1. The plaintiff in this case purchased the property to which the suit relates on the 2nd July 1883, the property being then subject to two mortgages, one an equitable mortgage for Rs. 100 without interest, the other a legal mortgage for Rs. 200 with interest at 18 per cent. The plaintiff brought this suit to redeem the mortgages and recover possession of the property. He paid into Court Rs. 600 as sufficient to cover all that could be due upon the mortgages to the defendants or any of them. He alleged that the defendants or some of them had wrongfully obtained and held possession from a time long before his own purchase, and for this he claimed mesne profits.
2. The case was heard before Cunningham, J., who made his decree, dated the 23rd February 1885, by which he ordered certain accounts to be taken--(a) 'an account of what is due to the defendants for principal on the equitable and legal mortgages...and for interest only on the legal mortgage at the rate of 18 per cent. per annum up to the date of tender by the plaintiff of the sum of Rs. 600;' (b) 'an account of the rents and profits of the house and premises' since the date of the plaintiff's purchase. It was ordered that the amount found on taking the second account should be deducted from that found on the first; and provision was made, first, for the case of the sum found after such deduction not exceeding the Rs. 600 paid in, and, secondly, for the case of its exceeding that sum. The other provisions in the decree were those that are usual in a decree for redemption.
3. The Registrar took the accounts as directed and made his report. The material passage in that report is this : 'There is due to the defendants upon and by virtue of the equitable and legal mortgages the sums of Rs. 100 and 200 for principal and the sum of Rs. 528 for interest on the principal sum due on the said legal mortgage. Out of the sum of Rs. 528-12, I have allowed only Rs. 200, and have disallowed the rest under the rule of Damdupat.' This finding of the Registrar was excepted to, and the case came upon further directions before Trevelyan, J. The learned Judge agreed with the Registrar in thinking that the rule of Damdupat, by which the amount of interest recoverable at one time cannot exceed the principal, was properly applicable to the case, but he thought he was precluded by the terms of the decree of Cunningham, J., from applying it. He, therefore, allowed the exception, and varied the report accordingly. Against that decision the plaintiff has now appealed.
4. We are unable to agree with the view which the learned Judge has taken of the construction of the former decree. The governing passage in the decree is that in which the accounts to be taken are defined. The first account is of 'what is due' for principal and interest upon the mortgages, and it would, we think, require very strong ground to justify us in extending those words so as to include anything not legally due. The fact that a subsequent passage contemplated a result of the account which the rule of Damdupat would render impossible is not, in our judgment, sufficient. The most that that can show is that the question of Damdupat was not present to the mind of the learned Judge who made the decree, not that he considered and excluded the rule.
5. But it was contended on behalf of the respondent that, on the merits and apart from any question arising upon the construction of the original decree, there is no rule applicable to this case limiting the interest recoverable to a sum equal to the principal. This involves two questions ; first, whether the rule of Damdupat, whatever it be, does or does not apply in this Court to contracts between Hindus ; secondly, if it does, whether it has the effect of limiting the amount of interest recoverable in this case.
6. It is well settled that in this province, outside the Presidency town, no rule limiting the amount of interest to a sum equal to the principal prevails. This has been held in Deen Dyal Paramanick v. Koylash Chunder Pal Chowdhry 1 C. 92; Surjya Narain Singh v. Sirdhary Lall 9 C. 825; Ret Narain Singh v. Ram Dein Singh 9 C. 871 and in other cases, and it is no doubt an anomaly that there should be one rule in Calcutta on such a point and another outside it. But a comparison of the history of the law of Contracts in the Presidency town with that in other parts shows, we think, that the difference does exist. The Statute 21, George III, c. 70, Section 17, required the Supreme Court of Fort William to determine 'all matters of contract and dealing between party and party in the case of Gentus by the laws and usages of Gentus.' There was never any such legislative provision in force in the rest of the province. The result was that, as between Hindus, the Supreme Court was expressly bound to give effect to the Hindu law of contracts, and the Hindu law of contracts included the law of Damdupat. The High Court by its first charter was required to administer the same law as the Supreme Court, and the second charter continues the same law as was in force under the first. It appears to follow of necessity that the law of Damdupat is in force in this Court between Hindus, unless there has been some legislative enactment inconsistent with it.
7. The only Act cited said to be inconsistent with it, and therefore to overrule it, is the Act for the repeal of the Usury Laws (XXVIII of 1858). But we think there is nothing in that Act (which deals exclusively with the rate of interest which may be allowed) inconsistent with the rule now in question. And the authorities are unanimous in favour of that view. To this effect are the decisions of Sausse, C.J., and Forbes and Newton, JJ., in Dhondu Jagannath v. Narain Ramchandra M.H.C.R. 47; of Couch, C.J., and Newton, J., in Khusal Chand Lall Chand v. Ibrahim Fakir 3 B.H.C.R.A.C. 23; of the learned Judges in Nathubhai Panachand v. Mulchand Hirachand 5 B.H.C.R A.C. 196; of Couch, C.J., and Westropp, J., in Hakima Manji v. Maman Ayab Haji 7 B.H.C.R.O.C. 19. The same law was laid down by Westropp. C.J., and Nanabhai Haridas, J., in Pava Nagaji v. Govind Ramji 10 B.H.C.R. 382 (385), and re-affirmed by Westropp, C.J., and Melvill, J., in Ram Chandra Mankeshwar v. Bhimrav Ravji 1 B. 577, and by Westropp, C.J., and Green, J., in Ganpat Pandurang v. Adarji Dadabahi 3 B. 312. In this Court the authorities lead to the same result. In Ram Lall Mookerjee v.. Haran Chandra Dhar 3 B.L.R.O.C. 130, Peacock, C.J., went even further, and held that Act XXVIII of 1855 did not effect the rules of the Hindu law relating directly to the rate of interest. The correctness of this view carried to its full extent was questioned by Phear, J., in Mia Khan v. Bibi Bibijan 6 B.L.R. 500 (505), but that learned Judge fully approved of the Bombay decisions; and the same rule was followed in Ram Connoy Audicarry v. Johur Lall Dutt 5 C. 867. The result is that, in our opinion, the rule in question does in this Court apply to contracts between Hindus.
8. The question remains whether the effect of the rule is to preclude the defendants from claiming the full amount of interest in this case. The statement of the rule in the first of the Bombay cases already referred to has generally been accepted as correct. 'The rule of Hindu law is simply this, that no greater arrear of interest can be recovered at any one time than what will amount to the principal sum.' But on behalf of the respondent it was argued that the nature of the doctrine has been totally misunderstood, the main contentions being, first, that the rule of Damdupat was only a moral precept and not a rule of law at all, and, secondly, that it applied only to interest prescribed by law in the absence of agreement and not to stipulated interest. The primary source of our knowledge on the subject is, of course, the text of Manu and the other original authorities. The texts are collected in Colebrooke's Digest, Book I, c. 2 ; and the works from which they are taken are now for the most part easily accessible to English readers. It was not contended that these texts taken by themselves suggest any restriction or qualification such as that proposed. But it was contended that the opinions of the commentators collected by Jagannatha and the views expressed by that learned writer himself throw an entirely different light upon the matter. The main question under consideration in the passages referred to is the rate of interest which might lawfully be charged, and whether there was any restriction in the case of stipulated interest; in connection with this the rule as to interest not exceeding the principal is also discussed. Mr. O'Kinealy showed very clearly that some at least of the commentators were disposed to restrict that rule or get rid of it altogether as a rule of law; but it is equally clear that they are far from being agreed as to the principle upon which, or the extent to which, it could be limited, some leaning to the view of a mere moral precept, others to confine it to legal as distinguished from stipulated interest. And though Jagannatha does, if we rightly understand him, express his own opinion upon the main question under discussion whether there was any restriction of rate in the case of stipulated interest, we cannot find that he does so with regard to Damdupat. Harington (Analysis, Part I, Sections 3, p. 181) says with reference to this discussion : 'A considerable difference of construction has been given by the commentators upon the Hindu law of contracts to the texts which respect the limitation of interest and the invalidity or immorality only of usurious loans and engagements.' And Sir Thomas Strange (Hindu Law, Vol. I, p. 298) says: ' Involved in apparent contradiction the subject is considered by Jagannatha to be intricate, nor has his Commentary always the effect of elucidating what is obscure or disentangling what is perplexed.' We agree with these remarks and cannot gather any distinct rule from this source. All the later authorities agree in understanding the rule of Damdupat as it has been laid down by the Bombay Court. Thus Sir Thomas Strange, in the place already referred to, so states it; and in the Appendix to Chapter XII he gives a case (p. 473, Edit. of 1830) to which are appended remarks by Colebrooke and Ellis, both of whom independently and without hesitation state the law to the same effect. Lastly, there is the long series of decisions in the Bombay High Court and this Court, from the whole of which we must dissent if we were to hold either that the rule of Damdupat is a mere moral precept or that it does not apply to stipulated interest. And that we are not prepared to do. The anomaly of the present state of the law, if it is to be removed, can only be removed by the Legislature.
9. One other argument it is necessary to notice. It was contended, on the authority of Nathubhai Panachand v. Mulchand Hirachand 5 B.H.C.R.A.C. 196, that the rule in question cannot equitably be applied in the case of a mortgagee in possession when the account is taken on both sides, the mortgagee being as such debited with the rents and profits. And it was said that this case fell within the rule there laid down. But the facts here are very different. The account of rents and profits was not asked or ordered against the defendants as mortgagees in possession, but by way of mesne profits against wrong-doers ; and accordingly they were limited to the time since the plaintiff's purchase, which could not properly have been done if the account was on the other footing.
10. The result is that, in oar opinion, the order of the learned Judge, so far as it allowed the plaintiff's exception and varied the report of the Registrar, was wrong, and that the report should have been and should now be confirmed in its entirety.