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Bank of Commerce Ltd. Vs. Runja Behari Kar S/O Ishan Chandra Kar and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata
Decided On
Reported inAIR1944Cal196
AppellantBank of Commerce Ltd.
RespondentRunja Behari Kar S/O Ishan Chandra Kar and anr.
Cases ReferredCameron v. Smith
Excerpt:
- .....on promissory notes, therefore, is a matter with respect to contract in the concurrent legislative list. the bengal act has received the assent of the governor-general. in view of the provisions of section 107 (2), constitution act, sections 29 (2) and 30, bengal money-lenders act, 1940, must prevail.6. the petitioner bank is not the holder of the promissory note in due course. we therefore express no opinion on the question as to whether sections 29 (2) and 30, bengal act, affect the rights of holders of promissory notes in due course. the subordinate judge was therefore right in dismissing the suit of the petitioner bank. the rule is accordingly discharged. the parties will bear their own costs in this rule.7. civil bevision gases nos. 284 of 1942,451 of 1942, 453 of 1942, 1348 of.....
Judgment:
ORDER

1. Civil Revision No. 818 of 1941. The opposite parties jointly borrowed a sum of Rs. 150 from the K. L. Bank Ltd. (formerly known as the Khulna Loan Co. Ltd.) on 3rd January 1920, on a promissory note with a promise to pay on demand to the said Bank the sum borrowed with interest at the rate of Re. 1-6-0 per cent, per annum. The opposite parties paid Rs. 415-11-0 as interest on the said loan. The last payment of interest was made on 11th March 1938. In the year 1940 the Bank instituted a suit against the opposite parties for recovery of Rs. 150 as principal sum of the loan together with RS. 99-13-0 as balance of interest due in the small Cause Suit No. 495 of 1940 of the second Court of the Miinsif at Khulna. The defence of the opposite parties in the suit was that they had already paid a sum of Rs. 415-11-0 and so the bank was not entitled to get any decree against them in view of the provisions of Section 30, Bengal Money-lenders' Act, 1940. On 5th April 1941, the Small Cause Court Judge held that as more than double the principal sum had already been realised the plaintiff bank could not realise any other sum from the opposite parties. He accordingly dismissed the suit. By an Order of this Court under Section 153 (a), Companies Act, dated 12th May 1941, the entire undertakings, assets and liabilities of the bank were transferred to the petitioner bank. On 23rd June 1941, the petitioner bank obtained a Rule from this Court under Section 25, Provincial Small Cause Courts Act, upon the opposite parties to show cause why the Order of the Small Cause Court Judge dated 5th April 1941 dismissing the Small Cause suit should not be set aside.

2. The material provisions relating to interest on loans advanced on the basis of promissory notes are contained in Sections 32 and 79, Negotiable Instruments Act, 1881, Section 3, Usurious Loans Act, and Sections 3 to 6, Bengal Moneylenders Act, 1933. All these Acts were passed before the commencement of part 3, Government of India Act, 1935. These provisions, therefore, constitute the existing Indian law relating to promissory notes as defined by Section 311 (2), Constitution Act. The Bengal Money-lenders Act, 1940 (hereinafter referred to as the Bengal Act) was passed by the Bengal Legislature after the commencement of part 3, Government of India Act, 1935. This Act by excluding promissory notes from Exception (e) to the definition of loan has shown a deliberate intention to deal with interest on promissory notes. 'Promissory note' comes within the exclusive field of the Federal Legislature (Entry No. 28 of List l), while 'money-lending and money-lenders' is within the exclusive competence of the Provincial Legislature (Entry No. 27 of List 2). In (1943) 6 F.L.J.F.C. 221,1 it was held by the Federal Court that the Bengal Act must, taken as a whole, be held to fall within the description legislation in respect of money-lending and money-lenders' and is not wholly void as ultra vires of the provincial Legislature.

3. Section 30, Bengal Act, is repugnant to Sections 79 and 80, Negotiable Instruments Act, 1881,Section 29 (2), Bengal Act, is repugnant to Section 82 read with Section 79, Negotiable Instruments Act. Now the question is how this conflict is to be resolved. The contention of the Advocate-General is that this conflict should be resolved by applying Clause 2 of Section 107, Govern, ment of India Act, 1935 and that it should be held that provincial law (Sections 29 (2) and 30, Bengal Act) should prevail. The contention of Dr. Sen Gupta is that this conflict should be resolved not by the application of Section 107 (2), Government of India Act, 1935, but by an extension of the principle of Section 107 by analogy or by the application of the Canadian doctrine of the occupied field as suggested by Sulai-man J. in Subrahmanyan Chettiar's case? In (1943) 6 P.L.J.F.C. 2211 referred to above the Federal Court has observed:

Where the problem can only be one of conflict between the provisions of the local law and the provisions of a central enactment, each being intra vires the particular legislature, it isunnecessary to invoke the Rule of seyerability to uphold the validity of the impugned Act. Language has sometimes been employed in enunciating the doctrine of 'accupied field' which may seem to suggest that in respeot of a field oocupied iby central legislation, the provincial legislature would have no power at all to deal with the subject. But having considered all the decisions bearing on that question, in our judgment it is the doctrine of repugnanoy and not the doctrine of ultra vires that has to be applied in this class of cases.

4. The material provisions of Section107, Government of India Act, 1935, are these:

107. (1)-'If any provision of a Provincial law is repugnant to any provision of a Federal law which the Federal Legislature is competent to enact or to any provision of an existing Indian law with respect to one . of the matters enumerated in the Concurrent Legislative List, then subject to the provisions of this section, the Federal law, whether passed before or after the Provincial law, or, as the case may be, the existing Indian law, stall prevail and the Provincial law shall, to the extent of the repugnancy, be void.'

107. (2)-'Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnant to ' the provisions of an earlier Federal law or an existing Indian law with respect to that matter, then, if the Provincial law, having been reserved for the consideration of the Governor-General or for the signification of His Majesty's pleasure, has received the assent of the Governor-General or of His Majesty, the Provincial law shall in that Province prevail but nevertheless the Federal Legislature may at any time enact farther legislation with respect to the same matter. * * * ** * * *

Clause 2 of Section 107 contemplates a conflict between a provincial law with respect to one of the matters enumerated in the Concurrent Legislative List and the provisions of 'an existing Indian law' as defined by Section 311 (2), Government of India Act, 1935, with respect to that matter. In Subrahmanyan Ghet-tiar's case? Gwyer C. J. observed:

I doubt whether any provincial Act could, in the form of a debtors' relief Act, fundamentally afiect the principle of negotiability or the rights of a bona fide transferee for value. Perhaps the position is different where the promissory note has never changed hands and is sued upon by the original payee; and it may be (though I do not decide the question) that an Act such as the Court is now con. sidering can operate upon the original debt in such cases, even though the creditor has taken a promissory note in respect of his debt. If it were otherwise, the power of Provincial Legislatures to enact remedial legislation in a field peculiarly their own would be very greatly hampered; so much so, indeed, that the Central Legislature might well find itself compelled to review the situation. But it would perhaps be inadvisable that I should say more on this occasion.

5. The Negotiable Instruments Act, 1881, deals with negotiability, incidence of contract and its breach, and rules of evidence relating to negotiable instruments. The expression 'other like instruments' in Entry No. 28 of List I means 'instruments of the same g'enus as cheques, bills of exchange and promissory notes.' Negotiability is the common essential attribute of the instruments mentioned in the said entry. Legislation with respect to matters coming under Entry No. 28 pf List 1 must, therefore, mean 'legislation with respect to the negotiable aspect of these instruments.' The other aspects of these instruments dealt with by the Negotiable Instruments Act, 1881, do not, therefore, properly come within List I. Contract and the rules of evidence come under the Concurrent Legislative List. Interest is payable-(a) where there is a contract and (b) where there is no contract as damages for breach of contract. Cameron v. Smith (1819) 2 B. and Aid. 305 Interest on promissory notes, therefore, is a matter with respect to contract in the Concurrent Legislative List. The Bengal Act has received the assent of the Governor-General. In view of the provisions of section 107 (2), Constitution Act, Sections 29 (2) and 30, Bengal Money-lenders Act, 1940, must prevail.

6. The petitioner bank is not the holder of the promissory note in due course. We therefore express no opinion on the question as to whether Sections 29 (2) and 30, Bengal Act, affect the rights of holders of promissory notes in due course. The Subordinate Judge was therefore right in dismissing the suit of the petitioner bank. The Rule is accordingly discharged. The parties will bear their own costs in this rule.

7. Civil Bevision Gases Nos. 284 of 1942,451 of 1942, 453 of 1942, 1348 of 1942, 438 of 1943 and 814 of 1943.- In view of our decision in civil Bevision Case NO. 818 of 1941, the other rules are all discharged without costs. We hereby certify that these cases involve a substantial question of law as to the interpretation the Government of India Act, 1935.


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