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Nihalchand Dalichand Vs. Mumtaz Shaikh - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai High Court
Decided On
Case NumberO.C.J. Suit No. 393 of 1962
Judge
Reported in(1974)76BOMLR171
AppellantNihalchand Dalichand
RespondentMumtaz Shaikh
Excerpt:
.....use of that term in proviso (ii) to section 29 of the bombay money-lenders act must cover not merely a decree awarding an amount, but also a decree dismissing a suit, like the decree (exh......provisions of sections 18 and 19 of the bombaymoney-lenders act does not entail dismissal of the suit.issue no. 5: in the negative. it is, however, open to the plaintiffs to prove that thereal consideration was not cash, but past debts of which accounts willhave to be taken.issue no. 6: consideration did pass between the plaintiffs and the defendant. whatwas the consideration is, however, a matter of accounts which, in theview that i take on issue no. 7, will have to be determined by thecommissioner,issue no. 7: the defendant is entitled to have all transactions relating to the mortgage in suit (exh. f) re-opened and accounts thereof taken as fromnovember 21, 1956 between the parties, except in regard to the firstpro-note for bs. 6,000 dated august 29, 1959 (part of exh. a), andto have.....
Judgment:

Vimadalal, J.

1. The plaintiffs have filed this suit for enforcement of a mortgage for Rs. 60,000 executed by the defendant in their favour on September 22, 1961. The Mortgage Deed has been tendered and marked exh. F in the proceedings before me. In para. 2 of the plaint it is stated that on the date of the said Mortgage Deed, the plaintiffs, at the request of the defendant, lent and advanced to the defendant a sum of Rs. 60,000 which was agreed to be repaid on March 31, 1962, and that as collateral security for the repayment of the said sum, the defendant mortgaged her immovable property at Lonavala in favour of the plaintiffs. In the course of the hearing before me, it was, however, admitted by the learned Counsel for the plaintiffs themselves that the consideration for the said mortgage mainly consisted of past debts under various promissory notes executed from time to time in favour of the plaintiffs. It was stated by Mr. Karanee, in opening the plaintiffs' case before me, that the first of those promissory notes was one dated August 29, 1959 for Rs. 6,000, and this was followed by six other promissory notes for various amounts on different dates. Those seven promissory notes have been tendered and collectively marked exh. A before me. The total of the amounts for which the said promissory notes were passed comes to Rs. 52,600. It is common ground that on February 2, 1961, a suit, being suit No. 519 of 1961, was filed by the plaintiffs against the defendant for recovery of the amount due only tinder the first promissory note for Rs. 6,000 dated August 29, 1959 and it is also common ground that on July 6, 1961, that suit was allowed to be dismissed for non-prosecution in consequence of a certain settlement arrived at out of Court between the parties. The terms of that settlement are to be found recorded in the defendant's attorneys' letter dated April 20, 1961, which is part of exh. C in this suit. It may be mentioned that the Court is not concerned in this suit with Clause 1 of the terms set out in the said letter, tinder Clause 2, the claim of the plaintiffs in respect of all the promissory notes executed by the defendant and/ or her daughter Suraiya, who, it may be mentioned, is a film actress, was settled for Its. 56,000 with interest at 9 per cent, per annum from April 1, 1961. By Clause 3 it was agreed that the defendant would execute a mortgage for Rs. 60,000 in respect of her Lonavala property as security for repayment of the said sum. Clause 4 of the terms of settlement set out in the said letter mentions1 that the suit filed by the plaintiffs against the defendant in the City Civil Court, being1 suit No. 519 of 1961, was to be withdrawn. It was pursuant to the said settlement that a pro-note for Rs. 56,000 (part of exh. D) was executed by the defendant on June 28, 1961, and the Mortgage Deed dated September 22, 1961, for the enforcement of which the present suit has been filed, was also executed by the defendant.

2. The defence taken up by the defendant in the written statement is that there was no consideration for the said promissory note dated June 28, 1961, and that defence is to be found in para. 6 of the written statement. That defence, however, is clearly false in view of the fact that on the averments to be found elsewhere in the written statement, as well as on the admission of the learned Counsel for the defendant in the course of the hearing before me, some amounts at least, viz., Rs. 9,900 under the seven promissory notes (exh. A), and Rs, 1,500 paid at the time of the execution of the mortgage (exh. F), aggregating to Rs. 11,400, were due to the plaintiffs. The real defence of the defendant, therefore, is that the full consideration mentioned in the said several promissory notes and in the Indenture of Mortgage was not received by her from the plaintiffs, but a much lesser amount was received by her.

3. In this state of the pleadings, the following issues were framed by me:

(1) Whether the plaintiffs are money-lenders and whether the provisions of the Bombay Money-lenders Act apply to the loan in suit.

(2) If so, whether the suit is maintainable by the plaintiffs in the absence of a money-lender's licence.

(3) Whether the plaintiffs have complied with the provisions of Sections 18 and 19 of the Bombay Money-lenders Act.

(4) If not, whether the suit should be dismissed.

(5) Whether the plaintiffs lent and advanced to the defendant a sum of Rs. 60,000 on September 22, 1961 as alleged in para, 2 of the plaint.

(6) Whether no consideration passed between the plaintiffs and the defendant in respect of the promissory note dated June 28, 1961 and the deposit of title deeds, as alleged in para. 6 of the written statement.

(7) Whether the defendant is entitled to have the transactions in suit reopened and to have an account between the parties taken under Section 29 of the Bombay Money-lenders Act.

(8) Whether the mortgage dated September 22, 1961 was obtained by the plaintiffs by means of coercion and undue influence, as alleged in para. 6 of the written statement.

(9) Whether the plaintiffs are entitled to any relief, and if so, what,

(10) And Generally.

4. As far as issues Nos. 1 and 2 are concerned, it is common ground that a licence under the Money-lenders Act has now been obtained by the plaintiffs and the said issues, therefore, no longer survive. As far as issue No. 3 is concerned, Mr. Karanee for the plaintiffs has conceded that the provisions of Sections 18 and 19 of the Bombay Money-lenders Act have not been complied with by the plaintiffs. Issue No. 4 relates to the legal consequences of non-compliance with those statutory provisions, but, I am afraid, in' view of the provisions of Section 21(6) of the Bombay Money-lenders Act, non-compliance with those provisions cannot entail the dismissal of a suit but can only affect the grant of interest and costs, and issue No. 4 must, therefore, be answered accordingly.

5. As far as issue No. 5 is concerned, the same was sought in view of the averment in para. 2 of the plaint which is to the effect that on September 22, 1961 when the mortgage (exh. F) was executed, a sum of Us. 60,000 was lent and advanced by the plaintiffs to the defendant, which, Mr. Chinoy has submitted, is admittedly not true and which, according to Mr. Chinoy, must therefore mean that the suit, as framed, must fail, since the plaintiff cannot be allowed to make out a new ease to the effect that the consideration for the said mortgage consisted of past debts under various promissory notes. I am afraid, the decision of Lokur, J. in the case of Kasturchand Jiwaji v. Manekchand Devichand : AIR1943Bom447 which was relied upon by Mr. Karanee, furnishes a complete answer to this contention of Mr. Chinoy. Following an earlier decision of our own High Court, it was held in that case that even when there is an averment in the plaint that cash consideration was paid in regard to the transaction which is the subject-matter of the suit, it is open to the plaintiff to prove what the real consideration was and, in the course of doing so, to show that the real consideration consisted of a past debt or debts (at pp. 840 and 842). Following that decision, with which I agree, I must reject this contention of Mr. Chinoy and hold that, notwithstanding the averment of cash consideration in para. 2 of the plaint, it is open to the plaintiffs to show what the real consideration for the mortgage transaction in suit was, and issue No. 5 must be answered accordingly. As far as issue No. 6 is concerned, as already stated by me, the averment in para. 6 of the written statement that there was no consideration at all for the promissory note dated June 28, 1961 (part of exh. D) is clearly false and issue No. 6 must, therefore, be answered against the defendant.

6. The questions which really arise for my decision in this suit are two: (1) whether the defendant is entitled to reopen the account which was settled at the figure of Es. 56,000 at the time of the pro-note dated June 28, 1961 (part of exh. D); and (2) if so, what is the amount due to the plaintiffs. It may be mentioned that in the plaintiffs' attorneys' letter dated September 27, 1961, a copy of which is part of exh. C in this suit, it is stated that the amount of Es. 60,000 mentioned in the Mortgage Deed dated September 22, 1961 (exh. F) was made up of the said sum of Es. 56,000 under the pro-note dated June 28, 1961 (part of exh. D), and a further sum of Es. 4,000, which was made up of Es. 2,500, being the plaintiffs' costs of the City Civil Court suit No. 519 of 1961 and of the preparation of the Mortgage Deed, and of a sum of Rs. 1,500, being a further loan advanced by the plaintiffs to the defendant at or about the time of the execution of the said mortgage. These questions are covered by issue No. 7 framed by me and I must now proceed to consider the same.

7. The decision of issue No. 7 turns on a construction of Section 29 of the Bombay Money-lenders Act, 1946 (Bombay Act, XXXI of 1947). That section provides as follows:

29. Notwithstanding anything contained in any law for the time being in force, the Court shall, in any suit to which this Act applies, whether heard ex parts or otherwise--

(a) reopen any transaction, or any account already taken between the parties;

(b) take an account between the parties;

(c) reduce the amount charged to the debtor in respect of any excessive interest;

(d) if on taking accounts it is found that the money-lender has received more than what is due to him pass a decree in favour of the debtor in respect of such amount:

Provided that in the exercise of these powers, the Court shall not--

(i) reopen any adjustment or agreement purporting to close previous dealings and to create new obligations which have been entered into by the parties or any person through whom they claim at a date more than six years from the date of the suit;

(ii) do anything which affects any decree of a Court.

Explanation.--For the purpose of this section 'excessive interest' means interest at a rate which contravenes any of the provisions of Section 25.

The substantive portion of the said section lays down in mandatory terms that the Court must reopen a transaction to which the said Act applies and order accounts to be taken between the parties. Mr. Karanee has however relied on proviso (ii) to the said section which lays down that in exercising the powers conferred by the said section, the Court is not to do anything which affects any decree of a Court. Mr. Karanee's contention is that in view of the definition of the term 'decree' in Section 2(2) of the Code of Civil Procedure, the use of that term in proviso (ii) to Section 29 of the Bombay Money-lenders Act must cover not merely a decree awarding an amount, but also a decree dismissing a suit, like the decree (exh. E) by which the suit filed by the plaintiffs, being suit No. 519 of 1961 in the City Civil Court, was dismissed for non-prosecution. Mr. Karanee has contended that the said suit was got dismissed pursuant to an overall settlement between the parties of all the plaintiffs' claims for a lump sum of Rs. 56,000 which included the subject-matter of the said City Civil Court suit, and the decree was part of that settlement. It is Mr. Karanee's contention that the Court is bound to take notice of the settlement pursuant to which the decree for dismissal of the City Civil Court suit was passed. He has submitted that to reopen the transactions between the parties in the present ease must necessarily be held to affect the said decree within the terms of proviso (ii) to Section 29 of the Bombay Money-lenders Act. Mr. Karanee has submitted an alternative argument to the effect that if the Court comes to the conclusion that it is not bound to take notice of the settlement out of Court and that proviso (ii) to Section 29 cannot apply to the same, and comes to the further conclusion that as far as the pro-note for Rs. 6,000 which was the subject-matter of the City Civil Court is concerned the Court cannot reopen that claim, even so, the Court should not preclude the plaintiffs from relying on the amount of that claim as far as proof of consideration for the pro-note for Rs. 56,000 (part of exh. D) is concerned.

8. In answer to the arguments of Mr. Karanee, Mr. Chinoy has contended that exh. E is not a 'decree' within the terms of proviso (ii) to Section 29 of the Bombay Money-lenders Act, but is an order, as there is no adjudication of the rights of the parties to the said City Civil Court suit which was merely dismissed for non-prosecution by the plaintiffs. He has submitted that proviso (ii) to Section 29 of the Bombay Money-lenders Act, therefore, cannot come to the assistance of Mr. Karanee. Mr. Chinoy has also submitted that the reopening of accounts would not affect the decree (exh. E), but would only affect the settlement which was a settlement out of Court and which could be construed as a fresh promise to pay the amount, including the amount which was the subject-matter of the City Civil Court suit.

9. In my opinion, the order dated July 6, 1961 (exh. B) dismissing the said City Civil Court suit for non-prosecution by the plaintiffs is a decree within the terms of Section 2(2) of the Code of Civil Procedure and proviso (ii) to Section 29 of the Bombay Money-lenders Act in so far as it does conclusively determine the rights of the parties to the said suit. I am also of opinion that the settlement arrived at between the parties out of Court which was recorded in the defendant's attorneys' letter dated April 20, 1961 (part of exh. C) cannot be said to be a part of the decree, though the decree may be a part of the overall settlement between the parties which was recorded in the said letter. Under proviso (ii) to Section 29 of the Bombay Money-lenders Act, the Court is concerned only with seeing whether the reopening of accounts or the taking of accounts would affect any part of the decree, and is not concerned with the question whether it affects the settlement which the parties have chosen, to arrive at out of Court. I, therefore, do not accept Mr. Karanee's argument that to reopen accounts in the present case would be contrary to the provisions of proviso (ii) to Section 29 of the Bombay Moneylenders Act. In my opinion, however, in view of the terms of that proviso, it is not open to the Court to reopen accounts under cl, (a) of Section 29 of the Bombay Money-lenders Act in regard to the sum of Rs. 6,000 to which the first pro-note dated August 29, 1959 (part of exh. A) related, as the same was the subject-matter of the suit in the City Civil Court which was dismissed by the decree (exh. E). To reopen the same would, in my opinion, directly affect that decree. Proviso (ii) to Section 29 is not limited in its application to a decree obtained by a money-lender in his own favour. The object of the Legislature in enacting that proviso was that the finality of judicial decisions already given was not to be affected. It should, therefore, make no difference whether the decree in question be in favour of the money-lender or against him. I also do not accept Mr. Karanee's further argument that even if the claim under the said pro-note dated August 29, 1959 is not allowed to be reopened, the plaintiffs should not be precluded from relying on the same as far as proof of consideration for the pro-note for Ra 56,000 dated June 28, 1961 (part of exh. D) is concerned. According to the construction which I place upon Section 29, even to take the amount of the said pro-note for Bs. 6,000 dated August 29, 1959 into account under Clause (b) of Section 29 would amount to affecting the decree whereby that claim was dismissed by the City Civil Court. I have, therefore, come to the conclusion that the transactions between the parties relating to the mortgage in suit (exh. F) should be reopened and that accounts be taken of all transactions from November 21, 1956 between the parties, except in regard to the transaction to which the pro-note dated August 29, 1959 for Es. 6,000 related, in respect of which the plaintiffs had filed City Civil Court suit No. 519 of 1961 which was dismissed for non-prosecution. The amount due to the plaintiffs, if any, should be ascertained on that footing.

10. It may be mentioned that Mr. Chinoy has, in the course of his arguments, sought to raise various other points regarding the return of jewellery, and with regard to credit not having been given to his client for the sums of Rs, 10,000 and Es. 5,000, but I am afraid, he cannot be allowed to go into the same in the present suit for the simple reason that not only has the defendant not made a set-off or counterclaim in respect of these items, but there is not even an averment in the written statement in regard to any such items of jewellery, or in regard to any repayments made by the defendant to the plaintiffs. Though a general averment has been made in the written statement that on proper taking of accounts, nothing would be found due and payable by the defendant to the plaintiffs, in the absence of a specific averment that there was any repayment made at any time by the defendant to the plaintiffs, I am afraid, no such question can arise in the present suit and the same need not be gone into by the Commissioner.

11. As far as issue No. 8 is concerned, Mr. Chinoy has, in the course of the hearing of the suit before me, expressly given up the same and that issue, therefore, does not survive.

12. I answer the issues as follows:

Issues Nos. 1 and 2: Do not survive.Issue No. 3: In the negative.Issue No. 4: Non-compliance with the provisions of Sections 18 and 19 of the BombayMoney-lenders Act does not entail dismissal of the suit.Issue No. 5: In the negative. It is, however, open to the plaintiffs to prove that thereal consideration was not cash, but past debts of which accounts willhave to be taken.Issue No. 6: Consideration did pass between the plaintiffs and the defendant. Whatwas the consideration is, however, a matter of accounts which, in theview that I take on issue No. 7, will have to be determined by theCommissioner,Issue No. 7: The defendant is entitled to have all transactions relating to the mortgage in suit (exh. F) re-opened and accounts thereof taken as fromNovember 21, 1956 between the parties, except in regard to the firstpro-note for Bs. 6,000 dated August 29, 1959 (part of exh. A), andto have the amount due by the defendant to the plaintiffs, if any, ascertained.Issue No. 8: Given up by the defendant.Issues Nos. 9 and 10: Received.

13. Both sides have stated that they do not desire to lead any evidence before me, since accounts will have to be gone into before the- Commissioner. I, therefore, pass the usual preliminary mortgage decree directing1 accounts to be taken by the Commissioner on the basis stated by me above, and direct that the Commissioner should make his report within six months of the receipt of the minutes of this order. Costs and further directions reserved.


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