1. The petitioner Nivrutti Narayan Bankar was a member of the Respondent 1 Adarsha Padhegaon Vividh Karyakari Seva Sahakari Society Ltd. from the year 1960. The respondent 1 Society used to give crop loans to the petitioner. Thus the petitioner was in arrears of the loan amount of Rs.62,863/- on 30th June 1963. The Respondent 1 Society, therefore, made an application to the Registrar of the Co-operative Societies under S. 101 of the Maharashtra Co-operative Societies Act for the issue of a Recovery Certificate. The Respondent-Society obtained such a certificate in the year 1964 and thereafter started recovery proceedings by attachment etc. It is the case of the petitioner that the Respondent 1 Society received payments of Rs. 96,000/- till the year 1976 under the said Recovery Certificate. The petitioner therefore challenged the further recovery of the amount, which was obviously towards interest, in view of the amended provisions of Maharashtra Act No. III of 1974 whereby S. 44A was inserted in the statute book. According to the petitioner, in view of the provisions of S. 44A, which have been given retrospective effect, the respondent 1 Society is not entitled to charge or recover on account of interest a sum greater than the principal of the loan; the Society has already recovered a sum greater than the principal of the loan and, therefore, the further recovery is wholly illegal.
2. Initially for challenging this Recovery Certificate, the petitioner had raised a dispute under S. 91 of the Act. The Judge of the Co-operative Court granted an injunction restraining the Society permanently from recovering interest amount greater than the principal of the loan. Being aggrieved by the order of the Co-operative Court, the Respondent Society filed an appeal before the Maharashtra State Co-operative Appellate Court. The Appellate Court came to the conclusion that the certificate issued under S. 101 of the Act being conclusive and final, the dispute under S. 91 itself was not maintainable. Therefore, the Appellate Court allowed the appeal and set aside the order passed by the Co-operative Court. It is this order of the Appellate Court which is challenged in the present writ petition.
3. After the original writ petition was filed, by an application dt. 5-3-1984 the petitioner sought permission to amend the petition, which was allowed. Dr. Naik, the learned counsel appearing for the petitioner, contended before us that the Respondent 1 Society is under a statutory obligation under S. 44A of the Act not to recover from the petitioner as and by way of interest, in respect of the suit claim, an amount exceeding Rs.62,863/- which is the principal amount and, therefore, the petitioner is entitled to a Writ of Prohibition against the Society from recovering any further amount. It is not possible for us to accept this contention of Dr. Naik. S. 44A with which we are concerned in this writ petitioner, reads as under :-
'44A. Notwithstanding anything contained in any agreement or any law for the time being in force, a society (other than a land development bank) shall not, for any loan given by it to any member for a period not exceeding 15 years (whether the loan was given before or is given after the commencement of the Maharashtra Co-operative Societies (Third Amendment) Act, 1973), charge, on account of interest, a sum greater than the principal of the loan.'
This provision has been inserted in the statute book by Act No. III of 1974 which came into force from 1-3-1975. The Statement of Objects and Reasons indicates that the new S. 44A was inserted with a view to prohibiting certain societies from charging interest exceeding the amount of loan, in accordance with the well-known principle of 'dam duppat'.
The principle of 'dam duppat' is well known to Hindu law. The rule of 'dam duppat' is a branch of the Hindu Law and according to this rule, the amount of interest recoverable at any time cannot exceed the principal. In para 599 of Mulla's Hindu Law, the learned author has explained the said rule in the following terms :-
'Where a suit has been instituted to recover a loan, the rule of Damdupat ceases to operate. The result is that though the Court is bound to apply the rule of damdupat up to the date of the suit it is free to award interest to the creditor at such rate as it thinks proper from the date of the suit up to the date of decree or payment upon the total amount that may be found due to him after applying that rule.
The rule of damdupat does not apply to interest recoverable in execution of a decree. The reason is that the rule ceases to operate after suit.'
4. The Supreme Court in Hukumchand v. Fulchand : 3SCR91 has also made a reference to this principle of Damdupat in para 37 of the judgment, which reads as under :-
'The principle of Damdupat was evolved both as an inducement to the debtor to pay the entire principal and interest thereon at one and the same time in order to save interest in excess of the principal and as a warning to the creditor to take effective steps for realising the debt from the borrower within a reasonable time so that there be not such accumulation of interest as would be in excess of the principal amount due, as in that case he would have to forgo the excess amount........'
If the phraseology used in S. 44A is tested in the background of this well-recognised principle, the legislature in its wisdom has used the expression 'charge' which means 'demand'. The expression used is not 'recover'. Therefore, the said expression cannot be confused with the recovery of the amount after it has been crystallised either in an Award or order of a competent authority. Section 101 of the Co-operative Societies Act deals with the recovery of the amount due to certain societies as arrears of Land revenue. The said procedure of recovery is notwithstanding anything contained in Ss. 91, 93 and 98 of the Act. For obtaining such a certificate the Society is obliged to furnish a statement of accounts in respect of the arrears to the Registrar to grant a certificate for recovery of the amount after making such inquiry as he deems fit. Therefore, ultimately it is the certificate granted by the Registrar which is operative in the field, though such a certificate is issued on an application filed by the society. In the present case, when the application for a certificate was filed by the society, the amount of interest charged or claimed was merely Rs.9,435/-, which was obviously much less than the principal amount of the loan, which was Rs.62,863/-. Therefore, the Society had not charged on account of interest a sum greater than the principal of the loan. If the amount was not paid by the petitioner-debtor, further interest is accumulated. The rate of this further interest was prescribed in the certificate issued by the Registrar and it is this future interest which is being recovered by the Society. Therefore, it cannot be said that after the commencement of the Third Amendment of 1973, the Society has charged on account of interest a sum greater than the principal of the loan. In this view of the matter, in our opinion, S. 44A has no application to the present case.
5. It is no doubt true that S. 44A has been given retrospective effect, meaning thereby that even if the loan was given before the commencement of the Maharashtra Co-operative Societies (Third Amendment) Act, 1973, after the coming into force of the enactment, the Society cannot charge on account of interest a sum greater than the principal of the loan. However, in the present case, interest was charged by the Society much before the said enactment came into force. When the amount of interest was charged, it was not greater than the principal of the loan. The Society is not charging any interest today on the said amount, but is merely recovering the amount of future interest at the rate stated in the certificate issued by the Registrar under Section 101 of the Maharashtra Co-operative Societies Act. Neither the certificate nor the rate of future interest granted therein is challenged before us. The petitioner who is debtor of the Co-operative Society has not paid the amount of loan in spite of issuance of the certificate. By paying the amount he could have saved payment of future interest. Thus in substance he wants to take the advantage of his own wrong. The provisions of S. 44A cannot be used to help such a defaulter. As observed by the Supreme Court in Hukumchand's case : 3SCR91 the principle of Damdupat was evolved as an inducement to debtor to pay the entire principal and interest thereon at one and the same time in order to save interest in excess of the principal. It is not meant for those who do not want to pay the amount, in spite of the order of competent Court, or who want to use the amount without payment of future interest as granted by the Competent Authority. The said provision cannot be used as premium for non-payment of the amount in spite of Recovery Certificate or Award. This being the position in law, in our opinion, the case of the petitioner is not covered by section 44A of the Act.
6. In the result, therefore, there is no substance in the petition. Hence Rule is discharged. However, in the circumstances of the case, there will be no order as to costs.
7. Rule discharged.