>Ri:ME couRT REPoR.Ts [l964J voL. the judgment-debtors was that there were two persons who were legatees under the will. They took the villages not a; ancestral properties but as self-acquired properties, and the peshkash payable on these two villages must be divided between them before s. 3 (ii), proviso (D) of the Act was made applicable. The contention the side of the decree-holders was that these properties were held by an undivided Hindu family and the sons of Narasimha Rao took the properties peshl~sh in respect of the two villages must be added together for the purpose of the application of the said proviso. The High Court held that the proper ties taken by the two sons of Narasimha Rao under the will were their separate properties and not ancestral properties, as there were no words to show a contrary intention. The High Court also referred to the conduct of the respondents in partitioning the villages and held that the property was held not jointly but in definite shares. The High Court, therefore, held that the peshl; ash in respect of the two villages could not be agreggated. The High Court, accordingly, broke up the peshkash in respect of Kalagampudi three-fifth share of Pedamamidipalli into two halves and held that as each son of Narasimha Rao was required to pay only the peshkash paid by them individually his share did not exceed Rs. 500/- mentioned in proviso {D), therefore, agriculturists. This part of the case was not chal lenged before us by the learned Advocate General of Andhra Pradesh. Indeed, the decision of the High Court is supported by C. N. Arunacha/IJ Jfudaliar v. C. A . .lforuganatha Mwialiar {'),in respect of the character of the property inherited by the two sons of Narasimha Rao. and this fundamental fact could then start with the not be questioned. We must conclusion that the judgment-debtors are agricul turists. Before we consider the other objections to judgment-debtors were, (I) [19M] S.0.ll. 263. 1963 Pulavarthi Vt'nkata S•bba R.,, v. Val/uri Jagannadha Rao Hitlayat ilfaii J. 2 s.c.k. SUPREME COURT REPORTS 3i9 It is contended the claim of the respondents to have the decree scaled down, we will deal with another argument on this part of the case. that the High Court was in error in interfering with finding that the respondents are not agriculturists in an application for revision under s. 115, Civil Pro· cedure Code. This, in our opinion, is not a correct summing up of what the High Court did. The High Court had called for a finding and it was to be subject to objections by the parties. The High Court could have called for the evidence and itself In re-examining the evidence with given a finding. a view to reachiug a correct finding on the question whether the judgment-debtors were agriculturists or not, the High Court was not interfering in revision with a finding of fact, but was drawing the correct inference from evidence it had itself ordered to be recorded before considering the law applicable to the case. this objection has no validity. In our opinion, It was next argued that the respondents cannot claim the benefit of the Act, because the compn•mise decree must be considered to have become a final decree and the second clause of s. 16 of the Amend ing Act and not the third applied, and in any event, the respondents were concluded by the compromise decree which operated as res judicata. To under· stand this argument, it is necessary to read s. 19 of the Act. and s. 16 of the Amending Act. Section 19 of the Act was amended by the addition of sub· s. (2) in 10i8. Section 19, as amended, reads :- " 19 ( 1) Where before the commenc~ment of this Act, a court has passed a decree for the repayment of a debt, it shall, on the application of any judgment-debtor who is an agriculturist or in respect of a Hindu joint family debt, on the application of any member of the family whether or not he is the judg ment-debtor, or on the application of 320 SUPREME COURT REPORTS [1964] \tot. 1963 Puft11rrf'hi V11.~ /If ~1.ibbc Rao v. Vnliu1i Ja~aFfntldha n., decree.holder, apply the provisions of this Act to s1Jch rkcree an<l sh~ll. notwirhstandin!! am·· tb.ug cou tained in tire Cod" ul Civil Pro~~<lur~, !U08, amend the decree accordingly or enter satisfaction, as the ca~e may be : Provided that all payments made or amounts recovered, whether before or after the commencement of this Act, in respect of any such decree shall first be applied in p~yment of all costs as originally decreed to the creditor. (2) The provisions of sub·scction ( 1) shall also apply to cases where, after the commencement of this Act, a Court has passed a decree for the repayment of a debt payable at such commencement." The Amending Act also provided bys. I():- "16. The amendments made, by this Act shall apply to the following suits and proceed· ings, namely :- (i) all suits and proceedings instituted after the commencement of this Act; (ii) all suits and proceedings instituted before the commencement of this Act, in which no decree or order has been passed, or in which the decree or order passed has not become final, before such commencement; (iii) all suits and proceedings in which the decree or order passed has not been excuted or satisfied in full before the commencement of this Act : Provided that no creditor shall be required to refund any sum which has been paid to or 1963 Pulavartlfi Vtn, kata Subba Rao v. Valluri JagMlniJ.dha &o Hidayatul/oh J. 2 S.C.R. SUPREME COURT REPORTS 321 realized by him, before the commencement of thl·s Act." is, interlocutory or preliminary. The conte:ition of the appellants is that a compro mise decree is a decree which finally determines the rights of the parties and the case therefore, governed by cl. (ii) of s. 16 and not by cl. (iii); as claimed by the respondents. There seems to have been at one time some difference of opinion in the interpretation of this section in the High Court, but the view which has prevailed is that the section applies only to those decrees which can be said to be final in contra-distinction to decrees which are merely It has also been held now for a Jong time in the High Court that cl. (iii) governs all cases of money decrees in which the decree passed has not been executed or satisfied in full before the commencement of the Act. See Venkataratnam v. Seshamma ('). Iu other words, all decrees which have been executed and satisfied before the commencement of the Amending Act on January 12, I9i9, are unaffected by the Amending Act, but all decrees which are not final and which remain to be executed either wholly or in part, are subject thereto, but the proviso states that in scaling down such decrees, the decree· holder would not be required to refuud any sum which might have been paid or realised by him. No distinction is made between decrees passed after contest and decrees passed on com pramise. Both the kinds of decrees are amenable to the provisions of s. 19 (2) and also of s. 16 (iii). There being no distinction between decrees passed after contest and decrees passed on compromise, the words "in which the decree or order passed has not become final" in cl. (ii) of s. 16, cannot be held to refer to a compro· mise decree but to decrees which are final such as final decrees for foreclosure, etc., in suits on mortga ges. The prevailing interpretation of the section in the High Court is preferable in view of the generality (I) I.L,R. 1952 M~d. fg2, - 322 SUPREME COURT REPORTS [1964] VOL. 1963 Pul•f:Jl!f'thi Ytrillkata Suiba Rao v. l'allu1i Jatannadha R .. /fidll]atullah J, J!l (2) and 16 the words used in ss. (iii). to unsettle a In any event, it would be improper view of law which has now become inveterate. This case was governed bys. 16 (iii), read with s. I\:! (2) and the respondents were entitled to broach the ~uestion of the scaling down of the decree once again. The appellants then seek to reach the same It result by invoking the principle of res judir, ata. is contended that the earlier decision amounts to res judicata and the respondents were not entitled to raise the same issue which by implication must be held to be decided against them by the compro mise judgment and decree. In the alternative, it is contended that the earlier compromise decree creates an estoppcl against the respondents because the appe llants at that time had shown some concession in the amount which they were claiming and a decree for a lessor amount was passed. This estoppel was In our opinion, said to be an estoppel by judgment. these contentions cannot be accepted. The Act as amended confers this right upon petly agriculturists to save them from the operation of loans taken at usurious rates of interest. No doubt the conduct of respondents in omitting to press the claim for reduct ion of the amount of the claim on the first occasion is significant, but this did not constitute res judicata, either statutory or constructive. The compromise It was the decree was not a decision by the Court. acceptance by the Court of something to which the It has been said that a compro· parties had agreed. mise decree merely sets the seal of the court on the agreement of the parties. The court did not decide anything. Nor can it be said that a decision of the court was implicit in it. Only a decision by the court could be res judicaw, whether statutory under s.11 of the Code of Civil Procedure, or constructive as a matter of public policy on which the entire doctrine rests. The respondents claim raise the - 1963 Pul1Jv4rthi Venkata Suhh« Rflo v. Valluri Ja4anr1atiha RQD Hid•y•tu/lah J, 2 S.C.R. SUPRE.NIE COURT REPORTS 323 over again because of the new rights conferred by the Amending Act, which rights include, according to them, the re-opening of all decrees which had not become final or which had not been fully executed. The respondents are entitled to take advantage of the amendment of the law unless the law itself barred them, or the earlier decision stood in their way. The earlier decision cannot strictly be regarded as a matter which was "heard and finally decided". The decree might have created an estoppel by con duct between the parties; but here the appellants are in an unfortunate position, because they did not plead this estoppel at any time. They only claim ed that the principle of res judicata governed the case or that there was an estoppel by judgment. the principle of res judicat,a is By that expression, described in English law. There is some evidence sums under the consent decree, but that evidence cannot be looked into in the absence of a plea of estoppel by conduct which needed .to be raised and tried. The appellants are, however, protected in respect of these payments by the proviso to cl. (iii) of s. 16 of the Amending Act. respondents had paid show that In our opinion, this appeal has no merits and · must fail. It is accordingly, dismissed, but in the cir cumstances of the case, we make no order about costs in this Court. Appeal dismi11sed. , - - -- '