Malik, C.J:— This is a defendant's appeal in a suit brought for realization of money due on a mortgage. The mortgage was executed on the 27th of January, 1930, for a sum of Rs. 1,000 and carried interest at 9 per cent, per annum. The defendant had been regularly paying the interest up to the 27th of. July, 1937. The defendant claimed that he was an agriculturist and was entitled to the benefit of section 34 of the Agriculturists' Relief Act and section 9 of the Debt Redemption Act. The suit was decreed by the lower courts and the decree was modified by this Court, with the result that the plaintiff was granted a decree for Rs. 741-10 together with pendente lite and future interest at three and a, half per cent, per annum and proportionate costs. Two objections have been raised by the learned counsel for the appellant. The first objection is that he defendant being an agriculturist, as the plaintiff did not send accounts for the years 1935, 1936 or 1937 under the provisions of section 34, sub-section (c) of the Agriculturists' Relief Act (XXVII of 1934), the plaintiff was not entitled to claim any interest for those years. Section 34, sub-section (c), however, provides that if the provisions of clause (b) of section 32(1) have not been complied with by the creditor, the court shall in computing the amount of interest due upon the loan exclude every period for which the creditor has failed to comply with the said provision. The learned single Judge was of the opinion that this sub-section would entitle the court to disallow interest for the year in which the provisions of clause (b) of section 32(1) had not been complied with, only if the interest had not already been paid and was due; the section would not otherwise be applicable. This appears to us to be a correct interpretation of the sub-section. Section 34 deals with accounting between the creditor and the debtor and the mode in which such accounting is said to be done and has provided, in the sub-section, for disallowance of such interest as may be due for the period for which accounts have not been sent. The decision of the learned single Judge on this point is, therefore, correct.
The other ground raised by the learned counsel is that the mode of accounting is not correct as the learned Judge has taken the principal sum to be Rs. 1,000 and has calculated interest at four and a half per cent, and has deducted from the sum total the amount paid, instead of making deductions year by year as each payment was made. It is urged that since the statute has reduced the rate of interest, the amount paid at the old contractual rate in excess of the statutory rate should have been deducted from the principal as and when it was paid.
Under section 9, sub-section (1) of the Debt Redemption Act the court has to “determine the principal and take into account all sums paid by or on behalf of the debtor and in the case of mortgage with possession the not profits realised by the mortgagee or which with the exercise of ordinary diligence might Have been realised by him.”
After the court has done that it has to determine the amount due by the debtor in accordance with certain provisions contained in the rest of the section. Those provisions are—
(a) that accounts have to be re-opened up to the 1st day of January, 1927, so that any amount which has been converted into principal before that date under any contract or settlement of account between the parties has to be taken as principal.
(b) The amount due by the debtor must not exceed the amount that would have been due if the rate of interest had been, in the case of a secured loan, four and a half per cent, per annum simple interest and in the case of an unsecured loan six per cent, per annum simple interest.
(c) and lastly the amount due by the debtor as interest must not exceed the amount of the principal outstanding on the date on which the amount by the debtor is determined. This, in short, is the reproduction of the rule of damdupat.
The sub-section does not provide that the contractual rate of interest is reduced to four and a half per cent, but that the amount payable shall not exceed the amount that would be due calculating the interest on the principal at the reduced rate of 4½ per cent. In calculating the principal regard is not to be had to the reduction of the rate of interest by the Act. It has to be calculated according to the general law as modified by the proviso to section 9, sub-section (1) of the Act which we have summarised as provision (a) above. No doubt this would, in the case of a debtor, who has been regularly paying the interest, work less favourably to him than to a debtor who had neglected to pay the interest, but the section being worded as it is, we are afraid it can not be helped.
We are, therefore, of the opinion that the decision of the learned single Judge on this point also is correct.
The appeal has no force and is dismissed with costs.
Appeal dismissed.