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Vithal Krishna Shanbhag Vs. Sogmal Nathmal and Co. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai High Court
Decided On
Case NumberA.F.O.D. No. 340 of 1955 with F.A. No. 276 of 1955
Judge
Reported inAIR1958Bom92; (1957)59BOMLR1043; ILR1958Bom329
ActsCode of Civil Procedure (CPC), 1908 - Sections 4 and 4(1) - Order 37, Rules 1, 2, 2(2) and 3; Debt law; Bombay Money-lenders Act, 1947 - Sections 2(9), 2(17), 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 30(2) and 30(3); Bombay Money-lenders Act, 1946 - Sections 30
AppellantVithal Krishna Shanbhag
RespondentSogmal Nathmal and Co.
Appellant AdvocateT.N. Walawalkar, Adv.
Respondent AdvocateB.J. Kapadia and M.U. Patel, Advs., i/b., Madgaonkar and ;Thakordas, Attorneys
Excerpt:
.....30--maintainability of.;the right conferred upon a defendant in a suit, to which the bombay moneylenders act, 1946, applies, to present an application under section 30 of the act is not in any manner affected, if the suit happens to be a summary suit and he has not obtained leave to appear and defend.;govind dhondo v. mannabai (1954) 56 bom. l.b. 470 referred to. - section 31(4) (since repealed) :[tarun chatterjee & h.l.dattu, jj] jurisdiction of high court - respondent, a government company, chartered appellants vessel to carry rock phosphate from togo to west coast india - dispute arose between parties - under agreement, respondent had chosen mumbai as port of delivery vessel carrying rock phosphate was delivered at port of bombay - application filed by respondent earlier before..........for rs. 3000/- ; and in this suit the defendant made an application under section 30 of the bombay money-lenders act, 1946. this application was dismissed by judge k. m. vakil on the 18th of february, 1955, as he held that the defendant was not entitled to take out a notice under section 30 of the act in a summary suit without obtaiuing leave to defend the suit. against this order an appeal was admitted to this court. in the meantime a summons for judgment was taken out and conditional leave to defend was granted; but as the defendant was unable to comply with the condition for deposit of money an ex parte decree has been passed against him. an appeal has now been filed against this ex parte decree as well. both the appeals are before us for hearing and final disposal.2. the only point,.....
Judgment:

Tendolkar, J.

1. This is an appeal from an order as well as an ex partc decree of the City Civil Court. The suit was filed as a summary suit on a Promissory note for Rs. 3000/- ; and in this suit the defendant made an application under Section 30 of the Bombay Money-Lenders Act, 1946. This application was dismissed by Judge K. M. Vakil on the 18th of February, 1955, as he held that the defendant was not entitled to take out a notice under Section 30 of the Act in a summary suit without obtaiuing leave to defend the suit. Against this order an appeal was admitted to this Court. In the meantime a summons for judgment was taken out and conditional leave to defend was granted; but as the defendant was unable to comply with the condition for deposit of money an ex parte decree has been passed against him. An appeal has now been filed against this ex parte decree as well. Both the appeals are before us for hearing and final disposal.

2. The only point, which is a neat question of law, that really arises for determination is whether the defendant is entitled to present an application under Section 30 of the Bombay Money-Lenders Act, notwithstanding the fact that ho has failed to obtain leave to appear and defend the suit. Now, it is necessary, in the first instance, in order to determine this question to look to some of the provisions of the Bombay Money-Lenders Act. The preamble makes it plain that the object of the Act is to regulate and control the transactions of money-lending. A 'loan' is defined in Section 2(9) as an advance at interest whether of money or in kind and although by Sub-clause (f) of the definition an advance made on the basis of a negotiable instrument is excluded, as advance made on a promissory note is included within the definition. Then Sub-section (17) defines 'suit to which this Act applies'' as meaning any suit or proceeding for the recovery of a loan made after the date on which the Act comes into force. Then Sections 18 to 29 lay down various provisions which have to be followed for the purpose of taking accounts as between a money-lender and his debtor. Section 29 casts upon the Court an obligation, even in a matter which is heard ex parte, to do certain acts in relation to the taking of accounts in a suit to which the Act applies and this obligation apparently has to be carried out even if the defendant is absent and does not seek the intervention of the Court to have an account taken. Then we come to Section 30 which is in these terms.

'(1) Any debtor may make an application at any time to the Court, whether the loan to which the suit relates has or has not become payable, for taking accounts and for declaring the amount due to the money-lender. Such application shall be in the prescribed form and accompanied by the prescribed fee.

(2) On receipt of such application, the Court shall cause a notice of the application to be given to the money-lender.

(3) On the date fixed for the hearing of the application or on such date to which the hearing may be adjourned from time to time, the Court shall make an inquiry and shall after taking an account of the transactions between the parties pass an order declaring the amount, if any, still payable by the debtor to the money-lender, in respect of the principal and interest, if any. In taking accounts under this section the Court shall follow the provisions of Sections 18 to 29 and Section 31A'.

It has been held by the learned Chief Justice in Govind Dhondo v. Mannabai Govind 56 Bom. LR 470 that an application under this section has to be made in a pending suit or proceeding to which the Act applies. It is clear that in this case there was a suit before the City Civil Court to which the Act applied and under the Bombay Money-Lenders Act the defendant had a right to make an application under Section 30 ; and when such an application is made, it is obligatory upon the Court under Sub-section (2) of Section 30 to issue a notice of the application to the money-lender and proceed to determine it according to the provisions of Sub-section (3). Now, the question is whether a defendant who is entitled to make such an application under the Bombay Money-Lenders Act is precluded from doing so, because the suit in which he wishes to make the application is a summary suit, filed under the provisions of Order XXXVII of the Civil Procedure Code, in which he has not obtained leave to appear and defend. In the first instance, the right that is conferred upon a debtor by Section 30 of the Bombay Money-Lenders Act, 1946 is a substantive right and no procedural provision shall be so construed as to negative a substantive right. The provisions of Order XXXVII of the Civil Procedure Code are procedural only and they are not matters of substantive rights. Therefore, it would be improper, in our opinion to construe these provisions as negativing or superseding the right of a debtor under the Bombay Money-Lenders Act, 1946 to present an application under Section 30. This aspect is emphasized by Section 4 of the Code itself. Sub-section (l) of that section provides:

'In the absence of any specific provision to the contrary, nothing in this Code shall be deemed to limit or otherwise affect any special or local law now in force or any special jurisdiction or power conferred, or any special form of procedure prescribed, by or under any other law for the time being in force'.

Of course, the section deals with other laws relating to procedure only ; and if other laws relating to procedure, to the extent of their inconsistency with the Civil Procedure Code, are to prevail, it cannot possibly be that other substantive laws are in any way affected or are negatived by the procedural provisions of the Civil Procedure Code. Order XXXVII, Rule 2 (2) provides that a defendant 'shall not appear or defend the suit unless he obtains leave so to appear and defend' and Rule 3 provides that the Court shall give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application. Therefore, in the case of a summary suit a defendant wishing to defend the suit on any ground whatsoever and he may have a large variety of defences must first obtain leave to appear and defend and when such leave has been granted on conditions which he is unable to fulfil, the effect is the same as leave having been refused which disentitles him from appearing and defending the suit on the merits. But there are two views possible of the right conferred by Section 30 of the Bombay Money-Lenders Act; and in either view, the provision of Order XXXVII which debars a defendant from appearing and defending a suit without obtaining leave cannot, in our opinion, apply to him. The first view is that the proceedings initiated under Section 30 are, when one looks at the prescribed form which is form No. 11 merely intended for the purpose of determining the amount due on the taking of accounts, because the form says:

'The undermentioned debtor applies for taking accounts of the loan described below and for declaring the amount due to the money-lender.'

Therefore, when the procedure prescribed in Section 30 has been followed to its legitimate conclusion, it will only result in the ascertainment of the amount due on the taking of accounts. The suit in which the application was made will undoubtly have to be stayed until the accounts are so taken and the amount determined, and the amount so found due can be the only amount for which the plaintiff will be entitled to a decree, subject to any other defences that the defendant may have to the claim of the plaintiff. That would be the position in an ordinary suit. When we come to a summary suit, unless the defendant obtains leave to defend, his other defences are barred.

But quite obviously there cannot be a decree against him for an amount higher than the amount which has been determined upon the taking of accounts. The other view may well be that in effect, although not in form, Section 30 enables the defendant to defend the suit in the sense that he can dispute the amount due and have it determined what is the amount due. Even if this view were adopted, the right to raise this defence is a substantive right conferred by the Bombay Money-Lenders Act and that is a right which, in our opinion, can be exercised ..... notwithstanding the fact that leave to defend has not been obtained.

It is only for the limited purpose of exercising the right under Section 30 that the defendant can appear in the suit on his application under Section 30 and for the disposal of such application; and he cannot in the suit be allowed to raise any other defence, he being precluded from doing so by reason of the fact that he has not obtained leave to appear and defend the suit. Therefore, whichever way one looks at it, in our opinion, that right conferred upon a defendant in a suit, to which the Bombay Money-Lenders Act applies, to present an application under Section 30 is not in any manner affected, if the suit happens to be a summary suit and he has not obtained leave to appear and defend.

3. Mr. Walawalkar on behalf of the appellant has attempted to canvass a far wider proposition. He urges that in a case to which the Money-Lenders Act applies, the provisions of Order XXXVII of the Civil Procedure Code do not apply at all; and he says that the moment an application under Section 30 is made in a suit, if it happens to be a summary suit it becomes converted into an ordinary suit. His argument is that a special procedure has been prescribed by the Money-Lenders Act in respect of suits to which the Act applies. Order XXXVII prescribed also procedure and the special procedure must prevail over the general procedure prescribed by Order XXXVII.

The whole argument is based on the assumption that the Money-Lenders Act prescribes procedure for obtaining a decree; but obviously it does not No decree can be passed under the Money-Lenders Act as such. The Money-Lenders Act confers upon the debtor the right to have accounts taken in the manner laid down in the Act and no more. In other words, it deals with substantive rights and not procedure and the question of one procedure prevailing over another cannot arise for determination. It cannot be that by reason of the fact that an application has been made under Section 30 by the defendant in a summary suit also gets the right to defend the suit on grounds other than those which arise on taking of accounts, because such grounds are not within the scope of the Bombay Money-Lenders Act and they can have nothing to do with the application under Section 30.

We are, therefore, unable to uphold this submission of Mr. Walawalkar; but it is really not necessary to determine it for the purpose of determining this appeal.

4. In our opinion therefore, the learned Judge was in error in holding that the application under Section 30 wag not competent, because the defendant had not, obtained leave to appear and defend the suit. We, therefore, set aside his order made on this application and direct him to proceed to determine the application according to law. As we have already pointed out, the result of presenting such an application must necessarily always be that until the application is disposed of, no decree can be passed in the suit.

The learned Judge, therefore, erred in passing an ex parte decree which also we set aside and we direct that when he has determined what amount is due on the application under Section 30 made by the defendant, he shall proceed to pass a fresh decree for the amount that may be found due, as in this particular case the defendant is debarred from raising any other defence to the suit.

5. The result, therefore, is that the appeal succeeds and the order of the learned trial Judge on the application under Section 30 and the ex parte decree shall be set aside and the matters sent back to the trial Judge for determining the application under Section 30 and passing an appropriate decree. The plaintiff shall pay the costs of the appeal against the order dismissing the application under Section 30; costs of the appeal against the decree shall be costs in the cause- We also set aside the order of the learned Judge granting costs of dismissing the application under Section 30 to the plaintiff and direct that the costs shall be paid by the plaintiff to the defendant.

6. Appeal allowed.


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