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Baldeo Singh and ors. Vs. Bulaqi Dass - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Judge
Reported in6Ind.Cas.203
AppellantBaldeo Singh and ors.
RespondentBulaqi Dass
Excerpt:
contract act (ix of 1872), section 16 - undue influence--mortgage--debt borrowed under arrest for payment of government revenue--interest--unconscionable bargain. - .....to repay the principal within two years. the bond contained a covenant that the interest should be paid half-yearly. if the half-yearly interest was not paid, it should be added to the principal and interest should then run on it at the same rate. the half-yearly instalments of interest were to be paid out of the allowance fixed by the court of wards. if the principal and interest were not paid at the promised time, namely, at the end of two years, the whole was to be recoverable by the creditor by instituting a suit from the movable and immovable property of the debtor. their lordships of the privy council held that owing to the fact that the debtor's estate was under the management of the court of wards and that the creditor know-it, the latter was in a position 'to dominate the will.....
Judgment:

1. This appeal arises out of a suit to enforce a mortgage. It appears that in the year 1898 certain of the defendants, who are all members of a joint Hindu family, had been arrested for non-payment of Government revenue. They had been under arrest for some days. They managed to persuade the Tahsildar to allow them to go to the plaintiff who is a money-lender. In all probability the chaprasi or chaprasis of the Tahsildar accompanied them to the money lender's house. A small sum of Its. 99 was advanced, the rate of interest being 37 1/2 per cent, compound interest with rests at six months. In consideration of this small advance, the debtor1 hypothecated substantial zitmindari property. The zamindari itself except the sir was already mortgaged with possession to other persons. The sir, however, must have been security for many times the amount of the advance. In the year 1904, the principal and interest due to the plaintiff in respect of the advance of 1898 had amounted to no less than Rs. 779-10. A further advance of Rs. 220-6 was then made and a fresh mortgage of the same property, with compound interest at 18 per cent, for Rs. 1,000. It will thus be seen that in the year 1898, Rs. 99 principal sum was advanced and in the year 1904, Es.220. The principal and interest now due in respect of these small advances amounted when the suit was brought to Rs. 2013-6. The Court of first instance found, that the bargain was a hard and unconscionable one and gave the plaintiff a decree for sale of the property calculating the interest in the following way. It gavelS percent, compound interest on the first bond up to the date of the second bond and then gave 18 percent, compound interest from the date of the second bond on the amount of the principal and interest it ascertained as being due on the first bond plus Rs. 220 then advanced, The lower appellate Court with natural reluctance set aside the decree of the Court of first instance and gave the plaintiff a decree for the full amount claimed. The facts as found by the Court of first instance are accepted by the lower appellate Court and they have not been disputed here. There is no doubt that the debtors, who entered into the bargain on behalf of other members of the joint family (many of whom were minors), were under arrest. The only question is whether or not the Court was entitled under the circumstances to find that the bargain was an unconscionable one in respect of which the Court was entitled to give relief under the provisions of Section 16 of the Contract Act as amended. The question is not by any means free from difficulty and it is to be regretted that the Legislature has not invested the Courts with clear and properly defined powers to intervene in cases where the interest charged against villagers is inequitably excessive. la the case of Dhanipal Das v. Maneshar Bakhsh Singh 28 A. 570 : 4 C.L.J. 1 : 1 M.L.T. 205 : 3 A.L.J. 495 : 9 O.C. 188 : 8 Bom. L.R. 491 : 10 C.W.N. 849 : 16 M.L.J. 292, the Court relieved a debtor under the following circumstances. The debtor was a 'disqualified proprietor' under the provisions of the Oudh Land Revenue Act, XVII of 1876, and his property was under the management of the Court of Wards. He executed a bond agreeing to pay interest at 24 per cent, and to repay the principal within two years. The bond contained a covenant that the interest should be paid half-yearly. If the half-yearly interest was not paid, it should be added to the principal and interest should then run on it at the same rate. The half-yearly instalments of interest were to be paid out of the allowance fixed by the Court of Wards. If the principal and interest Were not paid at the promised time, namely, at the end of two years, the whole was to be recoverable by the creditor by instituting a suit from the movable and immovable property of the debtor. Their Lordships of the Privy Council held that owing to the fact that the debtor's estate was under the management of the Court of Wards and that the creditor know-it, the latter was in a position 'to dominate the will of the debtor.' We think that having regard to the fact that the principal debtors in the present case only attained their temporary release from jail for the purpose of obtaining this loan, a fact which the plaintiff must have been aware of, placed him in a position to dominate the will of the borrowers. It is said that however this might have been at the time of the original bond in the year 1904, when the present bond was executed, the creditor was no longer in a position to dominate the will of the borrowers. This is to a certain extent true, but it must be remembered that at this time the debt under the first transaction had swelled from Rs. 99 to Rs. 779-10 and it is common knowledge that it is not easy to obtain a fresh loan from another money-lender once the property has been mortgaged to a man of the same class. Our attention was called to the case of Satish Chandra Giri v. Hari Chandra Mukhopadhyaya 19 C. 823. In that case the borrower had borrowed on a pro-note at an exorbitant rate of interest. The Court held that as there was no fiduciary relation between the parties, the mere fact that the Borrower was in urgent need of money was no ground for granting a relief. The learned Judges distinguished the case before them from a ruling of this Court in Madho Singh v. Kashi Ram 9 A. 228. The distinction they drew was that in the case before this Court there was ample security for the loan while in the case before them there was no security whatever except the pro-note executed by the debtor. In the case we are at present con-sidering there was ample security for the advances. Under all the circumstances of the case, we think that the defendants were entitled to the relief afforded them by the Court of first instance. We, accordingly, allow the appeal, set aside the decree of the lower appellate Court and restore the decree of the Court of first instance with costs in this Court and in the lower appellate Court to be paid by the respondent.


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