1. In this suit the plaintiffs are suing the defendants for relief under the provisions of the Bengal Money-lenders Act, 1940, in respect of a decree obtained against them on 12th June 1935 for Rs. 4,58,058-1-9. This was a consent decree which had been obtained by the Maharaja of Darbhanga in respect of the balance due to him on account of a loan of Rs. 6,00,000 advanced to the predecessors of the plaintiffs. The main reliefs which the plaintiffs seek are a declaration to the effect that they are not liable to pay to the defendants any amount in excess of the limits specified in the Bengal Money-lenders Act, and, in any event, in excess of Rs. 12,00,000 for principal and interest. They also ask for the re-opening of the abovementioned decree and the transactions connected therewith and for release from all further liabilities in respect thereof. The facts relating to this case are admitted by all the parties concerned and are briefly as follows: The principal parties to the suit belong to the same family and their relationship is shown in the following genealogical table:
RAI PASUPATI NATH BOSE (died 1907)|----------------------------------------------| |(Second wife) (Third wife) Sarat Kumari (died 1912)|| Anath (Deft. 4)=Sm. Renula Boss (Deft. 1)||---------------------------------|| |Amar (D. 28-2-1915)= Sarjubala Amulya (D. 31-12-1917)= Niharnalini (D. 21-11-1921) (D. 9-6-1940)|-------------------------------------------------------------| | | |Manmatha (Plff. 1) Manindra (Plff. 3) Debendra (Plff. 2) Jogendra (Plff. 4)| | | |Ajit Kumar Bose | Dilip Kumar Bose Protap Kumar Bose(Defendant 10) | (Defendant 8) (Defendant 9)|---------------------------------------------------------| | |Mothindra Nath Bose Arun Kumar Bose Amal Kumar Bose (Deft. 5) (Deft. 6) (Deft. 7)
2. On 25th May 1914, all persons interested In certain properties which had belonged to Pashupathi Nath Bose mortgaged the same to the Maharaja of Darbhanga as security for the sum of Rs. 6,00,000. This mortgage carried interest at the rate of 6 per cent. per annum with half yearly rests. The parties to the mortgage deed were Maharaja Manindra Chandra Nandi (as trustee of the estate), Amarnath Bose, Amulya Nath Bose. Monmotho Nath Sen (as guardian of Anath Bose who was at that time a minor) and Sarajubala, the wife of Amar. Amar died intestate in 1915 and his wife succeeded to a life interest in his share of the estate. Thereafter Amulya died on 3lst December 1917, after having executed a will whereby, subject to the payment of his debts, he gave his interest in the family property to his nephews (the present plaintiffs) for their lives and after their death to their respective sons absolutely. On 18th June 1919, the Maharaja of Darbhanga instituted suit No. 1618 of 1919 on the mortgage which had been executed in his favour. Sarajubala died on 21st November 1921, and Anath attained majority in January 1923. The Maharaja of Darbhanga obtained a preliminary decree in his suit on 3rd July 1923, which was made final on 12th June 1935, for the sum of Rs. 4,58,058.1.9. Admittedly, before 12th June 1935, the mortgagors had paid the Maharaja in cash from time to time an aggregate sum of Rs.8,57,703-10.0. On 17th September 1936, the Maharaja of Darbhanga assigned to Sreematy Renula Bose, the wife of Anath Bose, the decree which he had obtained on 12th June 1935, and the benefit of the securities under the mortgage deed which had been executed in his favour on 25th May 1914. The sum mentioned as consideration for the assignment was rupees 4,59,364-4-3. On the same date Renula again assigned this decree by way of mortgage to Kumar Promotho Nath Roy in consideration of a sum of Rs. 4,75,000. On 2nd February 1937, Renula obtained leave of the Court to execute the decree which had been assigned to her. Admittedly the total sums which have been paid in respect of the mortgage are as follows:
To the Maharaja of Darbhanga ... Rs. 8,57,703-10-0To Renula Bose as set off. ... ' 1,80,000-0-0Price paid by other purchasersand withdrawn by Renula ... ' 1,06,195-13-3 Cash paid to Renula ... ' 42,100-0-0Paid under order dated 24thSeptember 1940. ... ' 15,500-0-0-------------------Rs. 12,01,499-7-3
3. This suit was filed on 5th September 1940. The main contention of the plaintiffs is that, in view of the provisions of the Bengal Money-lenders Act, 1940, no further sum is payable by them under the final decree in the mortgage suit as the total amount realised by Renula and the Maharaja of Darbhanga already exceeds twice the amount of the principal of the original loan. The plaintiffs are represented by Mr. S. M. Bose. The principal defendant is 'Renula, who is seeking to execute the decree which was assigned to her on 17th September. 1936. She is represented by Mr. P.C. Ghose. She maintains that the provisions of the Money-lenders Act do not operate as a bar to the execution of the decree, and that, in any event, she and Promotho Nath Roy are protected as bona fide assignees of the final decree which was passed on 12th June 1935. Promotho Nath Roy, defendant 3, has not yet sought to enforce the mortgage executed in his favour by Renula on 17th September 1936, but, by reason of the latter transaction, he is a necessary party to the present suit. The Maharaja of Darbhanga, defendant 2, and Anath, defendant 1, have been impleaded as persons in whose presence it is desirable that this matter should be agitated. Defendants 5 to 10 are the sons of the plaintiffs, who have a beneficial interest in the estate under the terms of the will of Amulya Nath Bose. They are separately represented by Mr. B. C. Ghose and support the plaintiffs. The following issues have been framed:
1. Is the decree in Suit No. 1618 of 1919 (Maharajadhiraja Sir Kameswar Sing Bahadur of Darbhanga v. Rai Anath Nath Bose and Ors.) affected by the provisions of the Money-Leaders Act?
2. Is the Money-Lenders Act a bar to the execution of the said decree?
3. Are the plaintiffs entitled to any relief under the Money-Lenders Act, and if so, what?
4. Does Chapter 5, Money-Lenders Act, impose any liability on an assignee of the lender, who took the assignment before the commencement of the said Act?
5. Are the defendants Renula Bose and/or Kumar Promotho Nath Roy entitled to the protection of Section 36 (5) of the said Act 1
4. It will be convenient to deal with issues' 1 and 5 first. With regard to these issues Mr. P.C. Ghose, who appears for Renula, contends that whatever right the plaintiffs may have to invoke the provisions of the Money-lenders Act as against the original lender, his client is nevertheless entitled to execute the decree which was assigned to her before the Money-lenders Act came into force. He maintains that no provision in this Act can be construed to operate against a bona fide assignee for value in the case of an assignment which took place before the commencement of the Act, that his client's vested rights have not been affected by the provisions of the Act and are in any case protected by S.36 (5). Mr. S. M. Bose and Mr. B. C. Ghose contend, on the other hand, that it was not the intention of the Legislature to protect persons to whom debts had been assigned before the commencement of the Act, and that on the contrary the statute clearly imposes upon such persons the same liabilities and disabilities as it places upon the lenders themselves.
5. The main scheme of the Money-lenders Act was to afford the greatest possible measure of relief to borrowers in respect of loans which had been advanced to them at rates of interest which the Legislature considered to be excessive and to prevent loans from accumulating to an unreasonable extent. This being the case, the main intentions of the Legislature would have been frustrated if in respect of past loans the liabilities and disabilities contemplated by the statute had been imposed merely upon the lenders, while an assignee of a loan had been left free to realise from a debtor the full amount of the loan under the law as it stood before the commencement of the Money-Lenders Act. Therefore, in view of the manifest intention of the Legislature, the framers of the Act had no option but to treat such assignees as lenders. As regards future assignments however they were in a position to afford the assignee some measure of protection by ensuring that the assignor should make the assignee fully acquainted at the time of the assignment with regard to the extent to which the assigned debt had been affected by the new statute and furnish him with complete information as to the state of the loan. Those sections of the Act which deal with assignments of loans have clearly been framed in order to give effect to the policy which has been outlined above. Section 28 is applicable only in the case of an assignment after the commencement of the Act. It provides that before the assignment is made the assignor shall 'give to the assignee notice in writing that the debt, interest thereon, agreement or security is affected by the operation of this Act,' and also provides that certain prescribed information shall be given to the assignee in respect of a loan covered by an assignment. Section 28 (2) provides a penalty for failure to comply with the provisions of the first part of the section. Section 29 (1) also relates to assignments made after the commencement of the Act. It protects a 'bona fide assignee or holder for value without notice of any defect) due to the operation of this Act.' But a further provision in the same section ensures that such protection shall not operate to the detriment of the interests of the borrower because
in every such case the lender or money-lender shall be liable to indemnify the borrower or any other person who is prejudiced by virtue of this section.
6. The position of a person who obtained an assignment before the commencement of the Act is governed by Section 29 (2) which is in the following terms:
The provisions of this Act shall apply and be deemed always to have applied and shall continue to apply as respects any debt due to a lender or money-lender in respect of loans advanced by him before the commencement of this Act or in respect of interest on such loans or of the benefit of any agreement made or security taken in respect of any such debt or interest, notwithstanding that the debt or the benefit of the agreement or security may have been assigned to any assignee, and except where the context otherwise requires references in this Act to a lender or money-lender shall accordingly be construed as including any such assignee as aforesaid.
7. The language of this sub-section is so clear that it leaves no room for doubt that lit was intended that, if an assignment had been made either before or after the commencement of the Act in respect of the loan advanced before the Act, the assignee of such loan should be subject to the same statutory liabilities and disabilities as if he had been the original lender 'except where the context otherwise requires.' In a case in which the loan was advanced before the Act and the assignment is effected after the Act, Section 29 (2) must of course be read subject to the provisions of Section 28. In such a case, therefore, it will be the duty of the assignor to give the assignee the notice and information prescribed by the section and, if the assignee Is prejudiced by reason of the non-receipt from the assignor of such notice or information, the latter will be liable to indemnify him. If the requirements of Section 28 have been fulfilled, the assignee cannot throw upon the borrower any liability in respect of a loan beyond the limits prescribed by Section 30 of the Act. 'Where these limits have been exceeded, the borrower will have the same rights against the assignee as regards (the re-opening of transactions under Section 36 of the Act as he has against the original lender, provided that, in the case of a refund under Section (36) (d), the assignee will only be liable to repay such sum as the Court considers to be repayable in proportion to the sum which he had actually received. If such an assignee had not received the notice prescribed by Section 28, besides being protected by Section 28 (2) of the Act, he would receive further protection by virtue of section 36 (5) which is in the following terms:
Nothing in this section shall affect the rights of any assignee or holder for value if the Court is satisfied that the assignment to him was bona fide, and that he had not received the notice referred to in Clause (a) of Sub-section (1) of Section 28.
8. But what is the position under the Act of a person such as Renula who received before the commencement of the Act an assignment of a loan advanced before the Act came into operation? It is argued by Mr. P.C. Ghose that his client is protected by Section 36 (5) and, by virtue of this section alone the plaintiffs are debarred from reopening the decree which was transferred to his client on 17th September 1936. Mr. Ghose admits that Renula could not have received a notice under Clause (a) of Sub-section (1) of Section 28 because no such notice had been prescribed or was in existence at the time of the assignment to her. He maintains, however, that as she did not receive such notice, her rights under the assignment as they stood before the Act are unaffected. This argument cannot be accepted. Section 36 (5) can only have any possible application in the case of a person to whom the notice contemplated in Section 28 (1) (a) can be given, i.e., an assignee after the commencement of the Act. Section 29 (2) makes it clear that an assignee before the commencement of the Act is in exactly the same position as the lender 'except where the context otherwise requires.' The remedy which the plaintiffs are seeking in the present suit is under Section 36 of the Act and the only exception provided by the context in that section in favour of an assignee before the commencement of the Act appears to be contained in the proviso to Section 36 (d) of the Act, to which reference has already been made. Apart from this provision the remedies provided by Section 36 are equally efficacious as against the lender or an assignee from such lender, provided the assignment took place before the commencement of the Act.
9. The reason for the insertion of Sub-section (5) in Section 36 of the Act appears to be that in framing the abovementioned proviso to Section 36 (d) the Legislature had used language which might be taken to impose a certain liability upon assignees generally, who fall within the scope of Section 29 (2) of the Act, regardless of the question whether the assignment had taken place before or after the commencement of the Act, and it was to protect assignees falling within the latter category, who had not received the notice prescribed under Section 28 (1) (a) that it was probably thought desirable to enact Sub-section (5) of S 36. I am, however, clearly of opinion that this sub-section cannot be taken to protect a person in the position of Mr. P.C. Ghose's client. Having regard to the above-mentioned consideration, issue 4 must be answered in the affirmative and issue 5 in the negative.
10. This leads us to the consideration of issues 1 and 2. The main case for the plaintiffs is that the original loan taken by their predecessors amounted only to six lakhs of rupees, and they therefore contend that, in view of the provisions of Section 30 (1) (a), Bengal Money-lenders Act, 1940, they are not liable to pay any amount in respect of this loan in excess of 12 lakhs of rupees. They maintain that they have already paid Rupees 12,01,499-7-3 and that in these circumstances they are entitled to be released from all further liability in the matter. Mr. P.C. Ghose, on the other hand, argues that, in view of the terms of Section 30 (1) (a) of the Act, the relief which the plaintiffs seek is beyond the scope of the enactment, and that the plaintiff's ease is based upon an erroneous construction of Section 30. He points out that the interest charged on the original loan, which has been included in the decree which Renula seeks to execute, does not exceed the rate specified in Section 30 (1) (c) of the Act, and he maintains that the only clause of Section 30 upon which the plaintiffs rely, namely Section 30 (1) (a), cannot operate by reason of its terms to afford the plaintiffs the relief which they seek. This sub-section reads as follows:
(1) No borrower shall be liable to pay after the commencement of this Act-(a) any sum in respect of principal and interest which together with any amount already paid or included in any decree in respect of a loan exceeds twice the principal of the original loan.
11. In this connexion, Mr. P.C. Ghose points out that Renula is merely seeking to execute a valid decree which was passed in favour of the Maharajah of Darbhanga and which has been assigned to her. He argues that there are no express words in the statute which can be taken as operating to deprive his client of the benefits to which she would ordinarily be entitled under the decree after its assignment to her and that on a strict interpretation, Section 30 (1) (a) can only apply.(1) when there is no decree in respect of a loan, when the borrower is required to pay any amount in excess of payments already made, or (2) when there is such a decree outstanding against the borrower (e. g. a decree for a portion of the amount due to the lender), when he is required to pay an amount over and above the amount included in the decree. According to Mr. P.C. Ghose, it is only in such cases that any further payment which the borrower is called upon to make after the commencement of the Act must be limited to the difference between the amount already paid otherwise than under the decree plus the amount of the decree (if any) and twice the principal of the original loan. He maintains, however, that in a ease such as that with which we are now dealing, where the plaintiffs are not being called upon to pay more than the sum due under the decree of 12th June 1935, Sub-section (1) (a) of Section 30 of the Act can have no application. The plaintiffs are seeking to re-open the decree of 12th June 1935 and to obtain a declaration that they are released from par); of their liability under the decree. In view of the terms of Section 36 of the Act there is, of course, no doubt that a decree may be reopened, which contravenes the provisions of Section 30, and further as held recently in Suresh Chandra Mukherjee v. Lal Mohan Chatterjee O.S. Suit No. 1136 of 1936, in suitable cases even without the re-opening of a decree, the Court may release a borrower of all liability in excess of the limits specified in Clauses (1) and (2) of Section 30 of the Act. Section 36 does not, however, operate for the purpose of relieving a borrower from his legal liabilities and if such a person invokes this section for the purpose of obtaining relief, he must show that he is legally entitled under the provisions of the Act to the relief which he seeks.
12. It is therefore necessary to consider the precise extent of a borrower's liability under Section 30 (1) (a) of the Act. Mr. S. M. Bose contends that the intention of the Legislature in enacting Section 30 (1) (a) was that the total liability of a borrower 'in respect of principal and interest' should be limited to twice the principal of the original loan. According to him, this is the maximum amount which a borrower may be called upon to pay, and in computing a borrower's liability in respect of payments after the commencement of the Act a borrower should be given credit for 'any amount already paid or included in any decree.' He argues that the words 'or included in any decree' are merely used as referring to any payment before a decree, which has been taken into account in calculating the amount due to the decree-holder. In that sense, in the present case, where there is a decree, the borrower would receive credit for (1) any amount treated by the decree as having been paid or adjusted, that is, Rs. 8,57,703-10.0, and (2) any amount paid under the decree, that is, Rs. 3,43,795-13-3. According to this argument it will be only if these amounts together aggregate to less than twice the principal of the original loan that the borrower will be liable to pay the balance not exceeding the amount last mentioned. The main difficulties in accepting Mr. S. M. Bose's construction of Section 30 (1) (a) of the Act are as follows : (1) The argument assumes that the Legislature in-tended to grant retrospectively to a borrower relief from liability under a decree even in a case in which the rate of interest stipulated in respect of the loan does not exceed the rates prescribed in Section 30 (1) (c) of the Act. The legal principle of general application with regard to the retrospective operation of a statute has been stated in Halsbury's Laws of England in the following terms:
A statute is prima facie prospective and does not interfere with existing rights unless it contains express words or there is the plainest implication to that effect. (Halsbury, 2nd Edition page 513, para. 670).
13. Section 30 (1) contains no such express Words of this nature, although such words have been used in Section 30 (2) of the Act for the purpose of securing to the borrower retrospective release from liability in a case in which the amount of interest paid or decreed before the commencement of the Act exceeds the rates specified in Sub-clause (c) of Clause (1) of Section 30. (2) Mr. S. M. Bose relies on the concluding words of Sub-section (1) of Section :3o as operating to grant a borrower retrospective release from liability in cases such as that with which we are now dealing. These words are:
Whether such loan was advanced or such amount was paid or such decree was passed or such interest accrued before or after the commencement of this Act.
14. These words, however, do not have the effect which Mr. S. M. Bose seeks to attribute to them. They are merely descriptive of the loans, decrees and interest, to which reference has been made in the preceding portion of this Sub-section (3) The expression ' 'any amount' which is used in Section 30 (1) (a) is qualified by the two expressions 'already paid' and 'included in any decree.' From their context, it appears that the two latter expressions are intended to be mutually exclusive and it follows that the words 'already paid' mean 'already paid otherwise than under a decree at the time when the future liability is computed' and the words 'included in any decree' refer to any amount in respect of a loan which amount is covered by a decree and is (1) still outstanding, or (2) has been paid under the decree by adjustment or otherwise. The sub-section contemplates that the sums 'already paid' or 'included' in the above sense should be added together for the purpose of calculating the further amount (if any) which the 'borrower shall be liable to pay after the commencement of this Act.' It is only such further payments that are expressly limited. Obviously, when such calculation is made in the case of a long standing loan it might be found that the amount 'already paid' on account of interest alone had already exceeded the amount of the original loan. Such a contingency, however, would not operate to exclude any amount 'Included in any decree' from any further payment for which the borrower might be liable. (4) Mr. Bose's argument in construing the words 'or included in any decree' as referring to payments before the decree, which had been taken into account in calculating the amount due to the decree-holder in fact involves construing the expression 'included in any decree' as equivalent to 'excluded from the decree.' Such a construction would be repugnant to the clear language of the sub-section. In my view, the words 'included in any decree' should be given their natural meaning as referring to amounts covered by a decree, for which the judgment-debtor is liable to the decree-holder. (5) It obviously could not have been the intention of the Legislature to lay down a general rule under Section 30 (1) of the Act that in no circumstances could a borrower be called upon to repay to a lender more than twice the amount of the original loan. In this connexion, reference may be made to Section 30 (1) (b) which would be applicable in a case in which it is sought after the commencement of the Act to make a decree in respect of the liability of a borrower as regards outstanding principal and interest due on the loan. This sub-section states that:
No borrower shall be liable to pay after the commencement of this Act...(b) on account of interest outstanding on the date up to which such, liability is computed, a sum greater than the principal outstanding on such date.
15. Clearly, in such a case, part payments in respect of the original loan could not be regarded as outstanding. Such payments may have exceeded more than twice the amount of the original loan, but the only limitation imposed by this sub-section is to the effect that future payments on account of interest shall not execeed the principal outstanding on the date on which the computation is made. Section 30 (1) refers to prospective release from liability and Sub-section (2) refers to retrospective release from liability. The language used in section 30 (2) is sufficiently definite to indicate that the Legislature intended to affect retrospectively certain vested rights of the lender. The sub-section is in the following terms:
No borrower shall after the commencement of this Act, be deemed to have been liable to pay before the date of such commencement in respect of interest paid before such date or included in a decree passed before such date, interest at rates per annum exceeding those specified in Sub-clause (c) of clause (1).
16. Retrospective release from liability is, however, granted only in respect of interest which has been paid or decreed at rates exceeding those specified in Section 30 (1) (c). The remedy of the borrower in such a case would be to apply or sue for relief under Section 36 of the Act. Under that section it would be competent for the Court in appropriate cases to re-open the whole transaction in which excessive interest had been paid or decreed. Further, in certain cases (e. g., under Section 36 (d) of the Act), it would be open so the Court to direct the refund of excess amounts which had been paid by the borrower. Prospective release from liability is covered by Section 30 (1) of the Act. If the loan contemplates interest payable at rates exceeding these specified in Section 30 (1) (c), a borrower may apply to have the transaction re-opened under Section 36 and to have future payments adjusted to ensure that the total payments in respect of the original loan do not impose upon him any liability beyond the limits specified in Section 30 (1) of the Act.
17. It remains, however, to be seen what the position will be as regards the prospective liability of the borrower if the loan contemplates interest payable at rates which do not exceed the limits specified in Section 30 (1) (c) of the Act. As already stated, Section 36 con-templates that the powers conferred upon the Court under that section shall only be exercised in cases in which there is no liability on the part of the borrower to pay some part of the principal or interest in respect of the loan. Such liability is regulated by the provisions of Section 30 which does not release the borrower from liability in respect of past payments or decrees except to the limited extent set forth in Section 30 (2), i. e., where interest has been paid or decreed at rates exceeding those specified in Section 30 (1) (c). It follows that past payments with regard to 'principal and interest or decrees in respect [thereof are unaffected by the provisions of is. 80, provided the rates of interest mention-led in Section 30 (1) (c) have not been exceeded. Section 30 (1) (a) deals with a ease in which (i) there have been such past payments, or (ii) the amount due to the lender in respect of principal and interest has been declared by a decree of a competent Court. For what further payments is the borrower liable in such a case? As his liability in respect of past payments or decrees remains unaffected the transaction cannot be re-opened as regards such matters. It follows that he is entitled to no refund and his liability continues under any decree which may have been passed against him in respect of a loan. As regards further payments, however, in respect of principal and interest on the loan not covered by past payments or a decree, these are limited to the difference between the amount already paid or decreed and twice the amount of the principal of the original loan. If the past payments together with the amount of the decree in respect of the loan exceed twice the amount of the original loan as in the present case, nothing further will be payable beyond the extent of the liability of the borrower under the decree, which will continue. Further, when the loan has been partly adjusted by past payments and a decree, the payments made otherwise than under the decree must be added to the decretal amount, even if the decree has been partly adjusted by payments made during the execution proceedings. Future payments, if any, will be limited to the differences between the total so obtained and twice the amount of the principal of the original decree.
18. Finally, it is contended by Mr. S. M. Bose that the plaintiffs should not in any case be held liable to pay interest on the decretal amount. I have already pointed out that Section 30 (1) (a) cannot operate retrospectively to release a borrower from liability under a decree. In any case, however, interest on the decretal amount cannot be regarded as 'any sum in respect of principal and interest' nor as an 'amount .... included in any decree in respect of a loan.' In my opinion these words in Section 30 (1) (a) relate to the principal of and interest on the original loan. Interest due on the decretal amount has no connexion with the original contract and, as pointed out by the Privy Council in Kusum Kumari v. Debi Prosad Dhandhania :
When once a decree has been passed the loan or debt as the subject of enforcement no longer exists; it is in effect merged in the decree, and the allowance of interest on the decree is not the allowance of additional interest on the loan or debt.
19. This being the case the interest payable] on the decretal amount must be regarded as a liability included in the decree, to which the terms of Section 30 (1) (a) have no application and in respect of which this sub-section cannot operate to afford a judgment-debtor any relief. The result is that issues 1 and 2 must be answered in the negative, and it follows that the plaintiffs are entitled to no relief in this suit. The plaintiffs' suit must therefore be dismissed. The defendants who have appeared in the suit (except defendants 5-10) will be entitled to recover their costs from the plaintiffs. As regards Renula (defendant 1) I certify the case as fit for the employment of two counsel.