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PETITIONER: RAMNANDAN PRASAD NARAYAN SINGH

       Vs.

RESPONDENT: MAHANTH KAPILDEO RAM JEE ANDANOTHER(and 3 other appeals)

DATE OF JUDGMENT: 12/01/1951

BENCH: AIYAR, N. CHANDRASEKHARA BENCH: AIYAR, N. CHANDRASEKHARA KANIA, HIRALAL J. (CJ) SASTRI, M. PATANJALI

CITATION:  1951 AIR  155            1951 SCR  138  CITATOR INFO :  D          1963 SC1503  (19)

ACT:     Bihar  Money-lenders  (Regulation of  Transactions)  Act (VII of 1939), s. 7--Execution of fresh document for  amount remaining due on loan under earlier document--Suit on  later document--Interest before date of suit--Maximum amount  that could  be  decreed--Whether  to be calculated  on  basis  of earlier or later document--" Amount of loan mentioned in, or evidenced by, such document" meaning of.

HEADNOTE: Where a fresh document is executed for the amount  remaining due  on account of principal and interest under a  loan  ad- vanced prior document, and a suit is brought for recovery of the  amount due under the later document with  interest  due thereunder,  "the amount of loan mentioned in, or  evidenced by,  such  document" for the purposes of s. 7 of  the  Bihar Money-Lenders      Regulations and Transactions) Act,  1939, is the amount mentioned, or evidenced by, the later document and  not that mentioned in the original document  which  was renewed;  and the court can pass a decree for an  amount  of interest  for  the period preceding the institution  of  the suit,  which together with any amount realised  as  interest after  the date of the later document, is not  greater  than the  amount  of loan mentioned in the later  document.   The maximum  amount  that can be so decreed is  not  the  amount which  together with the interest realised from the date  of the original loan does not exceed the original loan.     Singheswar  Singh and Other’s v. Nadni Prasad Singh  and Others (A.I.R. 1940 Pat. 65), Lal Singh v. Ramnarain Ram and Others  (,A.I.R  1942 Pat- 138), Madho Prasad Singh  v.  Mu- kutdheri Singh and Others (193 I.C. 661), Deo Nandan  Prosad v.  Ram  Prasad    (I.L.R 23 Pat. 618),  Ram  Nandan  Prasad Narain  Singh  v. Kulpati Shri Mahanth  Goshwami  Madhwanand Ramji ([1940] F.C.R. 1), Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu Trust Estate and Others ([1940]  F.C.R. 39) referred to.

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JUDGMENT: APPELLATE JURISDICTION: Civil Appeals Nos. 98, 99, 100 and 101 of 1950. 139     Appeals from the orders of the High Court of  Judicature at  Patna (Manohar Lall and Imam JJ.) in  Miscellaneous  Ap- peals Nos. 108 to 111 of 1948. Shambhu   Barmeswar  Prasad  and      Ramanugrah Prasad  for the appellants. H.J. Umrigar for the respondents. 1951.  January 12.  The Judgment of the Court was  delivered by CHANDRASEKHARA  AIYAR  J.-- The decision of these  four  ap- peals,  which are connected with each other and  which  have arisen out of orders made by the High Court of Patna in four Miscellaneous  Appeals,  depends on  the  interpretation  of section 7 of the Bihar Moneylenders (Regulation of  Transac- tions) Act, 1939.     The facts which have led to the appeals are found brief- ly stated in the petition filed by the present appellants in the 3rd Court of Sub-Judge, Patna, and may be re-stated here for convenient reference :--     "The father of the petitioners borrowed Rs. 40,000  from the  guru  (ancestor) of the  decree-holder  under  mortgage bond, dated 11-1-1893.     Out of Rs. 40,370-7-6 interest and compound interest  up to  4-1-1910,  Rs. 32,370-7-6 was paid in cash and  for  the balance  Rs. 8,000 interest and Rs. 40,000 principal,  i,e., for  Rs,  48,000 a Mortgage Suit No. 14 of  1910  was  filed in1st  Court  of the Sub-Judge, Patna, and in  lieu  of  the claim  and  cost of the said suit two fresh  mortgage  bonds were executed on 11-7-1910, viz., one for Rs. 40,000 and the other  for  Rs. 9,488 and the latter bond was  satisfied  by payment of Rs. 15,835 in cash.     With  respect  to the above bond of  Rs.  40,000,  dated 11-7-1910 the petitioners paid Rs. 38,530-13-6. Mort-,  gage Suit  No.  110 of 1927 was brought in the 3rd Court  of  the Sub-Judge, Patna, and a decree for Rs. 58,012-2.0 was passed on 9-7-1929. Out of this Rs. 5,000 was paid in cash and  for the  balance  of  Rs. 53,012-12-0 one  mortgage  bond  dated 6-10-1931  was executed for Rs. 42,000 and on the same  date two 140 hand-notes  were executed, viz., one for Rs. 5,000  and  one for Rs. 6012-2-0.     One  Suit  No. 14 of 1933 for both  the  hand-notes  was brought  in 3rd Court of the Sub-Judge and a decree for  Rs. 15,008-2-0 was passed on 28-2-1935. This decree is under execution."     When  the  decree-holder  sought to  execute  the  money decree   by   attachment and sale  of  the  judgmentdebtors’ properties stating that they were subject to a mortgage lien of Rs. 62,272-13-0 under the mortgage bond dated  6-10-1931, the two judgment-debtors, who  are  brothers,  filed  objec- tions  under  sections 11  and  16 of  the   earlier   Bihar Money-lenders  Act III of 1938 and section 47 of  the  Civil Procedure  Code.  The petitions (two by each of  them)  were filed  separately  by  the  brothers.   They urged that on a proper  calculation under section 11 no lien was  subsisting on the properties owing to payments made towards the   mort- gage  debt   amounting  to Rs. 92,394-2-0.  The  Subordinate Judge held that this plea of the judgment-debtors could  not be entertained in the Miscellaneous case before him relating to  the execution and all that could be done was  to  notify the mortgage encumbrance without deciding anything as to the

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correctness  of the amount claimed to be due under  it;  and this conclusion was partly based on the fact that section 16 of  the Act had been declared by the High Court  void.   Ap- peals   taken  to  the  High  Court  were  dismissed.    The judgment-debtors thereupon preferred an appeal to the Feder- al  Court, contending that sections 7 and 13 of the new  Act (corresponding  to  sections 7 and 11 of  the  old  Act)were applicable and that it was the duty of the court to estimate the value of the property after making the necessary  calcu- lations  under  section 7 with reference to  the  lien.  The decision  of  the  Federal Court is  reported  in  Ramnandan Prasad  Narain Singh and Another v. Kulpati   Shri   Mahanth Goshwarni  Madhwanand Ramji(1).  The case was remitted  back to the High (1) [1940] F.C.R. 1 141 Court, giving liberty to the appellants to file an  applica- tion under section 13.     In  answer  to a fresh application for  execution  dated 2-7-1042,  the  two brothers filed the  same  objections  as before.  Miscellaneous Cases Nos. 45 and 46 of 1942  related to  sections  7 and 13 of the Bihar  Money-lenders  Act  and Miscellaneous  Cases Nos. 50 and 52 of 1042 related  to  the objections under section 47 of the Code of Civil  Procedure. The  Subordinate  Judge  held that the amount  of  the  loan should be taken as the amount mentioned in the mortgage deed of  1931 and not the amount advanced in 1893 and that a  sum of Rs. 70,840 was still due on the bond.  He determined  the market  value of the several properties given  as  security, adopting 16 times the net income as the basis.     Appeals  to the High Court were numbered as M.A. 108  to 111 of 1943 and they were heard by Manohar Lall and Imam JJ. They  modified the order of the lower Court in  certain  re- spects.   Even according to them the amount of the loan  was what  was mentioned in the mortgage bond      of  6-10-1931, but  as a sum of Rs. 11,855-3-0 had been   repaid  expressly towards  the principal amount after   the date of the  bond, that  amount became reduced to Rs. 28,150.  Adding an  equal sum  by  way  of interest which according to  them  was  the maximum  amount, permitted to be allowed under section 7  of the Act, the total liability was stated to be Rs. 56,300 and a charge was declared on the property for this amount.  They also  directed that the valuation of the property should  be fixed at twenty times the net income and not sixteen  times. It  is  from this order that the present appeals  have  been preferred.     Two  points  were  urged on behalf  of  the  appellants, namely  (a) that the decree-holder was barred  by  construc- tive  res-judicata  from contending that   the  construction placed upon section 7 by the judgmentdebtors was wrong;  and (b) that in applying section 7, we must consider the  origi- nal amount of loan of Rs. 40,000 given in the year 1893  and allow the claim 142 of  interest  only for that maximum sum, after  taking  into account all sums paid by the appellants and their  predeces- sors towards interest since 1893.     The first point is entirely without substance. When  the decree-holder contended that section 11 of the Bihar  Money- lenders  Act,  1938, was declared void and ultra  vires  and that  therefore section 7 of the new Act which  corresponded to  section 11 was also inapplicable,  the  judgment-debtors pleaded that they were entitled to the benefit of section  7 of  the new Act. The Federal Court held in Ramnandan  Prasad Narain  Singh and Another v. Kulpati Shri  Mahanth  Goshwami

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Madhwanand  Ramji(1)  that  the   judgment-debtors  (present appellants) were entitled to claim the benefit of the provi- sions  of  the new Act when the  executing  court  proceeded under section 13 to determine the value of the properties to be sold.  The correct interpretation of section 7 was not in question  between the parties.  To say that  the  appellants were entitled to take advantage of the provisions of section 7 is entirely different from the contention that the  inter- pretation  sought  to be put by them on section  7  was  the right  one.   The  Federal Court was not  dealing  with  any question of interpretation at all.  It is impossible to  see where the doctrine of constructive res judicata comes in, so as to be of help to the appellants.     The  second question raised on their behalf  relates  to the  true  meaning of section 7 of  the  Bihar  Moneylenders (Regulation  of Transactions) Act VII of 1939, which  is  in these terms:---     "7.   Notwithstanding   anything to the   contrary  con- tained  in any other law or in anything having the force  of law or in any agreement, no Court shall, in any suit brought by  a money-lender before or after the commencement of  this Act  in respect of a loan advanced before or after the  com- mencement  of  this Act or in any appeal or  proceedings  in revision  arising  out of such suit, pass a  decree  for  an amount of interest for the period preceding the  institution of the suit, (1) [1940] F.C.R. 1. 143 which together with any amount already realised as  interest through the court or otherwise, is greater than the   amount of  loan advanced, or, if the loan is based on  a  document, the  amount  of  loan mentioned in, or  evidenced  by,  such document."     In the present case, the original loan of Rs. 40,000 was advanced  as early as 11-1-1893.  The appellants  j  contend that  for  the purposes of calculating the  interest  to  be decreed prior to the date of the suit the loan advanced must be  taken to be the original sum and that if an  account  is taken  of all the sums received by the creditor as  interest from  that date up to the date of the suit, there  would  be nothing  due  for interest. On the other hand,  the  decree- holder  urges that having regard to the latter part  of  the section,  the loan must be taken to be the amount  mentioned in  the  mortgage bond dated 8-10-1931, namely  Rs.  42,000. Whichever  method  of  calculation is adopted,  it  must  be remembered  that it has to be made not for the  purposes  of passing any decree on the mortgage loan, but for  estimating under  section 13 of the Act the value of the properties  to be brought to sale in execution of the money decree  against the appellants.     As  pointed out by  Sir Maurice Gwyer C.J.  in  Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu Trust Estate and  Otherse),   "Section 7 of the Act of 1937 is  no  doubt extremely obscure and illdrawn."  The true intention of  the framers of the Act is somewhat difficult to gather.  But the Patna  High  Court has been consistently  placing  upon  the section an interpretation which is opposed to the contention of the appellant in these proceedings.    The point  came  up expressly for decision  in  Singhesh- war  Singh  and Others v. Madni Prasad  Singh      Others(2) where a mortgage bond was executed on 31-8-1922 for a sum of Rs. 2,000 which was the balance of the principal and  inter- est due-under a mortgage bond of the 11th of October,  1912, for    (1) [1940] F.C. R. 39

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  (2)A.T.R. 1940 Pat. 65.    19 144 Rs.  1,391.  The  judgment  debtors  raised  the  plea  that the  court  should  go  back to the  earlier  bond  of  1912 and  that as a sum of Rs. 1,512 had been paid as and by  way of  interest  towards that bond, no decree could  be  passed against them for more than the principal  sum of Rs.  1,391. The  learned Judges rejected this  contention and  took  the amount stated in the document of 1922, namely Rs. 2,000,  as the loan and they    held that the plaintiffs were  entitled to  get a decree    for interest for a sum not  larger  than Rs.  2,000 as no  payment had been proved to have been  made after   the execution of the bond. The same view  was  taken in Lal Singh v. Ramnarain Ram and Others(1) and  the  plain- tiffs  were awarded a decree on the basis that the loan  was to be taken as Rs. 2,909-8-0 which was  the amount for which the  hand-note  sued upon was  executed and  not  Rs.  1,000 which  was  the  original amount advanced  upon  an  earlier hand-note  of  the   year 1924. The case reported  in  Madho Prasad  Singh  v. Mukutdhari Singh and Others(2)  lays  down the  same  position.  The Full Bench decision in Deo  Nandan Prasad  v.  Ram  Prasad (3)  rei-terates  the   same   view, pointing  out the distinction between sections 7 and  8   of the Act and stating that while under section 8 we can go  to the  original loan in spite of a later  document,      under section  7, the loan must relate to the document   on  which the  suit is based, that is, the final document and not  the original one. In each one of these cases, the   question  of the true meaning of section 7 was pointedly      considered. This construction no doubt enables a creditor to  circumvent the beneficent provisions of the    Act by taking a document for the interest due and adding it to the principal  amount. Gwyer C.J. points out this difficulty at page 59 in the case Surendra  Prasad  Narain Singh v. Sri Gajadhar  Prasad  Sahu Trust  Estate and Others(4). If the interpretation does  not carry out the intentions of the framers of the Act by reason of  unhappy  or  ambiguous phrasing, it  is  for  the  Legis lature to intervene.  But far from doing so, it has (1) A.I.R. 1942 Pat. 138,139.      (3) I.L.R. 23 Patna 618. (2) (1941) 193 I.C.661.            (4) [1940] F.C.R.39. 145 acquiesced, during all these years in the construction which the Patna High Court has been placing upon the section  from the  very  next  year after the enactment  of  the  statute. Having  regard  to the great obscurity in the  language  em- ployed  in the relevant provisions and the inaction  of  the Legislature, it is, in our opinion, legitimate to infer that the view expressed by the Patna High Court is in accord with the intention of the Legislature.     The appeals fail and are dismissed with costs, only  one set in all of them together.                             Appeals dismissed. Agent for the appellants: Tarachand Brij Mohanlal. Agent for the respondent’: R.C. Prasad.