The main legal point established in the judgment is that the provisions of the Bengal Money-lenders Act, 1940, empowering the courts to reopen transactions and set aside decrees, fall within the law-making powers of the Bengal Legislature under the Government of India Act, 1935.

JUDGMENT

Derbyshire C.J.

1. This matter was re-ported to me by Sen J. under Rule 3 of chap. V of the Rules of the Original Side of this Court on the ground that it involves a substantial question of law as to the interpretation of the Government of India Act, 1935. Under the rule just mentioned, I appointed this Bench to hear the matter. Put shortly the question is are certain provisions of the Bengal Money-lenders Act, 1940, an Act of the Bengal Provincial Legislature which received the assent of the Governor-General in July 1940 and came into force on 1st September 1940, by order of the Governor of Bengal beyond the law-making powers of the Bengal Legislature under the Government of India Act, 1935?

2. The facts of the case are as follows : On 8th March 1933, Rai Bahadur Tarit Bhusan Roy, the father of the two plaintiffs, lent Rs. 50,000 to the defendant, Benoy Krishna Chakravarty. The loan was secured by an equitable mortgage of five properties in Calcutta the title deeds of which were deposited by the borrower with the lender, the transaction was evidenced by a memorandum of the deposit, which was registered. It was a term of the mortgage that the mortgagor should pay to the mortgagee compound interest at eight per cent. per annum with half yearly rests on the money owing. On 21st January 1935, the mortgagee by a deed of gift assigned his right, title and interest in the mortgage to the two plaintiffs. On or about 21st June 1938 the plaintiffs instituted this suit against the defendant mortgagor Claming a decree in Form No. 5 in Appendix D to the schedule of the CPC as amended by Act 12 of 1929. The rate of interest claimed in the plaint was eight per cent. per annum compound interest with half yearly rests. On 8th July 1938 a preliminary mortgage decree for sale in the form asked was made ex parte. On 4th August 1938 the plaintiffs obtained from the Court an order for the appointment of a receiver in the suit, such receiver however was by the terms of the order not to take possession of the mortgaged property if the defendant paid Rs. 400 monthly towards the plaintiffs' claim in the suit. The defendant has regularly paid the Rs. 400 per month. The Registrar took accounts in the suit and by his report dated 30th January 1939 found that on 13th September 1939 there would be due from the defendant to the plaintiffs under the mortgage Rs. 72,057-14-2 for principal and interest (compound with half yearly rests). On 22nd December 1939, a final mortgage decree for sale was made in favour of the plaintiffs who were however directed not to take any steps in the sale proceedings until after the then ensuing Easter vacation. Thereafter there were adjournments of the proceedings at the instance of the defendant and, eventually the Registrar fixed the sale for 13th November 1940.

3. In the meantime the Bengal Money-lenders Act, 1940, had come into force on 1st September 1940 and on 10th September the defendant petitioned the Court for relief under the Act alleging that the interest (eight per cent. compound) was in excess of that allowed by the Act (eight per cent. simple) for a secured loan (Section 30) and asking that the transactions between the mortgagor and the mortgagee should be reopened u/s 36 and that a new decree should be made in accordance with the provisions of the Act, giving the defendant such relief as he was entitled to under the Act. The plaintiffs filed an affidavit in reply in which they contended that the Act does not apply to the circumstances of this case, that there are no grounds for reopening the decrees, that they are assignees and protected from the operation of the Act and finally, that

in view of the Government of India Act 1935, the Bengal Money-lenders Act, 1940 is, so far as it seeks to affect decrees already passed and the rights of decree-holders under the said decrees, is ultra vires of the Bengal Legislature and the defendant is not entitled to any relief thereunder.

4. Upon that contention being raised