The Usurious Loans Act, 1918, as amended in the Punjab, applies to all loans, whether made before or after the commencement of the Act, and also to securities given in respect of any loan after the commencement of the Act, whether the loan was made before or after the Act.

Kapur, J.

1. The only point for decision in this case is one of rate of interest and the applicability of the Usurious Loans Act, 1918 , as amended later, to the facts of the present case.

2. On 9-11-1915 Gian Singh mortgaged the property in dispute with possession in favour of Kanshi Ram for Rs. 600. On 19-12-1916 Gian Singh sold 2 kanals 12 marlas of land out of the land mortgaged to Mela Ram for Rs. 900. Mela Ram on 29-8-1945 filed the present suit against Thakar Das son of Kanshi Ram for redemption. One of the issues raised was as to the rate of interest which the defendant was competent to charge, and it was held that as the mortgage was previous to the Usurious Loans Act of 1918, the rate of interest chargeable was the stipulated rate of Rs. 1/8/- per cent. per mensem, and this decree was upheld by the first appellate Court. This was on 6-12-1947. The question of the rate of interest does not seem to have been argued in the Court of the District Judge although the question had been raised in the grounds of appeal. In the second appeal by the plaintiff the only question which has been canvassed for our opinion is one of interest to be awarded in view of the amended provisions of the Usurious Loans Act.

3. The first contention raised by the defendant-respondent is that the question of the applicability of the Usurious Loans Act was not raised in the first appellate Court and cannot be raised now. The answer to that is a very simple one, and that is that under Section 3 (1) of the Act as amended in the Punjab for the word may the word shall has been substituted and therefore it is incumbent upon the Court to exercise the powers given under the Act.

4. It is then submitted by Mr. Wadhera for the respondent that this Act can have no application because it applies to securities given after the commencement of this Act, which was in 1918, the mortgage being of 1915. It is necessary to examine the scheme of the Act. Loan is defined in Section 2(2) to mean :

" Loan means a loan whether of money or in kind and includes any transaction which is, in the opinion of the Court, in substance a loan."

5. In Section 2(3) it is provided :

" Suit to which this Act applies means any suit -- (a) * * *

(b) * * *

(c) for the redemption of any security given after the commencement of this Act in respect of any loan made either before or after the commencement of this Act."

6. Section 3(2) (a) has been amended in the Punjab by Act 7 of 1934 as amended by Act 12 of 1940, and therefore in regard to mortgages the amount of interest shall be excessive if it exceeds 7 1/2 per cent. per annum. The question is whether this amended section is to be applied to a case of redemption. Mr. Gosain submits that under Clause (c) of Section 2(3) the Act applies to all loans whether made before or after the commencement of this Act and also to such securities which have been given in respect of any loan after the commencement of this Act, whether the loan was made before or after the Act, and that the word loan includes a mortgage loan, because the definition of the word as given in the Act would cover it, and he further submits that if this interpretation is not given, i.e., if the Act is not applicable to redemption suits in regard to securities given before the Act, then there will be inconsistency between the wording of that section and Sub-section (3) of Section 3 which is as follows :

"3(3)This section shall apply to any suit, whatever its form may be, if such suit is substantially one for the recovery of a loan or for the enforcement of any agreement or security in respect of a loan or for the redemption of any such security."

7. Thereis a great deal of force in this submission. The words used in Sub-section (3) of Section 3 are that the section applies to any suit if such suit is substantially ** * for the redemption of any such security. If these words are to be interpreted in their literal sense then this Act must apply to the present suit also.