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PETITIONER: SMT.  DAYAWATI AND ANOTHER

       Vs.

RESPONDENT: INDERJIT AND OTHERS

DATE OF JUDGMENT: 14/01/1966

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. SUBBARAO, K. BACHAWAT, R.S.

CITATION:  1966 AIR 1423            1966 SCR  (3) 275  CITATOR INFO :  F          1985 SC 111  (9)  E&F        1989 SC1247  (24)  RF         1991 SC1654  (44)

ACT: Usurious  Loans Act, 1918 (10 of 1918), s. 3, as amended  by s.  5  of  Punjab Relief of Indebtedness  Act-Section  6  of latter  Act making s. 5 applicable to "all suits pending  or to be instituted after, the commencement of this Act"-Appeal filed against judgment in suit-Whether suit ’pending’ within meaning of s. 6.

HEADNOTE: Interest  in  excess of 7 1/2 per cent was  awarded  to  the appellants by the trial court in a mortgage suit against the respondents.   The respondents file before the  High  Court, where an appeal by them against the decree of the trial  co= was  pending an application under a. 3 of the Usurious  Act, 1918 as amended by a. 5 of the Punjab Relief of Indebtedness Act.  They claimed, by virtue of the latter provision,  that interest  in excels of 7 1/2 per cent could not be  awarded- in the &Wt.  The High Court having accepted the  contention, the  appellants  cam  to this Court  by  special  leave  and contended that an appeal having been filed against the trial court’s  judgment  in the suit, the said suit could  not  be said  to  be.  pending’ within the meaning of a.  6  of  the Punjab  Act on the relevant date, and therefore a.  5  would not apply. HELD  :  (i)  The word ’suit’ includes an  appeal  from  the judgment                in between a suit. The  only difference between a suit and an appeal is that an appeal  "only  reviews and corrects the  proceedings  ’in  a cause already constituted but does not create the cause.  In the  present Act the intention is to give relief in  respect of  excessive  interest  in a suit which is  pending  and  a preliminary decree in a suit of this kind does not terminate the  suit.   The appeal is a part of the cause  because  the preliminary decree which decree.[281 D-F] (ii)The  words  of  s. 6 speak of a  suit  pending  on  the commencement of the Act and it means a live suit whether  in the  court of first instance, or an appeal court  where  the

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judgment of the court of first instance is being considered. It only excludes those suits in which nothing further  needs to  be done in relation to the rights and  claim  litigated, because  an executable decree which may not be  reopened  is already  in existence.  The decision of the High  Court  was right  in  applying  s.  3 of the  Usurious  Loans  Act  (as amended) to the case. [282 A, B] (iii)Ordinarily  a  court of appeal  cannot  take  into account a new law, brought into existence after the Judgment appealed  from has been rendered, because the rights of  the litigants in an appeal are determined under the law in force at  the date of the suit.  Matters of procedure are  however different  and  the  law  affecting  procedure  is.   always retrospective.   But  it  does not mean  that  there  is  an absolute rule of inviolability of substantive rights, If the new  law  speaks in language, which expressly  or  by  clear intendment,  takes  in even pending matters,  the  court  of trial as well as the court of appeal may give effect to such a  law  even  after  the judgment  of  the  court  of  first instance.  The distinction between laws effacting  procedure and  those affecting vented rights does not matter when  the court  is  invited  by law to take away  from  a  successful plaintiff what he has obtained under a judgment. [280 &H] 2 7 6 Quilter v. Maples‘n, (1882)9 Q.B.D. 672, Stovin v. Fairbrass (1919)88  L.J.  K.B.  1004  and  Mukerjee  (K.C.)  v.   Mst. Ramratan, 63 I.A. 47, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 246 of 1964. Appeal  by special leave from the judgment and decree  dated October 15, 1959 of the Punjab High Court (Circuit Bench) at Delhi in R.F.A. No. 1-D of 1954. S.T.  Desai,  D.  R. Prem and Mohan  Beharilal,  for  the appellants. N.C. Chatterjee, and H. P. Wanchoo, for respondents  Nos. 1 to 5. Tiryugi Narain, for respondent No. 6. The Judgment of the Court was delivered by Hidayatullah, J. In this appeal by special leave against the judgment  and decree of the Punjab High Court dated  October 15,  1959 the only question is whether, in the facts  to  be stated  presently,  the  High Court was  right  in  reducing interest  in a preliminary mortgage decree dated August  12, 1953  by  applying  ss.  5 and 6 of  the  Punjab  Relief  of Indebtedness  Act  which were extended to Delhi on  June  8, 1956. On January 17, 1946, Hazarilal (predecessor of respondents 1 to 5) and one Jagat Narain (respondent 6) executed a  simple mortgage  deed for Rs. 50,000 with interest at 9% per  annum or in default of payment of interest for 3 months at Re.   1 per  cent  per  month for the period  of  default.   As  the mortgagors made default in payment of interest and also  did not  pay  anything out of the mortgaged amount  a  suit  was filed for enforcement of the mortgage by sale of properties. The claim was for Rs. 76,692/9/8, by calculating interest at 9  per cent per annum for the first 3 months and at  12  pet cent  per  annum till institution of the suit  and  allowing credit for Rs. 14,000 as repayment.  The defendants admitted the mortgage and the consideration but pleaded that the rate of interest was both penal and excessive.  This plea was not accepted  and -a preliminary decree was passed for the  full claim  on  August  12, 1953.  Hazarilal  alone  appealed  on

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January  5,  1954  (R.F.A. No. 1-D of 1954)  and  asked  for reduction of interest by Rs. 7,900 and of the rate of future interest to 9 per cent per annum.  Court fee was paid on Rs. 7,900.   During the pendency of this appeal the  decree  was made final on April 3, 1954.                             277 Before the appeal was disposed of Inderjit and Satya Narain, sons  of Hazarilal, filed a suit for a declaration that  the properties  were ancestral and belonged to a  joint  family. They claimed that the properties could not be sold and asked for a temporary injunction which was first granted and later vacated.  Against the order vacating the stay they filed  an appeal  (F.A.0.  68-D of 1957) and obtained  temporary  stay from  the  High Court.  The mortgagees also  filed  in  that appeal a petition (S.M. 1318-D of 1957) for vacation of  the stay  order.  On February 10, 1958 a conditional stay  order was  passed by a learned single Judge of the High Court  but we need not trouble ourselves with it. On  October 29, 1958 the legal representatives of  Hazarilal (respondents 1 to 5) presented an application under s. 3  of the  Usurious  Loans Act, as amended by s. 5 of  the  Punjab Relief of Indebtedness Act, when the latter Act was extended to Delhi on June 8, 1956 under s. 2 of Part C States  (Laws) Act,  1950 (30 of 1950) and claimed that interest in  excess of 71 per cent per annum could not be awarded in this  suit. We may, at this stage, read the relevant sections.   Section 3 of the Usurious Loans Act, in so far as it is material  to our purpose, reads as follows :-               "3. Re-opening of transactions.               (1)Notwithstanding anything in the Usuary Laws               Repeal Act, 1855, where, in any suit to  which               this  Act applies, whether heard ex  parte  or               otherwise, the Court has reason to believe,-               (a)   that the interest is excessive; and               (b)               the  Court  may  exercise all or  any  of  the               following powers, namely, may,-               (i)re-open  the transaction, take  an  account               between the parties, and relieve the debtor of               all  liability  in respect  of  any  excessive               interest;               (2)(a)  In this section "excessive"  means  in               excess  of  that which the Court deems  to  be               reasonable having regard to the risk  incurred               as  it  appeared,  or must be  taken  to  have               appeared,  to the creditor at the date of  the               loan.               (b)               (c)               (d)               278               (3)This  section shall apply to  any  suit,               whatever  its  form may be, if  such  suit  is               substantially one for the recoveryof a  loan               or  for  the enforcement of any  agreement  or               security  in  respect  of a loan  or  for  the               redemption of any such security.               By  s. 5 of the Punjab Relief of  Indebtedness               Act, it was provided :-               "5.  Amendment  of  the  Usurious  Loans  Act,               1918.-               In  section 3 of the Usurious Loans Act,  1918               (X of 1918)-               (i)   for the word "and" in clause(a) of  sub-               section

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             (i)   the word ’or" shall be substituted.               (ii)for  the word "may" where it  appears  for               the  first  time in sub-section (1)  the  word               "shall" shall be substituted.               (iii)for   the  word  "may"  after  the   word               "namely"  in sub-section (1) the word  ’shall"               shall be substituted.               (iv)to  sub-section (2) the  following  clause               shall be added, namely:-               "(e)  The  Court  shall deem  interest  to  be               excessive  if it exceeds seven and-a-half  per               centum  per annum simple interest or  is  more               than  two  per  centum  over  the  Bank  rate,               whichever is higher at the time of taking  the               loan, in the case of secured loans, or  twelve               and-a-half   per  centum  per   annum   simple               interest  in  the  case  of  unsecured  loans;               Provided   that  the  court  shall  not   deem               interest  in excess of the above rates  to  be               excessive if the loan has been advanced by the               State  Bank of India or any bank  included  in               the  Second  Schedule to the Reserve  Bank  of               India  Act,  1934,  or  any  banking   company               registered  under  the Indian  Companies  Act,               1913 prior to the first day of April, 1937  or               any  cooperative society registered under  the               Bombay  Cooperative  Societies Act,  1925,  as               extended to the State of Delhi." Section 6 of the Act gave retrospective effect to the  above provisions by enacting 279 "6. Retrospective effect.-               The  provisions of this part of the Act  shall               apply  to all suits pending on  or  instituted               after the commencement of this Act." The  decree.-holders  opposed  the  application  on  several grounds.  The, main grounds (and they are the grounds  urged in  this  Court)  were that s. 5 of  the  Punjab  Relief  of Indebtedness  Act merely amended s. 3 of the Usurious  Loans Act,  that neither section applied to the facts of the  case and that no such plea was taken in the court below.   R.F.A. 1-D of 1954 came up for hearing on October 15, 1959 before a Divisional Bench and by the judgment under appeal the amount of  interest in the mortgage was, reduced by Rs.  15,027  by applying the provisions of the Punjab Relief of Indebtedness Act.   ’Me Divisional Bench followed an earlier decision  of the  same  court reported in L. Ram Sukh  Das  v.  Hafiz-ul- Rahman  and  others.(1) It was held in that  case  that  the provisions of the Punjab Relief of Indebtedness Act  applied to  a case in which a decree had already been passed and  an appeal  was  pending at the time the amendment  was  brought into force.  The Divisional Bench in this case held that  on the date on which they decided the appeal the provisions  of the  Punjab Relief of Indebtedness Act had been extended  to Delhi  and they were required to apply those provisions  and interest  in  excess of 71 -per cent per annum  con  not  be awarded. The preliminary decree was modified by reducing interest  up to, the date of the suit to Rs. 11,665 by applying the  rate of 7 1/2‘ per cent. per annum simple and future interest was awarded also at the same rate.  The judgment debtors who had applied  in  the High Court were ordered to  make  good  the court  fee  on.   Rs.  7,127.   After  sundry   unsuccessful proceedings  which included. an: application for review  and another  for  a certificate, the decree-holders  filed  this

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appeal after obtaining special leave of this Court- In  this  appeal  it is contended on behalf  of  the  decree holder-& that s. 5 of the Punjab Relief of Indebtedness  Act can  only  apply to a suit instituted or pending  after  the section  comes -into force and ’not in an appeal  after  the suit  has ended in a decree.  It is farther; contended  that this will be all the more so, because the section itself  is made retrospective for suits pending on or instituted  after the  commencement  of  the Act and thus  cannot  affect  the vested’   right  which  the  judgment  had  given   to   the appellants.   We  have  therefore,  to  decide  whether  the provisions of ss. 5 and 6 (1)  A. I.R. 1945 Lah. 177. Sup.CI/6  5 280 of the Punjab Relief of Indebtedness Act could be invoked by the Divisional Bench to reduce the interest as stated above. The  amended section 3 of the Usurious Loans Act is  plainly mandatory because it makes it obligatory for a court to  re- open  a transaction if there is reason to believe  that  the interest is excessive.  Further, where the rate of  interest exceeds  seven and a half, percentum per annum  simple,  the court  must  hold that it is excessive.   Therefore  if  the amended  section 3 of the Usurious Loans Act applies to  the case in hand, the High Court was right in acting as it  did. To  this Mr. S. T. Desai raises no exception.  He  contends, however,  that  s. 6 of the Relief of -Indebtedness  Act  in giving  retrospection to section 5 by which  the  amendments were made, limits it to suits pending on or instituted after the  commencement  of  the Relief of  Indebtedness  Act  and submits  that  the  suit here was  neither  pending  on  nor instituted after June 8 1956 when that Act commenced in  the Union  Territories  of  Delhi.  ’The  respondents  in  reply submit  that the appeal court must apply ,the provisions  of the Relief of Indebtedness Act same as the court ,of  trial, because  the  word  ’suit’, where the section  speaks  of  a -pending  suit, includes an appeal from the decision in  the suit. Now as a general proposition, it may be admitted that  ordi- narily a court of appeal cannot take into account a new law, brought into existence after the judgment appealed from  has been  tendered,  because the rights of the litigants  in  an appeal are determined under the law in force at the date  of the  suit.  Even before the days of Coke, whose maxim-a  new law  ought  to  be prospective,  not  retrospective  in  its operation-is  oft-quoted, courts have looked with  disfavour upon  laws which take away vested Tights or  affect  pending cases.   Matters of procedure are, how,ever,  different  and the  law affecting procedure is always retrospective’.   But it  does  not  mean  that  there  is  an  absolute  rule  of inviolability of substantive rights.  If the new law  speaks in language, which, expressly or by clear intendment,  takes in  even pending matters, the court of trial as well as  the court  of  appeal  must  have  regard  to  an  intention  so expressed, and the court of appeal may give effect to such a law even after the judgment of the ,court of first instance. The  distinction between laws affecting procedure and  those affecting  vested rights does not matter when  the,court  is invited  by  law to take away from a  successful  plaintiff, what he has obtained under judgment.  See Quilter v.  Maple- son(1)  and Stovin v. Fairbrass,(2) which are  instances  of new laws being applied.  In the former the vested rights  of the landlord (1) (1892) 9 Q.B.D. 672. (2) [1919] 88 L.J. K.B. 1004.

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                281 to recover possession and in the latter the vested right  of the statutory tenant to remain in possession were taken away after  judgment.   See  also  Maxwell’s  Interpretation   of Statutes  (11th  pp. 211 and 213, and Mukerjee (K.   C.)  v. Mst.   Ramaraton,(1) where no saving in respect  of  pending suits was implied when s. 26(N) and (0) of the Bihar Tenancy Act  (as amended by Bihar Tenancy Amendment Act, 1934)  were clearly applicable’ to all cases without exception. Section  6  of  the Relief of Indebtedness  Act  is  clearly retrospective.   Indeed,  the heading of the  section  shows that it lays down the retrospective effect.  This being  so, the core of the problem really is whether the suit could  be said to be pending on June 8, 1956 when only an appeal  from the  judgment  in the suit was pending.  This  requires  the consideration  whether  the word ’suit’ includes  an  appeal from  the judgment in the suit.  An appeal has been said  to be "the right of entering a superior court, and invoking its aid  and  interposition to redress the error  of  the  court below."   -(Per  Lord  Westbury  in  Attorney   General   v. Sillem(2).  The only difference between a suit and an appeal is  this  that  an appeal "only  reviews  and  corrects  the proceedings  in  a cause already constituted  but  does  not create  the  cause." As it is intended to interfere  in  the cause  by its means, it is -a part of it, and in  connection with  some  matters  and some statutes it is  said  that  an appeal is a continuation of a suit.  In the present Act  the intention is to give relief in respect of excessive interest in  a  suit which is pending and a preliminary decree  in  a suit  of this kind does not terminate the suit.  The  appeal is a part of the cause because the preliminary decree  which emerges from the appeal will be the decree, which can become a  final decree.  Such an appeal cannot have an  independent existence.   If this be not accepted for the purpose of  the application  of s. 3 of the Usurious Loans Act (as  amended) curious results will follow.  The appeal court in the appeal is  not able to resort to the section but if the  suit  were remanded the trial court would be compelled to apply it. For although,  in  the  appeal proper,  that  judgment  must  be rendered which could be rendered by the court of trial,  but if  the  suit is to be reheard, then the  judgment  must  be given on the existing state of the law and that must include s. 5 by reason of s. 6 of the Punjab Relief of  Indebtedness Act.  It is hardly to be suggested that this obvious anomaly was  allowed to exist.  It would, therefore, appear that  in speaking of a pending suit, the legislature was thinking not only in terms of the suit proper but also (1)  63 I.A. 47,                                (2) 11  E.R. 1200 at 1209. 282 of  those  stages in the life of the suit  which  ordinarily take  place  before a final executable document  comes  into existence.  The words of the section we are concerned  with, speak, of a suit pending on the, commencement of the Act and it means a live suit whether in the court of first  instance or  in an appeal court where the judgment of.,,the court  of first instance is being considered.  It only excludes  those suits in which nothing further needs to be done in  relation to  the  rights or claims litigated, because  an  executable decree  which may not be reopened is already  in  existence. The decision of the High Court was right in applying s. 3 of the Usurious Loans Act (as amended) to the case. The appeal thus fails and it will be dismissed with costs. Appeal dismissed. 283

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