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1943 Supreme(Cal) 103
CALCUTTA HIGH COURT
Henderson, J.
Sri Ram Charan Sinha - Appellant
Versus
Gopi Nath - Respondent
Decided On : 29-07-1943
The legal principle established is that the definition of a 'loan' under the Bengal Money-Lenders Act includes transactions in which interest is payable in kind, and usufructuary mortgagees are considered borrowers within the meaning of Section 38.
Headnote:
Bengal Money-Lenders Act - Usufructuary Mortgagees - Definition of Loan
Fact of the Case:
The petitioners sought an application u/s 38, Bengal Money-Lenders Act, to take an account and make a declaration regarding the amount due to the opposite parties on account of the mortgage. The learned Subordinate Judge refused to hear the application, stating that a usufructuary mortgagor is not a borrower when interest is payable in kind and not in cash.
Finding of the Court:
The court found that the petitioners are borrowers within the meaning of Section 38, as there is nothing in the definition of a 'loan' to suggest that it does not include a transaction in which interest is payable in kind. The Order of the learned Subordinate Judge was set aside, and the court directed him to hear and determine the application in accordance with the law.
Issues: The main issue was whether the petitioners, as usufructuary mortgagees, were entitled to apply u/s 38 of the Bengal Money-Lenders Act to take an account and make a declaration regarding the amount due to the opposite parties on account of the mortgage.
Ratio Decidendi: The court interpreted the definition of a 'loan' in Sub-section 2 (12) and concluded that the petitioners are borrowers within the meaning of Section 38, regardless of whether the interest is payable in kind or in cash.
Final Decision: The Rule was made absolute, the Order of the learned Subordinate Judge was set aside, and the court directed him to hear and determine the application in accordance with the law.
ORDER
Henderson, J. - This Rule raises only one small point. It is directed against an Order of the Subordinate Judge refusing to hear an application u/s 38, Bengal Money-Lenders Act, on the ground that it was not maintainable. The petitioners were largely responsible because they introduced into their petition a mass of matters which could not arise on such an application and the major portion of the learned Judge's judgment is not germane to the real point. It is not necessary to set out many details for the decision of the present point. Suffice it to say that the opposite parties are in possession of certain properties as usufructuary mortgagees. A part of the usufruct is to be credited as interest and the balance to the reduction of the principal sum due. The actual lands are in possession of produce paying tenants. u/s 38 the petitioners are entitled to apply to the Court to take an account and make a declaration how much, if any, is now due to the opposite parties on account of the mortgage. Nothing else will arise for consideration. The learned Subordinate Judge rejected the application on the ground that a usufructuary mortgagor is not a borrower when interest is payable in kind and not in cash. There is nothing in the definition of a "loan" to suggest that it does not include a transaction in which interest is payable in kind. In view of the definition of a "loan" in Sub-section 2 (12) I have no doubt that the petitioners are borrowers within the meaning of Section 38. The Rule is accordingly made absolute, the Order of the learned Subordinate Judge is set aside and I direct that he do hear and determine the application in accordance with law. The costs in this Rule will be costs in the application hearing fee, one gold mohur.
