1. The question for determination in this appeal relates to the applicability of the Cochin Agriculturists Relief Act, (XVIII of 1114), hereinafter referred to as the Cochin Act, and or the applicability of the Travancore-Cochin Indebted Agriculturists Relief Act 1956 (Act III of 1956), hereinafter referred to as the T.C. Act 1956, for fixing the amounts due from the appellants to the respondent. The main contention raised before the court below, and repeated before us, is that notwithstanding the provision in the overdraft agreement that appellants 1 and 2 (defendants 1 and 2) had entered into with the respondent - the plaintiff Bank - that interest accrued due and outstanding at the end of each quarter must be added to the principal, all such amounts added to the principal must be treated only as interest in calculating the amount due under S.14 of the Cochin Act. It was therefore urged that by the payment of Rs. 20,500/- on 1-1-1954 the debt due to the respondent was not only discharged but a sum of Rs. 826-7-6 will be repayable to appellants 1 and 2 along with the further sum of Rs. 4,100/- that appellants 1 and 2 had deposited on 6-12-1954 with interest from the date of withdrawal by the respondent of the above amount. These contentions were negatived by the court below and it passed a decree against appellants 1 to 3, the 3rd appellant-3rd defendant being a guarantor, and the plaint properties which were equitably mortgaged as security for the debt, for the sum of Rs. 7,268-6-0 with future interest at 6% from 11-9-1956. The court below also declared the right of the appellants to discharge the debt under the T.C. Act 1956.

2. In view of the importance of the question involved, the Division Bench before which this appeal came up for hearing has referred the case for the decision of a Full Bench and the appeal has accordingly come up before us.

3. On behalf of the appellants, it is contended that the decree of the court below is unsustainable, that appellants 1 and 2 are agriculturists and that no amount will be found due if a proper calculation is made in accordance with the provisions of the Cochin Act and or the T.C. Act 1956. It is necessary at this stage to refer to Ext. B series, Ext. B being the overdraft agreement, B (1) the promissory note and B (2) the letter of continuity executed by appellants 1 and 2 on the first of August 1950. Paragraphs of Ext. B provides that interest agreed upon, viz.,. at 71/2% will during the period of account be calculated quarterly on the last day of March, June, September and December every year and added to the principal. Reference may also be made to Ext. E, the extract of the current account ledger of the Bank of Cochin Ltd., the respondent here, from 24th May 1945 to 1st March 1953. It is seen from Ext. E that the interest outstanding due at the end of each quarter has been aided to the principal and it is not disputed that the account has been correctly maintained in accordance with the agreement between the parties. The amount outstanding due to the respondent on the 31st of December 1952 as disclosed by Ext. E was Rs. 28,384-13-9. This is the amount claimed in the plaint as due on that day. The point urged, as we indicated earlier, is that notwithstanding the provision in Ext. B that the interest outstanding at the end of each quarter should be added to the principal carrying interest thereafter, the provision must be ignored in calculating amounts due in accordance with the provisions of the Cochin Act and the T.C. Act, 1956. The argument is that interest added to the principal still retains its character as interest and all amounts so added to the principal must be treated only as interest.

4. The Cochin Act has not been specifically repealed either by the T.C. Act 1956, or by the later enactment, the Kerala Agriculturists Debt Belief Act, 1958. The appellants have therefore taken up the stand that the Cochin Act is still in force. This is not disputed by the respondent. We therefore proceed in this case on the basis that the Cochin Act is still in force. We, however, express no opinion on the question as to whether the Cochin Act is now in force or not. It is not disputed that appellants 1 & 2 are agriculturists.

5. Reliance has been placed only on S.14 of the Cochin Act which reads as follows: -

"14. In any proceeding for recovery of a debt, the court shall scale down all interest due on any debt incurred by an agriculturist after the commencement of this Act, so as not to exceed a sum calculated at 9 per cent per annum simple interest, where the creditor is a public company and at six per cent per annum simple interest in the case of other creditors:

Provided that Government may, by notification in the Cochin Government Gazette, alter and fix any other rate of interest, from time to time.

Explanation: For the purposes of this section, the definition of agriculturist in S.3 (ii) shall be read as if

(i) in proviso (a) to that section for the expression "the two financial years ending on the last day of Karkadagam 1114", the expression "the two financial years ending on the last day of Karkadagam immediately preceding the date on which the debt is incurred" were substituted; and

(ii) in provisos (b) and (c) to that section for the expression "the two years immediately preceding the 1st Chingam 1115" the expression "the two years immediately preceding the date on which the debt is incurred" were substituted."

S.14 applies to debts incurred after the commencement of the Cochin Act. The earlier S.7 to 10 and 13 in Chapter II of the Cochin Act, which relate to scaling down of debts and future fate of interest, relate to debts incurred before the commencement of the Cochin Act and have no application. It is, however, urged on the basis of S.14 that the sums added on to the principal must also be taken into account in determining the quantum of interest payable. It is further urged that the provision in Ext. B is nothing more than an agreement to pay compound interest and the same must be ignored in view of S.14 and only simple interest calculated on the original sum lent. Reliance has been placed on a decision of the Andhra Pradesh High Court in Sait Nainamul and others v. Balabhadra Subba Rao and others reported in A.I.R. 1957 A.P. 546 in support of this contention. The question decided therein was whether a payment made expressly towards interest at the contract rate can be re-opened and re-appropriated towards interest payable under the provisions of S.13 of the Madras Agriculturists Relief Act (IV of 1938). It was held that such payments can be re-opened and re-appropriated. S.13 of the Act considered in that case is similar to S.14 of the Cochin Act. However, in that case, there was no agreement to add the interest outstanding at any time to the principal and the only question that was considered was whether definite payments made towards interest at the contract rate can be re-opened and re-appropriated. What is more important is that the Division Bench in that case in making the order of reference came to the definite conclusion that the amount of Rs. 6,400/- for which the promissory note dated 7-12-1946 was executed - consisting of the sum of Rs. 6,100/- representing the various sums borrowed between 16-1-1946 and 11-11-1946, and the sum of Rs. 300, the interest that accrued due on those amounts up to 7-12-1946 - should be taken as the principal amount for the purpose of scaling down the debt under the Act. This clearly shows that if there is a fresh agreement treating a certain sum as the principal, that amount must be considered as the principal for the purpose of scaling down under the Act. This is against the contention urged on behalf of the appellants. In the case before us, no question of re-opening and re-appropriating the interest accrued due after 1-1-1953 arises since the interest claimed after that date is only what can be claimed under S.14 of the Cochin Act. The point decided by the Full Bench of the Andhra Pradesh High Court therefore does not arise for consideration in this case. Reference was also made to a decision of the Madras High Court in N.S. Sreenivasa Rao v. G.M. Abdul Rahim Sahib reported in A.I.R. 1956 Madras 618. The point that arose there also related to the payment of interest at a rate different than that provided in S.13 of the Madras Agriculturists Relief Act. It was held that the payments made at a rate higher than that provided under S.13 of that Act were made "under the: mistaken belief that in law the plaintiff was entitled to the higher rate of interest" and should be appropriated in the manner contemplated under S.13 of that Act. As we said earlier, that question does not arise before us for determination. A number of decisions of the Cochin High Court were also referred to, viz., the decisions in Lekshmi v. Kalyani (XXXV Cochin 513), Narayana Panicker v. Narayani Amma (XXXV Cochin 125) and Kumaran Ezhuthassan v. Paramekavu Devaswom XXXIV Cochin 147). In all these oases, the debt was one incurred before the Cochin Act came into force and all that was decided was that the payments made are open payments and that appropriation must be made in accordance with the provisions of the Act for scaling down of debts and calculating future interest in regard to debts that were subsisting at the commencement of the Cochin Act. We do not think that these decisions have any application and we are not called upon to decide about the correctness or otherwise of those decisions and we refrain from doing so. In none of those cases was there any agreement to treat interest accured due up to certain dates as principal and to add the same to the principal. The only decision to which our attention has been drawn wherein there was an agreement similar to the one in the case before us is the one reported in XXXV Cochin 542 - Anthony and others v. Mala Catholic Union Bank Ltd. It was held there that the terms of the agreement only amounted to allowing the Bank - the plaintiff therein - to charge compound interest with a rest of three months period. The above conclusion has been reached on the basis of a decision of the erstwhile Cochin High Court reported in XXXII Cochin 578 - Narayana Marar v. Neelakanta Ayyar. The question that arose in the latter decision related to a debt that was subsisting at the commencement of the Cochin Act and it was held therein that any sums specifically paid towards interest during the period first Chingam 1107 up to first Chingam 1115 towards interest will go in discharge of interest payable and will be governed by the provisions of S.9 of the Cochin Act. It was also held that the payments made were all open payments and an account has to be taken of what is due from one party to the other as at the date of the commencement of the Cochin Act. It appears to us that the above decision does not touch the question arising for determination here and does not support the conclusion reached in Anthony and others v. Mala Catholic Union Bank Ltd., (XXXV Cochin 542). In the appeal before us, the point to be decided is whether the agreement to add arrears of interest to the principal should be ignored in applying the provisions of the Cochin Act. This has not been answered in Narayana Marar v. Neelakanta Ayyar (XXXII Cochin 578). With respect, we are unable to agree with the view taken in Anthony and others v. Mala Catholic Union Bank Ltd., (XXXV Cochin 542) that such a provision in the agreement is only an agreement to charge compound interest. We think that the effect of the agreement in the case before us is to wipe off all interest outstanding at the end of each quarter by means of further advances from the Bank of similar amounts which are debited to the account of the debtor. The interest that thus accumulated with principal at the end of each quarter becomes principal and never thereafter ceases to be dealt with as principal. We are fortified in this view by the decision in Pazhaniappa Mudaliar and others v. Narayana Ayyar and others reported in A.I.R. 1943 Madras 157. In that case, Their Lordships referred to the English case in Inland Revenue Commissioners v. Hoder (1931) 2 K.B. 81 and quoted with approval the following passage from that case:

"I am therefore of opinion that having regard to the method in which, with the concurrence of the company, the account was kept by the bank, the company must be deemed to have paid each half year the accruing interest by means of an advance made for that purpose by the bank to the company".

We respectfully follow the above decisions. For a long number of years the, Travancore High Court had taken the view that an agreement to add interest outstanding at given times to the principal and to treat the whole amounts as principal carrying interest thereafter is a valid agreement and it has later been held that for the purpose of S.11 of the Travancore Debt Belief Act (Acts II and III of 1116) the principal mentioned in S.11 must be taken to be the amount treated as principal by agreement of parties. Reference may be made to the Full Bench decisions of the Travancore High Court reported in X T.L.J. 367 - Eappen Eappen v. Godavarma Kochugovindan, LVII T.L.R. 886 - Kora M. Varghese v. Neelakanta Ayyar, Subramania Ayyar, LVII T.L.R. 895 - Joseph Mathew v. Harihara Ayyar Venkiteswara Ayyar and 1943 T.L.R. 324 - Kanakku Narayana Pillai Sankara Pillai v. Kochu Pillai Amma Kunjulekshmi Amma. We hold that the principal amount outstanding on 1-1-1953 in this case is the sum of Rs. 28,384-13-9.

6. Arguments have also been advanced based on S.4 and 5 of the T.C. Act, 1956. We extract below S.4 (1) and the explanation and S.5 which were relied on:

"4(1). Notwithstanding any law or custom for the time being in force, or any contract, or any decree or order of court to the contrary, any debt due by an agriculturist may be discharged by repayment of the principal amount of the debt outstanding in ten equal half-yearly instalments together with such interest as would be payable under the provisions of S.5. The instalments shall be payable on or before the last day of February and August of each of the five years commencing on the commencement of this Act.

Explanation: In the case of a decree, the amount decree 1 shall be deemed to be the principal.

5. Provision for interest:- (1) The interest outstanding at the commencement of this Act, on any debt shall be paid in ten equal half-yearly instalments, each such instalment being payable along with the corresponding instalment of the principal amount specified in subsection (1) of S.4:

Provided that the amount of the interest payable by an agriculturist under subsection (1) shall not exceed one-half of the principal amount outstanding at the commencement of this Act.

(2) Notwithstanding anything contained in sub-Section (1), no creditor shall be required to refund any sum paid to him which is in excess of the amount calculated as due under sub-section (1), nor shall such excess amount be liable to be adjusted towards any future interest or the principal amount of the debt.

(3) The interest payable after the commencement of this Act shall be at the rate applicable to the debt under any law or custom for the time being in force or under any contract or under a decree or order of any Court, or at six per cent per annum simple interest, whichever is less, and the amount of interest accrued due on the principal amount outstanding till the date of payment of each of the instalments under sub-section (1) of S.4 shall be payable along with such instalment".

It was contended that the debt mentioned in S.4 of that Act must be split up into its component parts of the principal amount of the debt outstanding and interest as could be scaled down under the provisions of S.5. Here again, the question for determination is what is the principal amount of the debt outstanding. In the view we have taken, we have no hesitation in coming to the conclusion that the principal amount of the debt outstanding was the above sum of Rs..28384-13-9. Emphasis was laid on the expression "notwithstanding any contract" in S.4 and it was argued that the contract to treat interest as principal should be ignored. We are unable to agree. The section only allows payment by instalments of the debt in the manner provided in the section and "notwithstanding any contract" in that section can only refer to the contracts in, relation to the time and manner of repayment of the debt. Reference was also made to the long title of the T.C. Act, 1956 and the scheme of the Act and it was contended that the scope and object of the Act will warrant the construction sought to be placed on S.4 of the T.C. Act, 1956 by the appellants. We do not think so. There is nothing in the Act, as far as we are able to see, which either expressly or by implication seeks to abrogate agreements entered into between the parties to treat interest accrued due up to certain dates as principal. In the view we have taken of S.4, there can be no question of S.5 of the T.C. Act, 1956 being attracted, the interest claimed in the suit, Rs. 567-7-9 being very much less than half the principal amount of Rs. 28,384-13-9.

7. We may, in passing, refer to the definition of the term principal in the Kerala Agriculturists Debt Relief Act, 1958, wherein it is specifically provided that the principal means the amount originally advanced together with such sum, if any, as has been subsequently advanced, notwithstanding any stipulation to treat any interest as principal. There is no such definition of the term principal in the T. C. Act, 1956, and no reliance has been placed on Act XXXI of 1958 by the appellants.

8. In the light of the above conclusions, it is clear that the judgment and decree of the court below do not call for any interference and that this appeal has to be dismissed. We do so and direct the parties, in the circumstances of the case, to bear their respective costs.

Dismissed.