Atul Krishna Das And Anr. v. Amrita Lal Chakravarty .

The Judgment of the Court was as follows:

1. These appeals arise out of a mortgage suit brought by the Appellants on July 16th, 1937, against the Respondent. The mortgage loan was Rs. 15,500; the date of the loan was August 13th, 1934; the rate of interest in the bond was nine per cent. per annum. There was an ex parte preliminary decree on February 28th, 1938; this was set aside, on the application of the Respondent, and another ex parte preliminary decree was made on September 7th, 1938; this also was subsequently set aside, and a third ex parte preliminary decree was made on March 1st, 1939 This was followed by a final decree on April 24th, 1939, in execution of which the mortgaged property was sold to the decree-holders on May 15th, 1940 Before the date fixed for, confirmation of the sale, the Respondent took various other proceedings which need not be recapitulated here. Ultimately, on June 4th, 1941, the Subordinate Judge reopened the decree under sec. 36 of the Bengal Money-Lenders Act, 1940 and passed a new decree “for the principal sum of Rs. 15,500, with 8 per cent. per annum simple interest, from the date of the bond till the institution of the suit and proportionate costs.” The Respondent was allowed to pay in five equal annual instalments commencing in January, 1942. The sale of May 15th, 1940, was cancelled.

2. One of these appeals (No. 174 of 1941) is against the new decree and the other (No. 239 of 1941) against the order reopening the old decree. The Appellants, however, do not press the latter appeal (which we accordingly dismiss hereby) and they raise only one point in the former, namely, as to the amount allowed as interest. No objection is taken to the rate of interest having been reduced to 8 per cent. per annum, as required by sec. 30 of the Bengal Money-Lenders Act, 1940, or to the instalments allowed under sec. 34 of the Act. The only objection is as. to the period for which interest has been allowed. The material portion of the decree runs:

“It is hereby declared that the amount due to the ‘Plaintiffs on the mortgage mentioned in the plaint calculated upto this 113th day of July, 1937, is the sum of Rs. 15,500, for principal, the sum of Rs. 3,634 for interest on the said principal at 8 per cent. per annum from the date of the bond (13th August, 1934) and the sum of Rs. 1,448-2-0 for the costs in proportion of the suit awarded to the Plaintiff, making in all the sum of Rs. 20,582-2-0”.

3. It will thus be seen that the Subordinate Judge has allowed interest only from the date of the bond to the 16th day of July, 1937, that is, the date of the suit; no interest has been allowed between the date of the suit and the date of the decree, or for any subsequent period.

4. The Subordinate Judge has given no reason for allowing no interest after the institution of the suit. Indeed, he has commenced his judgment by observing that the judgment-debtor has been guilty of consistent bad faith; obviously, then, if the matter had rested in the Subordinate Judge's discretion, he would have been disposed to exercise it in favour of the Plaintiffs and to allow interest. We are, therefore, driven to infer that he was under the impression that there was some provision in the Bengal Money-Lenders Act, 1940, which debarred the award of any interest after the date of the suit. We have not been able to discover any such provision. Possibly, he had in mind sec. 31 of the Act, cl. (a) of which ???.

“Notwithstanding anything contained in any law for the time being in force, no Court shall, in any decree passed in any suit to which this Act applies

(a) if the loan to which the decree relates was advanced before the commencement of this Act, allow any interest on the decretal amount.”

5. Now, apart from the fact that this does not prohibit the award of interest upto the date of the decree,— since this would necessarily be included in the decretal amount and would not be interest on that amount there is a more fundamental consideration. Secs. 30 and 34 of the Act both open with the words, “Notwithstanding anything contained in any law for the time being in force or in any agreement”, but in sec. 31, which is between these two sections, the non obstante clause does not contain the words “or in any agreement”. It can be plausibly argued that the words are, strictly speaking, superfluous even in secs. 30 and 34; for, either the agreement is enforceable by law, (e.g, the Indian Contract Act), or it is not. If it is, the words “Notwithstanding anything contained in any law for the time being in force” would be sufficient to over-ride the law by which the agreement is enforceable and therefore also the agreement itself. If, on the other hand, the agreement is such as is not enforceable by law, it can create no rights or obligations. In either case, therefore, the words “or in any agreement” may be said to be redundant. But the fact that the Legislature has thought it necessary to insert them in secs. 30 and 34 and has left them out in sec. 31 can hardly be treated as being of no significance. It does lead to the inference that sec. 31 is not intended to apply where there is an agreement to the contrary. In other words, we must read the opening clause of sec. 31 as if it ran, “Notwithstanding anything contained in any law for the time being in force, but subject to the operation of any agreement”.

6. In the present case there is an agreement, namely, the mortgage-bond, which specifically provides for the payment of interest at nine per cent. per annum on the principal “till the realisation of the entire amount”. Of course, the rate of interest stipulated is cut down by sec. 30 of the Bengal Money-Lenders Act, 1940, to 8 per cent. per annum, and the period of the stipulation is cut down by Order 34, rule 11, of the Code of Civil Procedure, so as to end at the date fixed for redemption in the preliminary decree instead of running on “till the realisation of the entire amount”; after the date fixed for redemption, the rate of interest allowed by clause (b) of that Rule is such as the Court deems reasonable. But within these limits the agreement is still effective; and it remains unaffected by sec. 31 of the Bengal Money-Lenders Act, 1940, as we read that section, so that interest on the principal at 8 per cent. per annum remains payable until the date fixed for redemption. After that date, the agreement is superseded by Or. 34, r. 11(b), which, in its turn, is over-ridden by sec. 31 of the Money-Lenders Act.

7. We may now dispose shortly of certain connected points. Subject, as already explained, to the operation of any agreement, there can be no doubt that sec. 31 of the Bengal Money-Lenders Act, 1940, applies to the preliminary decree in a mortgage suit, since it is expressed to apply to any decree in any suit to which the Act applies and sec. 2(22) makes it clear that the Act applies to mortgage suits.

8. We have also no doubt that the term “decretal amount”, with reference to such a decree, can only mean the amount found or declared to be due to the Plaintiff at the date of the decree under Or. 34, r. 2, (1)(a) or (b). That is the whole amount payable under the decree if the judgment-debtor is in a position to pay it at once. If he is given a period of grace for redemption, he has to make additional payments depending to some extent upon the time allowed; the total amount of these additional payments is not entered in the decree, nor can it even be computed at the date of the decree, since the time originally allowed may be subsequently extended. It cannot, therefore, be said to form part of the decretal amount.

9. Sec. 31(a) of the Bengal Money-Lenders Act, 1940, prohibits the award of “any interest on the decretal amount”. It seems to us that this necessarily includes a prohibition of interest on any portion of the decretal amount; otherwise the provision could easily be circumvented by disallowing interest on one small item of the amount and allowing it on the others. We think it necessary to state this, because the interest allowed by Or. 34, r. 11(a) of the Code of Civil Procedure is not on the whole of the amount found or declared due in the preliminary decree,— that is to say, not on the whole of the “decretal amount”, but on certain items thereof; and the question may, therefore, arise whether it can be said to be “interest on the decretal amount” within the mischief of sec. 31 of the Bengal Money-Lenders Act, 1940. We think that it can, and that it, therefore, falls within the ban of the section, subject, of course, to the operation of any agreement, as already explained. No question can arise with respect to the interest allowed by Or. 34, r. 11, (b) of the Code of Civil Procedure, for that falls on all items and is undoubtedly “interest on the decretal amount”.

10. The net result is that the Appellants are entitled to interest at 8 per cent. per annum on the principal, not only upto the date of the preliminary decree but also upto the dates fixed therein for payments of the several instalments of the decretal amount, the interest between any two successive dates being reckoned on the portion of the principal outstanding between these dates; but the Appellants are not entitled to any further interest. The decretal amount declared as due upto the date of the preliminary decree will be payable in five equal annual instalments commencing on August 23, 1943.

11. We make no order as to costs in this Court in these appeals.

12. The cross-objection is dismissed without costs.

13. No order is necessary on the application relating to Appeal No. 239 of 1941.

14. For definiteness, we give the following directions regarding the preparation of the preliminary decree:

The first paragraph will declare the amount due upto the date of the decree under the heads

(i) Principal … … Rs. 15,500 (ii) interest on principal at 8 per cent per annum up to the date of this decree, — that is, up to February 23, 1943… … Rs. 10,574.6.0 (iii) costs of suit awarded by the lower Court, (there being no other costs, charges or expenses) … … … Rs. 1,448.2.0 Total Rs. 27,522.8.0.

on Rs. 15,500- from 23-2-43 to 23-8-43 at 8% p.a Rs. 620 on Rs. 12,400- from 23-8-43 to 23-8-44 at 8% „ „ Rs. 992 on Rs. 9,300- from 23-8-44 to 23-8-45 at 8% „ „ Rs. 744 on Re. 6,200- from 23-8-45 to 23-8-46 at 8% „ „ Rs. 496 on Rs. 3,100- from 23-8-46 to 23-8-47 at 8% „ „ Rs. 248 Rs. 3,100

15. The second paragraph will order and decree

(i) that the Defendant do pay into Court the said sum of Rs. 27,522.8.0 in 5 equal instalments of Rs. 5,504.8.0 each, as per details below: On account of principal … Rs. 3,100.0.0 On account of interest & costs Rs. 2,404.8.0 Total Rs. 5,504.8.0

the first instalment being due on August 23, 1943;

the second instalment on August 23, 1944;

the third instalment on August 23, 1945;

the fourth instalment on August 23, 1946;

the fifth instalment on August 23, 1947;

(ii) that on payment of the aforesaid instalments and on payment thereafter, before such date as the Court may fix, of such amount as the Court may adjudge due in respect of such costs, charges and expenses as may be payable under R. 10 together with interest on the principal upto the dates of the above instalments, that is to say,

the Plaintiffs shall bring into Court all documents in their possession or power relating to the mortgaged property mentioned in the plaint and all such documents shall be delivered over to the Defendant or such person as he appoints:

Provided that the date's hereby fixed for the several payments may, for good cause shown and upon terms to be fixed by the Court, be varied by subsequent orders of the Court; and

Provided further that the total amount of interest together with the principal shall in no case exceed double the principal.

16. The third paragraph will order and decree that in default of payment as aforesaid, the Plaintiffs shall, after giving to the Defendant such notice as may be prescribed under the Bengal Money-Lenders Act, 1940, be entitled to apply for a final decree for the sale of the mortgaged property; and on such application being made, the mortgaged property, or a sufficient part thereof shall be directed to be sold; and for the purpose of such sale the Plaintiffs shall produce, before the Court or such officer as it appoints, all documents in their possession or power relating to the mortgaged property.

17. The fourth paragraph will order and decree that the money realised by such sale shall be paid into Court and shall be duly applied (after deduction therefrom of the expenses of sale) in payment of the amount payable to the Plaintiffs under the decree and under any further order that may be passed in the suit and in payment of any amount which the Court may adjudge due to the Plaintiffs in respect of such costs, charges and expenses as may be payable under R. 10 together with interest on the principal or such portion thereof as may be outstanding from time to time from the date of the decree to the date of the default; and that the balance, if any, shall be paid to the Defendant or other persons entitled to receive the same.

18. The fifth paragraph will order and decree that if the money realised by such sale shall not be sufficient for payment in full of the amount payable to the Plaintiffs as aforesaid, the Plaintiffs shall be a liberty (where such remedy is open to them under the terms of the mortgage and is not barred by any law for the time being in force) to apply for a personal decree against the Defendant for the amount of the balance; and that the parties are at liberty to apply to Court from time to time as they may have occasion and on such application or otherwise the Court may give such direction as it thinks fit.

19. We shall add a word of explanation on each of these paragraphs.

20. The first paragraph gives effect to Order 34, rule 4, read with Rule 2 of the Code of Civil Procedure. The declaration is in the terms required by Rule 2(1)(b), read with rule 2(1)(a). The rate of interest is that allowed by sec. 30(1)(c)(ii) of the Bengal Money-Lenders Act, 1940.

21. Clause (i) of the second paragraph gives effect to sec. 34(1)(a)(i) of the Bengal Money-Lenders Act, 1940, payment being directed in five equal annual instalments. Clause (ii) of the paragraph gives effect to the second direction contained in Order 34, rule 2(1)(c)(i) of the Code of Civil Procedure.

22. The reference in that direction to “subsequent interest” under Rule 11 has been modified so as to accord with sec. 31(a) of the Bengal-Money-Lenders Act, 1940, only interest on the principal upto the several dates of payment prescribed in Clause (i) of the paragraph being permissible. The two provisos in this paragraph correspond to the first proviso in sec. 34(1) and to the provision of sec. 30(1)(a) of the Bengal Money-Lenders Act, 1940, respectively.

23. The third paragraph carries out the first direction in sec. 34(1)(a)(ii) of the Bengal Money-Lenders Act, 1940, the second direction being incorporated in effect in the fourth paragraph.

24. The other directions need no explanation; but to illustrate the working of the fourth paragraph, let us suppose that the judgment-debtor, after paying the first instalment, defaults in the payment of the second. The Plaintiffs' dues, to be met out of the sale proceeds of the mortgaged property, would then be Rs. 27,522-8-0 minus the first instalment of Rs. 5,504-8-0 plus costs, etc., under Order 34, rule 10 plus interest on the principal of Rs. 15,500 from the date of the decree upto the date of the first instalment,—i.e, Rs. 620 plus interest on the entire unpaid balance of Rs. 12,400 from the date of the first instalment to the date of the default,— i.e, Rs. 992. This last item gives effect to the second direction in sec. 34(1)(a)(ii) of the Bengal Money-Lenders Act, 1940.

P.C