MANIGLAL Vs. ABDUL HAMID

JUDGEMENT

(1.) THIS is an appeal by the creditor plaintiff from the judgment and decree of the first appellate Court in which it has gone behind the pro -note written in settlement of old acc -aunts and on which the suit was based, on the principle that the creditor who is a moneylender is not entitled to recover from the debtor who is an agriculturist, any interest because he did not periodically send him accounts, that Court has actually deducted the element of interest on examination of older accounts it was able to find in the consideration of the new pro -note and has decreed only what it finds to be the unpaid arrears of the original principal. The appellant contends that, whatever the propriety of disallowing interest on the amount of the pro -note for the period after its execution, the first appellate Court was wrong in going behind the pro -note itself and still assuming that part of the consideration was interest when the borrower himself had treated it as part of the new loan.

(2.) THE respondent, on the contrary has argued that the non -entitlement to interest is a penalty provided by Statute which the first appellate Court has found appropriate in this case. For the purpose of knowing how much had been included in the consideration by way of interest, the Court was competent to go behind the pro -note and reopen the accounts and then disallow what had gone there as interest, and this in addition to the disallowing of interest for the period after the execution of the pro -note.

(3.) AT this stage the facts found can be treated as non -controversial, The transactions between the plaintiff who is the appellant here and the defendant respondent started on 5 -10 -1951 with a loan taken by the letter from the former of 3800 and an additional sum of 50 taken sometime later. On 21 -7 -1954 it was found that the amount payable was 3850 plus interest which was 955. A sum of 2925 had been paid, the largest single payment of 2700 being made on 21 -7 -1954. The result was that the parties found that on that day a total of 1880 was outstanding, 925 the balance of unpaid principal plus 955 interest on 3850 during this period. It is worth nothing even here that the transactions upto this stage had not contravened any law regarding interest nor involved such terms as would call for interference by the Courts under Section 3 of the Usurious Loans Act. The three -year period was nearly ending and the borrower executed a new pro -note in favour of the creditor on that date for 1880 and interest for the future at the rate of 8 annas per cent per month. Nothing being paid either for interest or towards the principal till November 1955, the present suit was brought for 1880 principal plus 145/12 interest, a total of 2025/12. The borrower urged that he was an agriculturist and the plaintiff creditor was a moneylender for the purposes of the Madhya Bharat Moneylenders Act, the provisions of which in this regard are substantially the same as those in the Madhya Pradesh Moneylenders Act which has subsequently been brought into force in this area also. Under either enactment a moneylender who fails to send annual statement of account to the borrower is subject to the disability that he would not get from the Court anything by way of interest. Certainly when it is a promissory note, the periodical statement of account is an extremely simple formality; but the provision of law being such and the Courts having found that the appellant had not complied with that provision he was not entitled to interest. The trial Court disallowed interest for the future and decreed the suit itself for 1954 -11. On appeal by the defendant the first appellate Court took the view that the disentitlement to interest would go even behind the pre -note and operate on all interest claims from the date of the original loan in 1951, Whatever had been paid since would be applied to the principal whether or not the borrower himself had so directed. On that basis the appellate Court reopened the whole matter and on the figures already mentioned reduced the decretal amount to 925/ - plus costs, which comes to 1002/ - Now it is the turn of the plaintiff creditor to come to this Court. His grievance is not in regard to the interest on the amount mentioned in the pro -note for the period after 21 -7 -1954; it is that the disability could not be applied to a period before the execution of the pro -note itself. There was an order for instalments, with which we are not concerned immediately.