1. This is an appeal by special leave from a judgment of a Division Bench of the Calcutta High Court confirming the decree of dismissal of a suit passed by another learned Judge of that Court.
2. The plaintiff, the appellant before us, claims relief under the Bengal Money Lenders Act, 1940. In order to appreciate how the relief is claimed, it is necessary to set out a brief summary of the relevant facts. On September 5, 1930, the appellant executed a mortgage in favour of the first respondent to secure re-payment of a sum of Rs. 13,000/- with interest at the rate of 10% per annum with quarterly rests. The properties mortgaged were four in number, two in Calcutta within the original jurisdiction of the High Court and two outside the said jurisdiction. The plaintiff had also executed a second deed of mortgage in favour of one Hari Sadhan Banerjee in respect of two out of the aforesaid properties besides another property belonging to him. On 28th August 1939, the mortgages-first respondent instituted a suit against the plaintiffand the puisne mortgagee Had Sadhan Banerjee claiming the usual mortgage decree. On February 21, 1940 the suit was decreed on compromise providing for payment of Rs. 13,000/- as principal and Rs. 9,325/- by way of interest up to February 20, 1940 with further interest at the rate of per annum on Rs. 13,000/-. The decretal account was made payable in instalments and in default of payment of any one instalment, the mortgaged properties were to be sold. On August 27, 1940, a farther preliminary decree was passed in the same suit in favour of the second mortgagee Hari Sadhan Banerjee. On February 3, 1942 the plaintiff executed a conveyance of the mortgaged properties in favour of the first respondent By agreement between the parties the amount payable to the first respondent from the plaintiff under the compromise decree in the mortgage suit on account of principal, interest and costs was fixed at Rs. 22,000/- after taking into account all payments made up 1o date and the concessions made by the first respondent. The price of the mortgaged properties was fixed at the same amount, i.e. Rs. 22,000/- The conveyance of February 3, 1942 shows that the plaintiff had received to his satisfaction the consideration money by way of repayment through deduction or adjustment of the dues of respondent No. 1 on the basis of the compromise decree. Satisfaction of the decree was entered up in favour of the first respondent in the mortgage suit. On February 28 1944, a final decree for sale was passed in favour of Tokend Prasad Ramani Kumar Pal, the assignee of the preliminary decree passed in favour of Hari Sadhan Banerjee in suit No 1821 of 1939 (mortgage suit). On May 3, 1945; on application of Tokend Prasad Ramani Kumar Pal, an order was passed in the said suit recording the release of premise Nos. 30 and 30/1 Uma Das Lona and No. 6 Gopal Chatter-jee Road (three out of the four mortgaged propertiss) from the mortgage dated September 23 1930. On June 2, 1945, the first respondent sold to the second respondent the two Calcutta properties 30 and 30/1 Uma Das Lane for Rs. 24,000/-. On April 30, 1946, full satisfaction was entered up in Suit No, 1821 of 1938 in respect of the decree dated August 27, 1940 and 28th February 1944. On August 27, 1946, the first respondent sold to the third respondent premises No. 5 Gopal Chatterjee Road for a sum of Rs. 19,000/-.
3. The suit out of which this appeal arises was filed on February 19, 1952 for relief under the Bengal Money Lenders Act by re-opening the decree dated February 21, 1940 and setting aside the sale deeds dated February 3, 1942 June 12. 1945 and August 27, 1946. To appreciate the basis of the plaintiff's claim for re-opening of the decree already passed and to set aside the conveyances, it is necessary to note the provisions of Sections 30 and 36 of the Act. Under Section 30 no borrower was to be liable to pay after the commencement of the Act, interest at a rate exceeding eight per cent simple on a secured loan and no borrower was, after the commencement of the Act, to be deemed to have been liable to pay before the date of such commencement in respect of interest paid before such date included in a decree passed before such date interest at a rate exceeding the rate mentioned above on a securedloan. Section 36 laid down the conditions under which transactions and decrees could be re-opened Sub-section (1) of the section made it obligatory on the court to re open a transaction inter alia if it had reason to believe that relief could be given to the borrower by releasing him of all liability in excess of the limits specified in Section 30 and in such a case if anything had been paid or allowed in account on or after the first day of January, 1939 in respect of the liability mentioned above, it could also order the lender to repay any sum which it considered to be repayable in respect of such payment or allowed in account as aforesaid Under Sub-section (2) of Section 36 on the re-opening of a decree the court was to pass a new decree in accordance with the provisions of the Act and inter alia order the restoration to the judgment-debtor of such property, if any, of the judgment-debtor acquired by the decree-holder in consequence of the reopened decree as might be in the possession of the decree-holder on the date on which the decree was reopened at the same time directing the judgment debtor to pay to the decree-holder in such number of instalments as it thought proper, the whole amount of the new decree.
4. After setting out the above facts, the plaintiff stated in paragraph 5 of the plaint that he had paid several sums of money to the first respondent both before and after the sale deed dated February 3, 1942. The plaintiff claimed that he was entitled to the reopening of the said decree and cancellation of the deeds of sale. His case further was that he had been induced to execute the deed of sale dated February 3, 1942 on the fraudulent misrepresentation of the first respondent that notwithstanding such execution he (the plaintiff) would be entitled to remain in possession of the properties, collect rents and profits thereof and pay the first respondent the said decretal amount from such rents and profits and on liquidation of the entire amount due under the decree, the first respondent would re-convey the properties to the plaintiff. In paragraph 9 of the plaint, it was stated that the plaintiff continued at all material times to remain in possession of the properties, collected the rents and profits thereof and paid the first respondent from such rents and profits various sums approximating Rs. 5,000/-. The plaintiff challenged the sales by the first respondent to the other respondents on the ground that the latter were not bonafide transferees for value and that the sales were effected at gross under-value of the properties and that he came to know of the sales only in August, 1949.
5. The defence of the first respondent was struck out and the suit as against him was heard ex parte. The second defendant alone contested the suit and put in a written statement. Its case was that it was a bonafide transferee for value and that the trans-action in its favour could not be challenged or impugned under the Bengal Money Lenders Act. The learned trial Judge framed several issues and the two with which we are concerned are ;
(1) Whether the plaintiff made any payment to the first defendant as alleged in paragraphs 5 and 9 of the plaint and
(2) Whether the sales dated 3rd February 1942, 12th June1945 and the 27th August 1946 were illegal and void and whether the plaintiff was entitled to relief under the Bengal Money Lenders Act.
6. On the evidence adduced, the learned trial Judge held that the amount due to the first respondent at the date of the decree was Rs. 18,314/- calculating interest at 8% per annum simple allowable under the Bengal Money Lenders Act out of which Rs. 3,481/- had been paid by the mortgagor as was apparent from the endorsement on the mortgage deed itself. He concluded that interest secured by the decree was obviously in excess of the rate of interest allowable under Section 30 of the Bengal Money Lenders Act. It does not appear that the learned Judge accepted the plaintiff's case with regard to his right to get a reconveyance on the basis of any alleged representation by the decree-holder nor did he accept the evidence of the payment of Rs. 5,000/- and as pleaded. According to the learned Judge, on the date of satisfaction of the decree, February 3, 1942. the mortgagee was entitled to a sum of Rs. 13/000- as principal and a sum of Rs. 11,816/- as and by way of interest at 8% less, Rs. 3,431/- paid and endorsed on the mortgage deed, with the result that his claim was not to exceed Rs. 21,336/- As the deed of sale was for Rs. 28,000/- the mortgagee secured for himself the benefit of payment of Rs. 665/- in excess secured for himself excess of the limit prescribed by the Bengal Money Lenders Act. The learned Judge held that the suit was thus one to which the Act applied and that if the court had reason to believe that the exercise of ane or more of the powers under Section 36 of the Act would give relief to the borrower, the court was bound to exercise all or any of the powers as might be applicable appropriate to the case. He however held that the defendants 2 and 3 were bonafide transferees for value and their interests were protected under Section 36 with the result that the sales could not be set aside.
7. The whole object of the suit was to rescind conveyance of the properties which were the subject matter of the deed of sale dated February 3, 1942 in view of the enormous rise in value of the properties in Calcutta. The learned Judges in appeal checked the accounts which are to be found in the judgment of the learned trial Judge and said that
'if accounts are taken on the basis of the Money Lenders Act on February 2, 1942, the defendant No. 1 would be entitled to a sum of Rs. 13,000/- as the principal sum and a sum of Rs. 11,816/- as and by way of interest at eight per cent per annum less Rs. 3,481/- paid before the date of the decree with the result that on that footing defendant No. 1 would be entitled to a sum of Rs. 21,335. Mr. Chatterjee has drawn our attention to the fact that on the plaintiff's evidence it appears that a further sum of Rs. 100/- was paid by the plaintiff between February 21, 1940 and February 3, 1942. On this footing after taking into account all payments upto date and calculating interest in accordance with the Bengal Money Lenders Act the defendant No. 1 would be entitled to payment fromthe plaintiff for a sum of Rs. 21,836/- on account of principal and interest calculated up to February 3, 1942. The compromise decree dated February 21, 1940 also provided for payment of costs. The plaintiff has not shown precisely what sum was due to the defendant No. 1 from the plaintiff on account of the costs under the decree dated February 21,1940 For all that we know, the costs might well have exceeded the sum of Rs. 765/-. It would thus appear that the dues of the defendant No. 1 under the compromise decree dated February 21, 1940 on account of principal and interest calcuolated up to February 3, 1942 in accordance with the provisions of the Bengal Money Lenders Act and also on account of costs might well exceed Rs. 28,000/-. The result is that the plaintiff has not proved that he has made any over' payment to the defendant No. 1 on Februarys, 1942.'
8. According to the learned Judges hearing the appeal, full satisfaction having been entered up of the compromise decree dated February 21, 1940, there was no point in re-opening the decree and there was no question of over-payment taking into account the costs of the suit and there could be no question of granting any relief to the plaintiff by the re opening of the decree.
9 The question as to whether the borrower can get relief under the Bengal Money Lenders Act by having a voluntary transaction of sale in favour of the decree holder set aside, came up for consideration by the Federal Court in Shrimati Padmakamini Debi v. Naba Kumar Singh Dudhuria and Anr. (1). There, the judgment-debtor had transferred properties for a sum of Rs. 30,000/- to be set off towards a decree which was for a much higher amount and after the coming into force of the Bengal Money Lenders Act, claimed to have the decree re-opened and the sale set aside. The Subordinate Judge who heard the application preferred under the Act directed that (1) the mortgage decree be re-opened and a new decree be passed, (2) the judgment-debtor be restored to possession as owner of the four items of property which were sold to the decree- holders by the conveyance, and (3) the sum of Rs. 30,000/-which was the consideration for the said conveyance be taken into consideration in calculating the amount due on the new decree. The Division Bench of the Calcutta High Court hearing the appeal decided that the conveyance in favour of the decree-holders could not be upset and the sale and the lease back to the judgment debtor could not be reopened or set aside under Section 36 of the Act. Examining the provisions of the various sections of the Money Lenders Act, the Federal Court held that the various clauses of Section 36(1) did not provide for restoration of property to a borrower, although Clause (a) of this sub-section dealt primarily with re-opening of transactions. The Court also noted that the only provision relating to re-storation of property was that contained in Sub-section (2) which regulated the rights of the parties when a decree was reopened. According to the court, the rights of the parties were to be adjusted and worked out in terms of the several clauses of Sub-section (2) of Section 36 and this Sub-section could only apply to a case of an involuntarysale in execution of the decree and not to any private or voluntary sale effected by the judgment debtor in favour of the decree-holder with a view to liquidate his debt either wholly or in part.
10. Mr. Mookherjee appearing for the appellant did not contend that this judgment required reconsideration. He did not seek to distinguish the facts of that case From the facts before us and we see no reason to interpret Section 36 of the Act in a different way. The result is that the transaction of sale dated February 3, 1942 cannot be impugned or attacked. It necessarily follows that the sales effected by the first respondent cannot be attacked by the appellant before us.
11. Mr. Mookherjeee however contended that even if that were so, his client could ask for relief under the Act if the decree was reopened and accounts were, taken of the amounts claimed to have been paid by his clients before and after the decree. According to him some payments were made in between the date of the decree and the date of sale while other payments were made after the date of the conveyance in favour of the first respondent. Para graph 5 of the plaint did not specify the exact amount which was alleged to have been paid before or after the sale deed while according to paragraph 9 the plaintiff paid the first respondent Rs. 5,000/-from out of the rents and profits collected by him while he was in possession of the properties. Our attention was drawn to the oral evidence of the plaintiff about these payments The plaintiff no doubt had stated that he had made some payments in cash and some by cheques. He did not however cause the original cheques to be produced nor did he produce any evidence from the Bank under the Bankers Book Evidence Act to show what payments, if any, had been made by him to the first respondent. He only tendered the counter-foils of the cheques which according to him added up to Rs. 6,450/-. Besides this, he also said that in respect of a sub-mortgage, one Ghosal had paid Rs. 5,000/- to the first respondent for which he was entitled to credit. No attempt was made to call Ghosal to prove that any such payment had been made Although the learned trial Judge did not discuss the evidence of these payments in his judgment, it is quite clear that he did not accept any of the payments and the plaintiff's evidence in cross examination thoroughly discredited the plaintiff. It appears that the first respondent had to file a suit in the High Court in the year 1944 against the plaintiff for recovery of arrears of taxes due to the Corporation of Calcutta prior to the deed of sale dated February 3, 1942 and payable by him. The plaintiff admitted in the witness box that he had not contested the suit, but it had been decreed and the decree executed and fully satisfied. He was also shown a letter dated 1st September, 1943 written to him by one Krishna Ballav Roy, a pleader engaged by the first respondent demanding payment of Rs. 1,560/- alleged 1o have been wrongly collected by him from the tenants of premises No. 30 and 30/1 Umadas Lane after the sale to the first respondent. He admitted having collected the rent from the tenants but he could not remember whether he had sent any reply to the letter and he did not even remember whether he had met the first respondent in connection with this letter. It was then put to him thata suit had to be filed by the first respondent against him for the recovery of Rs. 1,600/- on account of rent wrongly collected by him from the premises Nos. 30 and 30/1 Uma Das Lane. He accepted the statement in the plaint to be correct as also the institution of the suit and said that the decretal amount had been paid of although he did not remember the contents of the plaint. It was suggested to him that apart from the decretal amount, a sum of about Rs. 2,000/ was due to respondent No. 1 on account of costs of the mortgage suit and the only answer he could give was that he did not know. It is therefore quite clear that on the evidence before him the learned trial Judge was not disposed to accept the vague and uncorroborated testimony of the appellant that he had paid any moneys to the first respondent as alleged by him and pleaded in paragraphs 5 and 9 of the plaint. Both the trial Judge and the court hearing the appeal came to the conclusion that re-opening of the decree would afford no relief to the borrower inasmuch as the Sum of Rs. 21,325/- which was due under the decree, taking into account the payment of Rs. 3,481/- already made fell short of Rs. 22,000/- the figure mentioned in the conveyance by about Rs. 700/- only. As the decree-holder was awarded costs of the suit, there could be no doubt that the claim of the decree-holder together with costs would over top the sum of Rs. 22,000/- for which the conveyance was executed. Inasmuch as the decree stood satisfied by payment of Rs. 22,000/- as recorded in the conveyance, there was no question of re-opening the decree. It could have been reopened if the appellant had succeeded in showing that besides the amount mentioned in the decree he had paid further sums to the decree-holder which together with the amount of Rs. 21,235/- and the costs of the suit exceeded the consideration for the sale deed. Both the payments alleged by him were not accepted by either of the courts below and in our opinion rightly. In the result the appellant is not entitled to any relief under Bengal Money Lenders Act and the appeal must be dismissed with costs as against the contesting respondent No. 2.