JISUK RAM Vs. MSUBBA RAO

JUDGEMENT

(1.) This is a second appeal by the defendants, which arises out of a suit brought by the plaintiff-respondent on the basis of a hand-note dated 3l July, 1930. The question raised in the appeal is whether certain provisions of the Orissa Money- lenders Act apply in the case of loans based on promissory notes. The Court of first instance had applied certain provisions of the Orissa Money lenders Act, and had reduced the principal and interest. The lower appellate Court has re. versed that decision of the Court of first instance, and has held that the Orissa Money, lenders Act does not apply to loans based on promissory notes. Hence the present second appeal by the defendants. The question raised is, in my opinion, concluded by the latest decision of the Federal Court in Bank of Commerce, Khulna V/s. Kunja Behari where their Lordships have reviewed the earlier decisions of the Federal Court as also of other High Courts on the subject, and have observed as follows: It was contended on behalf of the appellant, that the Bengal Money- lenders Act interferes not merely incidentally but substantially with at least two of the matters enumerated in List I of Schedule 7, Constitution Act. By making Secs.30, 36 and 38 applicable to claims under promissory notes, it was said that the Act was an invasion of Entry 28..... In the view we take of the complaint of encroachment of Entry 28, it is not necessary for the decision of these appeals to deal with the argument advanced with reference to Entry 38. It was contended that the rules enacted in Secs.32, 79 and 80, Negotiable Instruments Act, were among the essentials of the law relating to promissory notes and that the provisions of Secs.30, 86 and 38 of the impugned Act affect them so substantially that it would be impossible to regard them as merely amounting to an incidental enoroachment on the law relating to promissory notes. This contention is in our judgment well-founded.

(2.) Their Lordships have further considered the distinction, which had been drawn in some previous cases, between the aspect of negotiability of promissory notes and the aspect of contractual relationship between the parties arising out of such promissory notes. Dealing with that distinction their Lordships have observed as follows: He (the Advocate-General of Bengal) further con-tended that the rights as between the promisor and the promisee, including the right to interest, were only matters pertaining to the Law of Contracts and should not be held to be comprised in Entry 28 of List I. We are unable to accede to this argument. The entry expressly refers to cheques, bills of exohange and promissory notes and then adds and other like instruments. Whatever may be the result of construing these added words in the light of the ejusdem generis rule, we see no warrant for limiting the three specified categories of documents to instruments which are negotiable. Non-negotiable promissory notes are known to the law and are recognised by the Negotiable Instruments Act. Some of the provisions of the Negotiable Instruments Act specifically refer to negotiable instrument but other seotions refer to promissory note, bill of exchange or cheque and there is no justification for limiting these latter provisions to only such documents as are negotiable. Even if it were possible to limit entry 28 to negotiable instruments there is no justification for importing the further limitation that this entry relates to only so-much of the law as bears on the negotiability of such instruments and its consequences.

(3.) It is no doubt true that their Lordships were considering some of the provisions of the Bengal Money-lenders Act. The provisions of the Orissa Money- lenders Act are, however, similar to the said pro visions, of the Bengal Money- lenders Act, and the principles laid down by their Lordships would apply to similar provisions of the Orissa Money-lenders" Act. In view of that decision, the relevant provisions of the Orissa Money-lenders Act, on which the appellants rely for a reduction of principal and interest, cannot affect claims based on promissory notes.