JUDGMENT
Srinivasan, J.
1. The appellant filed the suit for recovery of Rs. 4037.32 P. under peculiar circumstances. He was the owner of the suit property. He executed a usufrucutary mortgage in favour of Alli Rani on 23.2.75 for a sum of Rs. 11,000. The mortgage was assigned by the mortgages to the defendants on 14.7.75 for a consideration of Rs. 11,000. The plaintiff entered into an agreement with the defendants on 10.3.78 for selling the property to them for a total consideration of Rs. 22,000. A sum of Rs. 3,000 was paid in advance on the date of the agreement. It was agreed that a sum of Rs. 11,000 should be adjusted by the defendants towards the discharge of the usufructuary mortgage, which they got by assignment from Alli Rani. The balance of Rs. 8,000 was agreed to be paid on or before 13.6.78. Actually, the time for completion of the transaction was extended upto 13.9.78 and a sale deed was executed by the plaintiff in favour of the defendants, which is marked as Ex.A.1. The plaintiff filed the present suit claiming that he was, on the date of the sale deed, entitled to the benefits of the Tamil Nadu Deb Relief Act (Act 40 of 1979) and that the amount due under the mortgage would have been only Rs. 7,520.18 p. If scaled down. It is claimed by the plaintiff that a sum of Rs. 3,479.82 P. was thus paid in excess towards the mortgage when in the sale deed it was agreed that a sum of Rs. 11,000 was to be adjusted by the defendants in discharge of the mortgage. The plaintiff, therefore, alleged in the plaint that the defendants were aware of the benefits to which the plaintiff was entitled to and by fraud they bad written false recitals in the sale deed with regard to the consideration. The plaintiff claimed that he was entitled to get a refund of the said sum of Rs. 3,479.82 P. with subsequent interest thereon and filed the present suit. The plaintiff, also claimed a sum of Rs. 557.50 P. by way of refund of stamp duty paid by him on the usufructuary mortgage.
2. Both the courts below held that the plaintiff was not entitled to claim any amount from the defendants as having been paid in excess of the amount due under the mortgage. The lower appellate Court took the view that the matter was governed by Section 8(3) of the Tamil Nadu Act 40 of 1979 and the plaintiff was, therefore, not entitled to claim back the amount. As regards the refund of stamp duty, learned Counsel for the plaintiff conceded at the time of arguments before the lower appellate Court that he was not pressing the said claim. That concession has been recorded by the lower appellate Court in its judgment. That resulted in the confirmation of the dismissal of the suit by the trial Court.
3. In this second appeal it is contended by Mr. Velusamy appearing for the plaintiff/appellant, that the lower appellate Court is clearly wrong in invoking the provisions of Section 8(3) of the Act to this case as according to him, Section 8(3) of the Act will not apply to mortgages. Learned Counsel draws my attention to Sections 7, 8, 9 and 10 of the Act and submits that as regards the debts falling within the scope of Section 9 of Act, Section 8(3) of the Act cannot be invoked. It is, therefore, submitted that the payment made by the plaintiff was a payment under a mistake of law and the plaintiff would be entitled to recover back the excess amount paid by virtue of Section 72 of the Contract Act. Learned Counsel relies upon the decisions in Nainamul v. B. Subba Rao (1901)2 An.W.R.J.3 : (1957) An.L.T. 536 A.I.R. 1957 A.P. 546, Sales Tax Officer v. Kanhaiya Lal and Corporation of Calcutta v. Hindustan Construction Co., Ltd. for the proposition that a payment made under a mistake of law will also be governed by Section 72 of the Contract Act.
4. Learned Counsel for the respondents submits that Section 8 is not completely excluded from the purview of Section 9 of the Act. He draws my attention to certain provisions of Section 9 of the Act which refer to the scaling down under the provisions of Section 8 of the Act. For example, Section 9(2) Clause (ii) and Section 9(4)(ii)(ii) refer to Section 8 of the Act. It is, therefore, submitted that Section 8 of the Act must be read along with Section 9 of the Act and a harmonious interpretation should be given to the provisions contained in the Act.
5. At the outset, it should be pointed out that there is no provision in the Act which prohibits a debtor from voluntarily paying the amount due under the contract to the creditor. Nor a creditor is prevented from accepting the full amount due to him as per the contract and give a discharge to the debtor. Though the Act applied to both agriculturists and non-agriculturists it does not apply to all debtors. The definition of ‘debtor’ in Section 3(3) of the Act excludes from its purview Certain categories of persons. Similarly certain kinds of debts and liabilities are not affected by the Act (Vide Section 4). Whether a debtor is entitled to the benefits of the Act and whether the debt in question is covered by the Act are matters to be decided on the facts of each case.
6. Section 7(1) of the Act provides that all debts payable by any debtor on 14.7.78 shall be scaled down in accordance with the provisions of the Act notwithstanding anything contained in any law, contract or instrument. The proviso to the sub-section excludes the debts which were already scaled down under Tamil Nadu Act IV of 1938 or Tamil Nadu Act XXXVIII of 1972. Section 7(2) prohibits recovery of any sum from the debtor in excess of the amount as scaled down under Section (7)(1). The language of Sub-section (2) is clear in that the recovery of excess is barred only if the debt is scaled down under Sub-section (1). Of Course Sub-section (1) is mandatory as it uses the word ‘shall’. But significantly the section does not by its own operation wipe out any portion of the debt. The section confers a benefit on the debtor to avail himself of the provisions of the Act and get the debt scaled down, Section 8 contains a provision similar to the ‘damdupa rule’ embodied in Section 8 of the Tamil Nadu Act IV of 1938. Sub-section (1) of Section 8, declared that if a debtor has paid to a creditor one and half times the amount of the principal whether by way of principal shall be deemed to be wholly discharged. This sub-section provides for automatic discharge of the debt and does not expect or required the debtor to do anything further. Once the payment made by the debtor equals or exceeds one and half limes principal amount, the debt stands discharged whether such payment was made towards interest or principal or both, sub Section (2) of Section 8 provides for cases in which the payment made by the debtor falls short of one and half times the principal, Sub-section (3) of Section 8 reads as follows:
Section 20 to 23 nothing contained in Clause (1) and (2) shall be deemed to require the creditor to refund any sum which has been paid to him or to increase the liability of debtor to pay any sum in excess of the amount which would have been payable by him if this Act had not been passed.
It is not necessary to refer to the explanations appended to the section. The language of Section 8 does not restrict or limit the applicability of the section to particular category of debts. The section is applicable to simple money debts as well as mortgages. There is no indication whatever in the section that it will not apply to mortgage debts, Sub-sections (3) extracted above saves excess payments from the operation of Sub-sections (1) and (2) and enables the creditor to retain the excess. The terms of the sub section are clear and unambiguous. The operation of the sub section is not limited to the payments made before the Act came into force. It would equally apply to payments made after 14.7.78. While dealing with Section 8(4) of Tamil Nadu Act IV of 1938 which is pari materia, a Division Bench of this Court held in Ganapathisubramania Ayyar v. Gopalaswami Naidu that the operation of that subsection would apply to payments made before and after 1.10.87 which was the relevant date under that Act.
7. The Exception to Section 8(3) is found in Section 20 to 23 of the Act as expressly mentioned in the sub-section, Section 20 deals with cases in which the moveable property of a debtor has been sold on or after 14.7.78 in execution of a decree obtained by the creditor and provides for an application by the judgment debtor for refund of any sum received by the decree holder in excess of the amount to which he would have been entitled under the provisions of the Act. Section 21 provides for setting aside sales of immovable property of the debtor held on or after 14.7.78 in execution of a decree obtained by the creditor, Section 22 is only a consequential provision on setting aside of sale under Section 21. Section 23 enables the Court to enforce the provisions of the Act if it is satisfied that the claim made before it is in evasion of the provisions of the Act. The provisions in Sections 20 to 23 of the Act were necessitated because the Legislature wanted to give restrospective effect to the Act. The Act was passed in June, 1979 but deemed to have come into force on 14.7.78. A reading of Sections 8 and 20 to 23 makes it clear that while the legislature thought it fit to provide for the refund of excess payment made by enforcement of decrees and for reopening of discharge brought about by Court auction sales, it did not want to disturb the discharge of a debt by voluntary payment outside Court. On the other hand Section 8(3) expressly permits the creditor to retain such excess payments obviously for the reason that they are voluntary. Though Section 8(3) refers to Clauses (1) and (2) of the section, the question of excess payment can arise only when the debtor has paid more than one and half times the principal amount. If the debtor has paid less than one and a half times the principal, he is liable to pay so much of the amount as would be sufficient to make the total payment one and half times the principal. In such cases there is no possibility of considering the payment as in excess of what is due to the creditor under the provisions of the Act. It follows that the question of excess repayment of refund thereof can arise only in cases falling under Section 8(1) whereby the debts stand discharged on payment of one and half times the principal amount or more. Thus Section 8(3) enables the creditor to regain the amount received by him and prohibits the debtor from claiming a refund of the amount paid by him in excess of the amount; which would be due if the provisions of the Act had been invoked and the debt had been scaled down.
8. Learned Counsel for the appellant contends that Section 8(3) cannot be invoked by the respondent who is a usufrucutary mortgagee. He relies on the provisions of Section 10 of the Act which read thus:
Nothing contained in Section 8 shall affect:
(i) any mortgage of the description referred to in Sub-section (1) of Section 9, except to the extent provided for in that section; or
(ii) any liability for which a charge is provided under Section 55, Clause (4) Sub-clause (b) of the Transfer of Property Act, 1882 (Central Act IV of 1882).
The language of Section 10 is rather significant. It says that nothing contained in Section 8 shall affect any mortgage covered by Section 9(1) except to the extent provided for in Section 9. The word used is ‘affect’. That indicates very clearly that the rights and liabilities flowing from the usufructuary mortgages described in Section 9(1) should not be altered or influenced by the provisions of Section 8 except to the extent expressly provided for by Section 9. But for Section 10 of the Act the provisions of Section 8(1) and (2) would affect the mortgages described in Section 9(1) of the Act. Section 8(3) cannot by any stretch of imagination be said to ‘affect’ such mortgages. It is already seen that Section 8 is wide enough to cover all lands of debts, to which the Act is applicable. The operation of Sub-sections (1) and (2) of Section 8 is expressly restricted by the terms of Section 10 which refers to the entirety of Section 8, and it cannot apply to Section 8(3) because of the language used therein. The contention that Section (3) will also be excluded in cases of mortgages described in Section (1) cannot be accepted. Even if the provision of Section 8(3) is applied to a mortgage covered by Section 9(1) cannot accepted. Even if the provision of Section 8(3) is applied to a mortgage covered by Section 9(1) the former will not ‘affect’ the latter as contemplated by Section 10. Hence Section 8(3) can be invoked by a mortgagee even if the mortgage is one described in Section 9(1).
9. Excepting Section 5(a) of Section 9 all the other provisions of Section 9 direct the mortgagor to pay certain amounts before seeking redemption of the mortgagee. It is only under Sub-section 5(a) the mortgage is deemed to be wholly discharged under certain circumstances.
This provision expressly states that it will operate notwithstanding anything contained in Sub-section 8 and 12. But this is not a case falling under Section 9(5)(a). The provisions for scaling down under the other sub-sections of Section 9 would apply if the mortgage remains undischarged. Where the mortgage has been discharged by payment and not by virtue of Section 9(5)(a), the provisions of Section 8(3) will apply. Even if they do not apply as such, the principal underlying the section would apply. So long as there is no provisions for reopening the discharge brought about the voluntary payment outside court, there cannot be a claim for refund of the amount paid in excess of what would have been due if the debt had been scaled down under the Act. Such payment is not vitiated by any illegality.
10. Consequently, the plaintiff in the case is not entitled to seek recovery of the amount paid by him voluntarily to the creditor as per the contract. In the plaint, the case of the plaintiff is that the defendants played a fraud on him and recovered the entire amount due under the mortgage. There is absolutely no evidence in support of the case of fraud pleaded by the plaintiff. The case of fraud is not also argued by learned Counsel for the appellant before me. The only contention raised by learned Counsel for the appellant is that it is a payment made by mistake of law. That case has not been pleaded by the plaintiff. There is no question of mistake of law as the debtor has voluntarily paid the amount due to the creditor under the terms of the contract. In the view I have taken, the decisions relied on by learned Counsel for the appellant are not relevant.
11. In the result, the second appeal has to fail and it is dismissed with costs.