BIRBHADRA CHANDRA Vs. SURENDRA PRASAD LAHIRI

JUDGEMENT

(1.) This appeal which is by the debtor, arises out of an application made by him under Section 38, Bengal Money-Lenders Act (10 of 1940). The facts, which are not in controversy, are the following. On 27 October 1897, the appellant's grandmother Bama Sundari Debi, as executrix to the estate of the appellant's father borrowed from the respondent's predecessor- in-interest Swarnamoyee Debi Rs. 5000 on a simple money bond (Ex. A-3) with a stipulation to pay simple interest at the rate of Rs. 7-8-0 per annum. On 1 October 1904 the appellant executed a renewed bond (Ex. A-2) for Rs. 7000 in favour of the said Swarnamoyee Debi at the same rate of interest. The said sum of Rs. 7000 was made up of Rs. 5000 the original loan and of Rs. 2000 which represented the arrears of interest on the same due at the date of the renewed bond. On 25 September 1911 the appellant executed the bond Ex. A, in favour of the creditor, Swarnamoyee, for Rs. 14,000. The said sum was made up of Rs. 10,264-12-9, which represented the principal and arrears of interest due on the previously renewed bond Ex. A-2, and a sum of Rs. 3735-3-3 advanced in cash on that date. Simple interest at the rate of Rs. 7-8-0 was also payable on this bond. Interest payable in terms of this bond up to 25th June 1919 amounting to Rs. 8137-8-0 was paid on or before that date. On that date the sum of Rs. 14,000 which was treated as the principal in the bond Ex. A was only due. For securing the said sum of Rs. 14,000 the appellant executed the mortgage bond (Ex. A) in favour of the creditor Swarnamoyee on 25 June 1919. The document (Ex. A) recited that Rs. 14,000 was payable by the debtor on that date after adjustment. That amount was treated as principal payable with interest at 6 per cent, per annum (compound) with yearly rests. The appellant has applied under Section 38 of the Act to the Court for taking account in respect of the loan secured by this mortgage.

(2.) From the aforesaid facts it is clear that the sum actually advanced by way of loan was Rs. 8735-3-3 (namely, Rs. 5000 advanced on 27 October 1897, and Rs. 3735-3-3 advanced on 25 September 1911). It is admitted that all these years from 1897 till the application the total amount paid by the borrower is Rs. 27,000 odd. As that amount is more than double the actual advance the appellant wanted the Court to declare that nothing was payable on the mortgage bond (Ex. A) which he had executed on 25 June 1919 to secure the sum of Rs. 14,000. The learned Subordinate Judge did not accept the appellant's contention. He held that the amount mentioned in the mortgage bond as principal, namely Rs. 14,000 has to be taken as principal for the purpose of taking accounts under Section 38 of the Act. Proceeding on that footing he found that Rs. 8686-0-5 was still due to the creditor on that bond at the date of the application. He relied upon proviso (i) to Section 36(1) of the Act, to support his conclusion that Rs. 14,000 is to be treated as the principal of the loan. In taking accounts he started from the mortgage bond Ex. A, took into account all payments made since the date of that mortgage bond but refused to take into account payments made before the said date. Calculating interest in terms of Section 30 of the Act, from the date of the said mortgage bond-Ex. A-and taking into account payments made since that date he came to the finding that Rs. 8407-3-11 was due on account of principal and Rs. 278-12-6 as interest--total Rs. 8686-0-5. Against his Order the debtor has filed this appeal and on his behalf two points have been urged:

(3.) (i) that the learned Judge ought to have taken Rupees 8735-3-3 as the principal of the loan, that being the sum which was actually advanced by the creditor, and (ii) in case Rs. 14,000 be taken to be the principal of the loan the lender was not entitled to recover interest on that amount from the date of the mortgage bond. If the first contention be not accepted but the second is, nothing would be due to the creditor at the date of the application, as the sum of Rs. 18,114-12-4 had been paid by the debtor to the creditor between the date of the mortgage bond (25 June 1919), and the date of the application. Section 2(16), Bengal Money-lenders Act (10 of 1940), defines the term principal of a loan. Unless there is anything repugnant in the subject or context it means the amount actually advanced to the borrower. Where however an agreement cannot be reopened by reason of proviso (i) to Section 36(1) of the Act, the amount treated as principal of the loan by the parties in that agreement must be taken to be the principal of the loan. This is the effect of our judgment in Nripendra Chandra V/s. Md. Abbas Ali . No convincing argument has been advanced by the appellant's advocate which would induce us to revise the opinion which we have expressed in that case. The question therefore is whether that proviso is attracted in a proceeding under Section 38 of the Act. It is, therefore, necessary to examine the scope of that section.