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Bhansarlal Paramsukh and ors. Vs. Navalkishor Mungalal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 13 of 1953
Judge
Reported inAIR1958MP21
ActsLimitation Act, 1908 - Sections 19; Contract Act, 1872 - Sections 25(3); Madhya Bharat Interest Act, 1956 - Sections 3; Constitution of India - Article 245; Code of Civil Procedure (CPC) , 1908 - Sections 107 - Order 41, Rule 33
AppellantBhansarlal Paramsukh and ors.
RespondentNavalkishor Mungalal and ors.
Appellant AdvocateHarihar Newas Dwivedi, Adv.
Respondent AdvocateBhagwandas Gupta, Adv.
Cases ReferredPardo v. Bingham
Excerpt:
.....from these authorities that in considering whether the provisions like section 3 of the madhya bharat interest act have retrospective operation, it is not only the language of the section but also general scope and the purview as also the purpose of enacting it that should be taken into consideration. it is quite possible that its provisions may cause hardship in a particular case but it cannot be disputed that this act was passed for public good and to secure public justice, 25. the language of section 3 is then imperative. there is ample authority referred to by my learned brother for the view that consideration of public good affords justification for holding such a legislation to operate ex post facto. 31. i should also like to add that in determining whether the plaintiffs have..........charged compound interest which cannot be allowed in view of the provisions of section 3 of the madhya bharat interest act, being act no. 17 of 1956.5. the plaintiffs have, in support of their claim, produced from their account books entries alleged to have been signed by the defendants from time to time. these are exhibited in this case as exs. p/l, p/2, and p/5.6. exhibit p/5, which is the first material document, is an extract from the khata of the defendants for the year 1988-87. the document shows the previous balance to be rs. 9,009-8-0. the defendants agreed to pay this balance by annual instalments within seven years ending jeth sudi 15 samvat 1995. the entry is signed by the defendant no. 2 chhuttilal.7. the next document is ex. p/2 which ig a copy of the khata of the.....
Judgment:

Samvatsar, J.

1. This is defendants' first appeal and arises out of a suit brought by the plaintiffs-respondents in the Court of the Civil Judge, First Class, Guna, to recover from them a sum of Rs. 8,000/-, The plaintiff's case as laid out in the plaint is that the defendants who are members of a joint Hindu family and carry on business in the name of Mansukhdas Khemchand, had from time to time borrowed various sums of money from the plaintiffs; that an account of these dealings, was made on 28-5-1939 when a sum of Rs. 8,000/- was found due to the plaintiffs; that the defendant No. 1, who was then the manager of the business and Karta of the joint family admitted the correctness of the balance and affixed his signature to the debit entry in plaintiffs' Bahi.

It is then alleged in the plaint that on 25-4-1942 the defendant No. 3 borrowed a further sum of Rs. 125/- and signed the debit entry in the plaintiff's Bahi acknowledging receipt of this loan that on 27-5-1945 defendant No. 3 approached the plaintiff and offered to clear the old account by payment of the principal sum; that an account was thereupon made between the parties when a sum of Rs. 8,000/- was found due; that the said defendant promised to pay this amount within a couple of days and signed the debit entry in plaintiffs' Bahi; that the defendant did not fulfil the promise. Besides this sum of Rs. 8,000/-, the plaintiffs claimed that they were entitled to Rs. 5,931/4/- for interest and the miscellaneous sum of Rs, 125/- borrowed by the defendant No. 3; but they relinquished their claim with respect to it and filed a suit to recover Rs. 8,000/- only.

2. The defendants filed separate written statements in which they denied the plaintiffs' claim. They also denied having signed the entries in the plaintiff's book. In the additional pleas raised by them the defendants pleaded that the suit was barred by time; that the defendants were agriculturists and that they were not liable to pay Rs. 8,000/- as this sum included compound interest which was not recoverable under the Gwalior Interest Act dkuu lwn fj;klr Xokfy;j laor 1974

3. On these pleadings the trial Court framed issues and recorded evidence which the parties tendered. In the end the Court decreed the plaintiff's claim. Aggrieved by this decree, the defendants have preferred this appeal.

4. Mr. Harihar Niwas Dwivedi, learned counsel for the appellants, reiterated all the contentions which were, put forward by the defendants in trial Court. He further urged that in case these contentions did not prevail the plaintiffs should be called upon to produce their previous account book in order to enable the Court to determine whether they have charged compound interest which cannot be allowed in view of the provisions of Section 3 of the Madhya Bharat Interest Act, being Act No. 17 of 1956.

5. The plaintiffs have, in support of their claim, produced from their account books entries alleged to have been signed by the defendants from time to time. These are exhibited in this case as Exs. P/l, P/2, and P/5.

6. Exhibit P/5, which is the first material document, is an extract from the Khata of the defendants for the year 1988-87. The document shows the previous balance to be Rs. 9,009-8-0. The defendants agreed to pay this balance by annual instalments within seven years ending Jeth Sudi 15 Samvat 1995. The entry is signed by the defendant No. 2 Chhuttilal.

7. The next document is Ex. P/2 which ig a copy of the Khata of the defendants for the year 1595-96. A sum of Rs. 8,000/- is Shown as debit balance of Jeth Sudi 10, Samvat 19S6 and the entry is signed by the defendant No. 1 Paramsukh. Prom the same Khata, plaintiffs have also produced another entry Ex. P/l. This entry is for Rs. 8,000/- and is signed by the defendant No. 3 Bhauwarlal on 27-5-1945.

8. The defendants have denied their signatures on Exs. P/l and P/2 but they are duly proved by the plaintiff's witness Munim Lakhmichand. He has stated on oath that Ex. P/2 was signed in his presence by Paramsukh and Ex, P/l was signed by Bhanwarlal. It was urged by Mr. Dwivedi that the witness was unable to state who were the ether persons present in the shop when these entries were signed by the defendants and his testimony therefore deserves no weight. In my opinion the evidence of the witness cannot be rejected on this ground as he was making a statement several years after these documents were signed and cannot therefore be expected to remember the incidents in great details. The trial Court has believed the evidence of this witness and there is no reason to differ from it.

9. Besides Lakhmichand, the plaintiffs examined one Hiralal Saksena a handwriting expert and the defendants on their side examined one Banmali Dwivedi another handwriting expert. Each of the experts supported the side for which he appeared and the learned trial Court refused to believe either of them. Considering that the evidence of the expert-witnesses is of a partisan-type, the learned trial Court was justified in refusing to place much reliance upon it in face of the direct evidence of P.W. Lakhmichand. In my opinion the finding of the trial Court that Ex. P/l was executed by Bhanwarlal and Ex. p/2 was signed by Paramsukh is proper and needs no interference.

10. The next contention of Mr. Dwivedi is that even if the document Ex P/l ig held to have been signed by Bhanwarlal, it was an acknowledgment which, not having been made before the expiry of the period of limitation, could not save the claim from being barred by limitation. The entry Ex. P/l which the defendant Bhanwarilal signed is as follows :

8000 ckdh ysuk cslk[k lqnh 8 laer 2002 rk-20&5&45 rd :tw dynkj g- Hkejyky eqUrtqe drkZ [kkunku eulq[k nkl [ksenUnA:- 8000 ysukA n% Hkejyky egsJh ij ckdh :i;k 8000 ckdh nsukA rk-20&5&45 HkejykyA

11. This entry, which is signed by the defendant Bhanwarlal indicates that both the parties settled the previous account on 20-5-1945 and found that a sum of Rs. 8,000/- was due to the plaintiffs. It is mentioned in the debit entry that the liability is being acknowledged by the defendant Bhanwarlal as manager and Karta of the shop Mansukhdas Khemchand. Then at the foot of this entry, there is an endorsement in the handwriting of Bhanwarlal under his signature. In the endorsement which is in the handwriting of Bhanwarlal, it is stated that a sum of RS. 8,000/-is due and is payable to the plaintiff. The endorsement read with the main entry Ex. P/l shows that it contains not only an acknowledgment of the previous balance but also an express promise to nay it.

The requirements of Section 25(3) of the Indian Contract Act are fully satisfied in this case. The document Ex. P/l contains a promise to pay a , sum of Rs. 8,000/-, It is in writing and is duly signed by the person charged therewith. Even if the contention of Mr. Dwivedi that the entry Ex. P/l was executed when the claim on the earlier document was barred by time is upheld, the bar of limitation does not operate as in my opinion Ex. P/l contains a fresh promise to pay a previous debt. It is well settled that the time-barred debt is a good consideration for a fresh promise to pay it.

12. The suit is based on Ex. P/l which, I have held, contains a fresh promise to pay. It has recently been held by the Supreme Court in Hiralal v. Badkulal, AIR 1953 SC 225 (A), that an acknowledgment imports a promise to pay and a suit can legally be based upon it. Under the circumstances, the contention of the defendants that the plaintiff's claim is barred by time is devoid of any substance and must be rejected.

13. The next point raised by Mr. Dwivedi is that the appellants were agriculturists and are entitled to protection under the provisions of the Gwalior Interest Act. There is no force in this contention also. The trial Court has found that the defendants had not proved that they were agriculturists. Mr. Dwivedi took us through the evidence led on behalf of the, defendants-to prove that they were agriculturists. But he was unable to show anything therein on which it could be held that the defendants' main source of income was agriculture. The defendant Ehanwarlal has examined himself and though he has stated that income of the land is the source of livelihood of his family, it is not disclosed what is the annual income of the family from agriculture and what is it from the other source. His witnesses also have failed to throw any light on this point. Under the circumstances I do not see any valid reason to differ from the view taken by the trial Court on this point.

14. Lastly Mr. Dwivedi referred to the Madhya Bharat Interest Act being Act No 17 of 1956. Relying upon Section 3 of that Act he submitted that the decree for Rs. 8,000/- could not be passed against the defendants as this sum included compound interest which the plaintiffs had previously charged. Section 3 of the Madhya Bharat Interest Act is as follows :

'Notwithstanding anything to the contrary contained in any law or in any agreement between the parties, the rate of interest adjudged on a principal sum or order in a decree by any Court, save when it is, so adjudged or ordered against or in favour of a Bank or Co-operative Society shall not exceed six per cent, per annum in case of secured and nine per cent per annum in case of unsecured debts.

Provided firstly that the amount of the interest paid in the past on the principal sum together with the amount of interest adjudged by the Court shall in no case exceed the principal sum : Provided secondly that the compound interest shall in no case be adjudged or ordered.'

15. The first part of Section 3 has obviously no application as it is nowhere alleged by the defendants that the plaintiffs have charged interest at more that nine per cent, per annum. But advantage is sought to be taken of the second proviso to this section which debars the Court from adjudging or ordering compound interest.

16. Before applying Section 3 of the Madhya Bharat Interest Act, a priliminary point raised by Mr. Bbagwandas Gupta learned counsel for the appellants, has to be considered, viz., whether the Madhya Bharat Interest Act can be applied to this case.

17. Section 107(2) of the Civil Procedure Code Says down that an appellate Court shall have the same powers and shall perform, as nearly as may be, the same duties as are conferred and imposed by this Code on Courts' of original jurisdiction in respect of suits instituted therein. An appeal to the Court of appeal is by way of rehearing and a Court may make such order as the Court of the first instance should have made, if the case would have been heard by it, on the day the appeal was heard. (See Attorney General v. Barmingham, 1912 AC 788 (B) and Quilter v. Mapleaon, (1882) 9 QBD 672 (C) An appellate Court is therefore not merely concerned to see whether or not the judgment of the trial Court was in conformity with the law as it stood when the judgment was given but has to take into account the subsequent events and to administer the law as it is on the date of the hearing of the appeal. The Madhya Bharat Interest Act was in force on the date when the appeal was heard and the provisions of that Act have to be taken into account if they are applicable to this case.

13. Mr. Bhaswandas Gupta learned counsel fur the appellant contended that the Madhya Bharat Money Lenders' Act which affected the vested and contractual right of the creditor cannot be applied to transactions effected before that Act had come into effect. The material question to be determined, therefore, is whether Section 3 can be applied to a transaction which was effected prior to the year 1955.

19. No direct authority bearing on this point, was brought to our notice by the learned counsel for the parties. Mr. Dwivedi however referred to the decision of Federal Court in Lachmeshwar Prasad Shukul v. Keshwar Lal, AIR 1941 FC 5 (D), to support the proposition that the provisions of Section 3 were imperative and affected the Courts power to pass a decree which was not in conformity with the provisions of that section.

20. The Madhya Bharat Money Lenders' Act was enacted to provide for regulation of interest in Madhya Bharat and is beyond doubt intended to affect vested rights. It is not and cannot possibly be suggested that the legislature I is not empowered to pass laws which will operate retrospectively and affect vested rights. Whether a particular statute or particular provision in a statute has retrospective effect and affects transaction made before it was enected is, in each case, to be determined by the Court having regard to the language used in the Statute, the general scope, the purview of the statute, and the purpose of enacting it.

21. It is no doubt true that Courts are generally reluctant to give a statute retrospective effect unless on an interpretation of the particular prevision, they come at the conclusion that the legislature intended it to be retrospective in effect. Craies in his 'Treatise on Statute Law' of 1952 Edition at, page 359 summarises the position in the following terms:

'Every law that takes away or impairs rights vested agreeably to existing laws is retrospective, and is generally unjust and may be oppressive; it is a good general rule that a law should have no retrospect, but in cases in which the laws may justly and for the benefit of the community and also of individuals relate to a time antecedent to their commencement.'

At page 361 the learned author has quoted to the following observation of Lord Hatherly in Pardo v. Bingham, (1869-4 Ch A 735) (E):

'Baron Parks did not consider it an invariable rule that a statute could not be retrospective unless so expressed in the very terms of the section which had to be construed, and said that the question in such case was whether the Legislature had sufficiently expressed that intention. In fact, we must look to the general scope and purview of the statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the Legislature contemplated. But a statute is not to be read retrospectively except of necessity.'

At page 365, the learned author has further remarked--

'If a statute is passed for the purpose of protecting the public against some evil or abuse, it may be allowed to operate retrospectively, although by such operation it will deprive some Per-son or persons of a vested right.'

22. A similar opinion is expressed by another great writer, Crowford in his 'Statutory Construction'. At page 569, the author has observed as follows:

'But considerations of public good and public justice nave been regarded as sufficient reasons for upholding retroactive legislation of a curative nature, even though certain vested rights were thereby impaired;'

23. It appears from these authorities that in considering whether the provisions like Section 3 of the Madhya Bharat Interest Act have retrospective operation, it is not only the language of the section but also general scope and the purview as also the purpose of enacting it that should be taken into consideration. If the intention of the Legislature that a particular provision should have retrospective operation, is sufficiently expressed, that intention should be given effect to.

24. The Madhya Bharat Interest Act was enacted to give relief to the debtors against high rate of interest which they had to pay to the creditors. The agriculturists in the State of Madhya Bharat were sufficiently protected by the Madhya Bharat Money Lenders Act but as this Act did not extend to persons who were not agriculturists, the Madhya Bharat Interest Act was enacted. The object of the Act is to remove the evil of usury and to enable the debtors to pay their debts with reasonable rate of interest. It is quite possible that its provisions may cause hardship in a particular case but it cannot be disputed that this Act was passed for public good and to secure public justice,

25. The language of Section 3 is then Imperative. The section affects the powers of the Court in matter of awarding interest. It lays down that notwithstanding anything to the contrary contained in any law or in agreement between the parties, the rate of interest adjudged on a principal sum or ordered in a decree shall not exceed 6 per cent per annum in case of secured and 9 per cent per annum in case of unsecured debts. It further provides that the Court shall in no case adjudge or order payment of compound interest.

26. The provision of law which thus restricts the powers of the Court in respect of adjudicating or ordering interest in a decree and that too notwithstanding anything to the contrary in any law or contract between the parties must be held to be retrospective in character and I am, therefore, of the opinion that Section 3 applies to this case.

27. This view also is supported by the decision of the Federal Court in AIR 1941 PC 5 (D). That was a case in which the defendants claimed a relief in respect of interest under provisions of Bihar Money Lenders Act (Act No. 3 of 1938). The High Court of Patna held the material provisions of the Act to be ultra vires and refused to give the relief claimed by the defendants. While an appeal against the decision of the High Court was pending before the Federal Court, another Act viz., Bihar Money Lenders Act, as amended by Act No. 5 of 1938, came into force. The defendants, who were the appellants before the Federal Court, claimed relief under Section 7 of that Act.

That section commenced with the words 'No Court shall ..... pass a decree etc., etc., .....' Suleman J., held that Section 7 affected the powers of the Court and applied it retrospectively to the transaction in suit although it was entered into, years before the amendment was passed. Holding therefore that the defendants were entitled to a relief under Section 7, their Lordships remanded the case to the High Court to adjust the claim in the light of this Section and to pass a decree in accordance with it.

28. In view of these authorities. I am of opinion that Section 3 of the Madhya Bharat Interest Act must be applied to the transactions in suit and the compound interest which may have been include in the amount of Rs, 8000/-, must be disallowed,

29. We allow the appeal in part ants remand the case to the trial Court to determine the amount payable to the plaintiff in the light of Section 3 of the Interest Act. The matter is an old one. The Court, therefore, will give the parties an opportunity to produce such evidence as may be in their possession on the material aspect. Costs of the appeal will be costs in the cause.

A.H. Khan, J.

30. In interpreting the Madhya Bharat Money Lenders' Act (No. 62 of 1950, Samvat 2007), it must be at the outset conceded that there to nothing in the language of the statute to indicate that it is retrospective in operation. But if we examine the scope and purview of the statute, there is no doubt that the law was enacted in order to eradicate the evil of high rate of interest and to afford relief to those groaning under its heavy burden.

There is ample authority referred to by my learned brother for the view that consideration of public good affords justification for Holding such a legislation to operate ex post facto. I concur in the view expressed by my learned brother that the Madhya Bharat Interest Act should be applied to this transaction and the case be sent back for determining the amount payable to the plaintiff under section 3 of the Act.

31. I should also like to add that in determining whether the plaintiffs have included compound interest in the suit amount, it will have to be borne in mind that Section 60 of the Indian Contract Act gives the creditor the option to appropriate the payment made by his debtor towards interest in the first instance, and, to adjust the balance, if any towards the principal. This right is not affected by the proviso (2) to Section 3 of the Madhya Bharat Interest Act. Furthermore the burden of the proof of the fact that the sum claimed contains compound interest shall be on the defendants.


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