1. On 18th November 1928 defendant-respondent 1 Hrishikesh Dass purported to borrow from the plaintiff appellant Rs. 1,60,000 on the security of immovable properties. The mortgage bond which was executed on that date provided for payment of compound interest at the rate of 8 1/2 per cent, per annum with yearly rests. Thereafter he paid large sums of money on diverse dates totalling Rs. 1,02,205. On calculating interest in terms of the mortgage bond and after giving credit for the payments Rs. 1,64,217-0-0 was found due from him on the 31st Chaitra 1342 B.S. (=14th April 1936). At the intervention of common friends, Rai Bahadur Satyendra Nath Dass and Jogesh Chandra Das, the appellant agreed to remit the sum of Rs. 48,012. On 14th Asar following corresponding to 18th June 1936 a memorandum (Ex. 4) signed by both the appellant and the respondent was addressed to Rai Bahadur Satyendra Nath Dass and Jogesh Chandra Dass. The material portion of the said memorandum runs thus:
After giving credit for payments made towards interest arid after deducting Rs. 48,012 only for remission allowed, a sum of Rs. 1,16,000 remains due as principal on the 1st Bysack 1343 B.S. in respect of the mortgage bond executed by Hrishikesh Babu. I, Hrishikesh Dass, acknowledge the said debt. From the 1st Bysack last interest will run on the aforesaid principal sum at the bond rate.
2. The plaint was filed before the Bengal Money-Lenders Act, 10 of 1940, had been passed. The claim at the date of the suit was laid at Rs. 1,03,524-8.0. While the suit was pending that Act came into force. The learned Subordinate Judge after taking into consideration Section 30 of that Act' and also other defences has decreed the suit for Rs. 90,107 plus costs. He has directed payment in fifteen annual instalments. He found that Rupees 1,53,687-9-0 and not Rs. 1,60,000, as stated in the bond, had been actually advanced and that Rs. 63,286 only was the principal and Rs. 20,882 arrears of interest due at the date of the suit. He allowed Rs. 6882 as pendente lite interest. In arriving at the finding that Rs. 84,118 was due to the plaintiff at the date of the suit on account of principal and interest, he held that the defendant was not entitled to get the benefit of the full remission (Rs. 48,012) made by the plaintiff and noticed in Ex. 4. Proceeding on the admission of the plaintiff's pleader (an admission, which the plaintiff's advocate appearing before us has withdrawn) he held that defendant was entitled only to propor tionate remission. He calculated the amount of remission to be allowed to the defendant in the following manner. As Rs. 48,012 was remitted on the footing that Rs. 1,64,012 was the amount then due and as on calculating interest at 8 per cent (simple) in terms of Section 30, Bengal Money-Lenders Act, instead of at the rate of 8 1/2 per cent (compound) in terms of the bond, Rs. 1,44,019-4-0 would be payable, the remission was calculated in the proportion which 144019 bore to the figure 164012. Applying the Rule of three, the amount came to Rs. 42,150 and not Rs. 48,012 and that sum and not Rs. 48,012 he allowed as remission to the defendant. Against the decree of the Subordinate Judge the plaintiff has preferred this appeal. The defendant has filed a memorandum of cross-objections. The plaintiff's contentions are: (i) that in view of the amount claimed by the plaintiff in the suit no relief to the debtor under the Bengal Money-Lenders Act is admissible, and (ii) that the rate at which pendente lite interest has been given is inadequate.
3. The defendant has urged the following points in support of his cross-objections: (i) that the learned subordinate Judge ought to have deducted the full amount of Rs. 48,012, which the plaintiff had remitted (ii) that the Court below ought to have held that the amount actually advanced was less than Rs. 1,53,687-9-0, and (iii) that the Court below ought to have held that the defendant had paid more than what the plaintiff has admitted.
The first point urged in the appeal and the first point urged in support of the cross-objection.
4. These two points depend upon the same question of law, which we now proceed to determine. As the admission made by the plaintiff's pleader in the lower Court that the defendant was entitled to a proportionate remission is an admission on a point of law we allow the plaintiff's advocate appearing before us to withdraw the same. On the merits of the question, we do not agree with the learned Subordinate Judge's reasons for allowing proportionate remission. In our view the defendant is either entitled to the full remission of Rs. 48,012 or to none at all. Section 36, Bengal Money Lenders Act (hereafter called the Act) gives the Court certain powers to be exercised only if it has reason to believe that the exercise of one or more of those powers would give relief to the borrower (Section 36 (1)). One of those powers is the power to reopen transactions and to take accounts. Adjustments or agreements between the lender and the borrower which are within 12 years of the suit can be reopened. Only adjustments and agreements which purport to close previous transactions and to create new obligations and which are beyond 12 years of the suit cannot be reopened. Exhibit 4 can, therefore, be reopened if by reopening it the borrower would get relief on the provisions of the Act, as it is within 12 years of the suit. For the purpose of following the arguments of the learned advocates the following are the figures in the three contingencies indicated below. Those figures have been supplied by them. We ourselves have not checked them but proceed upon them as no inaccuracies have been pointed out to us by the opposing advocates.
5. I. If Ex. 4 be totally disregarded-that is to say, if the adjustment, together with the agreement regarding the remission be disregarded and account be taken of the loan on the footing that interest payable is 8 per cent, simple in terms of Section 80 of the Act, a sum of Rs. 1,26,000 odd would be the dues of the plaintiff at the date of the suit-an amount much above the claim as laid in the plaint.
6. II. If the adjustment as embodied in Ex. 4 be only re-opened that is to say if only the agreement to treat Rs. 1,16,000 as principal be re-opened but the remission of Rs. 48,012 be maintained the sum of Rs. 82,686 odd would be amount of principal and Rs. 33,314: odd would be the arrears of interest due on 31st Chaitra 1342 B.S. on the footing that interest payable was 8 per cent, simple. That is to say, that although on that date the total debt of the defendant would be Rs. 1,16,000 only Rs. 82,686 would be the outstanding principal and the balance interest. On that basis the sum of Rs. 59,000 would be the balance of the principal and Rs. 23,840 would be. the interest outstanding at the date of the suit in viow of the fact that further payments had been made by the defendant after 1st Bysack 1343 and that interest payable under the law is 8 per cent, simple and not what has been provided for in the bond.
7. III. If Ex. 4 is untouched, that is to say, if the remission of Rs. 48,012 is left intact as also the adjustment by which Rs. 1,16,000 was to be taken as the principal outstanding on 1st Bysack 1343, then the sum of Rs. 1,02,000 odd would be due at the date of the suit if interest is calculated at the rate of 8 per cent, simple. The claim as laid in the plaint is excessive by about Rs. 1000 and Mr. Gupta appearing for the plaintiff concedes that position and is prepared to take a decree on that footing. All these figures which we have noted above proceed upon the finding of the learned Subordinate Judge that Rs. 1,63,687-9-0 and not Rs. 1,60,000 was the actual advance.
8. Mr. Gupta contends that the Court has power to re-open Ex. 4, as the adjustment and agreement embodied therein is not protected by proviso (i) to Section 86 (1) of the Act. But he contends that if the Court re-opens it, it must re-open not a part of it but the whole of it. This contention of his is based on the grammatical meaning of the word ' to re-open' which means 'to discard.' If that contention of his be accepted, the Court ought not to reopen it, in view of the provisions of Section 36 (1) of the Act which we have noticed in the earlier part of our judgment, for the re-opening would not give any relief to the borrower. In that case the decree ought to be on the basis of the figure we have noticed under heading no. III, and the amount decreed by the learned Subordinate Judge will have to be enhanced. As we do not accept his contentions for the reasons hereafter following, we do not determine what would be the amount of enhancement.
9. In the suit both the plaintiff and defendant deposed. The defendant however was examined first. In his deposition he stated that in Magh or Falgoon 1342 (February or March (1936) the plaintiff agreed to give him the remission if he paid Rs. 50,000 by the month of Chaitra following (chaitra 1342), and that as he in fact paid us. 50,000 on 20th chaitra 1342, by selling his Magrapara property the said sum of Rs. 48,012 was remitted and the fact of remission was noted in Ex. 4. This statement of the defendant has not been denied by the plaintiff who had the opportunity of denying it, as he deposed after the defendant. The remission of Rs. 48,012 therefore rests on the dis-tinct contract supported by good consideration.
10. The provisions of the Bengal Money.Lenders Act do not wipe out all contracts between a lender and a borrower. Terms of contracts between them are affected if they go, and only to the extent they go, against the provisions of that Act which are intended to lighten the burden of the debt. The principal alleviative provisions are those enacted in chaps. VI and VII of the Act. For the purpose of this appeal (Sections 30 (1) (e) and 30 (2) are material. A contract by which the lender himself relieves the burden of the borrower only furthers the in-tention of the legislature. There would thus bo no meaning of reopening such a contract, for its reopening would give no relief to the borrower, but on the other hand would take away the relief which the lender himself had condescended to bestow on him. From this it would follow that such a contract cannot be reopened even when it is embodied in the same instrument which contains another contract between the lender and borrower which the Court is empowered to reopen if it hasreason to believe that its reopening would give relief to the borrower on the terms of the Act. We accordingly hold that the re-mission stands in full and that the adjustment contained in Ex. 4 by which the outstanding principal was settled at Rs. 1,16,000 can be reopened and that figure can be analysed to find out what part of it would represent the principal outstanding on 1st Bysack 1342 and what part the arrears of interest. That analysis must proceed on the basis of Sections 30 (1) (c) (ii) and 30 (2) for the Act. The learned advocate for the respondent stated that the analysis made on that basis would give us the sum of Rs. 82,686 as principal and Rs. 33,314 as interest outstanding on 1st Bysack 1342 B.S. As we did not ourselves check these figures, the officer preparing our decree would check the same. In checking the figures the principal of the original loan would be taken to be the sum of Rs. 1,53,687 less the sum of rs. 550, the amount which we hold had not been advanced by the lender for the reasons indicated in our judgment on the second point argued in support of the cross-objections. In making the calculation interest at 8 per cent (simple) would be awarded and the payments made from time to time by the debtor as are shown in the schedule attached to the plaint to be taken into consideration. The full remission of Rs. 48,012 would also be taken into account.
Point 2 of the cross-objections.
11. The defendant contends that Rs. 2000 out of the consideration was withheld from him. This sum was not admittedly paid by the plaintiff ,to the defendant, but was retained by him and was applied as follows: Rs. 1200 was spent by the plaintiff for buying the stamp impressed on the mortgaged deed, RS; 250 was paid by the plaintiff to his pleader as the latter's fees for carrying the mortgage transaction through and Rs. 550 was retained by him for the tohoric (remuneration) of his own officers. The defendant says that the contract between him and the plaintiff was that the latter was to pay for the stamp required on the mortgage. We cannot accept his story. There thus remain for consideration the other two items of Rs. 250 and Rs. 550. The defendant contends that Section 33 of the Act makes those deductions illegal. Paragraph 1 of that section makes an agreement between the lender and borrower illegal by which the borrower agrees to pay to the lender any sum on account of costs and charges incidental or relating to the negotiations for or the granting of the loan. That section was intended against money-lender's commissions and things of like nature. An agreement to pay the fees of the lender's lawyer for investigating title in the case of a mortgage is excepted. As Rs. 250 was paid to the lender's lawyer under an agreement for that purpose, the defendant can take no objection to that sum. The amount of Rs. 850 deducted by the plaintiff for tohoric to his own officers, however, stands on a different footing. There is no evidence that the officers actually got the sum. It appears to us that the said sum was retained by the plaintiff under a false garb. That sum must accordingly be deducted. The principal of the loan must therefore be taken to be rupees 1,53,137.9-0 and not Rs. 1,53,687-9-0.
Point No. 3 of the cross-objections.
12. This involves a sum of Rs. 8000. The defendant's case is that on 16th October 1936 he paid Rs. 31,000 to the plaintiff by selling his garden Golap Bag, but a credit of Rs. 28,000 only was given. His further case is that he paid the whole sum towards principal but only a part was credited towards principal and the rest towards interest. The plaintiff's account as appended to the plaint shows that on 30th Aswin 1343 B.S. (=16th October 1986) a sum of Rs. 23,400 was credited towards principal and Rs. 4600 towards interest. The defendant admits that he paid Rs. 28,000 to the plaintiff and Rs. 3000 to the plaintiff's son as a sop, as the plaintiff's son wanted to buy that garden. The sum of Rs. 8000 in these circumstances cannot be regarded as a payment towards the plaintiff's dues. The defendant further admits that he signed the endorsement of payment on the mortgage deed allocating the sum of Rs. 28,000 towards principal and interest in the manner indicated in the plaintiff's account. We cannot accordingly accept this point.
Point No. 2 of the Appeal.
13. It has been decided in this Court that the provisions of the Bengal Money-lenders Act do not prevent the Court from giving pen-dente lite interest in a mortgage suit. It has been further held that the rate of pendente lite interest is in the discretion of the Court and may be awarded at a rate below the contract rate: 1. Jaigobind Singh v. Lachminarain Rarn , In this case the Court has awarded a lump sum of Rs. 6882 as pendente lite interest. The rate works out at about 2 1/2 per cent. We think that in the circumstances of this case that rate is too low. The suit was filed on 6th May 1935. The defendant posed as an agriculturist and went to the Debt Settlement Board. At his instance the suit was stayed under the provision of Section 34, Bengal Agricultural Debtors Act, from 11th June 1935 to 22nd November 1936. After the stay was vacated he filed his written statement as late as 9th February 1940 and even thereafter dragged the suit further by applying for adjournments. No doubt the suit was held up for about six months in the lower Court as the records were brought up in this Court in connexion with an appeal from about April 1940 to about February 1942. In these circumstances we think that pendente lite interest should be allowed at 4 per cent, per annum. The result is that both the appeal and the cross-objections are allowed in part. As the success is divided the parties would bear their respective costs in this Court. The plaintiff would get proportionate costs of the Court below. The costs decreed to be added to the mortgage claim. The defendant must pay the decretal amount in fifteen equal annual instalments; the first of such instalment to be paid within chaitra 1351 B.S. and the succeeding instalments within chaitra of each succeeding year. In default of payment of any one instalment the plaintiff will be at liberty to apply for a final decree in terms of Section 34 (1) (a) (ii), Bengal Money-lenders Act. Let a self-contained preliminary decree be drawn up in this Court.