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Pandurang Ganpatrao Welekar Vs. Nurumiya Serumiya - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 118 of 1954
Judge
Reported in(1960)62BOMLR547
AppellantPandurang Ganpatrao Welekar
RespondentNurumiya Serumiya
DispositionAppeal Dismissed
Excerpt:
.....encumbrance and charge without exception',and in our opinion, that would clearly imply that the encumbrances and charges existing on the date of the act would also be covered whenever they were created. that is precisely the argument which has been advanced on behalf of the appellants before us also and we think that the remarks of the learned lord justice are most apposite. we hold that the use of the word 'all' preceding 'encumbrances and charges' clearly makes a provision which applies to encumbrances and charges which have come into existence prior to the amending act by which section 5-a was added. that, as we have said above, is clearly provided under the terms of section 5-a unlike the provisions of law which fell to be construed in the cases cited by mr. in our opinion, the..........and respondent no. 3, the state, and that dispute arises in the following manner. after the mortgage dated may 10, 1944, was executed, the mortgagors borrowed a loan from the government under the provisions of the agriculturists'-loans act, 1884. it may here be mentioned that the original act did not contain the present section 5-a. that section was added by the c.p. and berar agriculturists' loans (amendment) act, 1947 (xxxiv of 1947). it was under the agriculturists' loans act as amended by the 0. p. act of 1947 that the mortgagors borrowed their loan which was for a sum of rs. 4,350. the date of the order granting the loan is not stated in the pleadings but the actual loan was advanced to the mortgagors by the state government on may 1, 1951. for the repayment of this loan, the.....
Judgment:

Kotval, J.

1. This is an appeal at the instance of the plaintiffs in a mortgage suit. Respondents Nos. 1 and 2, who are the mortgagors, have not put in appearance. Respondent No. 3 is the then State of Madhya Pradesh, but it is now not in dispute that the liability is that of the State of Bombay under the provisions of Section 91 of the States Reorganization Act.

2. The plaintiffs sued upon a mortgage executed on May 10, 1944, by respondents Nos. 1 and 2. The mortgage was for a consideration of Rs. 4,000, repayable in four yearly instalments of Rs. 1,000 each. The mortgage stipulated for interest at 1 per cent, per month, compound. The property which was comprised in the mortgage consisted of three fields, khasra No. 28, area 3.59 acres and khasra No. 41, area 2.52 acres, of mouza Poth Budhwar, tahsil Katol, district Nagpur, and khasra No. 313, area 5.12 acres of mouza Katol, tahsil Katol, district Nagpur.

3. The principal dispute in this appeal is not between the appellants-mortgagees and the original mortgagors but between the mortgagees and respondent No. 3, the State, and that dispute arises in the following manner. After the mortgage dated May 10, 1944, was executed, the mortgagors borrowed a loan from the Government under the provisions of the Agriculturists'-Loans Act, 1884. It may here be mentioned that the original Act did not contain the present Section 5-A. That section was added by the C.P. and Berar Agriculturists' Loans (Amendment) Act, 1947 (XXXIV of 1947). It was under the Agriculturists' Loans Act as amended by the 0. P. Act of 1947 that the mortgagors borrowed their loan which was for a sum of Rs. 4,350. The date of the order granting the loan is not stated in the pleadings but the actual loan was advanced to the mortgagors by the State Government on May 1, 1951. For the repayment of this loan, the mortgagors had mortgaged with the State khasra Nos. 40 and 41 of mouza Peth Budhwar. Of these two khasra numbers, khasra No. 41, as we have shown above, was already mortgaged to the plaintiffs-appellants, and, therefore, the State Government was impleaded in the suit, since they were subsequent mortgagees of part of the property mortgaged with the plaintiffs.

4. In the suit the original mortgagors, respondents Nos. 1 and 2, raised a number of pleas with which we are not concerned here. The only point taken in the appeal so far as they are concerned by Mr. W.G. Deo on behalf of the appellants is that certain interest has been wrongly disallowed to the plaintiffs from the date of the decree till realization. So far as the State, respondent No. 3, is concerned, they placed reliance upon the provisions of Section 5-A of the Agriculturists' Loans Act as amended by the amending Act of 1947 and claimed priority for their mortgage over the plaintiffs' mortgage. The trial Court has, so far as this plea is concerned, upheld the claim made on behalf of the State and ordered that the mortgage in favour of the State shall have priority over the mortgage in suit and that the State were not bound to redeem the plaintiffs' mortgage. The main contention in this appeal is directed against this finding of the trial Court.

5. Section 5-A of the Agriculturists' Loans Act, 1884, as amended runs as follows:

A loan granted under this Act together with interest due thereon and costs of recovery shall except in respect of land revenue and a loan granted under the Land Improvement Loans Act, 1883, have priority over all encumbrances and charges created before the date of the order granting the loan on the borrower's interest in any land.

The State relied upon this provision of law. In reply it was urged on behalf of the plaintiffs that their mortgage was prior to the date of the coming into force of Section 5-A. The amending Act No. XXXIV of 1947 came into force only on November 15, 1947. Therefore, unless its provisions can retrospectively apply, it will not affect the plaintiffs' mortgage dated May 10, 1944. The trial Court held that upon the terms of the Act as amended the provisions of Section 5-A were retrospective in operation and, therefore, it would affect the plaintiffs' mortgage and give the encumbrance in favour of the State priority over the plaintiffs' mortgage.

6. The appeal originally came up for hearing before Mr. Justice Badkas, and he was, of opinion that the question involved is of great public importance and whatever decision is taken is likely to affect many cases, and therefore he referred the question as to the applicability of the Act to a larger Bench by his order dated September 18, 1957. This then is the main question which falls to be determined. Now, the claim made on behalf of the State on the basis of the provisions of Section 5-A undoubtedly affects the plaintiffs' rights under the mortgage dated May 10, 1944. Normally, the presumption of law is that the Legislature does not intend what is unjust, and, therefore, the law leans against giving statutes retrospective operation. It is now settled law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. The rule is stated by Wright J. in the leading case on the subject, Athlumney, In re: Wilson Ex parte [1898] 2Q.B. 547 as follows (pp. 551-2) :

Perhaps no rule of construction is more firmly established than this-that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.

To this may be added the qualification which follows upon the normal rule of construction that if the language is plainly retrospective, it must be so interpreted.

7. Now the contention on behalf of the plaintiffs has been that the language of Section 5-A is susceptible of either interpretation and that, therefore, it ought to be construed as prospective only. The decisive words of the section are:

over all encumbrances and charges created before the date of the order granting the loan on the borrower's interest in any land.

Mr. Deo urged that the word 'all' governs the words 'encumbrances and charges' and that may mean either all encumbrances and charges from whatever time prior to the enactment of the section or it may also mean all encumbrances and charges from the date of the coming into force of the section. He urged that if the Legislature intended to give the clause the former interpretation, then they should have made it clear and expressed it in a language which admitted of no doubt. They could have added words such as 'whether created before or after the Act'. But since no such words are to be found and the language is ambiguous, the Court ought to lean against giving a retrospective effect.

8. The word 'all' is in the instant case followed by two plural substantives, namely, the words 'encumbrances and charges'. When it is used in con junction with such plural nouns, its significance is 'the entire number of the individual components of, without exception'; see sense No. 2 of the word 'all' at page 225 of the Oxford English Dictionary, volume I. In this sense it means nothing more or less than 'every or any whatever'. The plain meaning of the words 'all encumbrances and charges' would, therefore, be 'every encumbrance and charge without exception', and in our opinion, that would clearly imply that the encumbrances and charges existing on the date of the Act would also be covered whenever they were created.

9. In West v. Gwynne [1911] 2 Ch. D. 1, a similar provision, contained in Section 3 of the Conveyancing and Law of Property Act, 1892, arose for construction before the Court of Appeal in England. In that case the relevant section, Section 3, ran as follows:

In all leases containing a covenant, condition, or agreement against assigning, underletting, or parting with the possession, or disposing of the land or property leased without licence or consent, such covenant, condition, or agreement shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent; but this proviso shall not preclude the right to require the payment of a reasonable sum in respect of any legal or other expense incurred in relation to such licence or consent.

In that case the Act came into force in 1892; and the question was whether it applied to a lease which had been assigned to the plaintiffs in the case. The lease was dated July31, 1874. The question, therefore, before the Court plainly was whether Section 3 would apply retrospectively, and the argument was that since it was not expressly enacted that Section 3 was to apply where the lease was granted before the Act, its operation must on general principles be limited to cases where the lease was not in existence at the date of the Act. Joyce J. repelled this argument in the following words (pp. 5-6) :. and considering the express generality of the provision, namely, 'in all leases,' which I think is the same thing as if the statute had said 'in every lease' without making any distinction between leases granted before and leases granted after the passing of the Act, upon the whole I come to the conclusion that this section was intended to apply to every lease, both existing and future, and in effect, as from the commencement of this Act of 1892, and in the absence of an express provision to the contrary, to engraft', using the words of Cockburn C.J. in Duke of Devonshire v. Barrow SteelCo. (1877) 2 Q.B.D. 286 upon every existing lease 'a very plain enactment, and to this enactment we must give its proper effect'.

10. An appeal was taken from the decision of Joyee J, and Lord Justice Buckley-dealt with the argument at p. 13 as follows:

I will first take the section without assistance from the surrounding sections amongst which it is found. It provides that in all leases containing a certain covenant the covenant shall, unless the lease expressly provides to the contrary, be deemed to be subject to a certain proviso. I am asked to read this as if it were not 'In all leases' but 'In such leases as shall be executed after the commencement of this Act.' I see no reason for so doing. 'All leases' means, I think, all leases, that is to say, both existing leases and leases to come into existence.

That is precisely the argument which has been advanced on behalf of the appellants before us also and we think that the remarks of the learned Lord Justice are most apposite. We hold that the use of the word 'all' preceding 'encumbrances and charges' clearly makes a provision which applies to encumbrances and charges which have come into existence prior to the amending Act by which Section 5-A was added. The applicability of the section is plainly retrospective and admits of no doubt or difficulty. We do not think that there is any ambiguity upon a reading of the terms of Section 5-A and, therefore, it is our plain duty to give effect to the terms of the section.

11. Mr. Deo relied upon a number of cases in support of his argument, namely, Doolubdass Pettamberdass v. RamlollThackoorseydass (1850) 5 Moore's I.A. 109, Delhi Cloth Mills v. I.T. Commr., Ko Po Kun v. C.A.M.A.L. Firm A.I.R. [1932] Ran. 197; Bhagwant Rao v.Damodhar [1938] Nag. 91 and Abdul Razak v. Kuldip Narain : AIR1944Pat147 .

12. In Doolubdass Pett amber doss v. Ramloll Thackoorseydass, the provision of law that fell to be construed was:

That all agreements, whether made in speaking, writing, or otherwise, by way of gaming or wagering, shall be null and void; and no suit shall be allowed in any Court of Law or Equity for recovering any sum of money or valuable thing alleged to be won on any wager, or intrusted to any person to abide the event of any game, or on which any wager is made.

No doubt, in that case the Judicial Committee of the Privy Council held that the Act which fell to be construed before them ought not to be construed as affecting existing contracts. But the precise case before them was regarding a contract which had already been sued upon; and it seems to us that their Lordships' decision turned more upon the second part of the provision, namely, 'and no suit shall be allowed in any Court of Law etc. etc.' rather than the former part 'That all agreements, whether made in speaking, writing, or otherwise, by way of gaming or wagering, shall be null and void;'. At p. 126 of the Report the Judicial Committee expressly confined themselves to a case where a contract had already been sued upon and the suit was pending; and their observations were directed only upon those particular facts. The second clause in that provision was not in the same terms as the clause which falls to be construed in the present case. So far as the other cases relied upon by Mr. Deo are concerned, they are undoubtedly authority for the general proposition that Acts which have the effect of impairing contracts or affecting vested rights must be strictly construed and in interpreting such laws, the Court must lean against retrospective effect to their provisions. But in each of those cases the provisions which fell to be construed were in wholly different terms from the provision which falls to be construed in the present case. In most of these cases, however, and particularly in the Nagpur case and the Delhi Cloth Mills' case, the Court emphasised the principle that if a contrary intention does appear in any of the Acts it is the duty of the Court to give effect to it. That, as we have said above, is clearly provided under the terms of Section 5-A unlike the provisions of law which fell to be construed in the cases cited by Mr. Deo.

13. Mr. Deo then urged another ingenious argument. He pointed to the provisions of Section 5(d) of the Agriculturists' Loans Act which was also substituted by the amending Act of 1947. The section provides that subject to the rules, a loan granted under the Act with interest due thereon shall, in default of payment, be recovered in one of the several modes, and the mode prescribed in Clause (d) is-

Out of property comprised in collateral security, if any, according to the procedure for the realization of land revenue by the sale of immovable property other than the land on which that revenue is due.

In conjunction with this provision Mr. Deo referred to the provisions of Sections 140 and 135(c) of the Madhya Pradesh Land Revenue Code, 1954, and he urged that the cumulative effect of all these provisions is that where immovable property is sold for arrears of land revenue due thereon, then the sale is free from encumbrance; but where land other than the land on which the land revenue is due is sold for arrears of land revenue, then the sale is subject to encumbrances. He urged that if the interpretation of Section 5-A be that it is retrospective in operation and gives an encumbrance in favour of the State priority over all encumbrances and charges, then the provisions of Section 5(d) read with the provisions of the M. P. Land Revenue Code to which we have referred above, would be rendered nugatory.

14. With the effect of Section 5-A upon the provisions of the M. P. Land Revenue Code we are not here directly concerned. It may be that when the Legislature amended the Agriculturists' Loans Act, 1884, by the amending Act No. XXXIV of 1947, some corresponding amendments in Sections 135(c) and 140(1) of the M. P. Land Revenue Code may have been necessary. We do not say that they were necessary. But for that reason we cannot give to the provisions of Section 5-A a construction which upon its terms it cannot bear. In our opinion, the words of Section 5-A clearly imply that it applies to encumbrances and charges prior to the coming into force of the section; and if that be so, we can only give effect to its plain language without regard to its possible consequences upon the interpretation of other enactments. We uphold the finding of the trial Court upon this point.

15. Upon the view we have taken on this question it is unnecessary to consider an argument advanced by the Special Government Pleader on behalf of the State. The argument is based upon two decisions of this Court reported in Secy, of State for India v. Bombay Landing & Shipping Co.(1808) 5 B.H.C.R. 23 and Bank of India v. Bowman (1951) 57 Bom. L. 345; and the argument is that even apart from the provisions of the statute, debts of the State would have priority over the debts of private individuals. The principle, according to counsel, is founded upon the English Common Law. Since we have already held that upon the statute the State has a priority, we need not consider this argument.

16. The next question raised does not directly concern respondent No. 3 but only respondents Nos. 1 and 2 who were the original mortgagors, and that is the question of interest. The trial Court considered the question of future interest from the date of decree and disallowed it with the cryptic remark that 'future interest is not granted as the amount has already reached Damduppat'. It may be stated here that the principal amount of the mortgage was Rs. 4,000 and since the interest calculated up to the date of the decree came to much more than Rs. 4,000, the trial Court felt constrained to decree the claim for interest only up to the extent of the principal amount because of the provisions of Section 10 of the C.P. and Berar Moneylenders Act, which enjoins upon the Courts that they shall not in respect of any loan made after the Moneylenders Act came into force, decree on account of arrears of interest a sum greater than the principal of the loan.

17. While this is a good argument for limiting the quantum of the interest up to the date of the suit, we are quite unable to see how the provisions of Section 10 can be a valid ground for disallowing interest from the date of the suit until realization, which is in the discretion of the Court. That part of the claim for interest was claimed in the relief clause in the plaint and ought to have been granted. There is also a direct authority that Section 10 of the C.P. and Berar Moneylenders Act does not preclude the Court from allowing interest after the date of suit till realization and it is to be found in a Division Bench judgment of the Nagpur High Court in Devidas v. Yeotmal CentralBank [1956] A.I.R. Nag. 239

18. At the same time it was pointed out by Mr. Abhyankar who assisted us amicus curiae that interest from the date of decree until realization has subsequently been awarded to the plaintiffs. It appears that defendants Nos. 1 and 2, the mortgagors, made an application for instalments under Section 11 of the Moneylenders Act and at the time of granting instalments the Court awarded interest at 4 per cent per annum, simple, to the plaintiffs from the date of the decree until realization. This is not disputed by Mr. Deo. In view of this, we do not think that the claim for interest now made can be sustained. Mr. Deo urged that 4 per cent, was too low a rate and that he should be awarded interest at 6 per cent, per annum under Order XXXIV, Rule 11, of the Code of Civil Procedure. In our opinion, the order passed upon the instalment application cannot now be interfered with. In any event it was a discretionary order, with the exercise of which discretion we see nothing wrong.

19. The last point urged by Mr. Deo was as regards the costs of the State, respondent No. 3, which were saddled on the plaintiffs by the trial Court. Mr. Deo urged that so far as the plaintiffs are concerned, the claim of the State was founded upon a law which came into force after their mortgage and the State justified their prior claim only upon the basis of Section 5-A. He therefore, urged that so far as the plaintiffs are concerned, it was not their fault that they had to join the State as a party to the suit, because the State had become subsequent mortgagees, and even the right which they claimed was a right which was born after the mortgage and due to no fault of the plaintiffs. We think that in these circumstances the proper order to have passed, so far as the costs in the trial Court between the plaintiffs and the State are concerned, should have been that each party do bear its own costs and that the plaintiffs ought not to be mulcted with the costs of the State. To that extent the decree of the trial Court will be modified.

20. The other contention on the ground of costs directed against the trial Court's decree was that the counsel's fee assessed as between the plaintiffs and defendants Nos. 1 and 2 which was awarded by the trial Court was only Rs. 300. Mr. Deo urged that there is no reason why the full counsel's fee should not have been awarded to the plaintiffs. There appears to be no reason given in the judgment of the trial Court as to why the counsel's fee should have been arbitrarily limited to Rs. 300 and not granted on the ad valorem scale. In this respect also, we think that the discretion exercised by the trial Court was not a judicial discretion. We, therefore, order that the counsel's fee awarded to the plaintiffs in the trial Court shall be ad valorem as per the scales prescribed and applicable at that time.

21. In the result, we dismiss the plaintiffs' appeal with costs of respondent No. 3 only, and subject to the two modifications indicated above. A decree be drawn up accordingly.


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