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Gurcharan Prasad and ors. Vs. Ali Sajjad - Court Judgment

LegalCrystal Citation
Subject Civil
CourtAllahabad
Decided On
Reported inAIR1939All19
AppellantGurcharan Prasad and ors.
RespondentAli Sajjad
Excerpt:
.....1993 mah.lj 74; 1993 lab ic 1858 overruled]. - this plea is well founded; this was precisely the view which was taken by this court in man mohan das v. if a decree has already been passed on the basis of a loan and remains unsatisfied in whole or in part, the court which passed the decree shall on the application of the judgment-debtor amend it by reducing in accordance with the provisions of sub-section (1), the amount decreed on account of interest. there may therefore well be a case where a lower rate may be allowed......notified was to run with effect from 8th may 1935, onwards, the court below could not reduce the future rate of interest for the period prior to 8th may 1985. but we think that the court had full jurisdiction to reduce the rate to of 3 1/2 per cent, from 8th may 1935 till 14th january 1936. we also think that the rate of future interest allowable with effect from 15th january 1936 should be the notified rate of 3 1/4 per cent, until such a date when a new rate of interest is notified.8. section 30 of the act was not considered in that case. the court observed:it is unnecessary for us to express any opinion on the interpretation of section 30...as in the case before us the judgment-debtor did not apply under that section at all.9. in nannoo mal v. hoti lal : air1937all645 (which we have.....
Judgment:

Collister, J.

1. This is an application in revision by certain creditors in respect to an order which was passed by the Subordinate Judge of Jaunpur under the U.P. Agriculturists' Belief Act (Local Act 27 of 1934) on 10th July 1936. The opposite party are the judgment-debtors of the applicants. They executed a mortgage in 1911, the principal sum secured being Rs. 26,000. The rate of interest was 10 annas per cent, per mensem compoundable annually (equivalent to 7 1/2 per annum). On 29th January 1926, the mortgagees' suit upon the mortgage was decreed for Rupees 47,230-11-6. Rs. 19,000 had been realized before the suit, and it appears that after the decree a further sum of Rs. 36,000 was realized. The decree-holders then applied in execution with a view to realize the balance amounting to Rs. 38,000. The opposite party preferred an application purporting to be under Sees. 4 and 30, Agriculturists' Belief Act. Their prayer, as contained in paras. 7 and 8 of the application, was as follows:

7. Under Schedule 30, Act 27 of 1934, the interest from 1st January 1930, up to 8th May 1935, should be awarded at the rate mentioned in Schedule 3.

8. Under Section 4 of the aforesaid Act the rate of future interest shall not exceed the rate notified by the Local Government in the Gazette.

2. They also prayed for the fixing of instalments presumably under Section 5 of the Act. The operative part of the lower Court's order is in the following terms:

I would allow the petition of the judgment-debtor and order that the interest be reduced in accordance with the provisions of Section 30, U.P. Agriculturists' Relief Act, and further order that the sum. that may thus be found payable by the judgment-debtor be payable by instalments extending over a space of ten years, the rate of one-tenth of the debt for each year commencing from 31st December 1937, and in default of payment of any two consecutive instalments the amount of those two instalments would become at once realizable by execution of the decree. I would allow no future interest in view of the fact that already a very exorbitant amount has been realized by the creditor from the judgment-debtor.

3. The first plea taken before us by learned Counsel for the applicants is that the Court below was in error in directing that in default of payment of two instalments only those two instalments should become realizable. This plea is well founded; but a reference to Section 3(4) of the Act shows that the Judge's order is erroneous in another respect also. Sub-section (4) provides:

If the decree provides for payment by instalments, the Court shall direct that, where the number of instalments allowed is four or five and any two instalments are in arrears or where the number allowed is six or more and any three instalments are in arrears, the decree-holder may, notwithstanding the provisions of any law for the time being in force, immediately enforce payment of the whole amount then remaining due under the decree.

4. It is thus obvious that in the present case since the instalments are more than six, the decree-holders will not be at liberty to take out execution unless and until there has been default in three instalments the Section doe's not say whether they should be consecutive or otherwise-and that then the whole amount remaining due would become realizable. The other plea taken before us on behalf of the applicants is that interest should be allowed from 1st January 1930 up to and after the date of the order fixing instalments at the rates provided in the Act. The applicants judgment-debtors did not ask for and were not competent to ask for -any reduction of interest up to 1st January 1930. What they claim is that interest from 1st January 1930 should be awarded at the rate mentioned in Schedule 3, up to the date of the order fixing instalments and that thereafter it should be awarded in accordance with the various notifications which have been issued by the Government under Section 4 of the Act. The lower Court has directed that interest be reduced according to the provisions of Section 30, but has not specified the exact manner of such reduction. It has not allowed future interest. As regards future interest, i.e. interest from the date of the order fixing instalments, there has been considerable discussion before us as to whether Section 4 is or is not applicable to decrees passed before the coming into force of the Act. Section 4(1) provides that:

Notwithstanding anything contained in the Civil Procedure Code, 1908, the rate at which future interest may be allowed in any decree for payment of money or for sale in default of payment of money or for foreclosure or in any order for grant of instalments passed against an agriculturist shall not exceed the rate notified by the Local Government in the Gazette under Sub-section (2) as in force at the time when the decree or order, as the case may be, is passed.

5. It is contended on behalf of the applicants that Section 4 relates only to decrees passed after the Act came into force and does not apply to cases in which a decree previously passed is to be amended under Section 30(2), and reliance is placed on a single Judge decision, Nannoo Mal v. Hoti Lal : AIR1937All645 Against this there is a Bench decision, Man Mohan Das v. Iahar Husain : AIR1937All449 . As regards the last-named case, the judgment does not show whether the decree was passed before or after the Act; but we have sent for the record and we find that the decree dates back to a time prior to the passing of the Act. The Court had converted the decree originally passed into a decree for instalments. At page 371 the learned Judges (Sulaiman Order J. and Ben-net J.) observed:

We rather think that the reason why the provisions of Section 5 come immediately after Sections 3 and 4 is that it was intended that when the decree is converted into a new decree for payment by instalments, the provisions of Section 4 would naturally apply.

6. At page 372 they say:

We think that when a new decree is passed Under Section 5, the Court must, in fixing the future interest, act in accordance with the provisions of Section 4.

7. Towards the end of the judgment the learned Judges say:

In the present case the Court below made its order on 25th May 1935. As no rate of interest had been notified by Government for the period prior to 8th May 1935 and the rate of 3 1/2 per cent, notified was to run with effect from 8th May 1935, onwards, the Court below could not reduce the future rate of interest for the period prior to 8th May 1985. But we think that the Court had full jurisdiction to reduce the rate to of 3 1/2 per cent, from 8th May 1935 till 14th January 1936. We also think that the rate of future interest allowable with effect from 15th January 1936 should be the notified rate of 3 1/4 per cent, until such a date when a new rate of interest is notified.

8. Section 30 of the Act was not considered in that case. The Court observed:

It is unnecessary for us to express any opinion on the interpretation of Section 30...as in the case before us the judgment-debtor did not apply under that Section at all.

9. In Nannoo Mal v. Hoti Lal : AIR1937All645 (which we have already mentioned), Niamatullah J. held that Section 4, Agriculturists' Belief Act, is confined to cases in which a decree is passed after the Act comes into force and does not at all apply to cases in which a decree previously passed is to be amended under Section 30(2) of the Act. The learned Judge at page 683 says:

It is said that the word 'passed' indicates that Section 4 applies to decrees previously passed. I am unable to accept this contention, mainly because such an interpretation would bring Section 4 in conflict with Section 30(2). If Section 4 is applicable, as is contended, the Court can reduce future interest to 3 1/2 per cent, whereas Section 30(2) makes it incumbent upon the Court to allow interest for the period after 1st January 1930, at the scheduled rate, which is in most eases higher than 8 1/2 per cent.

10. There is another argument which has been advanced before us by learned Counsel for the applicants, and it is as follows : Section 3 of the Act provides for fixing of instalments in a decree which has been passed after the Act came into force. Section 5 gives the Court power to convert a decree, whether passed before or after the Act came into force, into a decree for instalments, and it makes Section 3 applicable for the purpose of fixing instalments. It is argued that since Section 4 was not made applicable, it was not the intention of the Legislature that the provisions of that Section should apply to decrees passed before the Act came into force. Section 5 however, as we have already said, is concerned with all decrees, whether passed before or after the Act came into force, and it merely provides for converting a decree as originally passed into an instalment decree in the manner laid down in Section 3. The expression occurring in Section 4 'or in any order for grant of instalments passed against an agriculturist' is apparently as it stands wide enough to cover all such orders, whether passed in respect of a decree anterior to or posterior1 to the Act, and we are inclined to think that when Section 3 was made applicable by Section 5, it was the intention that the provisions of Section 4 should automatically come into operation where a decree whether passed before or after the Act, is converted into a decree or order granting instalments. This was precisely the view which was taken by this Court in Man Mohan Das v. Izhar Husain : AIR1937All449 already referred to. As regards the single Judge decision in Nannoo Mal v. Hoti Lal : AIR1937All645 with great respect we are not inclined to agree with the learned Judge that Section 4 if held to be applicable in the case of decrees passed before the Act came into force, would be in conflicts with Section 30(2). Section 30(1) provides:

Notwithstanding anything in any contract to the contrary, no debtor shall be liable to pay interest on a loan taken before this Act comes into force at a rate higher than that specified in Schedule 3 for the period from 1st January 1930, till such date as may be fixed by the Local Government in the Gazette in this behalf.

11. Sub-section (2) says:

If a decree has already been passed on the basis of a loan and remains unsatisfied in whole or in part, the Court which passed the decree shall on the application of the judgment-debtor amend it by reducing in accordance with the provisions of Sub-section (1), the amount decreed on account of interest.

12. Under Schedule 3 certain maximum rates are prescribed with effect from 1st January 1930, and these rates were thereafter subject to modification in accordance with rates which might be notified by the Government under Section 4 subject to the provisions of Note (b); but when once an order for instalments was passed, it seems to us that it was the intention of the Legislature that the maximum rates should be those given in the various notifications under Section 4, being no longer subject to Note (b) to Schedule 3. Under Section 30(1), the rates fixed in Schedule 3 will be applicable only till such date as may be fixed by the Local Government in the Gazette in this behalf. In our opinion the interest from 1st January 1930 up to the date of the order under revision, i.e. the order fixing instalments, should be not higher than the rates given in Schedule 3 read with Notes (a) and (b); and we think the Court below was wrong in refusing future interest. From the date of the aforesaid order, interest should be calculated according to the various notifications which may have been issued by Government under Section 4. Learned Counsel for the applicants contends that we are not justified in allowing interest at rates lower than the maximum rates which have been prescribed by the Act. In the present case the rate of future interest originally decreed was 6 per cent, per annum, whereas the rate prescribed in Schedule 3 for the period from 1st January 1930 up to the date of the first notification, i.e. 8th May 1930, works out at 6 1/2 per cent. Learned Counsel maintains that this is the rate which we ought to allow. We are unable to accept this contention. Section 30(1) provides that the rate of interest shall not be higher than that specified in Schedule 3, and this does not imply that the Court is not at liberty to allow a lower rate than that prescribed by the Act. In a Full Bench case, Raghubir Singh v. Mulchand : AIR1937All598 the Court observed:

It may also be noted that the rates of interest proscribed in Schedule 3 are the maximum rates beyond which the interest cannot be allowed. They are not necessarily the rates which should be allowed in every case by the Courts. There may therefore well be a case where a lower rate may be allowed.

13. That same Full Bench held that the rate of interest to be fixed by the Court in an application under Section 30 of the Act is to be calculated, not on the accumulated amount due under the loan, but upon the principal amount advanced as loan, and it is thus clear that interest in the present case with effect from 1st January 1930 will be calculated on the principal sum. In the result we modify the lower Court's order in the following manner : We direct that interest from 1st January 1930 shall be calculated under Schedule 3, Note (a) of the Act upon the principal sum at 6 per cent, per annum simple up to 8th May 1935 (the date of the first notification), that thereafter it shall be calculated in the manner prescribed in Note (b) to Schedule 3 up to the date of the order granting instalments and that thereafter it shall be calculated at the rate prescribed in the notification of 11th January 1936 and shall thereafter be modified in accordance with any subsequent notifications which may have been or may be issued. As regards the matter of instalments we direct in accordance with Section 3(4) of the Act, that where any three instalments are in arrears, the decree-holder will be at liberty to enforce payment of the whole amount then remaining due under the decree. We make no order as to costs.


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