JAMUNA PRASAD Vs. RAGHUNATH

JUDGEMENT

(1.) This is a reference under Section 113, Civil P.C., by the Judge, Small Cause Court, at Hathras. The facts are that a suit was instituted in his Court on 6 July 1940 by Jamna Prasad against Raghunath Prasad on the basis of a bond executed by the latter on 28 September 1938. The bond was in the sum of Rs. 60 and interest was at the rate of Re. 1-2-0 per cent. per mensem. The bond was payable on demand. When the matter came before the learned Judge he felt that Sections 29 and 39, U. P. Agriculturists Relief Act, were not reconcilable. He also thought that under the circumstances of the case interest did not accrue on the document at all. He further formulated another question of law for our decision. That question is as follows : Whether in view of the mandatory provisions of Section 39, Agriculturists Relief Act, it is necessary that in every document a specific date should be provided for the repayment of the loan and also the rate of interest which shall prevail, if repayment is made within that date, must be given in the document ?

(2.) This question is not very happily worded, but we appreciate the difficulty which the learned Judge felt, and we shall try to remove that difficulty in the course of our judgment. Section 29 of the Act provides as follows : If an unsecured loan taken after the date on which this Act comes into force is, if it is not a loan for a fixed term, repaid within two years of the date of the taking of the loan, or, if it is a loan for a fixed period, is repaid within such period, the debtor shall not be liable to pay interest at a rate higher than the prevailing rate of interest for a secured loan of the same class in force at the time the loan was taken.

(3.) The rules made under the U.P. Agriculturists Relief Act, 1934, and printed at the Government Press, give the form of a bond at page 11, and we think that creditors who advance loans to agriculturists might have the form of a bond before them at the time of the transaction and comply as nearly as possible with the form. The meaning of Section 29 of the Act is not that a bond on demand cannot be executed at all, but the meaning is that in the case of a bond on demand there must be a separate entry to the effect that if the sum advanced is paid within two years of the execution of the bond, then the debtor shall not be liable to pay interest at a rate higher than the prevailing rate of interest for a secured loan of the same class in force at the time the loan was taken. These rates are mentioned in Schedule 2, U.P. Agriculturists Relief Act. It is, therefore, necessary for the creditor to see that an entry is made to that effect -- an entry in which the lesser rate of interest is clearly specified if the payment is made within two years of the execution of the bond.