NANILAL ROY Vs. RAJA GOPAL LAL ROY

JUDGEMENT

(1.) The defendant, Raja Gopal Lal Roy (hereafter called the borrower) borrowed from Nandalal Roy and Pulin Krishna Roy (they or the legal representatives are hereafter called the lenders) certain sums of money on three promissory notes dated (a) 25-9-1927, (b) 24-1- 1928 and (c) 12-2-1928. On 4-10-1930 he executed three promissory notes: (d) one for Rs. 30,760 in favour of Nandalal and Pulin Krishna Roy: (e) another for Rs. 5500 in favour of Nandalal Roy and (f) the third also for Rs. 5500 in favour of Pulin Krishna Roy. Interest at the rate of 12 per cent, per annum was payable on all these three promissory notes. It is admitted by the lenders that no cash payment was made in respect of the promissory note (d). The principal, Rs. 30,760 mentioned in that promissory note represented the principal and interest due up to 3-8-1930 on the three earlier promissory notes (a), (b) and (c), but the other two promissory notes (e) and (f) represented cash transactions. The borrower executed two other promissory notes in favour of the heirs of Nandalal Roy, who had died on 5-8-1930, and Pulin Krishna, namely: (g) one on 6-9-1930 for Rs. 6250 and (h) another on 15-10-1930 for Rs. 12,200. These promissory notes also provided for interest at 12 per cent, per annum. They also represented cash transaotions. On 15-10-1930 he deposited the title deeds of his zemindary, Pergunah Manthana with the lenders as security for the moneys due on the promissory notes (d) to (h). He was not the sole owner of that zemindary, for being a person governed by the Mitakshara School of Hindu Law and that being his ancestral property his two sons Kumar Bhairab Lal Roy and Girindra lal Roy (since deceased) were joint owners with him. He executed three more promissory notes in favour of lenders stipulating to pay interest at the rate of 12 per cent, per annum. They are: (i) one for Rs. 4800 executed on 28-10-1930, (j) another for Rs. 6200 executed on 3-11-1930 and (k) the third for Rs. 3250 executed on 12- 11-1930. They also represented cash transactions. But whether the whole of the sums mentioned as principal in the promissory notes (e) to (k) had been actually advanced to him or portions had been kept back by the lenders or paid back by the borrower as capitalist's commission, and if so, what is the effect, are points in controversy before us.

(2.) On 15-11-1930, he executed a mortgage in favour of the lenders for the sum of Rs. 1,00,000 hypothecating the aforesaid zemindary and a piece of vacant land, 48 square feet in area, situate in Calcutta, which he had purchased on that very day. He purported to mortgage the properties as Karta of a joint Mitakshara family consisting of himself and his two minor sons. He stipulated to pay interest on the said sum of Rs. 1,00,000 at the rate of 9 1/2 per cent, per annum with half yearly rests. The mortgage instrument recited the loans on the aforesaid promissory notes (a) to (k) and the borrower made the statement that they had been taken either for payment of antecedent debts or for legal necessity. The instrument further recited that the lenders had demanded payment from him of the sums due on the promissory notes marked (d), (e) and (f) above and that he had agreed to borrow from the lenders Rs. 66,979-10-6 for repaying the loans due on these promissory notes and other creditors of his. According to the mortgage instrument the principal of Rs. 1,00,000 to secure which the mortgage was executed, was made up of the said sum of Rs. 66,979-10-6 which the lenders are said to have advanced to the borrower to enable him to repay the loans due on the aforesaid three promissory notes and loans due to other creditors of his and the balance of Rs. 33,020-5-6 represented Rs. 320-5-6, being the interest due up to the date of the mortgage instrument on the five promissory notes marked (g) to (k), and the amount of the principal of the promissory notes marked (g) to (k). Thus only a portion out of the sum of Rs. 66,979-10-6 was actually paid in cash to the borrower. The mortgage was thus taken to secure the loans already due to the lenders on promissory notes and to secure a further loan of a comparatively small amount advanced to the borrower in cash on the date of the mortgage to enable him to pay his other creditors. The lenders instituted the suit on this mortgage on 20-3-1933 making the borrower and his two minor sons parties defendants. On 22-6-1933 they had a receiver appointed in respect of the zemindary mortgaged. The preliminary and the final mortgage-decrees were passed on 8-1-1934 and 4-6-1935 respectively. Thereafter on 16-7-1936 the borrower and his sons were declared wards of Court and the Court of Wards took possession from the receiver on 5-3-1937 on the basis of a consent order made by this Court on 14-12-1936. It is admitted that the Court of Wards had paid the lenders the sum of Rs. 78,999-5-4 up to 19-12-1940 from the time it took possession. On 4-7-1941 the Manager of the Court of Wards representing the borrower and his minor son Bhairab Lal Roy, Girindralal having died in the meantime, made this application under Section 36, Bengal Money-lenders Act (10 [x] of 1940, hereafter called the Act), which had come into force on 1-9-1940. This application is in essence an application in the mortgage suit made under Section 36, Sub-section (6), Clause (a)(ii) of the Act. There is no question that the applicants are entitled to relief under the Act, even if it required re-opening of the transactions represented by promissory notes, if they are otherwise entitled as the Act is not ultra vires the Bengal Legislature: Prafulla Kumar Mukherjee V/s. Bank of Commerce, Ltd. 34 A.I.R. 1947 P.C. 60 and Bank of Commerce, Khulna Ltd. V/s. Amulya Krishna 34 A.I.R. 1947 P.C. 66.

(3.) In Janaki Nath Roy V/s. Arun Chandra Sinha O.S. Suit No. 1214 of 1934 decided on 11th June last, we have held that the phrase "date of the suit" occurring in proviso (i) to Section 36, Sub-section (1) of the Act, means the date when the lender filed his suit to recover the loan, where the borrower seeks relief by an application made under Section 36, Sub-section (6), Clause (a)(ii) Prima facie, therefore, all the transactions beginning from the promissory note (a) are liable to be reopened. But the applicants do not claim to reopen the transactions, which are barred twelve years of his application, that is to say, the promissory notes (a), (b) and (c). The lenders are entitled to get interest at the rate mentioned in Section 30, Sub- section (1), Clause (c) of the Act on the principal of the loan and that they are only entitled to get a decree for a sum of money which, together with any amount already paid to them, does not exceed twice the principal of the loans. As interest up to this date would exceed the principal of the loans even if calculated at the rate mentioned in Section 30 (1)(c), the only relevant question before us is what sums are to be taken to be the principal of the loans, and that, would depend upon two questions (a) whether all or any of the transactions represented by the promissory notes (d) to (k) and the mortgage of 15 November 1930 can in law be reopened, and (b) what were the sums actually advanced by the lenders to the borrower? whether amounts mentioned in those documents as principal or something else.