JADUNANDAN PRASAD PANDEY Vs. MAHESWAR NARAIN SINGH

JUDGEMENT

(1.) This is an appeal by the defendant in a mortgage suit. The only point raised is that the liability on account of interest should be reduced. For this two grounds are advanced; first, that the plain, tiff having proved the necessity for the loan should have placed on him the burden of proving the rate of interest which it was necessary for the defendants to agree to pay in order to obtain the loan and the transaction being on behalf of a joint family, the plaintiff should have got interest at no higher rate than he actually proved it to be necessary for his borrower to promise to pay. The second point was that the transaction should have been re- opened under Section 8, Money-lenders Act of 1939 and the defendants relieved from the liability to pay interest more than 9 per cent, simple or such rate as the Court considered fair.

(2.) As to the first point, the bond rate was Re. 1-9-0 per month and the Munsif went into the question whether it was necessary to borrow at such a high rate. His opinion was that it was not necessary, but that it was fair that the defendants should pay interest at 1 per cent, simple. He, therefore, awarded interest at 1 per cent, on the amount of the mortgage bond of 7 April 1922, which was for RS. 651. I do not think that the defendants can get any further relief under this head, but it is to be seen whether they can get it under the provisions of the Money- lenders Act. The District Judge was asked to extend to them this relief, but he refused to do so because as he said: If I re-open the transaction I must go back to 1916 and the plaintiffs will be entitled under Section 7 of the Act, only to Rs. 200 principal and Rs. 200 interest. As the loan has been outstanding for 24 years this appears inequitable.

(3.) The District Judge has not fully understood the effect of Section 7 of the Act, and the damdupat rule. Section 7 is to be read with reference to the definition of loan in Section 2(f), Bihar Money-lenders Act 1988. Loan includes a transaction on a bond bearing interest executed in respect of past liability. Now, Section 7 of the 1939 Act, says that in a suit brought by a money-lender in respect of a loan advanced before or after the commencement of this Act, no Court shall pass a decree for an amount of interest for the period preceding the institution of the suit which is greater than the amount of loan advanced or, if the loan is based on a document, the amount of loan mentioned in, or evidenced by such document. In the present 5 case, the effect of Section 7 is that the loans being on the document of 1929, the money-lender cannot get a decree for more interest than the amount of Rs. 651 mentioned in the document. This Section 7 was examined in Madho Prasad Singh V/s. Mukutdhari Singh ( 41) 28 A.I.R. 1941 Pat. 378 and it was explained that the bond executed for past liability constitutes a loan within the meaning of Section 7. So much for Section 7: it is quite clear that the provisions of this section would, in no way impose, on the District Judge any obligation, if here- opened the transaction under Section 8, to limit the amount of the decree which could be passed to Rs. 400. A similar view was taken in Singheahwar Singh v. Medn Prasad Singh ( 40) 27 A.I.R. 1940 Pat. 65. Section 7 in the circumstances of this case limited the amount of decree to Rs. 1302. It was, therefore, under a misconception of the legal position that the District Judge thought that the transaction ought not to be re-opened under Section 8, Moneylenders Act. I am entitled to re-consider the propriety of that decision.