MAGANBHAI HARIBHAI PATEL Vs. MANGALDAS HARGOVINDAS SHAH

JUDGEMENT

(1.) THIS revisional application raises a very interesting question regarding the interpretation of Section 22 of the Bombay Agricultural DebtorsRelief Act, 1947, and it arises under the following circumstances. The petitioner is a debtor under the Bombay Agricultural Debtors Relief Act and the opponent is the creditor. The creditor had made an application for adjustment of the debts of the debtor. It appears that the first transaction between the parties had taken place sometime about the year 1938, and from June 1938 to December 31, 1939, the total advances made to the debtor amounted to a sum of Rs. 65. Substantial transactions, involving thousands of rupees, have taken place between the parties after January 1, 1940. The trial Court held that since the first transaction between the parties commenced before January 1, 1940, i.e., in 1938, Section 22(3) of the Bombay Agricultural Debtors Relief Act applied and, therefore, a 30 per cent, cut must be applied to the amount due in respect of the entire dealings between the parties. The creditor appealed to the District Court and the District Court held that the 30 per cent. cut would apply only to those transactions which took place before January 1, 1940, while, so far as the transactions after January 1, 1940, were concerned, only the interest could be reduced. The question which now falls to be considered is, which of the views is the correct one. It is the debtor who has come to this Court in revision.

(2.) MR . Patel has argued on behalf of the petitioner that a plain reading of Section 22 leaves no room for doubt that the decision of the trial Court is correct. Now, Section 22, so far as relevant, says: Notwithstanding any agreement between the parties or the persons (if any) through whom they claim, as to allowing compound interest or setting off the profits of mortgaged property without an account in lieu of interest, or otherwise determining the manner of taking the account, and notwithstanding any statement or settlement of account, or any contract purporting to close previous dealings and create a new obligation, the Court shall inquire into the history and merits of the case and take account between the parties from the commencement of the transactions subsisting between the parties and the persons (if any) through whom they claim, out of which the claim has arisen and determine the amount due to each of the creditors at the date of the application made under Section 4, according to the following rules... Then follow the rules. Rule 1 provides: (a) Separate accounts of principal and interest shall be taken; (b) In the account of principal there shall be debited to the debtor only such money as may from time to time have been actually received by him or on his account from the creditor, and the price of goods, if any, sold to him by the creditor; (c) In the accounts of principal and interest there shall also be debited the amounts, if any, respectively due for principal (including costs) and interest under any decree or order passed by a competent Court in respect of anydebt. Then there is a proviso with regard to apportionment towards principal and interest of the amount due under the decree where no specific mention is made about each of the items.We are not here concerned with that proviso. Then come Rules 2 and 3 on which great reliance is placed. Rule 2 provides as follows: In the case of transactions which commenced before the 1st January 1931 the Court shall take the account up to the date of the institution of the application and in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 12 per cent, per annum, whichever is the lowest. The amount found due in respect of principal as well as in respect of interest shall, each separately, be reduced by 40 per cent, notwithstanding that a decree or order of a civil Court was passed in respect of any such amount or portion thereof. The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of theapplication. To the similar effect is Rule 3 which provides as follows: - In the case of transactions which commenced on or after the 1st January 1931 but before the 1st January 1940 in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 9 per cent, per annum, whichever is the lowest. The amount found due on the date of the institution of the application in respect of principal as well as interest shall each separately be reduced by 30 per cent, notwithstanding that a decree or order of a civil Court was passed in respect of any such amount or portion thereof. The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of theapplication. Rule 4 says: In the case of transactions which commenced on or after the 1st January 1940 in the account of interest there shall be debited to the debtor simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at rate not exceeding 6 per cent, per annum, whichever is the lowest.

(3.) IT seems that while giving relief to debtors a somewhat arbitrary rule, which could not be avoided, has been adopted. It would appear that the Legislature had in view the fact that a creditor who has had a transaction for a long time would have been sufficiently paid and if a certain reduction is made in the amount due to him, he would not suffer any injustice. With that view possibly the Legislature enacted that in respect of transactions which commenced before January 1, 1931, a reduction of 40 per cent. must be applied and in the case of those transactions which commenced on or after January 1, 1931, but before January 1, 1940, a reduction of 30 per cent. must be applied, and in respect of recent transactions, which commenced after January 1, 1940, because not much advantage would have been gained by the creditor, only the rate of interest be reduced.