K. S. Hegde, J.
1. These arc connected appeals. They arise out of the decree and judgment of the learned District Judge, Civil Station, Bangalore, in O. S. No. 59 of 1949-50.
2. Appellants in Regular Appeal No. 154 of 1952-53 are defendants 1 to 7 in the suit, The plaintiff is the appellant in the connected Regular Appeal No. 196 of 1952-53. The suit in question was instituted on the foot of two mortgage deeds dated 12-1-1937 and 14-6-1937, executed by defendants 1 and 2 in conjunction with their deceased brother Ahmed Saleh Mohamed Sait. The principal sum secured, under the first mortgage is Rs. 20,000/-and under the second mortgage is Rs. 24.000/-.
A sum of Rs. 51,200/- was claimed with future interest under the first mortgage marked as Exhibit1 and a further sum of Rs. 60,200/- with future interest was claimed under the second mortgage marked as Exhibit II. The defendants admitted the execution of the suit mortgages but they pleaded that these deeds were executed under fraud, coercion and undue influence.
It was further pleaded that the same were not supported by consideration. In the alternative, the defendants prayed for reliefs under the Mysore Money Lenders Act as well as under the Mysore Usurious Loans Act. It was also contended that the defendants 1 and 2 were minors on the dates of the said mortgages. Exhibits I and II. The trial Court has rejected the defence based on fraud, coercion and undue influence.
It came to the conclusion that defendants 1 and2 have not been proved to be minors on the dates of the mortgages, Exhibits I and II, and that the mortgages in question were fully supported by consideration. The Court below held that the mortgagors were entitled to relief under Section 17 of the Mysore Money Lenders Act. But in its opinion it is not permissible to go behind Exhibits I and II and the consideration mentioned in these deeds should be deemed to be the 'original loan'.
Defendants 1 to 7 have challenged the correctness of the decision of the trial Court on the points held against them. But their learned Counsel quite appropriately did not press the pleas of fraud and coercion. He was content to rest his case on the plea of undue influence. The plea of minority of defendants 1 and 2 on the dates of Exhibits I and II was also not urged before us.
The true scope of Sections 14 to 17 of the MoneyLenders Act and Section 3 of the Mysore Usurious LoansAct was debated before us at length. Before examining these contentions it is necessary to set out brieflythe events leading up to the execution of Exhibits Iand II.
3. Defendants 1 and 2 and their deceased brother (Ahmed Saleh Mohamed Sait) are the sons of late Saleh Mohomed Sait. The said late Saleh Mohomed Sait was a Cutchi Memon. He was residing within the limits of the former Civil and Military Station, Bangalore, and he is said to have had an agency business. He was in a fairly prosperous condition.
He had a building in the Civil Station Area which fetched him a monthly rent of Rs. 650/-. He died in or about 1917, leaving behind him his widow (Rahamatbai) and his three minor sons (deceased Ahmed Saleh Mohammed Sait and defendants 1 and 2), and three daughters. At the time when the inheritance opened the parties were governed by Hindu Law in the matter of succession and inheritance.
From the available evidence, it is clear that Ahmed Saleh Mohomed Sait was born in about 1909; defendant 1 must have been born sometime in 1915 and the second defendant was born a few months after the death of his father. The eldest son became major only in or about 1927. Till then the widow (Rahamatbai) was managing the property. Till about 1930, no debts appear to have been borrowed either by the widow (Rahamatbai) or by the deceased Ahmed Saleh Mohamed Sait.
Under Exhibit V dated 20-5-1930 a sum of Rs. 6,000/- was borrowed. The said deed was a simple mortgage executed by the deceased Ahmed Saleh Mohomed Sait and defendants 1 and 2. Defendants 1 and 2 were minors at that time. Their mother (Rahamatbai) represented them as their guardian. Ever since this document, there have been continuous borrowings, in quick succession. Next in order of priority is Exhibit IV a mortgage dated 27-3-31 in favour of the plaintiff, for a sum of Rs. 22,000/-.
This was followed by Ex. VI a mortgage with possession in favour of one Krishnalal. He is said to be a benamidar for the plaintiff. But there is hardly any evidence in support of this plea. This was followed by a usufructuary mortgage Ex, III dated 14th July 1933, in favour of the plaintiff. The consideration for this deed is Rs. 50,000/-.
This transaction is the subject-matter of R. A. No. 134/53 arising cut of Original Suit No. 19/1943-on the file of the learned District Judge, Civil Station, Bangalore. The merits of this transaction will be considered separately. But ever since Ex. III the deceased brother of defendants 1 and 2 had been borrowing from the plaintiff in quick succession. To some of the transactions Defendants 1 and 2 were also parties.
Plaintiff appears to have been their sole creditor ever since Exhibit III. Defendants 1 and 2 were quite young at the time when these loans were borrowed. The recitals in Exhibit 1 show that there was indiscriminate borrowing. It is contended that the deceased Ahmed Saleh Mohomed Sait was a profligate; his mother was illiterate and ignorant; Defendant 2 was a minor during most of the period; Defendant 1 was immature and both defendants 1 and 2 were under the influence of their deceased brother.
It is alleged that the plaintiff exploited the irresponsibility of the deceased Ahmed Saleh Mohamed Sait and through him unduly influenced defendants 1 and 2. Most of the transactions are said to be prima facie unfair. From these we are asked to conclude that Exhibits I and II are the outcome of undue influence exercised by the plaintiff directly or through the deceased Ahmed Saleh Mohomed Sait.
It will be seen that ever since Exhibit III defendants 1 and 2 or their deceased brother was not in possession of any immovable property. It is not shown that they had any other source of income. It is vaguely suggested that they had an agency business. There is no satisfactory evidence in support of that case. Nor is there any material on record from which we can conclude as to what income, if any, this alleged agency business was yielding to them.
It may also be noted that on the dates of Exhibits I and II, the eldest brother (deceased Ahmed Saleh Mohomed Sait) was about 28 years old, the second brother (defendant 1) was 22 years old and the youngest (defendant 2) was 20 years old. To Exhibit II, the widow (Rahamatbai) was also a party. She had managed the property efficiently from 1917 to 1927. Both Ahmed Saleh Mohomed Sait and Rahamatbai died in about (1939).
The validity of the transactions under Exhibits I and II remained unchallenged till about 1943. Defendants 1 and 2 sold the suit property to Defendants 6 and 7 on 22-1-1943 as per Ex. 'C'. It is only after the said sale, the validity of Exhibits I and II came to be challenged. In Exhibit 'C' there is no mention of any undue influence having been exercised by the plaintiff. It is recited therein that they (Exhibits I and II) were taken by force and are not supported by consideration.
These recitals are obviously false. The relevant allegations in the written statement are vague and lacking in particulars. In the written statement, there is no reference to any undue influence having been exercised on defendants 1 and 2 by the deceased Ahmed Saleh Mohomed Sait. The averments in the written statement are rambling and confused. There is no clear cut case.
No issues were raised as regards any undue influence having been exercised by the plaintiff on the deceased Ahmed Saleh Mohamed Sait or his (Plaintiff) having exercised any such influence on Defendants 1 and 2 through Ahmed Saleh Mohomed Sait. Under these circumstances, it is not possible to reject the complaint of the plaintiff that the contesting defendants are taking up a new case.
4. Sri T. M. Krishnaswamy Iyer, the learned Counsel for the contesting defendants has invited our attention to a large number of decisions to ascertain the true scope of the plea of undue influence. Reliance was placed on the decisions reported in Permanent it Trustee Co., New South-Wales Ltd. v. Francis Henry Bridgewater , Sundarammal v. Subramania Chet-tiar, 29 Mad LJ 236: (AIR 191C Mad 278), Sami Sah v. Parthasarathy Chetty, 31 Ind Gas 739: (AIR 1916 Mad 862), Singar Kunwar v. Basdeo Prasad : AIR1930All568 , Palanivelu Mudaliar v. Neelavathi Ammal , and Rama Patter and Bros. v. Manikkam, ILR 58 Mad 454: (AIR 1935 Mad 726).
To these we may add the decision reported in Dubash D. K. Ahmad Ibrahim Sahib v. Meyyappa Chettiar : AIR1940Mad285 . It is seen from these decisions that the party pleading un-due influence will have to establish that the opposite party had an influence over Mm either be- cause of the close relationship existing or due to other circumstances and by exercising that influence he took unfair advantage at his cost. Once these factors are established then it is for the other side to establish the validity of the trans- action. In deciding the question of undue influence. as in most other matters, an overall view of the case will have to be taken.
Undoubtedly, the exercise of undue influence would ordinarily he a matter of inference from proved facts. The character of the transaction is likely to be one of the important circumstances that will have to be considered. But no single circumstance is conclusive. The unfairness of the transaction by itself is insufficient to invalidate the same. Applying these tests to the facts of the present case, we are not convinced that the contesting defendants have made out a case of undue influence. Initially, their case suffers from want of proper pleadings.
There is no evidence to show that Ahmed Saleh Mohmed Sait who was 28 years old at the time of Exhibits I and II was in the grip of the plaintiff nor is there any reliable evidence to prove that Ahmed Saleh Mohomed Sait exercised any influence over defendants 1 and 2. It is true that several of the debts included in Exhibit I would not have been binding on defendants 1 and 2 But it is likely that they undertook the liability to discharge the same as it was borrowed to meet their requirements as well. We are not satisfied that Exhibits F to F-16 are not supported by consideration. Their execution is admitted.
It is a fact that the plaintiff has not exhibited his account entries to corroborate Exhibits F to F16. But it is admitted that the relevant account books had been produced in Original Suit No. 19 of 1943 and the defendants had opportunity ot examining the same. P. W. 3 (Ganeshmull) an undivided cousin of Plaintiff speaks to the passing of consideration. His evidence as aforesaid is corroborated by Exhibits F to F-16. The available evidence is satisfactory and convincing. Hence is no contra evidence worth mentioning. Hence we hold that Exhibit I is supported by consideration.
5. The only ground urged against the binding character of Exhibit II is that there is no satisfactory proof as regards the amounts spent for reconstructing the cinema building. Other items of consideration have not been disputed before us. The fact that the mortgaged building had been reconstructed has not been disputed nor could the same be disputed. The reconstruction work was undertaken by the plaintiff, admittedly at the request of the mortgagors. In Exhibit II the mortgagors have ratified the work executed and fixed the amount spent.
In the circumstances of the case, it is cleat that the work was undertaken by the plaintiff as the agent of the mortgagors and not on his own. In view of the admissions made by the mortgagors in Exhibit II, we attach no importance to the fact that the plaintiff did not produce any other evidence, either by way of accounts or evidence aliunde, to prove the exact amount spent for effecting the improvements in question. For these reasons, we conclude that both Exhibits I and II are valid and supported by consideration.
6. This takes us to the question as to how far the transactions covered by Exhibits I and II are liable to be re-opened under the provisions of the Mysore Money Lenders Act and the Mysore Usurious Loans Act.
7. The plaintiff being a money lender, the suit transactions are controlled by Sections 16 and 17 of the Mysore Money Lenders Act and Section 3 of the Mysore Usurious Loans Act. As per Section 16 of the Mysore Money Lenders Act, where the interest charged is in excess of the rates prescribed as maximum in Sections 14 and 15, the Court is required to presume for the purpose of Section 3 of the Mysore Usurious Loans Act, 1923, that the interest charged is excessive and that the transaction was substantially unfair.
The maximum interest allowable under Section 14 is 9 per cent, per annum in the case of a secured loan and 12 per cent per annum in the case of an unsecured loan. Section 15 lays down that no money lender shall recover by suit interest of any kind at a rate exceeding 6 per cent. per annum with yearly rests in respect of any loan made after the commencement of the Money Lenders Act under a contract which provides for the payment of compound interest. The most important provision for the purpose of this case is Section 17 of the Mysore Money Lenders Act. There was much debate at the Bar as regards its true scope and hence we quote that section in full. It is as follows:
'No Court shall, in respect of a loan advanced before or after the commencement of this Act, 'decree on account of arrears of interest,' a sum greater than the 'principal of the original loan''. (underlining (here in ' ') is mine).
The Mysore Money Lenders Act defines the terms 'loan' as well as 'principal'. The definition of the term 'loan' is contained in Section 2(3) of the Act. It is as follows:
' 'Loan' means an advance, whether of money or in kind, at interest made by a money lender and includes any transaction which in the opinion of the Court is in substance a loan.' 'Principal' is defined under Section 2(9) of the Act and it is as follows :
' 'Principal' means in relation to a loan the amount actually lent to the debtor.' Under Section 3 of the Mysore Usurious Loans Act, is all cases where the Court has reason to believe that that interest charged is excessive and that the transaction as between the parties thereto is substantially unfair, the Court has the power to re-open the transaction, take an account between the parties, and relieve the debtor of all liability in respect of any excessive interest.
8. A perusal of Exhibit I clearly shows that initially the creditor advanced small loans and charged interest on the same at 37 1/2 per cent per annum. He consolidated those loans by funding the principal and interest together and took Exhibit I for the consolidated sum. The interest charged under Exhibit I is 12 per cent per annum. This transaction clearly falls within the mischief of Section 16 of the Mysore Money Lenders Act which enables the Court to reopen the transaction under Section 3 of the Mysore Usurious Loans Act.
It is admitted that the interest claimed in the suit is more than the principal and consequently the transaction is governed by Section 17 of the Mysore Money Lenders Act. The same is the position as regards Exhibit II. But there is great deal of controversy as regards the true meaning of the words 'decree on account of arrears of interest' and 'the principal of the original loan'. Let me first take up the question as to what exactly is the meaning of the words 'the principal of the original loan'.
It is contended on behalf of the plaintiff that the loan in Exhibits I and II is the amount mentioned as consideration in those documents. For this proposition reliance is placed on the decision reported in Jaigobind Singh v. Lachmi Narayan Ram, AIR 1940 FC 20. Similarly reliance is placed on the decisions reported in B. S. Lyle Ltd. v. Chappell, 1932-I KB 691; Chethambaram Chettiar v. Loo Than Poo, AIR 1940 PC 60; Lal Singh v. Ramnarain Ram AIR 1942 Pat 138; Raghunath Prasad v. Sarju Prasad, AIR 1924 PC 60.
We are clearly of opinion that these decisions are of no assistance in deciding the meaning of the words 'the principal of the original loan.'' The terms of a particular deed, may impress the deed with the character of a 'loan' though it includes earlier advances, it might well be that the fresh transaction may be deemed to discharge the antecedent loans and create a new loan. But in this case we are guided by the definition given in the Mysore Money Lenders Act.
The word 'principal' has been defined to mean, 'the amount actually lent to the debtor'. Again. the expression used is not 'loan' but 'original loan'. If we accept the argument advanced on behalf of the plaintiff then we must consider the word 'original' as legislative superfluity. Such a construction will not be in accordance with the accepted canons of interpretation of statutes. The Mysore Money Lenders Act was designed to give relief to the harassed debtors.
It is the duty of the Court to effectuate the true purpose of that Act. The interpretation placed should not be such as to give room for the creditor to defeat the purpose of the Act. An almost similar provision under the Orissa Money Lenders Act was considered by a Full Bench of the Orissa High Court in the case reported in Siba Prasad Misra v. Nurabati Zamindariani, AIR 1949 Orissa 37. The relevant portion of Section 10 of the Orissa Money Lenders Act is as follows :
'-......that no Court shall in any suit ..... orby any other person in respect of a loan ..... passa decree for an amount of interest .... which isgreater than the amount of the loan originally advanced . ....'
Their Lordships in interpreting file provision came to the conclusion that the 'original loan amount' meant the 'first loan' or in other words 'the money actually lent'. We are in agreement with this view. In our judgment the maximum amount that could be decreed as interest cannot exceed the principal, i.e., the money actually lent.
9. The next question that arises for consideration is as to what is the import of the words 'decree on account of arrears of interest'. According to the plaintiff, the mischief of Section 17 of the Mysore Money Lenders Act exhausts itself on the date of the institution of the suit and he is entitled to interest at the rate fixed by the Court from the date of the institution of the suit till the realisation of the amount.
It is contended that the contract between the parties comes to an end, on the institution of the suit and the decree ultimately passed dates back to the date of the suit. This contention is attempted to be based on the provisions contained in Section 34 and Order 34, Rule 11, C. P. C. It is urged that after the institution of the suit, interest allowable is in the discretion of the Court and is not governed by the contract.
It is urged that Section 17 of the Mysore Money Lenders Act may inhibit a contract but nut the discretion of the Court. On this assumption it is contended on behalf of the plaintiff that interest accruing after the institution of the suit cannot be properly called as 'arrears of interest. No authorities have been cited in support of this proposition. It appears to us that this contention is untenable.
It is true that by incorporating the amended Rule 11 to Order 34, C. P. C., the law as regards the awarding of interest subsequent to the institution of the suit in respect of mortgage suits has been brought in line with the provision contained in Section 34, C. P. C. By this amendment, the legislature has set at rest the prevailing conflict of judicial opinion on the relative scope of Section 34 vis a vis with that of Order 34, IV 11, C. P. C.
But there is nothing in this rule which affords any assistance to the argument that the relationship of mortgagor and mortgagee comes to an end on the institution of the suit. That relationship continues to exist till the date fixed for redemption as could be seen from Order 34, Rules 2 and 4, C.P.C. In support of this conclusion reliance can be placed on the decision of the Privy Council reported in Kusum Kumari v. Debi Prosad .
In that case, their Lordships had to interpret the scope of Section 6 of Sonthal Parganas Settlement Regulations. The relevant portion of that section is in pari materia with Section 17 of the Mysore Money Lenders Act. Interpreting the same, their Lordships held that 'the amount decreed as interest', which according to them meant, the interest payable till the date fixed for the payment of the mortgage money, should not be more than the principal originally advanced.
In arriving at this conclusion, Their Lordships relied on the fact that the relationship of mortgager and mortgagee continued to exist till the date fixed for redemption. It is urged on behalf of the plaintiff that in view of the amendment to Rule 11 of Order 34, C.P.C., there has been a change; in the law and the contract as regards the payment of interest is not operative after the institution of the suit. We do not think that it is so. It is reasonable to interpret the amendment as laying clown that the contract in question is subject to any modification directed by the Court.
In interpreting an amendment, it is not proper to assume that the legislature intended to make any basic departure from the existing law, unless the language employed either expressly or by necessary implication, suggests that interpretation is the most appropriate one. There is nothing in the language of the amended Rule 11 of Order 34, C.P.C. to support the construction contended for. Ordinarily, an amendment is intended to carry out tho immediate legislative objective, which so far as we can gather is to brine Rule 11 of Order 34 in line with Section 34 of the Civil Procedure Code.
To achieve this purpose, there is no need to make any change in the character of the contract; but it will be sufficient if the Court is given the discretion to modify the contract. We are unable to agree that the Privy Council decision referred to above is no more effective. The resulting position is that if the limit fixed by Section 17 of the Mysore Money Lenders Act was reached before the institution of the suit, no further interest can be allowed, for the period between that date and the date fixed for redemption.
10. The only question that remains to be considered is as to what is the 'principal amount originally advanced' under Exhibits I and II respectively, on the basis of the conclusions arrived at hereinbefore. There is no dispute on this point. We are obliged to the learned counsel for the contesting defendants for assisting us by filing a memo, after notice to the opposite side, showing tho monies originally lent. The calculations shown therein have not been challenged on behalf of the plaintiff. Hence, we accept them as correct, As per those calculations, the principal amount doc under Exhibit I is Rs. 15,017-8-0 and under Exhibit II, the principal amount due is Rs. 22,954/-.
11. The plaintiff is entitled to these amounts. He is further entitled to equal amounts, i.e., Rs. 15,017-8-0 under Exhibit I and Rs. 22,931/- under Exhibit II as interest under Section 17 of the Mysore Money Lenders Act. The interest so ordered will also include future interest till the date fixed for redemption. Six months' time is granted for redeeming the property. The principal amount will carry interest at 6 per cent per annum from the date fixed for redemption till realisation. The trial Court's decree is modified as indicated hereinbefore.
12. In the result R.A. No. 154/52-53 is allowed in part and R.A. No. 196/52-53 is dismissed. Neither party has succeeded in full. Taking into consideration the extent of the success or failure of the parties to establish the case put forward by them, we think it proper to direct the parties to bear their own costs in these appeals. But in the trial Court the plaintiff will get proportionate costs and the defendant will bear his own costs.
N. Sreenivasa Rau, J.
13. I agree.
14. Order accordingly.