SADASIVA BABU Vs. KASINATH TRUST FUNDS

JUDGEMENT

(1.) This is a defendants second appeal from the judgment of the District Judge of Cuttack-Sambalpur reversing a decision of the Subordinate Judge of Sambalpur, who dismissed; the plaintiffs suit which was based on a bond dated 14 May 1932. The facts giving rise to the-present suit were the following. The defendants- are members of a joint Hindu Mitakshara family, and one Dayanidhi Babu, father of defendants 2 to 4, had borrowed a sum of Rs. 2000 from Dasarathi and Ananda, the ancestors of on& Gangadhar, on the basis of a mortgage bond dated 16 August 1900. Gangadhar subsequently obtained a decree in 1922 on the foot of this bonds and started execution proceedings, the decretal dues along with interest having by that time swelled up to Rs. 8000, including the cost of execution. The same Gangadhar got some of the ancestral immovable properties of the defendants family sold in execution and purchased them himself for Rs. 2125. After the sale was confirmed and before Gangadhar could take possession, Dayanidhi, the harta of the defendants family, along with other family members came to an amicable arrangement with Gangadhar with a view to save the properties, the arrangement being that the defendants family paid a sum of Rs. 1000 to Gangadhar and executed a fresh bond for the balance of the above mentioned sum of Rs. 8000 in lieu of the said ancestral properties being returned to them. This bond which was for Rs. 7000 and was executed on 14 May 1982 is the bond in suit. It was an instalment bond, the executants promising to repay the sum of Rs. 7000 in seven annual instalments of Rs. 1000 each payable on the first day of the mon August, each year beginning from 1 August 1983; there was also a provision, that in case of default of any instalment, the entire amount of the instalments, remaining unpaid would become due at once and be recovered in one instalment. The defendant's family accordingly paid the first instalment to the said Gangadhar and also certain sum of money towards the second instalment. On 11 November 1984 Gangadhar, being hard pressed by his own creditors, transferred his rights under the bond in suit to the plaintiff by an assignment deed for a consideration of Rs. 3500, and Dayanidhi and other defendants were informed accordingly, and they admittedly made some payments thereafter to the plaintiff. The plaintiff in the suit is the "Kasinath Trust Fund" and the suit was brought by the trustees of this Fund on the ground that the second instalment due under the bond had not been fully paid up, and that the defendants had defaulted payment since 1 August 1934. The total claim including interest which was calculated at the rate of Rs. 6 per cent, per annum from the date of default, namely, 1 August 1934, was laid at Rs. 4893-6-0. The payments mentioned in paras. 8 and 9 of the plaint as having been made by the defendants were admitted by them, in the written statements filed on behalf of defendants 2 to 6 and the minor defendants, but the liability to pay anything more to the plaintiff under the bond in suit was sought to be resisted on various grounds which it is not necessary to investigate in this appeal for reasons which will presently appear. On 20 July 1940, by which date the Orissa Moneylenders Act of 1939 had been extended to Sambalpur, a supplementary written statement which was filed on behalf of defendants 2 and 4 said that according to the provisions of the Money-lenders Act the plaintiffs were not entitled to any decree, as they had admittedly realised more than double the principal amount of the loan under the bond of 1900, and that under the said Act the defendants were entitled to have the whole transaction re- opened with effect from 1900, the date of the original mortgage and interest calculated at 9 per cent, per annum and that a total sum of Rs. 6416-2-0 had already been paid up as against the original loan of Rs. 2000. The guardian- additem on behalf of the minor defendants also filed a similar written statement, and the only question for decision in this second appeal is whether the defendants- appellants are entitled to be relieved of their indebtedness under the bond in suit by reason of the provisions of the Money-lenders Act. The learned Subordinate Judge held that the defendants were entitled to the benefits ac truing to them under Secs.9 and 10, Money-lenders Act, and passed a decree in favour of the plaintiff only for the costs of the suit. He has found in the first place that Dasarathi and Ananda, the predecessors of Gangadhar (the plaintiff's assignor) were money- lenders as defined in Section 2(j), Money-lenders Act and has referred to the evidence adduced by the parties in this connection; as a corollary he has held that the plaintiff was a money-lender to whom the provisions of Act III

(3.) of 1939 were applicable. He has also held that even though the original loan had matured into a decree the bond in suit related to a past liability and that the consideration under the said bond was accordingly to be regarded a loan as defined in the said Act. He further held that the fact that the bond in suit contained no stipulation for interest did not make any difference to this position. The learned Subordinate Judge found that the defendants had admittedly paid up a sum of Rs. 6416-2-0 apart from a sum of Rs. 975 by attachment and sale of their paddy in execution, or, in other words, Rs. 7391-2-0 in all, which was almost treble the original amount advanced, and came to the conclusion that the defendants were, therefore, entitled to be relieved of their indebtedness under the Money-lenders Act without liability to make any further payments to the plaintiff. On appeal the learned District Judge has reversed this finding on three grounds. In the first place, the learned District Judge observed that there was no evidence on the record to show that Dasarathi and Ananda were moneylenders within the meaning of the Money-lenders Act. Secondly, he was of the opinion that no personal liability remained after the decree of 1922, that the said decree was in the circumstances to be considered merely "damages for fraud" and that such award of "damages for fraud" could not be regarded as a loan. In conclusion, the learned District Judge held that the plaintiff was entitled to a decree for the principal amount claimed, without any interest, inasmuch as the bond in suit did not bear interest. Hence this second appeal.

(2.) The learned District Judge thought that the mere description of Dasarathi and Ananda as Mdhajans in the original mortgage bond of the year 1900 was not sufficient to prove that they were money-lenders within the meaning of the Orissa Money-lenders Act and that on this ground alone the defendants case was bound to fail. In the Act of 1939 the expression moneylender was defined in Section 2(j) as a person who advances a loan in the regular course of business of money-lending with a capital of more than a sum of rupees one thousand for purposes of all sections of the Act except Secs.9 to 16, and for purposes of these sections as a person who advances a loan in the regular course of business of money-lending irrespective of the amount invested in the said business. It is, however, not necessary to examine this definition in its applicability to the present suit or to discuss the evidence on the point as to whether either Gangadhar, the plaintiff's assignor "was a money-lender, or whether his predecessors Dasarathi and Ananda can be deemed to have been money-lenders as defined in Section 2 of the Act, for the Amendment Act of 1947 (Act XVIII