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High Court Of Madhya Pradesh
A. H. Khan and Samvatsar, JJ.
BHANSARLAL PARAMSUKH - Appellant
Versus
NAVALKISHOR MUNGALAL - Respondents
First Appeal 13 Of 1953
Decided On : 09/12/1957
INTEREST - Madhya Bharat Interest Act (No. 17 of 1956), Section 3 - Retrospective application - Applicability to transactions entered into prior to the enactment of the Act - Interpretation of statutory provisions - Consideration of public good and public justice.
Fact of the Case:
Plaintiffs filed a suit to recover a sum of Rs. 8,000/- from the defendants, alleging that the defendants had borrowed various sums of money from them and had acknowledged the debt in writing. The defendants denied the claim and pleaded that the suit was barred by time and that they were agriculturists and were not liable to pay Rs. 8,000/- as it included compound interest which was not recoverable under the Gwalior Interest Act.
Finding of the Court:
The trial court decreed the plaintiffs' claim. On appeal, the court held that the Madhya Bharat Interest Act (No. 17 of 1956), Section 3, which prohibits the award of compound interest, applied to the transaction in suit even though it was entered into prior to the enactment of the Act. The court remanded the case to the trial court to determine the amount payable to the plaintiff in the light of Section 3 of the Interest Act.
Issues: 1. Whether the Madhya Bharat Interest Act (No. 17 of 1956), Section 3, can be applied retrospectively to transactions entered into prior to the enactment of the Act. 2. Whether the plaintiffs have included compound interest in the suit amount.
Ratio Decidendi: 1. The court held that the Madhya Bharat Interest Act (No. 17 of 1956), Section 3, can be applied retrospectively to transactions entered into prior to the enactment of the Act. The court considered the scope and purview of the statute and found that it was enacted to eradicate the evil of high rate of interest and to afford relief to those groaning under its heavy burden. The court also noted that there is ample authority for the view that consideration of public good affords justification for holding such a legislation to operate ex post facto. 2. The court held that the burden of proof of the fact that the sum claimed contains compound interest shall be on the defendants.
Final Decision: The court allowed the appeal in part and remanded the case to the trial court to determine the amount payable to the plaintiff in the light of Section 3 of the Interest Act.
( 1 ) THIS is defendants' first appeal and arises out of a suit brought by the plaintiffs-respondents in the Court of the Civil Judge, First Class, Guna, to recover from them a sum of Rs. 8,000/-, The plaintiff's case as laid out in the plaint is that the defendants who are members of a joint Hindu family and carry on business in the name of Mansukhdas Khemchand, had from time to time borrowed various sums of money from the plaintiffs; that an account of these dealings, was made on 285-1939 when a sum of Rs. 8,000/- was found due to the plaintiffs; that the defendant No. 1, who was then the manager of the business and Karta of the joint family admitted the correctness of the balance and affixed his signature to the debit entry in plaintiffs' Bahi. It is then alleged in the plaint that on 25-4-1942 the defendant No. 3 borrowed a further sum of Rs. 125/- and signed the debit entry in the plaintiff's Bahi acknowledging receipt of this loan that on 27-5-1945 defendant No. 3 approached the plaintiff and offered to clear the old account by payment of the principal sum; that an account was thereupon made between the parties when a sum of Rs. 8,000/- was found due; that the said defendant promised to pay this amount within a couple of days and signed the debit entry in plaintiffs' Bahi; that the defendant did not fulfil the promise. Besides this sum of Rs. 8,000/-, the plaintiffs claimed that they were entitled to Rs. 5,931/4/- for interest and the miscellaneous sum of Rs, 125/- borrowed by the defendant No. 3; but they relinquished their claim with respect to it and filed a suit to recover Rs. 8,000/- only.
( 2 ) THE defendants filed separate written statements in which they denied the plaintiffs' claim. They also denied having signed the entries in the plaintiff's book. In the additional pleas raised by them the defendants pleaded that the suit was barred by time; that the defendants were agriculturists and that they were not liable to pay Rs. 8,000/- as this sum included compound interest which was not recoverable under the Gwalior Interest Act dkuu lwn fj;klr Xokfy;j laor 1974
( 3 ) ON these pleadings the trial Court framed issues and recorded evidence which the parties tendered. In the end the Court decreed the plaintiff's claim. Aggrieved by this decree, the defendants have preferred this appeal.
( 4 ) MR. Harihar Niwas Dwivedi, learned counsel for the appellants, reiterated all the contentions which were, put forward by the defendants in trial Court. He further urged that in case these contentions did not prevail the plaintiffs should be called upon to produce their previous account book in order to enable the Court to determine whether they have charged compound interest which cannot be allowed in view of the provisions of Section 3 of the Madhya Bharat Interest Act, being Act no. 17 of 1956.
( 5 ) THE plaintiffs have, in support of their claim, produced from their account books entries alleged to have been signed by the defendants from time to time. These are exhibited in this case as Exs. P/l, P/2, and P/5. ( 6 ) EXHIBIT P/5, which is the first material document, is an extract from the Khata of the defendants for the year 1988-87. The document shows the previous balance to be Rs. 9,009-8-0. The defendants agreed to pay this balance by annual instalments within seven years ending Jeth Sudi 15 Samvat 1995. The entry is signed by the defendant No. 2 Chhuttilal.
( 7 ) THE next document is Ex. P/2 which ig a copy of the Khata of the defendants for the year 1595-96. A sum of Rs. 8,000/- is Shown as debit balance of Jeth Sudi 10, samvat 19s6 and the entry is signed by the defendant No. 1 Paramsukh. Prom the same Khata, plaintiffs have also produced another entry Ex. P/l. This entry is for rs. 8,000/- and is signed by the defendant No. 3 Bhauwarlal on 27-5-1945.
( 8 ) THE defendants have denied their signatures on Exs. P/l and P/2 but they are duly proved by the plaintiff's witness Munim Lakhmichand. He has stated on oa
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