BHRIGUNANDAN PRASAD Vs. OFFICER

JUDGEMENT

(1.) The only question raised in this appeal by special leave from the judgment of the Punjab High Court is the interpretation of S. 9 (1) of the Evacuee Interest (Separation) Act, No. LXIV of 1951 (hereinafter referred to as the Act). The question arises in this way. The appellants were mortgagees of certain properties, including a house, on the basis of a mortgage-bond dated July 19, 1928. The consideration of the bond was Rs. 25,000 and interest was provided at nine per cent per annum compoundable annually. Out of the properties covered by the bond, one of the properties was sold to Bibi Chand Tara on October 23, 1937 subject to the earlier mortgage of 1928. In October 1949, Bibi Chand Tara was declared an evacuee.

(2.) In 1939 the appellant filed a suit against the original mortgagors and others including Bibi Chand Tara for the amount due under the mortgage. A preliminary decree was passed in their favour in March 1942 and the final decree followed in April 1945. It appears that certain sums were received by the appellants before they had filed the suit. Certain other sums were also received after the preliminary and final decrees. It further appears that certain Zamindari Properties which were also included in the mortgage had been sold after the final decree and the money appropriated towards the decree. Another house which was also included in the mortgage bond was sold later and the sale money was again appropriated towards the decree. Eventually the appellants put the decree in execution in November 1952 against the house in dispute for a sum of Rs. 60,000 and odd. There was a sale in that execution proceeding, but it was set aside on the application of the Assistant Custodian, Patna. Thereafter the appellants made an application before the Assistant Custodian for the recovery of the mortgage money claimed by them and in this application their claim was for Rs. 40,000 and odd. This application was also dismissed as it was filed before a wrong authority. Eventually the appellants filed a claim for the same amount before the Competent Officer under the Act, inasmuch as the property in dispute was composite property in which the evacuee had mortgagor's interest while the appellants who are non-evacuees had mortgagees' interest which had ripened into a decree for sale. This application was resisted by the Custodian on a number of grounds. In the present appeal we are only concerned with one ground based on S. 9 (1) of the Act. The contention of the Custodian was that the appellants were not entitled to any interest higher than five per cent per annum simple from the date of the mortgage under S. 9 (1) of the Act. Therefore the Custodian claimed that the entire transaction should be reopened from the date of the mortgage and the amounts already received by the appellants should be taken into account after allowing interest at five per cent per annum simple to them and if more interest had been paid that should be credited towards the principal and after such accounting the sum if any due on the mortgage could be claimed by the appellants

(3.) The Competent Officer held that though the provisions of S. 9 (1) were retrospective to a certain extent they could not be stretched to mean that if a mortgagee had already realised interest at a rate exceeding five per centum per annum simple even before the Act came into force the excess would go the liquidate the principal amount proportionately. He therefore held that in the absence of special provision to the effect that past accounts should be reopened, the amount received as interest prior to the decree could not be taken into account. The Competent Officer further held that the principal money could not be reduced on account of any excess realisation of interest when such excess was realised before the Act came into force. He, therefore, ordered that (1) the amount of interest exceeding five per cent, per annum before the institution of the suit would not reduce the principal amount, (2) the appellants would be entitled to simple interest at six per cent per annum, i.e., the rate at which interest was decreed in their favour in the mortgage suit from the date of the institution of the suit till November 26, 1952 on the principal sum only, (3) the appellants would be entitled to interest at five per cent per annum simple from November 27, 1952, and (4) the appellants would also be entitled to costs of the suit decreed in their favour. The actual amount due was ordered to be worked out on these principles.