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Bherodan and ors. Vs. Murlidhar - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 28 of 1955
Judge
Reported inAIR1960MP292
ActsCourt-fees Act, 1870 - Sections 7 - Schedule - Article 17; Madhya Bharat Interest Act, 1956 - Sections 3; Code of Civil Procedure (CPC) - Order 34, Rule 11
AppellantBherodan and ors.
RespondentMurlidhar
Appellant AdvocateMungre, Adv.
Respondent AdvocateBhagwandas and ;Motilal, Advs.
DispositionAppeal allowed
Cases ReferredRadice v. New York.
Excerpt:
.....paid in the past as well as that to be adjudged due for the future has together not to exceed the principal sum, we do not see how the amounts realised by the defendant-mortgagee as rent and profits and which he claims to have adjusted towards the interest due to him on the mortgages in suit can be left out of computation. the scheme of the act clearly seems to be that the court should make fresh accounts and that it should take note of the sums paid, realised or adjusted towards interest in the past so that the sum, so paid, realised or adjusted together with interest adjudged due for the future together, does not exceed the principal sum due. it is an accepted doctrine of the american courts and which seems to me to be well-founded on principle, that the presumption is in favour of..........act.9. on the merits of the appeal, the plaintiffs-appellants might have had no case but for the madhya bharat interest act (act no. 17 o 1956)) which came into force in july 1956, i.e., during the pendency of the appeal. as it happens, the said act entitled them to all the reliefs which they claimed in appeal.10. the defendant-respondent, however, contends that the plaintiffs-appellants are not entitled to any of the reliefs claimed even under the provisions of the madhya bharat interest act, 1950 for the following reasons:1. the defendant was entitled to interest under order 34, rule 11, c. p. c., notwithstanding the madhya bharat interest act; 2. the madhya bharat interest act did not apply to mortgage transaction because they were not loans; 3. the amount realised by the defendant.....
Judgment:

1. This is an appeal by the plaintiffs whose suit for redemption and possession of certain suit properties has been dismissed by the Court of the District Judge, Gwalior.

2. The plaintiffs are auction-purchasers of the right of redemption in a Court auction sale. This auction sale was held in execution of a money decree of one Mahadeo Prasad against one Roshanlal, the original mortgagor. There were two mortgages in respect of the suit property both in favour of the defendant-respondent. The first was dated 9th September 1939. It was in favour of the defendant-respondent Murlidhar for a consideration of Rs. 7000/. It carried interest at 12 annas per cent per month and was redeemable after two years.

The mortgage was a usufructuary mortgage. It contained a stipulation that the mortgagee shallbe entitled to recover rents and profits of the mortgaged house and if the rent of the year was insufficient to meet the liability for interest for that period, the unpaid interest shall be capitalised in the next year. The second mortgage was in similar terms and was dated 10-7-1940. It was for a further consideration of Rs. 1000/. All the conditions of the first mortgage were made the conditions of the second mortgage, except in one respect, i.e., the second mortgage provided that as from 10-7-1940 interest on the total sum then due was chargeable at Rs. 12 per cent per annum. The date of redemption of this mortgage was

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3. The suit of the plaintiffs was principally for the determination of the price of redemption of the mortgages in suit. They, therefore, in their suit for redemption and possession, inter alia, claimed the following reliefs:

1. That the defendant was not entitled to compound interest on the principal amounts due on the mortgages; and

2. That the rule of 'Dam-dupat' applied and consequently the defendant could in no case recover as interest a sum more than the principal of the loan which admittedly was Rs. 8000/.

4. The trial Court passed a preliminary decree in favour of the plaintiffs, but negatived both the aforesaid reliefs claimed by them. The decree directed the appointment of a commissioner for taking accounts to determine the price of redemption of the two mortgages and for that purpose it also gave certain directions to the commissioner regarding:

(i) how rents and profits of the mortgage security which was in the possession of the defendant was to be calculated;

(ii) how and at what rate interest was to be calculated on the principal of the loan advanced under the two mortgages; and

(iii) how the rents and profits so calculated were to be adjusted towards the claim for interest.

5. In this appeal, the dispute is with regard to those directions only. The plaintiffs claim, first, that the interest charged was penal and could not be decreed at the rate claimed by the defendant and, secondly that the rule of 'Dam-dupat' applied and consequently the claim for interest could never exceed Rs. 8000/.

6. The appeal was filed on a court-fee stamp of Rs. 15/ and the first objection of the defendant-respondent was that as the memo of appeal was understamped, there was no proper appeal filed and consequently the decree of tne trial Court had become final and could not now be varied.

7. The question had once before been considered by the Court and the note then put up by the Deputy Registrar was that the memo of appeal was properly stamped. It was pointed out that there was no dispute with regard to the right of redemption, nor with regard to the principal money due on the mortgages and the only dispute was in regard to the method and manner of calculating the price of redemption which depended mainly on the question whether interest could be decreed at the rate claimed and whether the rule of 'Dam-Dupat', applied.

8. In our opinion, the note of the Deputy Registrar was correct and there is no force in the contention of the learned counsel for the respondent. In the instant case, neither the right of redemption nor the quantum of the principal amount of the mortgage debt is in dispute.' Consequently, Section 9(ix) (sic) (Section 7(ix) ) of the Court-fees Actwill have no application. The court-fees would be payable ad valorem on the subject-matter of the appeal and not on the sums secured by the instruments of the mortgages. (Nepal Rai v. Debiprasad, ILR 27 All 447). The court-fees to be paid on the memo of appeal would thus be governed by the nature of the reliefs claimed in the appeal.

It has been held that when an appellant claims extension of time or instalments, the 'reliefs are incapable of valuation and the court-fees are leviable under Schedule II, Article 17 of the Court-fees Act. (See Sitabai v. R. R. Abhyankar, ILR 1938 Nag 423 : (AIR 1938 Nag 409) (FB).) In the instant case, the decree under appeal directs the commissioner to ascertain in terms of the direction contained in the decree the amount to which the mortgagee-respondent would be entitled in addition to the principal of the mortgage. The appel-lant claimed certain alterations in the aforesaid direction but whatever the change the exact amount by which the sum to be arrived at by the commissioner would vary by the change in the directions cannot be determined, nor could it be known with any amount of certainty on the date the appeal was filed. Consequently, the relief claimed in appeal was incapable of valuation and the court-fees to be levied on appeal was governed by Article 17, Schedule II of the Court-fees Act.

9. On the merits of the appeal, the plaintiffs-appellants might have had no case but for the Madhya Bharat Interest Act (Act No. 17 o 1956)) which came into force in July 1956, i.e., during the pendency of the appeal. As it happens, the said Act entitled them to all the reliefs which they claimed in appeal.

10. The defendant-respondent, however, contends that the plaintiffs-appellants are not entitled to any of the reliefs claimed even under the provisions of the Madhya Bharat Interest Act, 1950 for the following reasons:

1. The defendant was entitled to interest under Order 34, Rule 11, C. P. C., notwithstanding the Madhya Bharat Interest Act;

2. The Madhya Bharat Interest Act did not apply to mortgage transaction because they were not loans;

3. The amount realised by the defendant as interest is not included in the definition of 'interest' in the Act. At least, it was not 'interest paid' within the meaning of the proviso to the Act;

4. Where interest was capitalised as per terms of the mortgage, it ceased to be interest within the meaning of the Act and could not thereafter be taken into account when computing the redemption price; and

5. The Madhya Bharat Interest Act was void because being a discriminating piece of legislation, it offended Article 14 of the Constitution.

11. In our opinion, there is no substance in these contentions.

12. Section 3 of the Madhya Bharat Interest Act provides 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 ordered 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.''

The Act enjoins on the Courts not to award interest in excess of six per cent per annum in cases of seemed debts notwithstanding any law or agreement to the contrary which obviously included the provisions of the C. P. C., or the terms of the mortgage in suit. Therefore, the defendant cannot be awarded interest under Order 34, Rule 11, of the C. P. C., in contravention of the provisions of the Madhya Bharat Interest Act. Again, the Act in terms applies to a secured debt and consequently, mortgages would be included in it. Similarly, when the amount of interest paid in the past as well as that to be adjudged due for the future has together not to exceed the principal sum, we do not see how the amounts realised by the defendant-mortgagee as rent and profits and which he claims to have adjusted towards the interest due to him on the mortgages in suit can be left out of computation.

The scheme of the Act clearly seems to be that the Court should make fresh accounts and that it should take note of the sums paid, realised or adjusted towards interest in the past so that the sum, so paid, realised or adjusted together with interest adjudged due for the future together, does not exceed the principal sum due. Agreement to capitalise interest can also not help the defendant-respondent because under the proviso to the Act, compound interest can in no case be adjudged or ordered.

13. It has been held in Bhansarilal Param-sukh v. Navalkishore Mungalal, AIR 1958 Madh Pra 21. that the Act was retrospective and that the language of the Act was imperative and restricted the powers of the Court in respect of matters provided therein. Again, if the Act is retrospective, it would apply to pending proceedings unless there was anything in the subject or context of the Act to the contrary. It is also undisputed that as the Madhya Bharat Interest Act was in force when we heard the appeal, the provisions of that Act will have to be taken into coasideration for giving relief to the plaintiffs, if its provisions were applicable to the facts of their case.

14. The contention that the Act (Madhya Bharat Interest Act) was ultra vires the Constitu-tion as it offended Article 14 thereof is also devoid of force. Article 14 guarantees equal protection of the laws, which has been always held to mean that all persons similarly circumstanced shall be treated equally. Classification provided it was not arbitrary and was based on a real and substantial distinction bearing a reasonable and just relation to the things in respect of which the classification was made, has always been held to be permissible.

15. 'It must be admitted' said Mukherjea J., in Charanjit Lal v. Union of India, AIR 1951 SC 41 at p. 57 that:

'the guarantee against the denial of equal protection of laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. As has been said by the Supreme Court of America, 'equal protection of laws is a pledge of the protection of equal laws' (see Yick Wo v. Hop-kins, (1885) 118 US 356 at p. 369), and this means 'subjection to equal laws applying alike to all in the same situation.' (Vide Southern Rly. Co. v. Greene. (1909) 216 US 400 at p. 412). In other words, there should be no discrimination betweenone person and another if as regards the subject matter of the legislation their position is the same.

***** '.....The legislature undoubtedly has a wide field of choice in determining and classifying the subject of its laws and if the law deals alike with all of a certain class, it is normally not obnoxious to the charge of denial of equal protection; but the classification should never be arbitrary. It must always rest upon some real and substantial distinction bearing a reasonable and just relation to the things in respect to which the classification is made; end classification made without any substantial basis should be regarded as invalid. (See (1909) 216 US 400 at p. 412).' ***** '..... It must be conceded that the Legislature has a wide discretion in determining the subject-matter of its laws. It is an accepted doctrine of the American Courts and which seems to me to be well-founded on principle, that the presumption is in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a transgression of constitutional principles. As was said by the Supreme Court of America in Middleton v. Texas Power and Light Co., (1918) 249 US 152 at p. 157:

'It must be presumed that a legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds'.....'

16. He also cited with appreciation the observations of Sutherland J. in Radice v. New York. (1923) 264 US 292 at p. 297) that

'the legislature is free to recognise degrees of harm and it may confine its restrictions to those cases where the need is deemed to be the clearest'

The legislature recognising the harms of usury and attempting to provide against it, was thus free to choose territories, persons and classes of transactions to which it may apply its restrictive or regulatory provisions provided it accorded equal treatment to all who were affected by it. It has always been recognised that it was not possible to secure to all persons the benefit of the same laws and that by itself could not be a ground for labelling an act as discriminatory. This is especially so when it is not within the powers of the Courts to canvass the Legislative judgments on such matters.

17. In the result, we allow the appeal andreduce the rate of interest stipulated in the mortgage deeds to six per cent per annum simple onthe principal sums due on them and direct that inmodification of the direction given by the trialCourt to the Commissioner for computing the priceof redemption of the mortgages in question, thefollowing directions shall be substituted:(The directions are omitted as not being materialfor the purposes of this report).


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