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Ram Chandra Sahai and ors. Vs. Bishambhar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1949All737
AppellantRam Chandra Sahai and ors.
RespondentBishambhar
Excerpt:
- - we are satisfied that there is no substance in this argument. 2,400 there intervened a civil suit which was instituted in 1930 and decreed on 17th december 1930. the final decree in this suit was passed on 29th january 1931. this final decree was satisfied by execution of a usufructuary mortgage on 17 th december 1932. it is urged that the two mortgages, therefore, got merged in the decree and inasmuch as the decree had been satisfied, it was not open to the respondent to go behind it......the learned civil judge and the real point in the case is one of interpretation of section 9, u.p. debt redemption act.2. the questions regarding that section have been raised before us. the first point that has been argued is that in determining the principal amount due on the simple mortgage dated 29th october 1907 the court was bound to treat as principal the accumulated interest inasmuch as there was an express provision in that mortgage for payment of compound interest. we are satisfied that there is no substance in this argument. the proviso to section 9 lays down that the court shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account or by any contract in the coarse of the transaction made before the 1st.....
Judgment:

Sapru, J.

1. This is a defendants' appeal arising out of a suit for accounts under Section 33, U.P. Agriculturists' Relief Act (Act XXVII [27] of 1934) read with Section 9, U.P. Debt Redemption Act (Act XIII [13] of 1940). The respondent is the debtor mortgagor and the appellants are the creditors mortgagees. The suit has been decreed by the learned Civil Judge and the real point in the case is one of interpretation of Section 9, U.P. Debt Redemption Act.

2. The questions regarding that section have been raised before us. The first point that has been argued is that in determining the principal amount due on the simple mortgage dated 29th October 1907 the Court was bound to treat as principal the accumulated interest inasmuch as there was an express provision in that mortgage for payment of compound interest. We are satisfied that there is no substance in this argument. The proviso to Section 9 lays down that the Court shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account or by any contract in the coarse of the transaction made before the 1st day of January 1917. It cannot be said that the accumulated interest was converted into principal at any statement or settlement of account or by any contract in the course of a transaction made before the 1st day of January 1917. These words indicate that no automatic conversion of interest into principal is contemplated. What learned Counsel for the appellants has argued is that interest, accruing by virtue of a contract made prior to 1917 will have to be included in the principal where the original contract provides for compound interest. Our interpretation of Section 9 is that it is only where by a subsequent agreement the accumulated interest has been converted into principal that the Court shall be bound to treat the accumulated interest as part of the original principal. This is clear from the language of the proviso itself, For this reason we do not find that there is any substance in the first point which was argued by the learned Counsel for the appellants.

3. We may point out that reliance was placed by learned Counsel for the appellants for the above proposition upon the case of Fateh Singh v. Rameshwar A.I.R. (31) 1944 Oudh 242. The principle laid down in that case was that interest before 31st December 1916 becoming part of the principal under the original contract must be treated as principal. In arriving at this conclusion the learned Judges were influenced by the fact that the language of the proviso to Section 9 (1), U.P. Debt Redemption Act was almost identical in terms with sub Section (6) of Section 14, Encumbered Estates Act. Admittedly no explanation to the proviso such as is to be found in sub Section (5) of Section 14, Encumbered Estates Act, finds a place in Section 9, U.P. Debt Redemption Act. For this vital reason, we think we would not be justified in imputing to the legislature an intention similar to that which must have prompted it when it enacted subs. (5) of Section 14. We are not, for this reason, prepared to agree with the law laid down in the ruling to which we have just invited attention.

4. The second point on which argument was addressed to us by learned Counsel for the appellants is that between the mortgage deed dated 17 th December 1932 which was for a sum of Rs. 5, 500 and the hypothecation bond dated 8th April 1918 which was for a sum of Rs. 2,400 there intervened a civil suit which was instituted in 1930 and decreed on 17th December 1930. The final decree in this suit was passed on 29th January 1931. This final decree was satisfied by execution of a usufructuary mortgage on 17 th December 1932. It is urged that the two mortgages, therefore, got merged in the decree and inasmuch as the decree had been satisfied, it was not open to the respondent to go behind it. It is argued that the principal could only be the sum of the 3rd mortgage which paid up the decree. The argument, in short, is that the term decree, connotes the idea of a subsisting decree. Our interpretation of Section 9 (1), U.P. Debt Redemption Act is that the limitation sought to be placed upon the word 'decree' is not correct. According to Section 9 (1) in a suit to which the U.P. Debt Redemption Act applies, notwithstanding anything to the contrary in any law, the decree or contract or in any agreement purporting to close past transactions, the Court shall determine the principal and take into account all sums paid by or on behalf of the debtor. There is nothing to qualify the word 'decree' and, we, therefore, cannot interpret it to mean a subsisting decree only. It was essential for the Court, notwithstanding the decree, to determine the principal, and the lower Court's view on this matter is correct.

5. For the reasons which we have given, we affirm the decree of the lower Court and dismiss the appeal with costs.


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