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1945 Supreme(SC) 12
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD GODDARD, SIR MADHAVAN NAIR AND SIR JOHN BEAUMONT.
RENULA BOSE, SRIMATI - Appellant
Versus
RAI MANMATHA NATH BOSE - Respondents
On appeal from the High Court at Calcutta.
Decided On : Mar. 7. 1945.
Solicitors for appellant:Hy. S. L. Polak & Co. Solicitors for respondents 1-4: A. J. Hunter & Co.
A bona fide assignee for value of a decree is protected under Section 36(5) of the Bengal Money Lenders Act, 1940, even if the assignment occurred before the Act's commencement, preventing the reopening of the decree to limit the borrower's liability.
Headnote:(A) Bengal Money Lenders Act, 1940 - Sections 30, 36, 28, and 29 - Relief to borrower - Reopening of decrees - Rights of bona fide assignee for value - A borrower is not liable to pay principal and interest exceeding twice the original loan under Section 30(1)(a). While Section 36 allows the court to reopen transactions and decrees not fully satisfied by January 1, 1939, Section 36(5) protects the rights of a bona fide assignee for value who has not received the statutory notice. The protection under Section 36(5) extends to assignees of decrees where the assignment took place before the Act came into operation, as the inability to give notice due to the Act's non-existence does not disqualify the assignee from protection.
(B) Merger of Contract into Decree - Where a debt due under a mortgage is merged into a decree, the relationship between the parties changes from lender and borrower to judgment-creditor and judgment-debtor. Provisions dealing with the assignment of loans where the contract is still executory do not apply to the assignment of a final decree.
Facts of the case:
A mortgage was executed to secure a loan. Subsequently, a consent decree was passed for the balance due. This decree was assigned to a bona fide assignee for value before the enactment of a money-lending regulation act. After the Act came into force, the mortgagors sought a declaration that they were not liable to pay further sums, as the total amount paid exceeded twice the original principal, seeking relief under the provisions of the Act.
Findings of Court:
The court found that the relief sought by the borrowers required the reopening of a final decree. While the Act provides for the reopening of such decrees, it specifically protects bona fide assignees for value. Since the decree had been assigned bona fide for value before the Act's commencement, the assignee's rights are preserved.
Issues: Whether a mortgagor can obtain relief under a money-lending act in respect of a final consent decree that was assigned to a bona fide assignee for value before the Act came into operation.
Ratio Decidendi: The court held that while Section 30 provides a defense regarding the quantum of liability, it does not automatically invalidate a decree. Relief against a decree can only be granted by reopening it under Section 36. However, Section 36(5) protects a bona fide assignee for value. The protection applies even to pre-Act assignments where notice could not have been given because the Act was not yet in force.
Result: Appeal allowed.
Appeal (No. 25 of 1942) from a judgment and decree of the High Court in its civil appellate jurisdiction (July 31, 1941), which reversed a judgment and decree of that court in its ordinary original civil jurisdiction (June 25, 1941).
The following facts, which were not in dispute, are taken from the judgment of the Judicial Committee The action out of which this appeal arose was brought by the plaintiffs, who were respondents 1-4, to obtain relief under the provisions of the Bengal Money Lenders Act, 1940, in respect of a mortgage dated May 25, 1914, whereby all persons interested in certain properties mortgaged them to the Maharaja of Darbhanga to secure the sum of Rs.6 lacs, with interest at six per cent, per annum. It is unnecessary to set out the title of the various parties. From time to time various amounts were paid to the mortgagee in respect of the sums due under the mortgage, and on June 12, 1935, in an action which he instituted against the mortgagors, a decree by consent was made in the action for some Rs.4,58,058, the balance due to him under the mortgage, which together with the amount already paid would exceed double the amount originally advanced. On September 17, 1936, the Maharaja assigned the benefit of the decree and the benefit of the securities under the mortgage deed to the appellant, who gave value therefor, and on February 2, 1937, she obtained the leave of the court to execute the decree. On September 1, 1940, the Bengal Money Lenders Act, 1940, came into operation, and thereupon the respondents 1-4 instituted proceedings in the High Court of Calcutta claiming relief under that Act. By that time more than twice the sum advanced had been paid either to the Maharaja or the appellant, and the respondents claimed in the action a declaration that they were not liable to pay any more, and also asked for repayment of money paid by them in excess of the amount allowed by the Act, though that latter claim was not pursued at the trial. The case was heard before Edgley J., who dismissed the action. On appeal his decision was reversed by the Appellate Division of the High Court (Derbyshire C.J. and Nasim Ali J.), who granted a declaration that the plaintiffs in the action were not liable to make any further payments either under the mortgage or under the decree of June 12, 1935, or otherwise. It was from that decree of the High Court that the present appeal was brought.
The relevant provisions of the Bengal Money Lenders Act, 1940, appear from the judgment of the Judicial Committee.
1945. Feb. 5, 6. Sir Herbert Cunliffe K.C. and W. W. K. Page for the appellant. The question is whether the Bengal Money Lenders Act, 1940, gives any relief to a mortgagor before the Act in respect of a final decree, made by consent before the Act, for payment of an agreed amount for principal and interest and assigned, also before the Act, to a bona fide assignee for value, where the rate of interest is well within the limits fixed by the Act. The answer to that question should be in the negative. The real contest is between the appellant, as the assignee of the decree, and the first four respondents as the assignees and successors of the mortgagors. It is submitted, first, that this Act has no relation to assignments which have taken place before the commencement of the Act; its provisions relate to loans and assignments which took place after the date of the Act, and they can only be effective if notice is given to an assignee of the application of the Act to the assignment which he has taken. It would require something very explicit to satisfy the court that the Act applied to a pre-Act assignment. The appellant took her assignment before the Act came into operation, and it is not reasonable to suppose that the legislature took all this trouble to protect an innocent assignee after the Act and yet left an even more innocent assignee before the Act in a worse position than one after the Act. If the Board is of opinion tha
