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Badri Prasad Vs. Nirmal Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1949All179
AppellantBadri Prasad
RespondentNirmal Singh and ors.
Excerpt:
- - costs throughout will be in proportion to success and failure......to section 30, u.p. agriculturists' relief act alone; the effect of this ruling is that a loan renewed before the u.p. agriculturists' relief act came into force would-be regarded as itself a loan for the purposes of the act: loans taken by an agriculturist after the coming into force of the act are governed by section 28, of the act. the language of section 30 is substantially different from that used in section 28 and the considerations which apply to an interpretation of section 30 will not be the same as those applicable to the either section. subsection (1) of section 28 runs as follows:notwithstanding anything in any contract to the contrary, no loan taken by an agriculturist after this act comes into force shall bear interest at a rate higher than that notified by the.....
Judgment:

Harish Chandra, J.

1. This is a second appeal arising out of a suit brought by the appellant's father who is now dead for the recovery of money on the basis of a promissory note executed by the respondent for a sum of Rs. 700 on 3rd October 1938, carrying interest at the rate of one per cent. per mensem. It would appear that the loan was originally advanced on 7th April 1931, the amount being Rs. 350. The rate of interest was the same. This pronote was subsequently renewed on 21st March 1934 to include the unpaid balance of the principal and interest. The amount for which this pronote was renewed was Rs. 500. Subsequently, a third pro-note was executed on 4th October 1935 to include the principal and interest of the previous pro-note. This pro-note was renewed a fourth time on 3rd October 1938 when the principal amount was ' fixed at Rs. 700, as representing the principal amount of the previous pro-note and interest. It is no longer in dispute that the respondent is entitled to the benefit of the U.P. Agriculturists' Belief Act (Act XXXVII [27] of 1934). The trial Court gave the appellant a decree for a sum of Rs. 700, as principal and interest at the rate of 11 1/4 per cent. per annum up to the date of the suit. Thereafter interest was allowed at the rate of three per cent. per annum. Actually there is an error in the operative portion of the judgment which need not be mentioned. The lower appellate Court, however, re-opened the previous transactions and gave the appellant a decree for the principal sum secured by the pro-note dated 7th April 1931, together with interest calculated according to Schedule III, U.P. Agriculturists Relief Act. The plaintiff has come up in appeal from this judgment and decree of the lower appellate Court.

2. Our attention has been drawn to the Full Bench case of Pratap Singh v. Gulzari Lal A.I.R. (29) 1942 ALL. 50 F.B. in which the interpretation to be put upon the word 'loan' as used in Section 30, U.P. Agriculturists' Belief Act was considered. It will be noted that Section 30 deals with the liability of a debtor to pay interest on a loan taken by him before the Act came into force. The date on which the Act came into force was 30th April 1935. The matter first came up before a Bench which referred the following question for consideration by a Full Bench:

Where an earlier transaction of loan is renewed, is the new transaction itself a loan for the purpose of the U.P. Agriculturists Relief Act (XXVII (27) of 1934)?

The Full Bench answered the question in the affirmative in accordance with the view of the majority of five Judges that constituted the Bench. The present case depends mainly on an interpretation to be put upon this ruling. That case related to certain transactions of loan that had taken place before the U.P. Agriculturists' Relief Act came into force and as is clear from a perusal of the full and elaborate judgment delivered by Dar J., the Full Bench considered the question that had been referred to it with reference to Section 30, U.P. Agriculturists' Relief Act alone; The effect of this ruling is that a loan renewed before the U.P. Agriculturists' Relief Act came into force would-be regarded as itself a loan for the purposes of the Act: Loans taken by an agriculturist after the coming into force of the Act are governed by Section 28, of the Act. The language of Section 30 is substantially different from that used in Section 28 and the considerations which apply to an interpretation of Section 30 will not be the same as those applicable to the either section. Subsection (1) of Section 28 runs as follows:

Notwithstanding anything in any contract to the contrary, no loan taken by an agriculturist after this Act comes into force shall bear interest at a rate higher than that notified by the Local Government under Sub-section (2) as the prevailing rate of interest for the particular class of loan at the time the loan was taken.

It would be clear that the section prohibits the taking of a loan by an agriculturist after the coming into force of the Act bearing interest at a rate higher than that specified in Schedule III (II). Out of the present pro-notes, two relate to the period before the coming into force of the U.P. Agriculturists' Belief Act, and having regard to the Full Bench ruling in Pratap Singh's case A.I.R. (29) 1942 ALL. 50 the renewed loan covered by the pro-note of 2lst March 1934 will be treated as 'loan' within the meaning of the Act. But the same considerations will not apply to the subsequent pro-notes executed after the coming into force of the U.P. Agriculturists' Belief Act. We accordingly hold that the appellant is entitled to a decree for the principal amount of the pro-note dated 21st March 1934 and interest thereafter up to the date of the suit in accordance with Schedules II and III. Interest pendente lite and future will be at the rate of three per cent. per annum. The decree of the lower appellate Court will be modified accordingly. Costs throughout will be in proportion to success and failure.


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