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Case Number

Re: Suit No. 1146 of 1936

Attorney(S)

S.R Das Gupta for the Petitioner.
S.R Das for the Respondent.

Judges

Edgley, J.

Acts

Act, and the provisions of rules 2 and 5 of Order XLVII of the First Schedule to the Code of Civil Procedure, 1908,
Bengal Agricultural Debtors Act, 1935.Sub-sec. (6) of sec. 36,
provisions of sec. 30 of the Bengal Money-Lenders Act
BENGAL MONEY LENDERS ACT 1940
BENGAL MONEY LENDERS ACT

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Smart Summary

Concise Analytical Summary of the Opinion (Edgley, J.)

Factual and Procedural Background

The petitioner is Lal Mohan Chatterjee, who applied for relief under the Bengal Money-Lenders Act, 1940. A preliminary decree in a mortgage suit (affecting the petitioner and others) was passed on 19 February 1937. An account taken by the learned Registrar found Rs. 26,076-11-9 to be due to the mortgagee. The decree was made final on 14 November, 1988 (as stated in the opinion). The mortgaged properties were sold on 30 August 1939 and 6 December 1939; the sale prices realised were Rs. 6,400 and Rs. 17,000 respectively (total Rs. 23,400). The sale was confirmed on 16 August 1940.

The application first came before the Court in Chambers on 6 March 1941. On that occasion, Mr. Das (for the Opposite Party) contended that the application was not maintainable on two grounds: (1) no application for execution of the decree was pending; and (2) the application could not be treated as an application for review. The Court, however, considered the matter further because important points of law were involved; counsel for both sides and Mr. B.C. Ghose acted as amicus curiæ and presented considerations.

The mortgage bond stipulated interest at 10% compound. The petitioner seeks relief under the Money-Lenders Act on the basis that s.30 limits post-Act interest liability to eight percent simple and that relief under s.36 may be available.

Solicitors: S.K. Kerr & Co. for the Petitioner; N.K. Roy for the Respondent.

Legal Issues Presented

Whether the present application relates to a “suit to which this Act applies” within the meaning of s.2(22) of the Bengal Money-Lenders Act, 1940 — specifically, whether a suit in which a final decree was obtained before 1 January 1939 but which was not fully satisfied on that date can be treated as “pending.”
Whether the petitioner may obtain relief under s.36 of the Act when no execution proceedings are pending, and if so, by what procedure (execution proceedings or an application for review pursuant to s.36(6)).
Whether the Court can exercise the powers in s.36(1) to relieve the borrower from liability for interest in excess of the rates fixed by s.30 without re-opening the entire decree, and what the effect of such exercise should be on the decree.
Procedural question: whether the petitioner was required to follow the formalities of Chapter XXXI of the Original Side Rules when filing an application for review under s.36(6), including filing copies of the judgment and decree sought to be reviewed.

Arguments of the Parties

Petitioner's Arguments

The petitioner contended that although the suit was filed before 1 January 1939, because the final decree had not been satisfied on that date the suit must be regarded as “pending” within s.2(22), and therefore relief under the Bengal Money-Lenders Act is maintainable.
The petitioner sought release from liability for interest in excess of the limits prescribed by s.30 (which caps interest at eight percent simple), given that the mortgage bond stipulated ten percent compound.
Implicitly, the petitioner sought that the Court exercise its powers under s.36 to obtain relief (the particular procedural form was later treated by the Court as an application for review under s.36(6)(a)(ii) and the Court dispensed with certain formalities).

Opposite Party's (Respondent's) Arguments

Mr. Das, for the Opposite Party, argued the application was not maintainable because (a) no execution application was pending in relation to the decree; and (b) the present application could not be treated as an application for review.
Mr. Das also argued that, because his client did not wish to put the decree into execution, the applicant should be required to file his application in strict conformity with Chapter XXXI of the Original Side Rules (meaning that certain formalities, such as filing copies of the judgment and decree, should have been observed).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court’s reasoning proceeds from statutory construction and legislative intent, applied to the facts. The principal statutory provisions considered were:

s.2(22) — definition of “suit to which this Act applies” (includes suits instituted or pending on or after 1 January 1939 and includes a proceeding in execution for recovery of a loan);
s.30 — limitation on a borrower's liability after commencement of the Act (no interest in excess of specified rates; in the passages quoted the relevant limit is eight percent simple for certain loans);
s.36 (subss. (1), (2) and (6)) — powers of the Court to grant relief, provisos limiting effects on certain decrees, and the special procedural provisions allowing exercise of s.36 powers in execution proceedings or on applications for review made within one year of commencement of the Act, with rr. 2 and 5 of Or. XLVII not applying to such applications.

Step-by-step analysis as expressed by the Court:

The Court accepted the petitioner’s contention that a suit with a final decree which was not fully satisfied on 1 January 1939 falls within the expression “suit to which this Act applies.” The Court read the phrase “pending” in s.2(22) in a technical sense broad enough to include suits with unsatisfied decrees outstanding on that date. The Court relied on the purposive interpretation indicated by s.30, the provisos to s.36, and s.36(6) to reach this conclusion.
The Court observed that s.30 limits post-Commencement liability for interest to specified rates (eight percent simple for the category relevant in this case) and that the mortgage bond’s stipulated rate (ten percent compound) therefore represented a liability from which the petitioner is entitled to be released if the appropriate procedure is followed.
The Court examined s.36’s procedural structure: relief may be obtained either by suit or by application. For courts of original jurisdiction, s.36(6) indicates applications should be made in execution proceedings, or where no execution is pending, by an application for review within one year of commencement. The Court recognized the special limitation for review applications and that rr. 2 and 5 of Or. XLVII are made inapplicable to such applications.
Although the appropriate procedural route in this case would have been an application for review, the Court noted the impracticality of strictly applying Chapter XXXI Original Side Rules formalities (e.g., filing copies of judgment and decree) for applications under the Money-Lenders Act. The Court therefore decided to treat the present filing as an application for review within the meaning of s.36(6)(a)(ii) and dispensed with filing copies of the judgment and decree.
On the question whether the Court should re-open the decree, the Court concluded that re-opening the entire decree was unnecessary. Given that the sale had been confirmed, a substantial portion of the debt had been set off against purchase-money, and the realised price was insufficient even if interest were calculated at the s.30 rates, the Court considered it sufficient and just to exercise the power in s.36(1)(c) to release the borrower from liability in respect of interest in excess of the statutory limit. The Court explained that this exercise would leave the decree intact but would treat the decree as fully satisfied by writing off the excess amount (i.e., the amount by which the decree-holder’s dues exceeded the amount calculated at the s.30 rates).
The Court applied the arithmetic provided in the opinion: if interest is calculated at eight percent simple to that date, the total sum due to the decree-holder would be Rs. 24,855-12-8 pies. Consequently, the debtor is released from all liability to the decree-holder in excess of this amount in regard to principal and interest.
Although the decree is not re-opened, the Court found it reasonable to apply the principle of s.36(2)(a) regarding costs; accordingly, the decree-holder is entitled to the costs of the application, which the Court directed would be treated as costs of a motion.

Holding and Implications

Core Ruling: The Court treated the petition as an application for review under s.36(6)(a)(ii) of the Bengal Money-Lenders Act and exercised its power under s.36(1)(c) to relieve the petitioner by writing off the portion of the decree-holder's dues that exceeds the amount calculated at the interest rates prescribed by s.30 (eight percent simple). The decree itself is left intact but is to be treated as fully satisfied to the extent that the excess liability is written off.

Direct consequences for the parties:

The debtor (petitioner) is released from all liability to the decree-holder in excess of Rs. 24,855-12-8 (the sum calculated in the opinion as due if interest is computed at eight percent simple), in respect of principal and interest.
The decree remains intact; the Court does not re-open the decree in its entirety but gives effect to the statutory relief by reducing the decree-holder’s recoverable amount to the level permitted by s.30.
The decree-holder is entitled to the costs of this application, which will be treated as the costs of a motion.

Broader implications: The opinion does not purport to establish a new precedent beyond the application of the Money-Lenders Act’s provisions to decrees unsatisfied on 1 January 1939. The decision is framed as an application of the Act’s statutory scheme to the facts of this case and the Court expressly relied on legislative intent to interpret “pending” in s.2(22) broadly; no separate or novel common-law principle was announced.

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Suresh Chandra Mukherjee v. Lal Mohan Chatterjee And Anr.

Edgley, J.:— In this case the Petitioner, Lal Mohan Chatterjee, has applied for certain relief under the provisions of the Bengal Money-Lenders Act, 1940. It appears from his petition that a preliminary decree was passed against him and certain other persons on the 19th of February, 1937. An account was then taken by the learned Registrar who found that the sum of Rs. 26,076-11-9 was due to the mortgagee. The decree was made final for that amount on the 14th of November, 1988 and the mortgaged properties were sold respectively on the 30th of August, 1939, and the 6th of December, 1939. The price realised for the first property was Rs. 6,400 and, as regards the second property, the price realised was Rs. 17,000 or in all Rs. 23,400. The sale was confirmed on the 16th of August, 1940.

This application originally came before me in Chambers on the 6th of March, 1941, on which occasion Mr. Das on behalf of the Opposite Party contended that it was not maintainable on the grounds (1) that no application for execution of the decree was pending and (2) that the application could not be treated as an application for review. At that time I was inclined to accept his contentions, but, as the matter raised some important points of law, I thought it desirable that it should be further considered. The decision with regard to this application involves the construction of certain sections of the Bengal Money-Lenders Act and the considerations which arise with reference thereto have now been placed fully before me by learned Counsel on both sides and by Mr. B.C Ghose as amicus curiæ.

The first point which arises for consideration is whether or not this application relates to a “suit to which this Act applies” within the meaning of sec. 2(22) of the Act. The relevant portion of this sub-section is in the following terms:

“‘Suit to which this Act applies’ means any suit or proceeding instituted or filed on or after the 1st day of January, 1939, or pending on that data and includes a proceeding in execation:—

(a) for the recovery of a loan advanoed before or after the commencement of this Act.”

Admittedly, the suit with regard to which this application is made was filed before the 1st of January, 1939, and no application for execution is pending with reference thereto. Learned Counsel for the Petitioner contends, however, that an application for relief under the provisions of the Bengal Money-Lenders Act is nevertheless maintainable because the final decree passed in the mortgage suit has not yet been satisfied and, from that point of view, the suit must be regarded as “pending” on the 1st of January, 1939. With this contention I must agree and in fact it is not seriously disputed by Mr. Das on behalf of the Opposite Party that the application has been made with reference to a “suit to which this Act applies.”

It might, of course, be argued that a suit cannot be regarded as pending after a final decree has been passed therein and that, in view of the language which has been used in sec. 2(22), the Act could not apply in the case of a suit which had been filed and in which a final decree had been obtained before the 1st of January, 1939. At the same time it is clear from the provisions of sec. 30 of the Bengal Money-Lenders Act that the Petitioner in the present case is not liable to pay interest in respect of his loan in excess of the amount of eight per cent, simple. The relevant portion of this section is in the following terms:

“Notwithstanding anything oentained in any law for the time being in force, or in any agreement,

(i) no borrower shall be liable to pay after the commencement of this Act

(ii) ??? loans, eight per centum simple, whether such loan was advanced or such amount was paid or such decree was passed or such interest accrued before or after the commencement of this Act;”

In the present case the interest stipulated under the mortgage bond was ten per cent, compound and it follows from the provisions of sec. 30, which have been quoted, that this represents a liability from which the applicant is entitled to be released.

The Court is empowered to grant relief to a debtor in cases such as this under the provisions of sec. 36 of the Act. Sub-sec. (1) of sec. 36 states that, if the Court has reason to believe that the exercise of one or more powers under this section will give relief to the borrower, it shall exercise certain powers which include the release of the borrower from all liability in excess of the limits specified in cls. (1) and (2) of sec. 30. There is a proviso to this part of the section which is of importance with regard to the question now under discussion. It is in the following terms:

“Provided that in the exercise of these powers the Court shall not

(ii) do anything which affects any decree of a Court, other than a decree in a suit to which this Act applies which was not fully satisfied by the first day of January, 1939, or anything which affects an award made under the Bengal Agricultural Debtors Act, 1935.”

Sub-sec. (6) of sec. 36, provides:—

“Notwithstanding anything contained in any law for the time being in force,

(a) the Court which, in a suit to which this Act applies, passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by sub-secs. (1) and (2)

(i) in any proceedings in execution of such decree, or

(ii) on an application for review of such decree made within one year of the date of commencement of this Act, and the provisions of rules 2 and 5 of Order XLVII of the First Schedule to the Code of Civil Procedure, 1908, shall not apply to any such application.”

It could hardly have been the intention of the Legislature to absolve debtors generally after the commencement of the Act from liability to pay interest in excess of the rates specified in sec. 30 and at the same time to place a serious impediment in the way of obtaining such relief in the case of unsatisfied decrees which had been obtained before the 1st January, 1939, by excluding the suits in which such decrees had been obtained from the category of “any suit to which the Act applies,” which is the expression used in sec. 36(1) of the Act. In fact, it is clear from the second proviso to sec. 36, and sub-sec. (6) of that section, that the Legislature intended that the powers conferred upon the Court by sub-secs. (1) and (2) should be exercised in suitable cases in the case of decrees obtained before the 1st January, 1939, but not fully satisfied on that date. These provisions therefore contain clear indications that in sec. 2(22) the Legislature used the expression “pending” in a technical sense wide enough to include suits in which unsatisfied decrees were outstanding on the 1st January, 1939.

From a consideration of those portions of the Act which have been quoted above it is clear that the intention of the Legislature was that by observing the appropriate procedure a debtor should be entitled to be released from liability to pay interest in excess of the rates mentioned in sec. 30 even in a case in which a decree was passed before the 1st of January, 1939, provided that decree was not fully satisfied on that date, and, this being the case, I am of opinion that the present application must be regarded as maintainable as relating to a “suit to which this Act applies.”

As regards the procedure which should be adopted in applying for relief under the provisions of the Bengal Money-Lenders Act, in cases such as that with which we are now dealing, the provisions of sec. 36 allow the borrower to obtain relief either by filing a suit or by making an application. In the case of applications it appears from the provisions of sec. 36(6) of the Act that, as far as Courts of original jurisdiction are concerned, it was the intention of the Legislature that such applications should be made either in the proceedings in execution of a decree or, if no such proceedings have been taken or are pending, the debtor should be at liberty to file what is described in the Act as an application for review. It does not appear that any question of limitation can arise provided the application for relief is filed during the pendency of the execution proceedings, but, as regards applications for the review of a decree, a special period of limitation has been provided, namely one year from the commencement of the Act. It may have been intended in suitable cases to treat decrees which violate the provisions of sec. 30 of the Act as being open to review on account of some mistake or error apparent on the face of the record, but, owing to the length of the period during which such application may be made, it was considered that the provisions of rr. 2 and 5 of Or. 47 of the Code of Civil Procedure would not be suitable and it is, therefore, provided that they should not apply to any such applications. Although in the present case the apropriate procedure for the borrower to adopt was to file an application for review it does not follow that the Court is only empowered to grant relief on such an application by re-opening the decree. As will be seen later, the powers conferred upon the Court by sec. 36(1) are sufficiently wide to enable it to treat an unsatisfied decree as satisfied in certain circumstances.

In the present case it is argued by Mr. Das that, as his client did not wish to put the decree into execution, it was incumbent upon the applicant to file his application for relief in strict conformity with the relevant provisions of Chapter XXXI of the Original Side Rules, which apply in the case of applications for review. In that case it would have been necessary for the applicant to observe certain formalities such as the filing of copies of the judgment and the decree which he seeks to have reviewed. Admittedly, however, it would be useless in the present case to file such copies and clearly the rules contained in Chapter XXXI of the Original Side Rules could not have contemplated applications for the review of decrees filed under the provisions of the Bengal Money-Lenders Act. I, therefore, propose to treat the present application as an application for review within the meaning of sec. 36(6)(a)(ii) of the Act and to dispense with the filing of copies of the judgment and decree.

The question remains as to which of the powers mentioned in sec. 36(1) and (2) of the Act it will be appropriate to exercise. In the present case the sale has actually been confirmed, a considerable portion of the debt due to the decree-holder has been set off against the purchase-money and the price realised at the sale of the mortgaged properties was insufficient to satisfy the dues of the decree-holder even if interest be calculated at the rate prescribed in sec. 30 of the Act. In such a case I do not think it necessary to re-open the entire decree, but I consider that the ends of justice will be served by releasing the borrower of all liability as regards interest in excess of the limits specified in sec. 30(1)(ii) of the Act as contemplated by sec. 36(1)(c).

It was faintly argued by learned Counsel for the applicant that the exercise of this power necessarily involves the re-opening of the decree in such a way as to entitle his client to the privileges enumerated in sec. 36(2) of the Act. I am not prepared to accept this argument. In my view the effect of the exercise of the power conferred on the Court by sec. 36(1)(c) in this particular case will be to leave the decree intact but, at the same time, the exercise of this power will result in the decree being treated as fully satisfied by writing off the amount by which the decree-holders' dues under the decree exceed the amount calculated at the rates of interest prescribed in sec. 30. Admittedly, if interest be calculated at the rate of eight per cent, simple to this date, the total sum of Rs. 24,855-12-8 pies would be due to the decree-holder to-day. The debtor is, therefore, released from all liability to the decree-holder in excess of this amount in regard to principal and interest.

Although I am not re-opening the decree it is only reasonable that the principle of sec. 36(2)(a) should apply as regards costs. The decree-holder, will, therefore, be entitled to the costs of this application which will be treated as a motion.

Solicitor: S.K Kerr & Co. for the Petitioner; N.K Roy for the Respondent.

C.C

Suresh Chandra Mukherjee v. Lal Mohan Chatterjee And Anr.

Concise Analytical Summary of the Opinion (Edgley, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Opposite Party's (Respondent's) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Suresh Chandra Mukherjee v. Lal Mohan Chatterjee And Anr.

Comments