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TMI Blog1952 (11) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be an authoritative ruling as to the interpretation of this new provision. The appeal will be posted before a Full Bench of three Judges. OPINION Venkatarama Aiyar, J. 2. This appeal has been referred for the decision of a Full Bench as it raises a question of considerable importance on the construction of Expl. (I) to Section 8, Madras Agriculturists' Relief Act, 4 of 1938, op which there is a conflict of judicial opinion. The facts are that on 12-11-1921 the respondent borrowed a sum of Rs. 2,000 from one Lakshminarayana Sastri and executed a promissory note therefor (Ex. D-1). Nine payments were made towards this promissory note and endorsed thereon. We are concerned in this appeal with five of them. The endorsements relating to them have been marked as Exs. D. 1(e) to D. 1(j) they state that the payments were made towards principal and interest . On 14-7-1929 there was a settlement of accounts after giving credit for the payments made, the balance found due was Rs. 1658 and for this amount a fresh promissory note EX. D. 2 was executed. The appellant is an endorsee of this promissory note. The respondent filed O.P. No. 23 of 1943 on the file of the Sub-Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the remedy. In -- 'Mayfair Property Co., In re, Bartlett v. Mayfair Property Co.', (1898) 2 Ch. D. 28, Lindley M. R. stated: In order properly to interpret any statute it is as, necessary, now, as it was when Lord Coke reported 'Heydon's case,' to consider how the law stood when the statute to be construed was passed, what the mischief was for which the old law did not provide, and the remedy provided by the statute to cure that mischief. Following these principles, it is necessary to consider what changes were effected in the general law relating to appropriation of payments by a debtor, by the Madras Agriculturists' Relief Act 4 of 1938; what led to the further amendment in 1948; and what its precise effect is. 5. The principles governing appropriation of payments made by a debtor are under the general law well settled. When a debtor makes a payment, he has a right to have it appropriated m such manner as he decides and if the creditor accepts the payment, he is bound to make the appropriation in accordance with the directions of the debtor. This is what is known in England as the rule in 'Ciayton's case (1816) 1 Mer. 572; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the principal The reason for the decision was thus stated by the Chief Justice: The principle of law which always has been observed and recognised is that when a payment is made in respect of principal and interest, there is an inference that the payment is ordinarily first allocated towards interest and thereafter any balance in respect of principal. That was recognised in the decisions under the Madras Agriculturists' Relief Act, 1938 in -- 'Ramaswami Aiyar v. Ramsyya Sastrigal', (1941) I Mad L. J. 295 and in -- 'Venkateswara Iyer v. Ramaswami Iyer', (1941) 1 Mad L. J. 9. In my view, the recognised and acknowledged principle regarding the utilisation of a payment which is made in respect of principal and interest has in no way been interfered with by any provision in the Madras Agriculturists' Relief Act, 1938. In the two decisions referred to in the Judgment, there had in fact been appropriation of the payments before the Act came into force. The larger principle laid down in this decision was that when there was no specific appropriation by either the debtor or the creditor, an Inference of appropriation would arise in law and that therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopened. In -- 'Rangareddi v. Venkatareddi', 1942-2 Mad L. J. 592 there was a mortgage in January 1922 towards which two payments had been made. On 29-1-1934 the accounts were settled and a fresh mortgage was executed. In holding that the payments made under the mortgage of 1922 could not be treated as open and unappropriated, the Court observed: When these two payments were adjusted to the debt in order to calculate the amount for which the later document was executed, it could no longer be contended that they were unappropriated. The point for decision is whether by the Explanation the Legislature intended to alter the law as laid down in these decisions. An examination of the scheme of Section 8 does not support the contention that such alteration was intended. Section 8(1) enacts that all interest outstanding on 1-10 1937 shall be deemed to be discharged. These words presuppose that interest as such remains outstanding and payable on that date and it is that outstanding interest that is discharged by the operation of the statute. If in fact there was no interest payable on that date Section 8(1) would have no application. Likewise, when the explanation prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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