The excess interest realized by a mortgagee can only be set off against the principal to the extent permitted by Clause (b) of Sub-section (2) of Sec.16 of the Bihar Land Reforms Act, 1950, which authorizes the deduction of interest in excess of 6% per annum or the stipulated rate of interest, whichever is lower.

Narasimham, J.

1. This is an application under Articles 226 and 227 of the Constitution to quash the order of the sole member tribunal constituted under Sec.18 of the Bihar Land Reforms Act, 1950 , allowing the Appeal from the judgment of the claims officer, Tirhut Division.

2. The petitioner is the mortgagee (Zarpeshgi lease) the mortgage having been executed on the 30th June, 1930 by respondent No. 1, his father and grandfather, mortgaging the estate known as Madhuban Estate for a sum of Rs. 17,00,000. The mortgagee was put in possession of the estate and the annual income of the estate was said to be about Rs. 2,00,000 and odd. The estate vested in the State of Bihar under the provisions of the Bihar Land Reforms Act on the 14th November, 1951. The mortgagee then applied under Sec.14 of that Act for the determination of the amount due to him out of the total compensation payable to the proprietors of the estate. In that application he gave a statement showing the rents and profits realised from the estate till the date of vesting. The learned Claims Officer held that the net profit realised by the mortgagee from the mortgaged property from the date of the mortgage till the date of vesting was Rs. 23,30,103-15-6.1/2. He calculated interest at 5 per cent on the principal (Rs. 17,00,000) and found that it came to Rs. 21,80,250. Deducting this sum from the total net profits he found that a sum of Rs. 1,49,853-15-6.1/2 was excess realisation by way of interest by the mortgagee, which under Clause (b) of Sub-section (2) of Sec.16 of the Bihar Land Reforms Act should be deducted from the principal. Deducting this sum he arrived at the net figures Rs. 15,50,146-0-5.1/2 as the amount of the principal legally and justly payable to the applicant. He further held that the applicant was not entitled to any further interest as he had already realised profits by way of interest to the extent of more than the amount of the principal. For this limited purpose he applied the provisions of Clauses (c) and (d) of Sub-section (2) of Sec.16 of the Act.

3. The learned sole member tribunal on appeal, however, construed the four clauses of Sub-section (2) of Sec.16 differently. He held that under no circumstance was the mortgagee entitled to appropriate towards interest any sum in excess of the principal. Hence he thought that that portion of the net profits which was above Rs. 17,00,000 must be completely appropriated towards deduction from the principal. He, however, made a slight error in assuming that the total net profit was only Rs. 21,80,250 and made the calculations accordingly. Deducting Rs. 17,00,000 from the said sum he arrived at the figures Rs. 4,80,250 as the excess realisation of interest, and deducting that sum from the principal, namely, Rs. 17,00,000 he held that Rs. 12,19,750 was payable to the mortgagee. A review petition was filed before him for correction of this error in estimating the total net profits and that was numbered as Case No. 1 of 1962, which is said to be still pending. This need not, however, affect the disposal of this writ petition because the main question of law which is to be decided is whether on a construction of the four clauses of Sub-section (2) of Sec.16 of the Act the Claims Officers view was correct, or else, whether, the view taken by the sole member tribunal was correct.

4. Mr. Lal Narain Sinha, who appeared for the mortgagee petitioner, urged that the learned member, claims Tribunal, has committed an obvious error of law in construing the various clauses of Sub-section (2) of Sec.16 of the Act. Sub-section (2) of Sec.16 may be quoted now:

"(2) In determining the principal amount and interest under Sub-section (1), the claims officer shall proceed in the following manner: (a) he shall ascertain the amount of the principal originally advanced in each case, irrespective of the closing of accounts, execution of fresh bonds, of decree or order of a court;

(b) he shall ascertain the amount of th