Back
1949 Supreme(SC) 14
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PORTER, LORD MACDERMOTT AND SIR JOHN BEAUMONT.
JOY CHAND LAL BABU - Appellant
Versus
KAMALAKSHA CHAUDHURY - Respondents
On Appeal from the High Court at Calcutta.
Decided On : March 17, 1949.
Solicitors for appellant: W. W. Box & Co.
Solicitors for respondents 1 to 10: Barrow, Rogers and Nevill.
A loan is not "commercial" if used for both business and other expenses. A mortgage suit remains pending if the right to a personal decree for any deficiency after the sale of mortgaged properties is still available and not barred by limitation.
Headnote:(A) Money Lenders Act, 1940 - Sections 2(4), 2(22), 30, 36, 40(5) - Code of Civil Procedure, 1908 - Sections 109, 115 - Revision jurisdiction - A subordinate court does not act illegally or with material irregularity merely because it decides a matter within its competence wrongly; however, if an erroneous decision results in the court failing to exercise a jurisdiction vested in it by law, the High Court may interfere in revision under Section 115(b) of the Code of Civil Procedure. (Para 72)
(B) Money Lenders Act, 1940 - Section 2(4) - Commercial loan - A loan is commercial only if advanced to be used solely for the purpose of business or trade; where a document recites that loans are required for business and other expenses, the loan is not advanced solely for business purposes and thus does not qualify as a commercial loan - Burden of proof to establish a loan as commercial lies on the lender. (Para 73)
(C) Money Lenders Act, 1940 - Section 2(22) - Suit pending - A mortgage suit remains pending if there is a right to obtain a personal decree for the balance not recovered from the sale of mortgaged properties, provided such right is not barred by limitation; a compromise decree providing for the realization of balance from the person of the debtor is a submission to a future personal decree and does not constitute a final personal decree for an unascertained sum. (Para 74)
Facts of the case:
The respondents executed a bond for obtaining loans for business and other expenses. A mortgage suit was subsequently filed, resulting in a compromise decree. Following defaults, the mortgaged properties were sold in execution. The respondents filed an application to reopen the decree under the Money Lenders Act. The subordinate court dismissed the application, holding the loan was a commercial loan. The High Court reversed this, holding the loan was not commercial and the suit was pending on the statutory date.
Findings of Court:
The loan was not a commercial loan as it was not for business purposes solely. The suit was pending on the relevant date because the right to apply for a personal decree for any deficiency remained open.
Issues: Whether the High Court had jurisdiction to interfere in revision; whether the loan was a commercial loan; and whether the mortgage suit was pending on January 1, 1939.
Ratio Decidendi: The court reasoned that the reference to "other expenses" in the bond meant the loan was not exclusively for business. Regarding the pending suit, it held that the potential to seek a personal decree for a deficiency after the sale of mortgaged properties keeps the suit pending until such right is barred by limitation.
Result: Appeal dismissed.
Legal Category Hierarchy
-
practice and procedure
-
civil procedure
- revision
- appeals
- execution of decrees
-
civil procedure
-
banking and finance
-
money lending
- bengal money lenders act
- commercial loans
-
money lending
-
property law
-
mortgages
- mortgage decrees
- personal decrees
-
mortgages
Judgement
Appeal (No. 70 of 1947) from an order of the High Court passed in its civil revisional jurisdiction (August 13, 1943) which set aside an order of the Subordinate Judge of Burdwan (July 18, 1942) rejecting the petition of the respondents Nos. 1 to 10 under ss. 30 and 36, sub-s. 6 (a) (ii), of the Bengal Money Lenders Act, 1940 (hereinafter referred to as " the " Act "), for reopening a mortgage decree dated October 5, 1931, passed against the respondents in mortgage suit No. 198 of 1930.
The following facts are taken from the judgment of the Judicial Committee. The questions argued on this appeal were first, a preliminary objection taken by the respondents that this appeal was incompetent; secondly, a preliminary objection taken by the appellant that the revision application to the
Law Rep. 76 Ind. App. 131 ( 1948- 1949) Joy Chand Lal Babu V. Kamalaksha Chaudhury
67
High Court from which this appeal was brought was incompetent. Apart from those preliminary objections the only two matters urged against the order of the High Court appealed from were first, that the loan to which the application of the respondents related was a " commercial loan" to which the Act did not apply; and secondly, that the suit in which the application of the respondents was made was not a " suit to which this Act applies " as defined by the Act, and consequently that the respondents were not entitled to any relief under the Act.
On January 6, 1925, the respondents or their predecessors in title executed a registered karbarnama, or bond for obtaining loans for business, in favour of the appellant for securing loans up to a sum of Rs. 25,000. [The material provisions of that document are set out in the judgment of the Board.] The appellant, on August 15, 1930, instituted a mortgage suit, No. 198 of 1930, claiming a sum of Rs. 40,600 and asking for the enforcement of the mortgage security. On October 5, 1931, a compromise decree was passed in the suit for a total sum of Rs. 45,825-8-0 with interest, payable in sixteen instalments, and it was provided that on failure to pay one instalment the whole of the outstanding sum would be due and recoverable with interest at 10 ½ per cent, per annum by sale of the mortgaged properties, and in case of deficiency by sale of the other properties of the mortgagors and also from the persons of the mortgagors by executing the decree. Default was made in payment of the first instalment under the compromise decree, and on August 20, 1932, application was made by the appellant for execution of the decree. In succeeding years further applications in execution were made, and all the properties subject to the decree were eventually sold and purchased by the appellant. The last sale in execution was confirmed in July, 1938, and on an application for possession made by the appellant on September 20, 1938, the court ordered possession to be delivered on November I, 1938, but owing to failure on the part of the execution clerk to return the writ to the court no order noting the fact of delivery of possession and finally disposing of the application for possession was entered on the records of the court until June 3, 1940. Meantime, namely, on November 29, 1938, there was an application by a third party under r. 100, or. 21, which was not disposed of until April, 1939.
On August 30, 1941, respondents Nos. 1 to 10 filed miscellaneous application No. 127 of 1941 in the court of the Subordinate Judge at Burdwan asking for relief under ss. 30 and 36 of the Act. The Act was passed on August 1, 1940, and the following provisions of it were relevant to this appeal
“Section 2. In this Act, unless there is anything repugnant " in the subject or context—
" (4) ‘commercial loan means a loan advanced to any M person to be used by such person solely for the purpose " of any business or concern relating to trade, commerce, "industry, mining, planting, insurance, transport, banking "or entertainment, or to the occupation of wharfinger,
