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Maganbhai Haribhai Patel Vs. Mangaldas Hargovindas Shah - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai High Court
Decided On
Case NumberCivil Revision Application No. 599 of 1958
Judge
Reported in(1960)62BOMLR609
AppellantMaganbhai Haribhai Patel
RespondentMangaldas Hargovindas Shah
DispositionAppeal Allowed
Excerpt:
.....with rule (1) following section 22, and after making a 40 per cent, cut in the amount due in respect of principal and interest the amount due must be brought to the date of the institution of the application for adjustment of debts. similarly, those transactions which commenced between january 1, 1931, and january 1, 1940, must be dealt with, the reduction in this case being 30 per cent, both in principal and interest, and the amount due has then to be brought to the date of institution of the application. in the case of transactions which commenced on or after january 1, 1940, only the interest could be reduced. thereafter subject to the other provisions of the act, the entire amount due at the date of the institution of the application must be determined and an award made. -..........1931, but before january 1, 1940, a reduction of 30 per cent. must be applied, and in respect of recent transactions, which commenced after january 1, 1940, because not much advantage would have been gained by the creditor, only the rate of interest be reduced.5. now, it is an accepted rule of construction of statutes that where the words of a statutory provision are clear and unambiguous, effect must be given to those words, whatever may be the inconvenience or hardship to the parties concerned. it is also an accepted rule that normally the presumption is that the legislature did not intend to cause greater hardship and injustice than was absolutely necessary. it is also an accepted rule of construction that where two constructions are possible, the court should adopt the one, which.....
Judgment:

Patel, J.

1. This revisional application raises a very interesting question regarding the interpretation of Section 22 of the Bombay Agricultural DebtorsRelief Act, 1947, and it arises under the following circumstances. The petitioner is a debtor under the Bombay Agricultural Debtors Relief Act and the opponent is the creditor. The creditor had made an application for adjustment of the debts of the debtor. It appears that the first transaction between the parties had taken place sometime about the year 1938, and from June 1938 to December 31, 1939, the total advances made to the debtor amounted to a sum of Rs. 65. Substantial transactions, involving thousands of rupees, have taken place between the parties after January 1, 1940. The trial Court held that since the first transaction between the parties commenced before January 1, 1940, i.e., in 1938, Section 22(3) of the Bombay Agricultural Debtors Relief Act applied and, therefore, a 30 per cent, cut must be applied to the amount due in respect of the entire dealings between the parties. The creditor appealed to the District Court and the District Court held that the 30 per cent. cut would apply only to those transactions which took place before January 1, 1940, while, so far as the transactions after January 1, 1940, were concerned, only the interest could be reduced. The question which now falls to be considered is, which of the views is the correct one. It is the debtor who has come to this Court in revision.

2. Mr. Patel has argued on behalf of the petitioner that a plain reading of Section 22 leaves no room for doubt that the decision of the trial Court is correct. Now, Section 22, so far as relevant, says:

Notwithstanding any agreement between the parties or the persons (if any) through whom they claim, as to allowing compound interest or setting off the profits of mortgaged property without an account in lieu of interest, or otherwise determining the manner of taking the account, and notwithstanding any statement or settlement of account, or any contract purporting to close previous dealings and create a new obligation, the Court shall inquire into the history and merits of the case and take account between the parties from the commencement of the transactions subsisting between the parties and the persons (if any) through whom they claim, out of which the claim has arisen and determine the amount due to each of the creditors at the date of the application made under Section 4, according to the following rules...

Then follow the rules. Rule 1 provides:

(a) Separate accounts of principal and interest shall be taken;

(b) In the account of principal there shall be debited to the debtor only such money as may from time to time have been actually received by him or on his account from the creditor, and the price of goods, if any, sold to him by the creditor;

(c) In the accounts of principal and interest there shall also be debited the amounts, if any, respectively due for principal (including costs) and interest under any decree or order passed by a competent Court in respect of anydebt.

Then there is a proviso with regard to apportionment towards principal and interest of the amount due under the decree where no specific mention is made about each of the items.We are not here concerned with that proviso. Then come Rules 2 and 3 on which great reliance is placed. Rule 2 provides as follows:

In the case of transactions which commenced before the 1st January 1931 the Court shall take the account up to the date of the institution of the application and in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 12 per cent, per annum, whichever is the lowest. The amount found due in respect of principal as well as in respect of interest shall, each separately, be reduced by 40 per cent, notwithstanding that a decree or order of a civil Court was passed in respect of any such amount or portion thereof. The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of theapplication.

To the similar effect is Rule 3 which provides as follows:-

In the case of transactions which commenced on or after the 1st January 1931 but before the 1st January 1940 in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 9 per cent, per annum, whichever is the lowest. The amount found due on the date of the institution of the application in respect of principal as well as interest shall each separately be reduced by 30 per cent, notwithstanding that a decree or order of a civil Court was passed in respect of any such amount or portion thereof. The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of theapplication.

Rule 4 says:

In the case of transactions which commenced on or after the 1st January 1940 in the account of interest there shall be debited to the debtor simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at rate not exceeding 6 per cent, per annum, whichever is the lowest.

3. Mr. Patel has laid a great deal of emphasis on the words 'transactions which commenced' appearing in the beginning of each of these rules. He argues that since the transactions between the parties in this case commenced, i.e., the first transaction took place, after January 1, 1931, but before January 1, 1940, Rule (3) of Section 22 applied to the case and, therefore, the view taken by the trial Court is correct. He also relies on the last sentence in each of these rules which reads as follows:

The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of theapplication.

On the other hand, Mr. Sheth argues that in this argument what is overlooked is that each transaction has a commencement and an end, inasmuch as regarding each transaction there are bound to be payments. He, therefore, argues that if this is borne in mind, then the construction for which he argues is neither improper nor impossible. If this test is applied, then it is clear that in respect of each transaction which commenced before January 1, 1931, a cut of 40 per cent. must apply, while in respect of each transaction that commenced on or after January 1, 1931, but before January 1, 1940, a cut of 30 per cent. must be applied, and in the case of each transaction which commenced on or after January 1, 1940, only the interest could be reduced. He says that this construction is consistent with rules of justice.

4. It seems that while giving relief to debtors a somewhat arbitrary rule, which could not be avoided, has been adopted. It would appear that the Legislature had in view the fact that a creditor who has had a transaction for a long time would have been sufficiently paid and if a certain reduction is made in the amount due to him, he would not suffer any injustice. With that view possibly the Legislature enacted that in respect of transactions which commenced before January 1, 1931, a reduction of 40 per cent. must be applied and in the case of those transactions which commenced on or after January 1, 1931, but before January 1, 1940, a reduction of 30 per cent. must be applied, and in respect of recent transactions, which commenced after January 1, 1940, because not much advantage would have been gained by the creditor, only the rate of interest be reduced.

5. Now, it is an accepted rule of construction of statutes that where the words of a statutory provision are clear and unambiguous, effect must be given to those words, whatever may be the inconvenience or hardship to the parties concerned. It is also an accepted rule that normally the presumption is that the Legislature did not intend to cause greater hardship and injustice than was absolutely necessary. It is also an accepted rule of construction that where two constructions are possible, the Court should adopt the one, which causes the least injustice to any of the parties, consistent with the object with which the statute was enacted. Now, applying these tests, I have no hesitation in accepting the contention of Mr. Sheth. Having regard to the fact that every transaction must have a beginning and an end, this construction is equally possible as the first one suggested by Mr. Patel. Adoption of this construction would lead to the least injustice to any one of the parties, and there is no reason why this construction should not be accepted.

6. My attention has, however, been invited by Mr. Patel to the provisions of Section 42 as it stood under the Act of 1939. Section 42, Sub-section (2), provided:

The Board shall take the account under Sub-section (1) according to the following rules, namely:-...

(e)(i) In the case of transactions which were commenced before the 1st January 1931, the Board shall take accounts in accordance with the provisions of this section up to 1st January 1931, provided that in the account of interest there shall be debited to the debtor yearly interest on the balance of the principal for the time being at 12 per cent, per annum or at the agreed rate whichever is lower. On taking such accounts, the amounts found due on January 1st 1931 in respect of the principal as well as in respect of the interest shall, each separately, be reduced by 40 per cent. notwithstanding that a decree or order of a civil court has been passed in respect of any such amount or portion thereof, provided that if such transactions had commenced on or after 1st January 1930, the reduction in both the amount of the principal and interest found due shall be by 30 per cent. The amount so reduced shall be taken to represent the amount due in respect of the principal and interest on 1st January 1931. Separate accounts shall thereafter be taken of the principal and interest up to the date of the application provided that the interest shall be calculated at the rate agreed to between the parties or 9 per cent. per annum whichever is lower;

(e) (ii) In the case of transactions which commenced on or after 1st January 1931, in the account of the interest there shall be debited to the debtor yearly interest on the balance of principal for the time being outstanding at 9 per cent. per annum or at the agreed rate whichever is lower....

It is argued that the Legislature has changed the words in the present section and it must be with a definite intent and that could only be to reduce the debt, as mentioned in Rules (2) and (5) of Section 22, irrespective of the slab system. It is not possible to accept this contention. The new sections which are framed under the Act of 1947 are more compact, but they do not show any intention on the part of the Legislature to so alter the provisions as to arbitrarily reduce the outstandings of creditors. Moreover, the present form has, it seems, become necessary because the period of the debts is divided into three parts with different reductions. The change of language has been adopted to suit the new scheme. As stated earlier, if this construction is adopted, then the whole scheme of Section 22 is obvious. The first part of the section says that the account of the dealings between the parties shall be taken according to the rules following the section. Rule (1) is a general rule which says that on the one hand you will take the principal and on the other the interest, and the amounts shall be made up in a particular manner. Rule (2) provides for transactions which commenced before January 1, 1931. All those transactions must be made up in accordance with Rule (7), and after making a 40 per cent. cut in the amount due in respect of principal and interest the amount due must be brought to the date of the institution of the application. Similarly, under Rule (3), those transactions which commenced between January 1, 1931, and January 1, 1940, must be dealt with, the reduction in this case being 30 per cent, both in principal and interest, and the amount due has then to be brought to the date of institution of the application. Rule (4) applies to those transactions which commenced on or after January 1, 1940, and it provides for reduction in the amount of interest alone. Thereafter subject to the other provisions the entire amount due at the date of the institution of the application must be determined and an award made. Since this construction causes the least injustice to the parties, this seems to be the proper construction which should be adopted in this case.

7. The result is, the rule is discharged. Under the circumstances of the case, there will be no order as to costs in this application.


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