RAMCHANDRA Vs. RATANLAL

JUDGEMENT

(1.) THIS appeal arises out of a suit brought to enforce a mortgage executed in 1928 by Ramchandra on his own behalf and of his sons Krishna and Prabhakar who were then minors. The principal sum secured for mortgage was Rs. 30,000 with interest at Re. 1-8-0 per cent, per month compound. No payment had been made and the claim was made roughly (or a lakh and a quarter of rupees. The claim was decreed and the property was ordered to be sold although the amount found due on the mortgage was reduced to Rs. 62,145 with interest at 6 per cent, per annum. Krishna the elder son of Ramchandra died during the pendency of the appeal and the real appellants now consist of Ramchandra, his son Prabhakar, and Sudhakar and Vimlabai who are respectively the son and widow of the deceased Krishnarao. The respondents are the three sons of Karnidan who was the manager of the joint family when the mortgage was executed in their favour, Jatanlal who is the son of Ratanlal, and Mangalchand (who was a non-contesting defendant) who was a subsequent purchaser of two of the mortgaged fields. Three points arise for determination in this appeal. The first is whether the mortgage was enforceable in respect of the whole amount advanced, the second is whether, in view of the provisions of the Usurious Loans Act as amended in 1934, the amount due should not be still further reduced, and lastly whether the property covered by the mortgage was in fact susceptible of alienation at all in view of the claim that it was a grant made in perpetuity to the ancestors of the mortgagors. Although in the memorandum of appeal the debts of the father were attacked by the sons as awyawaharik that position was abandoned in argument, are the only point urged in this respect is that a cash payment of Rs. 1865 which was advanced at the time of the mortgage and which was said to be for expenses of cultivation is not proved to have been for legal necessity. Of this it is conceded that Rs. 400 of the cash payment which went to satisfy another secured creditor does not come within the ambit of the attack which is in fact limited to Rs. 1465. Consideration for the rest of the mortgage is made up of old mortgages for debts which are now admitted to be valid.

(2.) THE mortgage deed is Ex. P-22, and while reciting the fact that' there was a cash payment of Rs. 1865 it is not stated in the deed itself what this Rs. 1865 was paid for. The only evidence on the point is that of P. W. 7, Mangalchand, who was the agent of the firm owned by the mortgagees, and he deposed that Karnidan, who died in the year 1934, had made enquiries as to the necessity of a cash advance for the purposes of cultivation. He deposed that Rs. 3000 was asked for this purpose but that only Rs. 1865 was advanced in cash. He deposed that Karnidan made enquiries from other persons and that he was satisfied by the result of his enquiries. On this particular point the learned trial Judge found that 19/20 of the consideration of the mortgage consisted of antecedent debts and that a very small fraction, namely Rs. 1465, was paid in cash for cultivating expenses. Following the decision in Laxmanprasad v. Ramdas the learned Judge held that consequently the whole debt was binding on the defendants. It is contended before us that the learned Judge has misapprehended the law on the subject and has applied to a mortgage the principles which only exist in the case of an alienation of joint family property by sale. The principle is laid down by their Lordships of the Privy Council in Sri Krishan Das v. Nathu Ram , namely that a sale Of joint property should not be set aside because a fraction of the proceeds has not been proved to have been applied for purposes of necessity. Laxmanprasad v. Ramdas does not deal specifically with that principle but laid down that the question of due enquiry by the mortgagee only arose when the actual necessity for the loan was not otherwise established and that it was open to an alienee to prove either that there was necessity in fact or that he had made reasonable enquiries as to the existence of that necessity. Here there is evidence, and the best evidence that could be afforded in the circumstances, that the enquiry had been made. No cross-examination was directed against the witness's evidence on this point. The mortgagee was dead and the witness had been his munim for many years. The mortgagor himself was alive and did not give evidence to refute the testimony that an enquiry was in fact made. We cannot agree to the proposition that the learned Judge ignored this evidence and proceeded to determine the issue on a misapprehension of the case on which he relied for an authority. We accordingly hold that the mortgage was valid in respect of the total amount advanced.

(3.) THERE next arises the larger question whether the amendment of 1934 did apply and whether consequently the trial Court was bound to hold that the interest was excessive and to reduce the interest in view of Section 3, Sub-section 2(a) of the amended Act, which defines the term "excessive" which finds place in Sub-section (1), Clause (a) of the same section. In the case before us the mortgage was executed in 1928 and the suit was brought in 1935. The learned Judge held, following the decision of a Divisional Bench in Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112, that the amendment could not operate in this respect and that the transaction entered into before 1934 could not be} reopened. The appellants on the other hand rely on a subsequent decision by a single Judge in Sheoshankar v. Surajmal in which Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 was distinguished and it was held that the amendment only failed to operate in respect of suits brought before the amendment and not in respect of suits brought after the amendment in respect of loans incurred before it, and it is claimed that this decision was approved by a Divisional Bench in F.A. No. 90 of 1939, published in Kalusingh v. Chhittusingh (42) 1942 N.L.J. 455. We do not consider that the contention of the appellants can prevail. In the first place the decision in Kalusingh v. Chhittusingh (42) 1942 N.L.J. 455 does not contain a whole, hearted approval of Sheoshankar v. Surajmal as the head-note in the Nagpur Law Journal would seem to imply. All that was said was that while Gulabdas v. Bahirmal A.I.R. 1937 Nag. 101 is not specifically mentioned in the judgment in Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 it was correctly pointed out in Sheoshankar v. Surajmal that the view taken in Gulabdas v. Bahirmal A.I.R. 1937 Nag. 101 had in effect been overruled by Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112. In Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 the operative part of the judgment is on p. 100: Applying the principles expressed in the above oases, we are of the opinion that Section 2(a) of the amending Act 11 of 1934 is not retrospective in operation so as to enable the Court to exercise the wider power to re-open loan transactions made before 15th June 1934, at any rate when the amount due under such a loan has become the subject-matter of a litigation instituted before that date. and this follows the view expressed by their Lordships of the Privy Council in Doolubdass v. Ramloll (1851) 5 M.I.A. 109 where it is stated: Their Lordships are of opinion, that this Legislative Act (an Act striking at wagering transactions) is not to be construed as affecting existing contracts; at all events, not those contracts on which actions have already been commenced, for Statutes are prima facie deemed to be prospective only and there are no words in this Act sufficient to show the intention of the Legislature to affect existing rights. Puranik J. in Sheoshankar v. Surajmal placed reliance on the concluding part of the passage which we have quoted from Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 and came to the conclusion that as the learned Judges of the Divisional Bench were dealing with a case where the loan transaction and the suit itself were both anterior to the material date, 15th June 1934, the decision would not apply to a case where the suit had been brought after 15th June 1934 in respect of a loan before that date. The decision in Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 cannot, in our opinion from a reading of the judgment and the discussion of the principles (therein, be narrowed down to this interpretation. The general principle is stated, as indeed it is in Doolubdass v. Ramloll (1851) 5 M.I.A. 109 and after the general principle the application of it to the facts in hand is propounded. In Kalusingh v. Chhittusingh (42) 1942 N.L.J. 455, a decision to which one of us was a party, there is no such approval of the distinction made by Puranik J. in Sheoshankar v. Surajmal . On the contrary the interpretation placed upon Bhagwant Rao v. Damodhar A.I.R. 1938 Nag. 112 was that the amendment was not retrospective so as to enable the Courts to re-open loan transactions made before the date on which it came into operation and the question of the date of the suit was in no way treated as a proviso. It may be possible to reconcile the decision in Sheoshankar v. Surajmal with the decisions in the two Divisional Bench cases which we have cited on the ground that in the former case a suit was brought on a bond instead of on a mortgage, but in the view that we take it is unnecessary to discuss the point further. The result is that there can be no reduction in the amount found due.