SHEWKISSEN MOHATA Vs. MANGALCHAND MALOO

JUDGEMENT

(1.) This appeal is in a suit Instituted by the mortgagee, Mangal Chand Maloo to enforce the four mortgages dated 10 August 1932, mentioned in our judgment delivered in First Appeal No. 96 of 1937. The persons against whom the mortgages are sought to be enforced are Premsukh, Pannalal and their sons and the grandson of Premsukh. Two other persons, Sukhdeo Das Baithi and Hanumandas Baithi were impleaded as defendants as puisne mortgagees. They disclaimed all interest in the mortgaged premises in the lower Court and so have been dismissed from the suit. The learned subordinate Judge has passed a preliminary decree on 16 March 1937. From this decree the sons of Premsukh, except his eldest son Shewratan, that is those of his sons who were minors at the time of the execution of the aforesaid four mortgages, the minor son of Pannalal and the minor grandson of Premsukh, being the son of Shewratan have preferred this appeal. The points pressed by the appellants are: (i) that the mortgages cannot bind their interest in the mortgaged properties as the mortgages were given by their direct ancestors Premsukh and Pannalal to secure debts, very substantial portions whereof were immoral debts, i. e., gambling debts; (ii) that a good portion of the debt was incurred in conducting new businesses started by Premsukh and Pannalal, one of them being in co-partnership with strangers including, namely Mangal Chand Maloo himself; (iii) some portions of the mortgage money (Rs. 17,579) represented debts of strangers taken over by Premsukh and Pannalal; (iv) that the Bengal Money-lenders Act, 1940, applies and so: (a) compound interest is not allowable, (b) simple interest at 8 per cent. per annum can only be allowed up to preliminary decree, (c) simple interest at 6 per cent. per annum on the principal sum can only be allowed after the preliminary decree and (d) payment by instalments must be provided for in the preliminary decree; (v) that in any event compound interest cannot: be allowed on the terms of the mortgages. Point 4 could not be urged in the lower Court as the Bengal Money-lenders Act, 1940, was only passed in the year 1940 and came into force in September of this year : Point 5 is not noticed in the judgment of the lower Court, but the other three points are dealt with by the learned subordinate Judge who overruled point 1 and though he seemed to have assumed that Rs. 39,994 odd had been incurred as loss in a new business started by Premsukh and Pannalal in co-partnership with strangers and that Rs. 17,597 odd represented a debt due by strangers to Maloo, the liability for payment of which had been taken over by Premsukh and Pannalal, he still held the appellants liable for the said sums of money and the mortgages bound their interest in the properties which were the ancestral properties of Premsukh and Pannalal, to the full extent of the consideration recited therein. The first question is whether any portion of the consideration mentioned in the mortgages represented gambling debts of Premsukh and Pannalal. It is established on the evidence the past modus operandi of the family business carried on through Premsukh and Pannalal in the name and style of Mangal Chand Chunilal and Dugasidas Mangal Chand was to buy jute at different jute marts at Khulna, Daulatpur and Sachiadaha, to store them in their godowns and sell them through commission agents or aratdars at Calcutta. Messrs. Mangal Chand Deep Chand ,of which the respondent Mangal Chand Maloo is the sole proprietor, was one of such commission agents. In Sambat 1989 (1931-32) Premsukh and Pannalal began to enter into forward contracts through Mangal Chand Deep Chand as their agents and brokers. There was great loss on those forward contracts.

(2.) The position appearing from the account books of Mangal Chand Deep Chand is as follows : In the year ending 1988 Sambati (15 April 1931) there was a credit balance of Rs. 25,924-15-6 in favour of Mangal Chand Chunilal (Ex. 13 (f); A, II, 23).. The account of the year 1989 Sambat ending with 15 April 1932 shows that the whole of the credit balance of Sambat 1988 had been wiped away and Mangal Chand Chunilal became indebted to Mangal Chand Deep Chand to the extent of Rs. 2,38,176-4-9 (ex. 12A, II, 25). The details of the loss are given in the Rojenamcha (Daily Account Book of Mangal Chand Deep Chand). Only portions of the Rojenamcha of 1989 Sambat have been printed and remaining relevant portions have been supplied to us in type. The Rojenamcha shows that Mangal Chand Deep Chand used to pay moneys payable on the forward contracts on behalf of Mangal Chand Chunilal. The defendants did not produce account books of Mangal Chand Chunilal in respect of the dealings with Mangal Chand Deep Chand though they were called upon to produce them. The plaintiff has produced some photographic copies of the account books of Mangal Chand Chunilal which he had obtained in circumstances not necessary to be detailed and those photographic copies tally with the corresponding entries in the account books of Mangal Chand Deep Chand. The account books of Mangal Chand Deep Chand must accordingly be accepted as correct. The case of the defendants is that some of those forward contracts were phatka or gambling transactions and the amount of loss debited against Mangal Chand Chunilal on account of the differences paid by Mangal Chand Deep Chand on behalf of Mangal Chand Chunilal cannot be recovered from the family properties or charged on the share of the junior coparceners who were minors at the date of the mortgages. Premsukh has not been examined as a witness on an excuse which does appear to us to be convincing. Pannalal has deposed. Ha says that only eight out of the many forward contracts represented phatka or gambling transactions. Those contracts, and the result thereof are as follows: .[We have marked the paper book of F.A. 224 of 1937 as A and that of F.A. 96 of 1937 as B and the book of photographs as C.].

(3.) The total loss of Mangal Chand Chunilal on those eight contracts was Rs. 99,876-2-9. The details of the loss which are given in col. 4 are taken from the Rojenamcha of Mangal Chand Deep Chand which has not been printed but of which typed copies were supplied to us. On the documentary evidence, we cannot hold that any of those eight forward contracts represented phatka transactions. Some of those contracts have been set out in a tabular form at Book All- 246 and one contract No. 4229 has been printed in extenso (Ex. 18 (e) All 252) and with that we propose to deal in detail. This was a contract dated 4 November 1931 by which Mangal Chand Deep Chand agreed to buy from the well known merchants, Messrs. Ralli Brothers Limited 20,000 maunds of jute of two qualities; shipment 15 January and/or February 1932; the mills to which jute was to be delivered were to be notified by 3 week of January 1932. This contract was entered into by Mangal Chand Deep Chand not as principals but as agents of three principals, one of them being Mangal, Chand Chunilal for whom 12,500 maunds was contracted for. This is proved by the endorsement on the back of the contract, where Premsukh himself puts down 12,500 maunds to Mangal Chand Chunilal. Extensions of time for performance of the contract were taken from Ralli Brothers from time to time and finally the time for delivery was fixed in May-June 1932. The fact that extensions were taken is inconsistent with phatka or gambling in differences only. The goods were sold by Mangal Chand Deep Chand on behalf of Mangal Chand Chunilal to a jute mill, e. g., India Jute Mills, and the goods were actually delivered to that mill. Exhibit 35, Bill No. 342 (a 11-270), is a bill by Ralli Brothers to Mangal Chand Deep Chand for 2800 maunds out of the quantity of contract Ho. 4229 dated 4 November 1931 actually sent to the India mills. It was for Rupees 18,275-8-6 being the price thereof less railway freight. The goods were sent insured through Atlas & Co. by railway. This sum was paid to Messrs. Ralli Brothers by Mangal Chand Deep Chand (Ex. 12 (b), at A II-30).