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1981 Supreme(Del) 251
High Court Of Delhi
LIFE INSURANCE CORPORATION OF INDIA - Appellant
Versus
SHAM SURAT SINGH - Respondent
Suit 277 of 1971
Decided On : 08/26/1981
G.N.AGGARWAL, H.D.TRIYOGI, Ravinder Sethi
The rule of damdupat, as enacted in Section 30 of the Punjab Relief of Indebtedness Act, 1934, applies to all debts, irrespective of the status of the debtor.
Headnote:
DAMDUPAT - INTEREST - MORTGAGE - SECTION 30 OF PUNJAB RELIEF OF INDEBTEDNESS ACT, 1934 - APPLICABILITY - INTERPRETATION OF SECTION 7(1) AND 7(2) - DISTINCTION BETWEEN 'DEBT' AND 'DEBTOR' - RULE OF DAMDUPAT APPLIES TO ALL DEBTS, IRRESPECTIVE OF THE STATUS OF THE DEBTOR.
Fact of the Case:
The Life Insurance Corporation of India (LIC) filed a suit against borrowers to recover Rs. 3,56,291.86 by sale of mortgaged property. The borrowers contended that Section 30 of the Punjab Relief of Indebtedness Act, 1934 (the Act) applied, limiting the decree to twice the amount advanced less any amount already received by LIC.
Finding of the Court:
The court held that Section 30 of the Act applied to the suit, and that LIC was entitled to a decree for twice the amount advanced less any amount already received by LIC. The court also held that LIC was entitled to interest on the amount advanced and on the expenses incurred in managing the property.
Issues: 1. Whether Section 30 of the Punjab Relief of Indebtedness Act, 1934 applies to the suit. 2. Whether LIC is entitled to a decree for twice the amount advanced less any amount already received by LIC. 3. Whether LIC is entitled to interest on the amount advanced and on the expenses incurred in managing the property.
Ratio Decidendi: 1. Section 30 of the Act applies to all debts, irrespective of the status of the debtor. 2. The term 'debt' in Section 30 of the Act is defined in Section 7(1) of the Act, which includes all liabilities of a debtor in cash or in kind, secured or unsecured. 3. The term 'debtor' in Section 30 of the Act is not defined in Section 7(2) of the Act, which defines a 'debtor' for the purposes of Part IV of the Act, dealing with Debt Conciliation Boards. 4. The rule of damdupat applies to all debts, irrespective of the status of the debtor.
Final Decision: The court passed a preliminary decree for Rs. 94,917.14 on account of principal and interest till today on the sum advanced. The Corporation will also be entitled to Rs. 1,10,694.65 on account of expenses incurred by them and interest thereon amounting to Rs. 97,000.00. The Corporation will also be entitled to proportionate costs of the suit. The defendants are allowed a period of 6 months to pay the amount. The Corporation shall be entitled to simple interest at the rate of 71% p. a. till the date of payment on the amounts of Rs. 94,917.14 and Rs -. 1,10,694.65p.
( 2 ) THE plaintiff, Life Insurance Corporation of India, on 28th May, 1971 brought a suit for the recovery of Rs. 3,56,291. 86 by sale of the mortagaged property against the borrowers on the foot of a mortgage dated 19th June, 1962. The plaintiff Corporation is the mortgagee. The defendants are the borrowers. The Corporation advanced a sum of Rs. 3,18,335. 67 to the borrowers. In terms of the mortgage deed the Corporation appointed a receiver of the mortgaged property to receive and recover rents, profits and income thereof under the provisions of the Transfer of Property Act, 1882. To begin with, the Zonal Managers were appointed receivers. Thereafter a committee of receivers was appointed by the court and then a sole receiver was appointed. After the death of the sole receiver some of the borrowers were appointed receivers to receive and recover rents, profits and income of the property.
( 3 ) THE real question for decision now is: What is the amount due to the Corporation on the foot of the mortgage ? The answer to this question will depend on another question. That question is whether the principle of damdupat as enacted in Section 30 of the Punjab Relief of Indebtedness Act, 1934 (the Act) as extended to Delhi applies to this suit. Counsel! for the Corporation says that Section 30 of the Acf has no application to the present suit. The Corporation claims interest @ 7-1/2% p. a. with half yearly rests as provided in the mortgage deed. The borrowers, on the other hand, contend that Section 30 of the Act forbids the court to pass a decree for a sum larger than twice the amount of the sum actually advanced less- any amount already received by the Corporation. Section 30 (2) of the Act says :
"in any suit in respect of a debt as defined insection 7, advanced after the commencement of this Act. no Court shall pass or execute a decree or give effect to an award in respect of such debt for a larger sum than twice the amount of the sum found by I he Court to have been actually advanced less any amount already received by a creditor. "
( 4 ) THIS section codifies the ancient doctrine of damdupat as known to Hindu Law. This Act was enacted with object of protecting borrowers whose needs or adversties compelled them to borrow money against the oppresive exaction of money lendera which often they were powerless to resist. The Act prohibits a court from passing a decree in respect of a debt for a larger sum than twice the amount of sum actually found by the court to have been advanced less any amount already received by the creditor. The Act is a shield of protection to the debtor. This- is the legislative policy behind the Act. The court has- to enforce the legislative policy.
( 5 ) THE Act is a social legislation. It is the product of social awareness that characterised the mid-thirties. It was enacted to achieve a social end. The social end was to give "relief of indebtendness", as the title suggests. One practical means adopted to achieve that end was to codify the ancient rule of damdupat. The Act strikes at transactions entered into by rapacious money lenders reserving an unconsicionable or exorbitant rate of interest.
( 6 ) BUT as the Act applies to private money lenders it applies to conglomerations of power. It applies to Life Insurance Corporafion with full rigour. True L. I. C. is an instrumentality of the State but nonetheless a mortgagee. It has advanced money to borrowers. These are debts. All debts are covered by the definition of the term in Section 7 (1) whether secured of unsecured, mature or not, simple or decretal. A mortgage debt is a debt. It is true some defined liabilities are excluded from that definition. It is also true that certain concentrations of power and wealthlike banks are excluded from the purview of Section 7 (1 ). Lest the shield of protection becomes a sword of offence. But L. I. C. is not excluded.
( 7 ) SECTION 30 refers to the defini
