1. This is an appeal filed by the original plaintiffs against the judgment and decree of the first appellate Court, that is, the District Judge Chanda, in Civil Appeal No. 5 of 1962, decided on 14-2-1963 allowing the appeal filed by the legal representatives of the filed by the legal representatives of the original defendant and confirming the lower court's decree under appeal with some modifications. This appeal has been filed by the plaintiffs for setting aside the judgment of the appellate Court and restoring the judgment and decree passed by the trial Court in toto.
2. The plaintiffs had filed a suit which was based on a mortgage. It was alleged by the plaintiffs that original defendant Ramakrishna took a cash loan of Rs. 4,200/- after admitting, the receipt of previous loan to the extent of Rs. 800/- and executed the suit mortgage. The agreement was to pay interest at 18 percent per annum in case there was a decent per annum in case there was a default on the part of the defendant to pay the installment as agreed. However, the plaintiffs claimed interest at 12 per cent that the plaintiffs are the regular money, license. The property which is the subject-matter of this suit was charged with the amount of loan, and therefore, the plaintiffs claimed a decree for foreclosure of the suit property. In the alternative the plaintiffs had also claimed a decree for Rs. 4,651-3-0 excluding the repayments. They also claimed further interest at 12 per cent per annum on the amount till repayment.
3. The defendant completely denied the receipt of the amount as such. The defendant contended that the whole account should be reopened because there were many transactions between the parties. It was further submitted that the plaintiffs had not complied with the provisions of the Central Provinces and Berar Moneylenders Act, and therefore, they should not be allowed costs and interest.
4. The trial Court passed a preliminary decree for sale of the property for Rs. 4,279.82 with corresponding costs of the suit. The defendant was given time to pay the amount within 6 months from the date of the decree. It was further directed that an amount of Rupees 4,279,82 will Cray simple interest at 4 per cent. per annum from the date of decree till repayment. If the whole amount is not paid the suit property was to be sold by public auction. The defendant was also personally held liable if the suit property is not sufficient to pay off the debts.
5. Being aggrieved by this judgment and decree the defendant filed an appeal before the District Judge, Chanda. In the meantime it seems original defendant Ramkrishna died and his legal representatives were brought on record. The only point which was argued in appeal before the District Judge was to the effect whether the plaintiffs have duly complied with the provisions of Section 3 (a) and (b) of the C.P. and Berar Moneylenders Act in respect of the suit mortgage debt for all the years in question and it not what is its effect.
6. After considering the evidence on record and the relevant provisions of the C.P. and Berar Moneylenders Act, hereinafter referred to as the Act the District Judge came to the conclusion that there is nothing on record to show that the plaintiffs have maintained accounts of the suit mortgaged debt in accordance with the provisions of Section 3 (1) (b) of the Act. So far as the statements of accounts sent by the plaintiffs to the defendant are concerned, the District Judge came to the conclusion that so far as the accounts made upto the end of Diwal of 1954, and Diwali 1955 are concerned, namely, Exs. 88 and 89, they were sent beyond the time prescribed by the Act and as no explanation is forthcoming for this delay the plaintiffs are not entitled for the interest for that period. As regards the statement of account Exhibit 92 for the year ending Diwali 1958 and Exhibit 93 for the year ending Diwali 1959 are concerned, the learned District Judge came to the conclusion that it is not possible to verify whether they are in conformity with the accounts maintained because the plaintiffs have not produced the relevant extracts from the account books or the account books themselves. If the accounts themselves are not maintained, then it cannot be said that the statements of accounts be said that the statements of accounts were sent that the statements of account were sent in conformity with the provisions of Rule 12 of the Rule under the Central Provinces and Berar Moneylenders Act, hereinafter referred to as the rules, and on that account the plaintiffs have incurred a penalty prescribed by Section 7 (b) of the Act. It was further found by the District Judge that so far as the statements of account Exhibit 90 for the year ending Diwali 1956 and Ex. 91 for the year ending Diwali 1956 are concerned, they were not sent to the defendant, but were sent to one Dharmaji Madhoji Thakre. Therefore, so far as the defendant is concerned, there is no compliance with the provisions of section 3 (b) of the Act and on that count also the plaintiffs are not entitled for the interest for that period in view of the penalty provided in Section 7 (c) of the Act. Therefore the district Judge came to the conclusion that the statements of accounts Exhibits 88 to 93 did not conform or comply with the provisions of Section 3 (a) and (b) of the Act and these provisions have not been complied with by the plaintiffs for the whole period from the date of the suit mortgage to the date of the suit. The District Judge further disallow the interest for the whole period. In this view of the matter the appeal filled by the defendant's legal representatives was partly allowed and an amount of Rs. 1,900/- was substituted in place of an amount of Rs. 4,279.82. The clause relating to the personal liability of the defendant was deleted and further time of six months was granted to the fendant to pay the amount. This time of 6 months was to commence from 14-2-1963, that is, the date of the appellate court's decree. Being aggrieved by this appellate judgment, this appeal has been filed by the plaintiffs.
7. Shir Pultamkar, who appears for the appellants before me, has contended that the interpretation put forward by the learned District Judge upon the various provisions of the Act and the Rule framed thereunder is not correct. According to shri Pultamkar, there is evidence on record to show that the plaintiffs have maintained accounts and have further sent the statements of accounts. The statements of accounts which were sent to Dharmaji Madhoji Thakre instead of defendant Ramkrishna were sent in good faith because in the meantime the property was transferred to Dharmaji by the defendant. Even otherwise the transaction being a simple one and there being only two repayments during the period the omission to maintain the account could not be vital nor it can result in penalty as prescribed by Section 7 (b) and (c) of the Act. In this view of the matter, according to Shri Pultamkar, the judgment of the appellate court is illegal and liable to be modified.
8. It is not possible for me to accept this contention of Shri Pultamkar. There is no evidence on record to establish that any accounts were maintained by the plaintiffs during this period . No doubt, a vague statement has been made by the plaintiff No. 1 as well and his son, the plaintiff No.2, in the witness-box. So far as the plaintiff No. 1 is concerned, he has stated in his deposition that he had account books. He had further stated that these account books were written by his son Deorao, who is plaintiff No. 2 in the present suit. He has further stated that the account books were thrown away because they were eaten up by white ants and they were not fit to be retained. Deorao, who is examined as P. W. 4 has stated that he was writing the account books. Thereafter he has referred to the statements of the accounts sent for the various years. In the Cross-examination Deorao has admitted that he has not produced the extracts of the account books for the years 1956 and 1957 were sent to Dharmaji by post. He has further stated that he has no sent any statement of accounts to the defendant for the years 1956 and 1957. Shri Pultamkar drew my attention towards the statement made by the defendant in his evidence. According to Pultamkar, the defendant in his evidence has admitted that the plaintiffs were maintaining accounts. This statement was made by the defendant when he produced two loose sheets purporting to be some account from the account books of the plaintiffs. This is all the evidence relating to the maintenance of the accounts on record.
9. In my opinion the learned District Judge was right when he observed that there is no evidence on record to show that the plaintiffs have maintained accounts in accordance with the provisions of the Act. Not only this, as a matter of fact the plaintiffs have failed to establish that any accounts were maintained at all in relation to the loan transaction which is the subject-matter if the suit. There is no evidence on record to show or indicate that the alleged statements of accounts which were sent by the plaintiffs were in conformity with the so called accounts maintained by the plaintiffs. Section 3 of the Act enjoins a duty on the moneylender to regularly maintain an account for each debtor separately of all trisections in respect of any loan advanced to that debtor. Section 3 (1) (b) then lays down that every moneylender has to furnish such debtor every year with a legible statement of accounts signed by the moneylender of accounts signed by the moneylender or his agent of any balance or amount that may be outstanding against such debtor on such dates and in such areas as may be prescribed. This statement of accounts has to include all transactions in respect of the loan entered into during the year to which the statement relates and has to be furnished in the Court language of the district in which the debtor resides, and in such manner, on such form, containing such details and on such date as may be prescribed. Sub-section (2) of Section 3 of the Act then lays down as to how the account is to be maintained. The account is to be maintained. The account required to be maintained under clause (a) of sub-section (1) of Section 3 is to be maintained in such a way that interest as separate and distinct from the principal sum and separate totals of principal and interest shall also be shown.
10. Rule 10 of the Rules prescribes that the statement has to be sent to the debtor within one month of the date or time specified in the said rule, Rule 12 which is important is as under:
'12 Entries in the statement relating to the amount and date of the loan, and the rate of interest, the appropriation of repayments, etc., shall tally with the entries made in the accounts maintained by the creditor in accordance with the provisions of the Act.'
From the scheme of the Act as well as the Rules, therefore, it is quite clear that a duty is case upon the moneylender first to maintain an account. The statement of accounts which the moneylender has to with the accounts maintained by him as per the provisions of the Act. Rules 10 of the Rules makes this further clear that this settlement of account should tally with the entries made in the accounts maintained by the creditor in accordance with the provisions of the Act. If no accounts are maintained by the creditor at all, the question sending the statement of accounts in accordance with the entries made in the accounts by the creditor will not arise. Therefore, the condition which the creditor has to comply for avoiding the penalty provided by Section 7 of the Act is first to maintain the accounts. Section 3 if properly read with Section 7 will also make it clear that the penalty provided by sub-section (b) of Section 7 will come into operation only when the Court finds that the provisions of clause (a) of sub-section (1) of Section 3 have not been complied with by the moneylender. But if we read sub-clauses (a) and (b) of sub-section (1) of Section 3 together with Section 7 and rules framed under the Act it will be clear that if no accounts are maintained at all it is not possible for the moneylender to furnish a statement of accounts as contemplated by Section 3 (1) (b) at all. Maintenance of some accounts, though it may not be in conformity with the provisions of the Act, cannot be equated with a case where no accounts are maintained by the moneylender at all. If no accounts are maintained by the moneylender at all, necessary corollary will be that there will be not only non-compliance of Section 3 (1) (b) of the Act. In this view of the matter, in my opinion, the learned District Judge was right when he disallowed the interest for the period 1958 and 1959 on the ground that there was non-compliance with the provisions of Section 3 (1) (b) of the Act. The same view seems to have been taken by the Nagpur High Court in Vasudeo v. Mahadeo, AIR 1956 Nag 105 wherein it is observed by the Nagpur High Court in para . 9:
'The intention underlying section 3 of the Act is doubtless to enable the debtor to know each year at a glance the amount due by him separately for interest and principal. Unless an account is made annually showing the amount of interest due till then separately from the principal, the creditor may not be able to send correct statements of account to the debtor as required by clause (b) of sub-section (1) of Section 3 of the Act.
This may result in his sending inconsistent statements of account which may leave the debtor perplexed as to the extent of his indebtedness. In such a case, if he were to ask to creditor to show to him the books of account, he may not find in them proper material accuracy of the accounts. An interpretation which may lead to such an anomaly cannot obviously be accepted.'
Section 7 (a) of the Act makes it obligatory on the part of the Court itself to frame and decide the issue whether the moneylender has complied with the provisions of clauses (a) and (b) of sub-section (1) of Section 3. This duty is cast upon the Court irrespective of the fact whether such a plea has been taken by the defendant in the written statement or not. If the court has to decide this issue, it must decide it on the basis of such material or evidence on record. In the absence of production of any accounts for any court to decide whether there to compliance with the provisions of Cls. (a) and (b) of sub-section (1) of Section 3 of the Act. If the Court comes to the conclusion that no accounts were maintained by the moneylender at all it is not possible for the Court also to decide an issue whether the moneylender has complied with the provisions of clause (b) of the sub-section (1) of Section 3 of the Act read with Rule 12 of the Rules framed thereunder. If no accounts are maintained it cannot be said that whatever statement is sent to the debtor is a statement of accounts. Rule 12 of the Rules framed thereunder. If no accounts are maintained it cannot be said that whatever statement is sent to the debtor is a statement of accounts. Rule 12 makes it further clear that such a statement of accounts should tally with the entries made in the accounts maintained by the creditor in accordance with the provisions of the Act. To afford a complete protection contemplated by the Act to a debtor, therefore, it is absolutely necessary that there should be some material before the Court on the basis of which it can come to a conclusion as contemplated by Section 7 (a) of the Act. As observed by the learned District Judge in the present case there is no material placed before the Court to decide such an issue. Not even an effort has been made by the plaintiff to adduce secondary evidence in this behalf. In the absence of any such evidence on record, therefore, in my opinion, the learned District Judge correctly cannot to the conclusion that in these years also there was non-compliance with the provisions of S. 3 (1) (b) of the Act.
11. So far as the statement of accounts for other years are concerned, that is, Exhibits 88 and 89 for the years 1954 and 1955, they were admittedly sent beyond the time prescribed by Rule 10 of the Rules. Proviso to Section 7 of the Act no doubt provides that if sufficient cause is shown by the moneylender for not furnishing the statement of accounts earlier the Court may notwithstanding such omissions include such period or periods for the purpose of computing the interest. However, in the present case the plaintiffs have failed to show any cause much less the sufficient cause for not furnishing have failed to show any case much less the sufficient case for not furnishing the accounts earlier. In this view of the matter the learned District Judge was clearly justified in coming to the conclusion that the plaintiffs have incurred a penalty under Section 7 (c) of the Act for this period also.
12. So face as the statement of accounts, namely, Exhibits 90 and 91 for the period 1956 and 1957 are concerned, according to the plaintiffs' own admission they were sent to one Dharmaji and not to the defendant. It is contended before me that the statements were sent to Dharmaji because in the meantime Dharmaji has purchased there property of the defendant. The defendant has effected a sale of the mortgage property in favour of Dharmaji Thakre who was his relative by a sale-deed 21-1-1955 and that sale-deed was held by the Court in another proceedings to be bogus deed vide judgment dated 30-8-1957. It is argued before me that till that decision was given. Dharmaji being the person entitled to redeem the mortgage the plaintiffs had sent the said statements of accounts to him, and therefore, there was compliance of Section 3 (1) (b) of the Act. Similar argument was advanced before the District Judge also. After considering rival contentions in this behalf the District Judge came to the conclusion, and in my opinion rightly, that in spite of this sale the plaintiffs were under duty and obligation to send annual statements of accounts to the defendant who was their debtor. The debt was incurred by the defendant and no by Dharmaji. The relationship of a debtor and a creditor was between the plaintiffs and the defendant. The only result of the sale to Dharmaji would be that Dharmaji had purchased the mortgage property subject to the mortgagee charge. However, there was no private of contract between the plaintiffs and Dharmaji, nor it was shown that Dharmaji was an assignee of the debtor. In no sense it could be said that Dharmaji become a debtor of the plaintiffs any time, more so when the said sale was found to be bogus the statement of accounts contemplated by Section 3 (1) (b) of the Act is to be furnished to such debtor. It all through the defendant continued to be the debtor of the plaintiffs it was the duty of the plaintiffs it was the duty of the plaintiffs who were the creditors to send the statements of accounts to the defendant. In this behalf the learned District Judge has also relied upon the decision of this Court in Manubhai Mahijibhai Patel v. Trikamlal Laxmidas, AIR 1960 Bom 247 wherein it was observed that a purchaser of the equity of redemption cannot be regarded to be either a transferee or an assignee of the mortgage debt. In this view of the matter it was not enough for the plaintiffs to have sent the statements of account to Dharmaji.
13. However, it was contended by Mr.Pultamkar that the statements of accounts were sent to Dharmaji in good faith and bona fide in view of the fact that in the meantime the property was transferred in favour of Dharmaji.
14. In my opinion, the question of good faith or bona fides will not arise in this case. The obligation is cast upon the creditor by a statute and a penalty had been provided for the non-compliance. If there is non-compliance of the mandatory provisions of the statue the necessary result is that a penalty is incurred by the creditor as provided by Section 7 (c) of the Act.
15. In this view of the matter the learned District Judge was perfectly justified in excluding this period also while computing the amount of interest. These were the only points which were argued before me.
16. In the result, the appeal fails and is dismissed. However, in the circumstances of the case there will be no order as to costs so far as this second appeal is concerned.
17. Appeal dismissed.