The amount of loan for the purpose of calculating compound interest under the Bihar Money-Lenders Act, 1938, is the amount mentioned in the document on which the suit is based, and not the original amount advanced.

A.Ahmad and M.Verma JJ.

1. Tins appeal by the defendants arises out of a suit for recovery of Rs. 12,631-8-0 on the basis of a hand-note dated the 29th June, 1954, as well as on the basis of Bahi Khata entry dated the 26th December, 1956. The appeal is confined to the question as to whether any decree has been passed in favour of the plaintiff-respondents by way of compound interest.

2. In order to prove their case, the plaintiffs examined five witnesses, but no witness was examines on behalf of the defendant-appellants. A perusal of the handnote, dated the 29th June, 1954, on the basis of which the present suit was brought, makes it clear that it was executed for a sum of Rs. 11,938-6-0 on account of various previous transactions. There is also a stipulation for payment of interest at the rate of 12 annas per centum per mensem.

3. Mr. Sailesh Chandra Sinha, appearing for the appellants, has, in the first instance, argued that the transactions prior to the execution of the handnote (Ext. 5/a) should be examined by this Court in order to see whether the appellants have been made liable to pay any compound interest on the various amounts advanced to them. We are not in a position to accept the submission of learned Counsel. It has been consistently held by this Court that, when a bond has been executed for an amount of money advanced or for past liabilities, it constitutes a loan within the meaning of the Bihar Money-Lenders Act. In case of such a bond, the amount for which it is executed is "the amount of loan" within the meaning of Section 7 of the Act. Vide Singheshwar Singh and Ors. v. Medini Pd. Singh and Ors. A.I.R. 1940 Pat. 65; Madho Pd. v. Mukutdhari Singh and other A.I.R. 1941 Pat. 378. In another Bench decision of this Court, namely, in Lal Singh v. Ramnarain Ram and Ors. A.I.R. 1942 Pat. 138, it was laid down that, where the liability under the original loan was altered from time to time by the debtor executing fresh handnote, after the account had been adjusted between him and the creditor, the amount of loan in a suit upon the renewed handnote must be taken to be the amount for which the hand-note in suit was executed, and not the original sum advanced. The view expressed in the above decisions was approved by a Full Bench of this Court in Deo Nandan Prosad v. Ram Prasad A.I.R. 1944 Pat. 303, wherein it was laid down that, if the loan was based on a document (as in the present case), the amount of loan mentioned in such document would be taken to be the amount for the purpose of calculating as to whether the debtor had been made liable to pay compound interest. The decisions of this Court already referred to were approved by their Lordship of the Supreme Court in Ram Nandan Prasad Narayan Singh and Anr. v. Kapildeo Ramjee and Ors. , and it was laid down as follows:

Under Section 7, the loan must relate to the document on which the suit is based and not the original one. In view of the decisions referred to above, the transactions prior to the execution of the handnote in the present case cannot be looked into in order to see whether the appellants were made, liable to pay compound interest.

4. If, however, the appellants have been made liable to pay compound interest subsequent to the execution of the handnote (Ext. 5/a), that amount must be struck off. With this end in view, we have examined the last portion of the plaint wherein the details of the claim have been given. A perusal of this portion of the plaint makes it clear that the principal under Ext. 5/a, namely, Rs. 11,938-6-0, has been taken to be starting point of the amount due. Interest on this amount has been calculated from the 29th June, 1954 to the 4th March, 1955. The total of these two amounts comes to Rs. 12,759-2-0. Payment made on the 4th March, 1955. The total of these two amounts comes to Rs. 12,759-2-0. Payment made on the 4th March, 1955 to the tune of Rs. 1,000-0-0 has been deducted from this amount, leaving a balance of Rs. 11,759-2