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Lala Man Mohan Das Vs. Syed Izhar HusaIn and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1937All449
AppellantLala Man Mohan Das
RespondentSyed Izhar HusaIn and ors.
Excerpt:
- - as the revision has partly failed and partly succeeded, we direct that the parties should bear their own costs of this revision......rate for future interest not exceeding such a maximum limit, and the maximum limit is fixed by the rate notified which is in force at the time when the decree or order is passed. sub-section (2) makes it further clear that:that rate shall be the rate in force for future interest from such date as may be notified by the looal government until such date as it is superseded by a new rate.5. this sub-section shows that the rate to be notified by government is to remain in. force for a definite period commencing from one date and ending with another, and that when a new rate is notified with effect from the last date until a further date, the new rate would supersede the' previous one. section 4, sub-section (2), therefore, seems to lay down future rates of interest for definite periods, and.....
Judgment:

1. This is a decree-holder's application in revision from an order of the Munsif of Allahabad, allowing an application of the judgment-debtor under Section 5, Agriculturists' Relief Act. The decree for money in this case was based on a compromise between the parties under which a certain amount was decreed, and carried future interest at Rs. 10 per cent, per annum. The Court below has granted a decree for instalments, and has also reduced the future interest to Rs. 3 per cent, per annum with effect from 15th December 1935. On behalf of the decree-holder, it is urged first that Section 5 of the Act has no application to a compromise decree at all and that accordingly no instalments should have been allowed; and secondly, it is contended 'that when an order for payment by instalments is made, future interest cannot be reduced under Section 4. He relies strongly on a case of the Oudh Chief Court, in Kailash Kuar v. Amar Nath A.I.R. 1936 Oudh 334. That case certainly supports the second contention. It is unnecessary for us to express any opinion on the interpretation of Section 30, nor is it necessary to consider the effect of the provision in that section that the amended decree should bear the date of the original decree, as in the case before us the judgment-debtor did not apply under that section at all.

2. We see no reason why Section 5 should not apply to a decree for money based on a compromise. The section is expressly made applicable to 'any decree for money, etc'. It matters little whether the decree has been passed after contest or is ex parte, or whether it is passed on the merits or whether it has been passed on the basis of an award or compromise. So long as it is a decree for money, it comes within the scope of Section 5. The Legislature has by using the word 'any' made the expression quite general and comprehensive. 'We have, therefore, no hesitation in holding that this compromise decree can under Section 5 be converted into a decree for payment by instalments in accordance with the provisions of Section 3. The second contention is certainly not so simple and the applicant has the authority of the Chief Court in his favour. But the learned Judges of Oudh themselves felt consider, able difficulty in coming to the conclusion that future interest cannot be reduced when instalments are ordered. They considered that such a view would lead to the result that the judgment-debtor would get the benefit of instalments and also an additional benefit of a reduced rate of future interest, while if his application under Section 5 is not allowed, the rate of future interest would not be reduced. They considered that this result was anomalous. The learned Judges considered:

It is true that the words 'any order for grant of instalments passed against an agriculturist' used in Section 4 are quite general, yet we think that in order to avoid the absurdity pointed out above the proper construction to be placed upon them is to restrict their application to orders for grant of instalments passed under Section 3.

3. We regret we are unable to see that there is any absurdity at all. The learned Judges felt compelled to hold that:

Section 5 which provides for the fixing of instalments after the passing of decree is therefore quite out of place in this chapter. Thus it will be seen that the position in which Section 5 has been placed is by no means logical or accurate. We cannot, therefore, help feeling that the drafting lacks precision and is rather inartistic.

4. On these grounds, they felt that the general words 'any order for grant of instalments' should, in the context, be confined to such orders passed at the time of the passing of the decree. We feel that it is the duty of the Court not to hold, if possible, that Section 5 has been misplaced by the Legislature or that its position in the chapter is not logical or accurate or that there is some defect in drafting which lacks precision and an artistic character. We rather think that the reason why the provision of Section 5 comes 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. Future interest obviously means interest which is to run on the decretal amount from the date of the decree. If the decree is converted into a new decree for payment by instalments, the amount due as' future interest may have to be necessarily altered. It may also perhaps be suggested that under Section 34, Civil P.C., the Court when granting a decree for money can fix future interest at a reasonable rate. 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. We may point out an anomaly, if the contrary view were to be entertained. The maximum rate of interest allowable for secured loans exceeding Rs. 20,000 would be less than Rs. 6 per cent, and yet if future interest were not to be reduced, its rate may be higher. The words used, in Section 4 'any order for grant of instalments' are very wide, and in our opinion, refer to any such order passed under the Act, whether that order be passed under Rule 3 or passed under Section 5. It is further to be borne in mind that the rate mentioned1 in Section 4 as notified by the Local Government is the maximum rate prescribed which should not be exceeded. It is open to the Court to fix any rate for future interest not exceeding such a maximum limit, and the maximum limit is fixed by the rate notified which is in force at the time when the decree or order is passed. Sub-section (2) makes it further clear that:

That rate shall be the rate in force for future interest from such date as may be notified by the Looal Government until such date as it is superseded by a new rate.

5. This sub-section shows that the rate to be notified by Government is to remain in. force for a definite period commencing from one date and ending with another, and that when a new rate is notified with effect from the last date until a further date, the new rate would supersede the' previous one. Section 4, Sub-section (2), therefore, seems to lay down future rates of interest for definite periods, and it is not necessary that there should be one inflexible rate after the date of the decree. That this is the policy of the Legislature is also suggested by the United Provinces Agriculturists' Relief (Amendment) Act, 3 of 1935, Section 2, where the footnote of Schedule 3 has been amended and the following words substituted,

the rate for the time being notified under Section 4 in respect of the period for which such rate is in force.

6. We find that in the notification of the Local Government dated 1st May 1935, it was provided:

That with efiect from 8th May 1935, until such date as may hereafter be notified 3 1/2 per cent, shall be the maximum rate to be allowed as future interest 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 as defined in the aforesaid Act.

7. Thus the rate was fixed for a definite period commencing from 8th May 1935, and was to be applicable to every order for grant of instalments. A fresh notification dated 7th January 1936 fixed Bi per cent, 'with effect from 15th January 1936, until such date as may hereafter be notified' as the maximum rate to be allowed as future interest. 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 1935. But we think that the Court had full jurisdiction to reduce the rate to 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 date when a new rate of interest is notified. The period of instalments fixed would continue to run from the date fixed by the Court below. We accordingly allow the revision in part and fix the contractual rate of future interest from the date of the decree till 7th May 1935, and direct that future interest should be reduced to 3 1/2 per cent, from 8th May 1935, till 14th January 1936 and to 3 1/4 per cent, from 15th January 1936, onwards until further notification. As the revision has partly failed and partly succeeded, we direct that the parties should bear their own costs of this revision.


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