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TMI Blog1942 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the appellants in the Court below--and their sole contention before us--was that they were "agriculturists" within the meaning of the Madras Agriculturists' Relief Act, 1938, and as such were entitled to the benefits thereof, and that if the debt due to the respondents was scaled down in accordance with the provisions of that Act, practically nothing would be found payable in respect of the debt. It is not disputed that the appellants are agriculturists as that term is defined in the Act, but their contention that all the accrued interest should be deemed to be discharged, and that the payments made from time to time should be applied in reduction of the principal sums advanced by the respondents was rejected by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest during the next year. 3. The latest of these settlements relating to the year ending 30th June, 1934, appears from the entries in the books to have taken place on 15th July of that year when a sum of Rs. 3,141-8-3 was debited as interest due up to the 30th June, and a balance was struck showing a sum of Rs. 25,177-2-8 as due from the appellants as for that date. After the account was thus balanced there were no advances, but only two payments of Rs. 2,000 and Rs. 1,750 on 15th July, 1934 and 20th June, 1935, respectively, after which the dealings ceased altogether, and the respondents have brought the suit, after a preliminary demand for payment, for recovery of the said balance of Rs. 25,177-2-8 with further interest up to date of pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been adopted by bankers in England for over a century had its origin as a device to secure compound interest by circumventing the usury laws under which agreements for charging compound interest were usurious and illegal; and though the usury laws were subsequently repealed and the necessity for such mode of dealing disappeared, the usage which ascribes to it, as a matter of implied term of contract, the effect referred to above has remained. In the case cited the English Court of Appeal had to deal with a claim to refund of Income Tax. The claimants had guaranteed the repayment of monies owing to a bank by one of its customers and were called upon to pay the balances accumulated over a period of years, on the customer's default. Hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of an advance made for that purpose by the bank to the company. These observations are equally applicable here, with the result that the interest accruing due each year up to 30th June, 1934, must be deemed to have been paid and discharged, and to be no longer, "outstanding" to be wiped out under Section 8 (1) of the Madras Agriculturists' Relief Act, 5. It was, however, said that the provisions of the Explanation to Section 8 had the effect of overriding this result. The Explanation says, Where a debt has been renewed or included in a fresh document in favour of the same creditor, the principal originally advanced by the creditor together with such sums, if any, as have been subsequently advanced as principal shall alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fu1 whether the system under which unpaid interest of any year was turned into capital during the subsequent year by the process of debiting the sum and carrying it forward as part of the interest bearing principal can be said to involve a "renewal" of the debt according to the ordinary connotation of the term. It is, however, unnecessary to pursue this point further, as we are inclined to hold that the explanation to Section 8 cannot, in any view, .affect the operation of the principle referred to above. 6. Nor can it be said that the application of the principle in scaling down debts due to banks renders superfluous the exemption of certain liabilities due to "scheduled banks" under Section 10 (2) (in) of the Act, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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