1. This appeal which is by the debtor, arises out of an application made by him under Section 38, Bengal Money-Lenders Act (10 of 1940). The facts, which are not in controversy, are the following. On 27th October 1897, the appellant's grandmother Bama Sundari Debi, as executrix to the estate of the appellant's father borrowed from the respondent's predecessor-in-interest Swarnamoyee Debi Rs. 5000 on a simple money bond (Ex. A-3) with a stipulation to pay simple interest at the rate of Rs. 7-8-0 per annum. On 1st October 1904 the appellant executed a renewed bond (Ex. A-2) for Rs. 7000 in favour of the said Swarnamoyee Debi at the same rate of interest. The said sum of Rs. 7000 was made up of Rs. 5000 the original loan and of Rs. 2000 which represented the arrears of interest on the same due at the date of the renewed bond. On 25th September 1911 the appellant executed the bond Ex. A, in favour of the creditor, Swarnamoyee, for Rs. 14,000. The said sum was made up of Rs. 10,264-12-9, which represented the principal and arrears of interest due on the previously renewed bond Ex. A-2, and a sum of Rs. 3735-3-3 advanced in cash on that date. Simple interest at the rate of Rs. 7-8-0 was also payable on this bond. Interest payable in terms of this bond up to 25th June 1919 amounting to Rs. 8137-8-0 was paid on or before that date. On that date the sum of Rs. 14,000 which was treated as the principal in the bond Ex. A was only due. For securing the said sum of Rs. 14,000 the appellant executed the mortgage bond (Ex. A) in favour of the creditor Swarnamoyee on 25th June 1919. The document (Ex. A) recited that Rs. 14,000 was payable by the debtor on that date after adjustment. That amount was treated as principal payable with interest at 6 per cent, per annum (compound) with yearly rests. The appellant has applied under Section 38 of the Act to the Court for taking account in respect of the loan secured by this mortgage.
2. From the aforesaid facts it is clear that the sum actually advanced by way of loan was Rs. 8735-3-3 (namely, Rs. 5000 advanced on 27th October 1897, and Rs. 3735-3-3 advanced on 25th September 1911). It is admitted that all these years from 1897 till the application the total amount paid by the borrower is Rs. 27,000 odd. As that amount is more than double the actual advance the appellant wanted the Court to declare that nothing was payable on the mortgage bond (Ex. A) which he had executed on 25th June 1919 to secure the sum of Rs. 14,000. The learned Subordinate Judge did not accept the appellant's contention. He held that the amount mentioned in the mortgage bond as principal, namely Rs. 14,000 has to be taken as principal for the purpose of taking accounts under Section 38 of the Act. Proceeding on that footing he found that Rs. 8686-0-5 was still due to the creditor on that bond at the date of the application. He relied upon proviso (i) to Section 36(1) of the Act, to support his conclusion that Rs. 14,000 is to be treated as the principal of the loan. In taking accounts he started from the mortgage bond Ex. A, took into account all payments made since the date of that mortgage bond but refused to take into account payments made before the said date. Calculating interest in terms of Section 30 of the Act, from the date of the said mortgage bond-Ex. A-and taking into account payments made since that date he came to the finding that Rs. 8407-3-11 was due on account of principal and Rs. 278-12-6 as interest--total Rs. 8686-0-5. Against his Order the debtor has filed this appeal and on his behalf two points have been urged:
3. (i) that the learned Judge ought to have taken Rupees 8735-3-3 as the principal of the loan, that being the sum which was actually advanced by the creditor, and (ii) in case Rs. 14,000 be taken to be the principal of the loan the lender was not entitled to recover interest on that amount from the date of the mortgage bond. If the first contention be not accepted but the second is, nothing would be due to the creditor at the date of the application, as the sum of Rs. 18,114-12-4 had been paid by the debtor to the creditor between the date of the mortgage bond (25th June 1919), and the date of the application. Section 2(16), Bengal Money-lenders Act (10 of 1940), defines the term 'principal of a loan.' Unless there is anything repugnant in the subject or context it means the amount actually advanced to the borrower. Where however an agreement cannot be reopened by reason of proviso (i) to Section 36(1) of the Act, the amount treated as principal of the loan by the parties in that agreement must be taken to be the principal of the loan. This is the effect of our judgment in Nripendra Chandra v. Md. Abbas Ali : AIR1944Cal113 . No convincing argument has been advanced by the appellant's advocate which would induce us to revise the opinion which we have expressed in that case. The question therefore is whether that proviso is attracted in a proceeding under Section 38 of the Act. It is, therefore, necessary to examine the scope of that section.
4. The section entitles the borrower to make an application to the Court, which would have jurisdiction to entertain a suit for the recovery of the loan, to take accounts and to declare the amount that was payable and already due to the lender or the amount that was payable but not yet due. The declaration made by the Court on such an application would have the force of a decree and so would be res judicata in a subsequent suit instituted by the lender for recovery of the loan or in the case of a secured loan, in a subsequent suit for redemption. In taking accounts in a proceeding Under Section 38 of the Act the Judge is not to act as mere accountant but he has to examine the transaction and to allow in the accounts only such amounts as are allowable to the lender under the provisions of the Act. The Judge is required to exercise the powers given by the Act which are intended for the relief for borrowers. All these are indicated by Sub-section (2) of Section 38. The Court is required to apply the provisions of Chaps. 4, 6 and 7 so far as they may be applicable. On an examination of the provisions of those chapters it is obvious that many of the sections contained in those chapters by their very nature would not be applicable to a proceeding tinder Section 38, for they have no bearing on the enquiry which is for the purpose of declaring what is payable or due to the lender on the accounts. For instance, of the four sections which constitute Chap. 4, Sections 24 to 26, would not be relevant to that enquiry. Section 27 is the only provision in that chapter which has any bearing on the question of accounts and by including Chap. 4 in Sub-section. (2) of Section 38 the Legislature intended the Court to do in an application made by a debtor under Section 38 of the Act, what the Court is required to do in a suit filed by the creditor to recover his dues, or in a suit for redemption, to which the Act applies. In connexion with an application Under Section 38 the words 'application Under Section 38' must accordingly be read in place of the words 'suit to which the Act applies' occurring in para. 1 of Section 27.
5. We need not examine the provisions of Chap. 6 in detail. In taking accounts under Section 38 the Court would have to apply the provisions of Sections 30, 32 and 33. Of the provisions of Chap. 7, Sections 34, 35 and 37 would not by their very nature come into the picture in a proceeding Under Section 38. They relate exclusively to suits for recovery of the loan. Section 39 deals with deposits in Court by the borrower and Section 40 with wrong entries in bonds, etc. That section and the succeeding two sections deal with penalties and so would not be material in an investigation into accounts under Section 38. Sections 43 and 44 also would not be material for that purpose. The only section of Chap. 7 which thus remains is Section 36. By mentioning Chap. 7 in Section 38 (2) the Legislature therefore had in mind the provisions of that section only. Accordingly the intention of the Legislature is that in taking accounts under Section 38 the Court is to exercise exactly the same powers conferred on it, which it is required to exercise in a suit instituted to which the Act applies, that is, in a suit for recovery of the loan or a suit for redemption in the case of a mortgage pending on or instituted after 1st January 1939 or in a suit instituted by the borrower for relief under Section 36. Those powers are defined in Clauses (a) to (e) of Sub-section (1) of Section 36. The two provisos to that Sub-section cannot be ignored for they exactly define the powers conferred by Clauses (a) and (b) of that Sub-section.
6. In this view of the matter in exercising the powers given under Section 36(1) when dealing with an application under Section 38 the Court is to regard that application as ii it was a suit of the nature mentioned in para. 1 of Section 36(1) of the Act. If therefore an adjustment or agreement could not have reopened by reason of proviso (i) to Section 36(1) in a suit of the nature mentioned in para. 1 of Section 36(1), if that suit had .been instituted on the date on which the application under Section 38 had been tiled, that adjustment or agreement cannot be reopened in an investigation under Section 38. This is our construction of the last part of Sub-section (2) of Section 38. This construction of ours is fortified by the fact that any other view would lead to inconsistent results, for if proviso (i) be held inapplicable to a proceeding under Section 38, an adjustment or agreement more than twelve years old would be liable to be reopened in taking accounts, and that proviso being applicable to a suit for recovery of the loan, that very adjustment or agreement could not be reopened in determining the dues of the lender. If such a suit and an application under Section 38 be pending at the same time, the lender would be entitled to get by the decree of the same Court different amounts in respect of the same loan according to the respective dates oi the disposal of the application and the suit. If the suit is disposed of before the application the lender may get a decree lor a sum larger than what would have been determined on the application under Section 38 and in such a case, where the suit is disposed of before the application, the application would become infructuous. If, however, the application be disposed of before the suit, the lender may get a decree for a lesser amount than he would be entitled to in view of the said proviso for the declaration of amount payable and due made under Section 38(2) would operate as res judicata in the suit by reason of Section 38(3).
7. We accordingly hold that the mortgage transaction in question cannot be reopened, as it could not have been reopened by the Court in view of proviso (i) to Section 36(1) in a suit to enforce the loan instituted by the lender on the date when the application was made by the defendant under Section 38 or in a suit by the borrower for relief under Section 36 instituted on that date. The agreement in the mortgage by which the parties treated Rs. 14,000 to be the principal of the loan cannot therefore be touched in these proceedings. That amount, and not what was actually advanced by the lender to the borrower before the said mortgage instrument, must be treated as the principal of the loan. The second contention has been urged by the appellant's advocate in the following manner. He says that if the mortgage instrument (Ex. A) so.far as it relates to Rs. 14,000 cannot be touched by reason of proviso (i) of Section 36(1) the mortgagor would be under the liability to pay the said amount to the mortgagee on the basis of the promise to pay the same contained in the mortgage instrument. But that in applying Section 30 the principal of the loan must be taken to be the actual advance, which in this case amounted to Rs. 8735-3-3. As the creditor, says he, can get in all interest equal to that amount, and as Rs. 8930-0-0 had already been paid by his client towards interest before 25th June 1919 when mortgage was executed, no further interest was payable.
8. But as adjustment recited in the mortgage instrument and the agreement embodied therein, by which the parties thereto took Rs. 14,000 to be the principal of the loan, cannot be touched, the sum of Rs. 14,000 has to be treated as the principal of the loan for all purposes, and in terms of Section 30 interest would be payable upon the said sum, so long as the interest paid by the debtor after the execution of that mortgage bond did not exceed the sum of Rs. 14,000. As Rs. 18,114-12-4 had been paid by the borrower after the execution of the mortgage (Ex. A) the declaration made by the learned Subordinate Judge that a sum of Rupees 8686-0-5 (which is made up of Rs. 8407-3-11 being the balance of the principal and Rs. 278-12-6 being the arrears of interest, calculated at 8 per cent, simple) was due and payable at the date of the application is correct for that amount added to Rs. 18114-12-4 is less than Rs. 28,000 which is double or what is to be taken as the principal of the loan. Both the contentions urged by the appellant's advocate are accordingly overruled and the appeal is dismissed with costs. Hearing fee three gold mohurs.