Back
PATNA HIGH COURT
Reuben and B.P.Jamuar JJ.
Gajadhar Marwari
Versus
Baidyanath Mandal
Appeal from Original Decree No. 113 of 1946 ;
Decided On : APRIL 05, 1950
MORTGAGE - REDEMPTION - INTEREST - EXCESSIVE AND PENAL - REDUCTION - USURIOUS LOANS ACT, 1918, SEC. 3 - CONTRACT ACT, 1872, SEC. 16 - T. P. ACT, 1882, SEC. 76(G) - RES JUDICATA.
Fact of the Case:
Plaintiffs, purchasers of equity of redemption in execution of a mortgage decree, sued to redeem two villages mortgaged to defendants. The mortgage bond stipulated for interest at 24% per annum compoundable with yearly rests. The Subordinate Judge reduced the interest to the maximum rate of 9% per annum simple, as provided under Sec. 5, Bihar Money-lenders (Regulation of Transactions) Act, 1939, and applied Sec. 7 of the Act to limit the total interest to the amount of the principal. The defendants appealed, and the plaintiffs filed a cross-objection challenging the finding that the defendants were not liable to account for the profits of one of the mortgaged villages.
Finding of the Court:
1. Sec. 5, Bihar Money-lenders Act, 1939, which provides for a maximum interest rate of 9% per annum simple, is not applicable to the suit as it applies only to suits brought by money-lenders for loans advanced after the commencement of the Act. The loan in this case was advanced in 1922, long before the commencement of the Act. 2. Sec. 7 of the Act, which limits the total interest to the amount of the principal, is also not applicable as it applies only to suits brought by money-lenders. The plaintiffs in this case are not money-lenders but purchasers of the equity of redemption. 3. The interest rate of 24% per annum compoundable with yearly rests, as stipulated in the mortgage bond, is not excessive or penal and cannot be reduced under Sec. 16, Contract Act, 1872, or Sec. 3, Usurious Loans Act, 1918, as there is no evidence of undue influence or unfairness in the transaction. 4. However, the high rate of interest can be taken into consideration in exercising discretion regarding pendente lite and future interest. The defendants are entitled to interest at the bond rate from the date of the mortgage up to the date of the institution of the suit, but pendente lite and future interest will be allowed at 4% per annum simple. 5. The defendants are liable to account for the profits of the village for which they failed to realize the minimum royalty due from the lessee, as they were entitled to do under the mortgage bond. The minimum royalty agreed to be paid from 23rd December 1926, namely, Rs. 1000, can be taken as representing the value of the leasehold, and the defendants should be credited with this amount in the accounting between them and the mortgagor beginning from the expiry of 1927. 6. The contention of res judicata raised by the defendants is not accepted.
Issues: 1. Whether Sec. 5 and Sec. 7, Bihar Money-lenders Act, 1939, are applicable to the suit. 2. Whether the interest rate of 24% per annum compoundable with yearly rests is excessive or penal and can be reduced. 3. Whether the defendants are liable to account for the profits of the village for which they failed to realize the minimum royalty due from the lessee.
Ratio Decidendi: 1. Sec. 5, Bihar Money-lenders Act, 1939, applies only to suits brought by money-lenders for loans advanced after the commencement of the Act, and Sec. 7 applies only to suits brought by money-lenders. The plaintiffs in this case are not money-lenders, and the loan was advanced long before the commencement of the Act, so these provisions are not applicable. 2. The interest rate of 24% per annum compoundable with yearly rests is not excessive or penal and cannot be reduced under Sec. 16, Contract Act, 1872, or Sec. 3, Usurious Loans Act, 1918, as there is no evidence of undue influence or unfairness in the transaction. 3. The defendants are liable to account for the profits of the village for which they failed to realize the minimum royalty due from the lessee, as they were entitled to do under the mortgage bond.
Final Decision: The defendants' appeal is allowed, and the plaintiffs' cross-objection is allowed in part. The decree of the Subordinate Judge is varied to include the profit realized from the Natundih property in the accounting between the mortgagor and the mortgagees, along with the profits realized from the Kenduadih property. No order as to costs is passed in this Court.
Jamuar, J.
1. This appeal is by defendants 1 to 4 (a), and arises out of a suit for redemption brought by the plaintiffs, who are members of a joint Hindu family and carry on business in coal under the name and style of Baidyanath Mandal and Co. The facts giving arise to the suit are these.
2. Thakur Girdbari Singh of Nowagarh was the proprietor of the two villages concerned in this case, namely, villages Kenduadih and Natundih. On 14th Chaitra, 1313 B.S. corresponding to 20th March 1907, he gave in lease by means of a registered patta (EX. 7) a plot of coal land having an area of 220 bigbas in village Kenduadih, as described in Schedule A of the plaints to one Praganna Kumar Bay. Tbe lease is still subsisting.
3. Thereafter, Thakur Girdhari Singh died and the succession to his estate being governed by the law of lineal primogeniture he was succeeded by his eldest son Ran Bahadur Singh, who by a registered patta (EX. 7 (a)), dated 14th February 1921, gave in lease the coal mining rights in village Natundih, as described in Schedule B of the plaint, to one Damodar Prasad Lala. This lease is also subsisting.
4. Then on 29th November 1922, Ran Bahadur Singh executed a mortgage, which is called either a usufructuary mortgage or an anomalous mortgage, by a regiatered deed (Ex. 9) in favour of the defendants 1 and 2 and the father of defendants 4 and 4 (a), named Sheodaumall Marwari, to secure a loan of Rs. 15,000 on the properties described in Schedules A and B of the plaint, and the mortgagees were said to have been put in possession of these properties, that is, of both the villages Kenduadih and Natundih. The mortgagees were entitled to recover rent and royalties from the leasehold properties, the minimum royalty for Schedule A property being Rs. 1,925 and that for Schedule B property R3. 4,720 per annum. According to the plaintiffs, the dues under this mortgage bond had been fully satisfied from the rents and royalties realised by these mortgage deeds.
5. Ran Bahadur Singh executed another mortgage deed on 2nd February 1923, mortgaging the entire village Kenduadih along with some other properties to Srimati Frobhabati Devi, the widow of the late Rai Bahadur Jyotirmoy Chatterji. On her death, her son T.K. Chatterji instituted a suit, being Mortgage suit No. 17 of of 1927, on the basis of that mortgage and having obtained a decree transferred it to one Suresh Chandra Dutta, who in his turn assigned it to Srimati Saralakshi Debi. She put the decree into execution and the entire village Kenduadih as also the property described in Schedule A of the plaint were sold and they were purchased by the plaintiffs on 15th July 1943. The plaintiffs obtained the usual sale certificate and also the delivery of possession through Court.
6. In these circumstances, the plaintiffs brought their suit, out of which this appeal has arisen, on 12th January 1944, against defendants 1 to 4 (a) as also against two other defendants, namely, Thakur Manmohan Singh, the son of Ban Bahadur Singh, as defendant 5 and Srimati Hira Kumari Devi, the wife of Thakur Manmohan Singh, as defendant 6. They claimed to be entitled to redeem the two villages Ken-duadih and Natundih, which were given in mortgage to the defendants. Their further claim was that the stipulated rate of interest under the mortgage, namely, at the rate of 24 per cent. per annum compoundable with yearly rests, is excessive and penal and should be reduced.
7. The defendants, who are the appellants, contested the suit. Their main defence was that they as mortgagees were not put in actual possession of village Natundih by Ran Bahadur Singh and that the minimum royalty mentioned in their lease in respect of this village was kept in abeyance for a certain period awaiting the allotment of a railway siding in the vicinity of the village, and on 23rd December 1926, by a document) called a Patta Ran Bahadur Siagh absolved the lessee of Natundih, namely, Damodar Prasad Lala, from payment of the mini
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
