DHARAM SINGH Vs. BISHAN SARUP

JUDGEMENT

(1.) In this case there had been previous dealings between the parties, and there were in existence two hypothecation bonds of 1926 and 1927, part of the amounts due on which were paid off. On 13 and 14 August 1933 the present applicant Dharam Singh executed a fresh mortgage deed in lieu of the amounts due under the previous bonds in favour of the defendant Bishan Sarup, admitting that Rs. 4,300 in all were due from him, and mortgaging with possession the same properties which had been previously hypothecated. It has been admitted that no fresh advance was made by the mortgagee and no additional cash was paid. Under the terms of the usufructuary mortgage deed the mortgagee was entitled to appropriate income in lieu of the interest due to him, and accordingly no rate of interest was prescribed under the usufructuary mortgage deed. The present applicant filed a suit in the Court of the Munsif of Ghaziabad under Section 33(2), Agriculturists Relief Act, for an account of money payable by him and for granting him a declaration to that effect. The trial Court applied the provisions of Section 33 (2) and reduced the interest under the Usurious Loans Act of 1918, which is not in dispute before us, and also reduced the interest further under Section 30 of the Act from 1 January 1930 till the date of the mortgage deed. On appeal, the lower Appellate Court, while upholding the reduction of interest under the Usurious Loans Act, has held that the debtor in not entitled to a further reduction under Ch. 4, Section 30. The lower Appellate Court has held: In my opinion there is no such sanction or justification. Schedule 3 provides for a loan taken before thin Act . This in my opinion must be the bond of 1933. The schedule rates will not govern the interest rates of the prior transactions.

(2.) When the applicant sued under Section 33(1) of the Act, he was certainly entitled to ask for an account of money lent or advanced to him by the defendant or due by him to the defendant, as well as of money paid by him to the defendant. When the suit is filed under Sub-section (1), then the provisions of Sub-section (2) apply and the Court is bound to follow the provisions of Ch. 4 of the Act and the provisions of the Usurious Loans Act of 1918. The provisions of Ch. 4 which were applicable to this case are contained in Section 30 of the Act. Under that section notwithstanding anything in any contract to the contrary, no debtor shall be liable to pay interest on a loan taken before this Act comes into force at a rate higher than that specified in Schedule 3 for the period from 1 January 1930, till a further date notified.

(3.) The contention urged on behalf of the respondent is that when the mortgage deed was renewed and a usufructuary mortgage deed was executed, then although there was no fresh advance of money, it was a now transaction of loan and the previous transaction must be deemed to have been completely wiped out, with the result that no reduction can be ordered prior to August 1933. It is urged that the renewal of the mortgage deed was itself a new lean or an advance in kind and would, if there had been a rate of interest specified, be treated as the starting point for the interest. Now, both the words "loan" and "interest" which occur in Rule 30(1) are defined in Section 2, and we must therefore understand from those words in the sub-section the meanings which have been given to them by their definitions. Loan means an advance to an agriculturist whether of money or in kind, and shall include any transaction which is in substance a loan; while "interest" includes the return to be made over and above what was actually lent, whether the same is charged or sought to be recovered specifically by way of interest or in the form of service or otherwise. Having regard to these definitions, there cannot be the least possible doubt that the amount actually advanced, that is to say the principal amount, is what is defined as loan and anything paid over and above that is interest , no matter what form or shape it may take. This point was considered at some length by a Full Bench of this Court in Raghubir Singh v. Mulchand where the view expressed in an Oudh case was dissented from.