Sir John Beaumont.-

This is an appeal from and judgment and decree dated 13th April 1942, of the Chief Court of Oudh at Lucknow, which modified a judgment and decree dated 25th May 1938, as amended by a judgment and decree dated 9th May 1940, or the Special Judge, First Grade, Barabanki, under the United Provinces Encumbered Estates Act, 1934 (hereinafter referred to as "the 1934 Act"). The questions raised in the appeal relate to the construction and effect of the 1934 Act as amended by the United Provinces Encumbered Estates Amendment Act, 1939 (hereinafter called "the 1939 Act"). The facts giving rise to the appeal are not in dispute.

On 23rd January 1912, Raja Raghuraj Bahadur Singh borrowed Rs. 5,00,000 from Raja Sir Harnam Singh, carrying interest compoundable half-yearly on the terms of a mortgage deed. On 20th October 1915, Raja Raghuraj Bahadur Singh executed a fresh mortgage (hereinafter referred to as "the mortgage of 1915") in favour of Raja Sir Harnam Singh, in substitution for the mortgage of 1912 for securing Rs. 5,71,490-13-9 carrying interest at 6 per cent. per annum payable on 30th June and 31st December in each year, with a provision that if any half-yearly instalment of interest was not paid on the due date it should be added to principal and carry interest at the rate of 6 per cent. per annum. The rate of interest was subsequently raised, but nothing turns upon this. On 8th January 1926, Raja Sir Harnam Singh obtained a preliminary decree on the mortgage of 1915 which decree was made final on 26th February 1927. In the year 1925, the mortgagor having died, his sons divided the estate and liabilities between themselves. One of the brothers paid off his share of the mortgage debt under the mortgage of 1915, and on 17th October 1929, the other son, namely the appellant, Kunwar Rajendra Bahadur Singh, executed a fresh mortgage (hereinafter referred to as "the mortgage of 1929") in favour of Raja Sir Harnam Singh to secure the appellant's share of the mortgage debt amounting to Rs. 7,60,108-11-9. Interest was to be payable at the rate of 7 per cent. per annum and there was a provision for capitalising interest in arrear similar to that in the mortgage of 1916. In February 1936, a decree for sale was made of the property comprised in the last mentioned mortgage.

In April 1935, the Act of 1934 came into operation. By S. 4, the right is given to any landlord who, or whose immovable property, is encumbered by private debts, to make an application to the Collector of the District re-questing that the provisions of the Act be applied to him. The Collector is required to forward the application to the Special Judge appointed under the Act. Section 14 provides for the hearing of the application by the Special Judge. Sub-sections (4) (a), (5) and (6) are in the following terms :

"(4) In examining each claim the Special Judge shall have and exercise all the powers of the Court in which a suit for the recovery of money due would lie and shall decide the questions in issue on the same principles as those on which such Court would decide them, subject to the following provisions namely :

(a) the amount of interest held to be due on the date of application shall not exceed that portion of the principal which may still be found to be due on the date of application.

(5) For the purpose of ascertaining the principal under cl. (a) of sub-s. (4) the Special Judge shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account, or by any contract made in the course of the transaction before 31st December 1916.

(6) For the purpose of ascertaining the principal under cl. (a) of sub-s. (4) the Special Judge shall not treat as principal any accumulated interest which has been converted into principal at any statement or settlement of accounts or by any contract made in the course of the transaction after 31st December 1916."

The effect of the Act seems to be that the Special