P.B. Mukharji, J.
1. This is a short liquidated claim in a banking company suit. It was instituted by the Sonar Bangla Bank Ltd. (in liquidation) through the Court Liquidator as the plaintiff. There are four defendants. The first defendant is the Calcutta Engineering College, a society registered under the Societies Registration Act. The second defendant is N.C. Chaudhuri, its Principal and Secretary of its governing body. The third defendant is Kalikata Shilpa Vidyapith, a society registered under the Societies Registration Act and having the same address as the first registered society defendant, namely, the Calcutta Engineering College. The fourth defendant is P.B. Ghose, the Principal Secretary of the Kalikata Shilpa Vidyapith, both for self as well as representing the said registered society.
2. It is a simple suit on mortgage. The decree sought for is a mortgage decree under Order 34, Rule 4 of the Code of Civil Procedure for the sum of Rs. 69,135-0-3. The mortgage on which the suit is based is dated 15th March, 1945. The parties to the mortgage are expressly said to be the Calcutta Engineering College as the mortgagor and the Sonar Bangla Bank Ltd. as the mortgagee.
3. It will be necessary to emphasise some of the features of the mortgage deed having regard to the issues raised in the suit. The mortgagor Calcutta Engineering College is expressly represented in the mortgage deed by 'the Secretary of the Governing Body of the said College.' It also recites that the college was in urgent need for money for meeting the expenses of the construction of the structure of the Calcutta Engineering College. It also expressly recites that this Secretary is entrusted as the sole representative having power to borrow money from outsiders against mortgagee.' 'No evidence is given by the College to deny that it had any such need or that it built any structure or construction. The mortgage deed admits expressly that 'the mortgagee advanced to the mortgagor various sums from time to time which amounted to a total sum of Rs. 35,000/- only, the receipt whereof the said mortgagor doth hereby acknowledge and admit.' It is signed by N. Chaudhuri as Secretary to the governing body of the Calcutta Engineering College. It is also executed by him as such.
4. Out of these four defendants three of them being the second, third and the fourth defendants have not contested the suit at the trial. Among these three the second defendant Chaudhuri filed a written statement, but did not appear at the trial. The other two 'defendants neither entered appearance nor appeared at the trial. The only defendant who appeared is the first defendant Calcutta Engineering College.
5. On behalf of the first defendant a large number of issues was raised by its counsel. The issues raised by him and accepted by the learned counsel for the plaintiff are as follows:
1. Is the suit maintainable under the Societies Registration Act?
2(a) Had the Court jurisdiction to grant leave on 2nd August, 1945? In any event can that question be agitated in this suit?
(b) Is the leave validly given?
3(a) Was the suit No. 4440 of 1950 non est on the 2nd August, 1955?
(b) Was the order, dated the 4th February. 1952 in suit No. 4440 of 1950 void and without Jurisdiction on the grounds pleaded in paragraph 10(bJ of the amended written statement?
4. Did the defendant No. 1 authorise defendant No. 2 to mortgage or to incur any debts on its behalf?
5. Did the defendant No. 1 or any of its authorised agent make any payment in respect of the accounts in suit? If so, were the same in the handwriting of any authorised agent of the defendant No. 1?
6. Was the defendant No. 2 authorised by defendant No. 1 to make any acknowledgment on behalf of the defendant No. 1?
7. Was the letter dated 27th November 1948 a valid acknowledgment of any and if so what debt?
Is the said letter binding on the defendant No. 1?
8(a). What were the terms and conditions of the loan and overdraft account?
(b) Were the said loans commercial loans?
9. To what principal and interest is the plaintiff entitled?
10. Can the loan or any part thereof be reopened under the Bengal Money Lenders Act and Usurious Loans Act?
11. Is any part of the plaintiffs claim barred by limitation?
12. Is the defendant No. 1 entitled to contest the suit in view of its admissions in the written statement about the College being taken over by the State of West Bengal and it having ceased to exist?
6. On behalf of the plaintiff Pulin Bihari Ghose has given evidence. On behalf of the defendant Calcutta Engineering College Rabindra Nath Ghose, Lalit Kumar Bai Chaudhuri, Saral Kumar Nag Chaudhuri, Ratan Kumar Bose and Promotha Nath Majumdar have given evidence. In addition to the oral testimony there is documentary evidence exhibited in this suit.
7. It will be unnecessary to go through the written statement of the defendant Calcutta Engineering College because the issues that I have already set out sufficiently represent the defence taken by this defendant at the trial. I shall, therefore, proceed to deal with the issues.
Issue No. 1
8. On behalf of the first defendant learned counsel contends that under Section 6 of the Societies Registration Act a suit against a registered society can only be brought in the name of the President, Chairman or the Principal, Secretary or Trustees as shall be determined by rules and regulations of the society and in default of such determination only in the name of such person as shall be appointed by the governing body for the occasion. The proviso to Section 6 says that it shall be competent for any person to have any claim or demand against any society to sue the President or Chairman or principal Secretary or the Trustees thereof if on application to the governing body some other officer Or person be not nominated by the defendant.
9. On the strength of this Section 6 of the Societies Registration Act it is, therefore, argued that this suit against the Calcutta Engineering College as a registered society is incompetent and bad. I am unable to accept this argument. I am of the opinion that Section 6 of the Act is only permissive. The opening sentence of Section 6 of the Act uses the word 'may' and therefore it is not mandatory but permissive. The language of the proviso to Section 6 uses the expression 'it shall be competent.' That is only an enabling expression'. It does not mean that if the registered society is sued as such, then it shall not be competent. Defect, even if any, on this point is cured by the fact that the Secretary of this registered Society, namely, the Calcutta Engineering College, himself entered appearance and filed the written statement on behalf of the registered Society. Secretary is one of the persons mentioned in Section 6 of the Act. The view that I am taking that Section 6 of the Societies Registration Act is permissive and not either exclusive or mandatory is supported by the decision of Bhagwati, J. of the Bombay High Court in Satyavart Sidhantalankar v. Arva Samaj, Bombay, AIR 1946 Bom 516. At page 523 of that report Bhagwati, J. observes as follows:
'I am of opinion that the provisions contained in Sections 6, 7 and 8 of the Societies Registration Act arc not inconsistent with the user of the registered name of the Society in connection with legal proceedings. As Lord Lindley observed in Taff Vale Railway v. Amalgamated Society of Railway Servants, (1901) AC 426 I do not say that the use of the name is compulsory but it is at least permissive.'
10. For these reasons I hold that the suit is maintainable, and answer the first issue in the affirmative.
Issues Nos. 2 and 3:
11. These two issues relate to the fact that a previous suit was instituted without including this mortgage and thereafter withdrawn by the plaintiff with leave to file the present suit. The previous suit was numbered Suit No. 4440 of 1950, Sonar Bangla Bank Ltd. v. N.C. Chowdhury. The order was made by Section Rule Das Gupta, J. on the 2nd August, 1955 in the following terms;
'Leave granted to the Court Liquidator to withdraw the above suit and liberty to file a fresh suit on the basis of the mortgage deed.'
That is what appears from the minutes of this Court of that date.
12. These two issues question the validity and the jurisdiction of that order. Leave to withdraw and liberty to file a fresh suit is clearly recognised in Order 23 Rule 1 of the Civil Procedure Code. It expressly recognises the Court's power to grant such leave to institute a fresh suit on such terms as it thinks fit. Section Rule Das Gupta, J. did so on 2-8-1955 as quoted above.
13. I am satisfied that the point is today concluded so far as this Court is concerned and that it is not permissible in this subsequent suit to re-agitate that question and to consider whether such leave was validly given or not. A Full Bench decision of this High Court in Hriday Nath Roy v. Ram Chandra reported in AIR 1921 Cal 34 decides that an order for withdrawal of a suit with leave to institute a fresh suit, even in circumstances not within the scope of the Rule, cannot be treated as an order made without jurisdiction and, therefore, such order could not consequently be null and void. A fresh suit instituted upon such leave so granted is, therefore, not incompetent. Tho Full Bench further holds that the Court trying the subsequent suit is not competent to enter into the question whether the Court which granted the plaintiff permission to withdraw the first suit with liberty to bring a fresh suit had properly made such an order. So far as I am concerned, this concludes these two issues Nos. 2 and 3.
14. On the authority of the Full Bench decision of this Court, I, therefore, hold under issue Nos. 2 and 3 that the leave granted to withdraw the previous suit No. 4440 of 1950 and to institute a fresh suit on the basis of this mortgage on the 2nd August, 1955 cannot be agitated and questioned in this suit. I, therefore, answer Issues Nos. 2 and 3 accordingly.
Issues Nos. 4 and 5:
15. These two issues really are the main defences on merits to the present claim. They raise the question of the authority of the second defendant, Chowdhury, to execute the mortgage for the first defendant. This issue depends entirely on the question of fact.
16. The mortgage deed itself expressly confers and states the authority of the defendant Chowdhury to borrow money on mortgage and to represent the first defendant, the Calcutta Engineering College. I have already referred to the relevant clauses and expressions in the mortgage deed.
17. The next relevant fact bearing on this issue is that this defendant, N. Chowdhury, was the Principal of the Calcutta Engineering College and was the Head of the Institution. He also was the Secretary to the Governing Body,
18. The Memorandum of Association of the Governing Body of the first defendant has, among its many objects, the following object in Clause 3(f):
'To borrow, raise and secure money by mortgage of the College properties or otherwise as the College shall think fit.'
This mortgage in suit was a mortgage of the College properties within the Objects Clause of this Memorandum.
19. The Rules and Regulations of the Calcutta Engineering College provide in Rule 11, inter alia, that the Governing Body shall perform all duties necessary for the proper management of the Institution and that the finances of the College will be controlled in the manner provided thereafter. By Rule 12 it is provided that there shall be one Calcutta Engineering College Fund and it shall be held by the Governing Body in trust for the said Institution and all money realised shall be credited to the said fund. Rule 13 provides that such money shall be credited to an account which shall be styled the 'account of the Calcutta Engineering College.' Facts show that the accounts in suit bore that name and title. Rule 14 provides:
'The Governing Body shall in a special meeting convened for the purpose determine how and by whom the cheques are to be signed in Order to withdraw any money from the Bank and who may enter into contracts for and on behalf of the Governing Body.'
20. It is significant that in this case the Governing Body of this first defendant has withheld all Minute Books of the Resolutions of its meetings and all account books. By Clause 6 of the Rules, this Calcutta Engineering College Governing Body has (1) a President, (2) a Vice-President, (3) a Treasurer, and (4) a Secretary. It also provides that ordinarily the Principal shall be the Secretary to the Governing Body. It also provides that the Secretary shall be the Principal ex-officio and Secretary to all the Sub-committees appointed by the Governing Body.
21. The Rules, therefore, establish that the Principal Chowdhury was a member of the Governing Body and was Secretary to the Governing Body and was Secretary to all sub-committees appointed by the Governing Body, and therefore must be regarded on the Rules and on the facts of this case as the principal executive, He was not only the Principal and the Head of the Institution, the College but he was also the principal executive acting for and on behalf of the Governing Body.
22. Now the main defence of the Calcutta Engineering College is that such a person as the Principal of the College and Secretary to the Governing Body had no authority to borrow the money on the mortgage in suit. The representations in the mortgage deed itself, the objects of the Memorandum, and the Rules of the College are all against this defence that he had no authority. Not one member of the Governing Body of the time has come forward to give evidence to say that no authority was given to the Principal and Secretary. Not a single book of the Calcutta Engineering College has been produced. No books of account and no books of the minutes of the Resolutions of the Governing Body have been produced to show that Principal Chowdhury had no authority even as Secretary of the Governing Body. Non-production of this evidence which has not been even attempted to be explained, entitles me to come to the conclusion that if the minutes of the Resolutions of the Governing Body were produced and if the books of account were produced and if any member of the Governing Body of that time was produced as a witness, then such evidence would not have supported this defence and would have shown that Principal Chowdhury and the Secretary of the Governing Body had full and complete authority to execute this mortgage and borrow the money on this mortgage on behalf of the Calcutta Engineering College.
23-27. I shall now deal with the oral evidence on the point. The evidence of the plaintiff on this point is given by Pulin Behari Ghosh. (His Lordship considered the oral evidence and continued as follows:) On an analysis of the oral evidence also I have no hesitation in coming to the conclusion that the defendant Calcutta Engineering College fully authorised defendant Chaudhuri to mortgage and to incur the debts on its behalf and the second defendant Chandhuri was the authorised agent to operate and make payments in the said accounts in suit. I shall add here only this that Pulin's evidence expressly states that accounts were sent to the Calcutta Engineering College. Yet the college has refused to disclose any books to show either that it did not receive those accounts or that no money on these accounts came to its coffers.
28. Therefore, both on the oral evidence as well as on the documentary evidence I answer the 4th and the 5th issues in the affirmative.
Issues Nos. 6, 7 and 11 :
29. These three issues may conveniently be taken together because they relate to the Question of limitation and acknowledgment. It is pleaded in paragraph 7 of the plaint that they by a letter dated the 27th November, 1948 signed by the second defendant for self and on behalf of the college there if an acknowledgement in writing of the liabilities. This acknowledgment has been criticised by the learned counsel for the defendant College on the ground that it does not expressly refer to the mortgage. That criticism is justified. But the fact remains that after 1945 all these different loans and overdrafts were consolidated in the mortgage and therefore there was no other loan Or debt to which this acknowledgment could be referable. But this question to my mind is academic because the plaintiff's case does not need depend on any acknowledgment' although it is pleaded. The fact shows that independently of any acknowledgment the claim of the plaintiff on the mortgage is not barred.
30. The mortgage is dated the 15th March, 1945. The date of maturity under the mortgage deed is the 1st December, 1946. The money, therefore, does not become due before the 1st December, 1946. Hence the 12 year period under Article 132 of the Limitation Act must run from the 1st December, 1946. This suit was filed on the 5th April, 1957 which is within the 12 year period. The covenant for re-payment of the debt of the mortgage is phrased in the following language:
'for securing repayment on or before the 1st day of December 1946 of the principal sum of Rs. 35,000/- with interest thereon at the rate of 12 per cent per annum until repayment.'
31. For these reasons I hold that no part of the plaintiff's claim is barred by limitation and answer issue No. 11 in the negative. Having regard to that finding issues 6 and 7 do no longer arise for determination. But were I to decide issues 6 and 7 I would hold on the facts of the present case that there was a proper and valid acknowledgment contained in the letter of the 27th November, 1948.
Issue No. 8 :
32. The terms and conditions of the loan and overdraft account are now immaterial because they are all stated in the registered mortgage deed. The principal amount of the debt is Rs. 35,000/-and is so expressly recorded in the mortgage deed. The mortgage deed recites interest at the rate of 12 per cent per annum. That is Pulin's evidence and it is also borne out by such of the ledger accounts as are available for the Court Liquidator. I, therefore, answer issue 8(a) accordingly.
33. Issue 8(b) raises the question whether these loans were commercial loans. This issue I consider to be immaterial because as I will presently indicate under issue 10, this claim is not affected by the Bengal Money-lenders Act at all and it is unnecessary and irrelevant to consider whether these loans are commercial loans or not. It may however be stated here that the purpose of the loan is also clearly stated in the mortgage deed itself which I have already quoted. That purpose was to meet the expenses of the construction of the structure of the Calcutta Engineering College and for meeting other expenses of the College. I find accordingly under issue 8(b).
Issue No. 10 :
34. Before taking up issue 9 I shall like to dispose of issue 10 first. Issue 10 raises the question whether this loan is affected by the Bengal Moneylenders Act or the Usurious Loans Act and whether it can be reopened under those statutes.
35. I am satisfied that the Bengal Money-lenders Act does not apply to this loan at all for many reasons. The first reason is that section 2(12) (g) of the Bengal Money-lenders Act excludes loans to societies registered under the Societies Registration Act from the operation of the Act. The second , reason is that loans advanced for the purchase or construction of a house are also excluded under section 2(12) (g) of the Act. The third reason is that the mortgage deed being of the year 1945 it cannot be reopened under proviso (1) to section 36 of the Bengal Money-lenders Act being an adjustment or agreement more than 12 years prior to the date of the suit.
36. It was then contended that this mortgage was hit by the Usurious Loans Act. Here again it is difficult for me to apply the Act. I am asked to apply the Act on the ground that the interest is 18 per cent in this case. Now, although in an affidavit of 1939 marked Ex. E affirmed by N. Chaudhuri and in the memorandum of 14th October, 1940 marked 'Ex. F a rate of interest of 18 per cent is shown, these documents are prior to the date of the mortgage. The mortgage deed itself being a registered deed and which I have come to hold as effective, valid, lawful, proper and binding shows interest at 12 per cent per annum. Merely on this ground of interest I am asked to apply the Usurious Loans Act. I am unable to do so. The case law on the point is quite clear. Incidentally have found no case where this Act was applied against a Bank lending money.
37. The Federal Court of India in the case of Girvvar Prasad v. Ganeshlal Saraogi, reported in 53 Cal WN (FR) 8; (AIR 1949 FC 57) decides that in order to apply the benefit of the Usurious Loans Act the borrower must establish (1) that the interest payable on the loan is excessive and (2) that the transaction as between the parties thereto was substantially unfair. Nothing has been shown OH evidence. I am only asked to infer that from the rate of interest. On the other hand I find that even an interest of 25 per cent compound was not re-opened under the Usurious Loans Act in the Calcutta decision of Narendra Nath v. Pahan Mondal : AIR1930Cal776 and even a rate of 18 per cent was not reopened under this Act in a Patna decision Prayaglal v. Palakdeo Narayan Singh, AIR 1942 Pat 419 of Harries, C. J. and Fazl Ali, J. of the Patna High Court.
38. Naturally questions whether a rate is excessive or whether a transaction is substantially unfair are always questions of fact. Unless those facts are established by evidence it is impossible to attract that Act on the principles laid down by these decisions. I need only repeat here the fact that far from the conditions being unfavourable they were extremely favourable by reason of the fact that that Principal Chaudhuri of the Calcutta Engineering College borrowing the money was himself the brother of Section K. Rai Chaudhuri, the Managing Director of the Sonar Bangla Bank Ltd. (now in liquidation). This relationship far from causing unfavourable situation would create rather favourable conditions. I do not wish to say further on this point,
39. On the authorities and on the evidence, therefore, I hold that the Usurious Loans Act cannot be applied to this transaction in suit and I hold accordingly.
Issue No. 9 :
40. On these findings I hold that the principal sum was Rs, 35,000 according to the admission in the mortgage deed. Mr. Hazra, learned counsel for the defendant College tried to depend on a stray statement from pure memory made by Rabindra Nath Ghose that the principal was only about rupees four to five thousand unsupported by any books. The books having been withheld by the College I am not prepared to accept that stray and casual observation of Rabindra Nath Ghose when I find a solemn admission of Rs. 35,000 in the mortgage deed by the Principal and Secretary of the governing body. Incidentally it was not pleaded in the written statement that the principal was only for Rs. 4000/- or Rs. 5000/-, the case there being a total denial of any loan. I also hold on the basis of the mortgage deed and on the evidence of Pulin that the rate of interest was 12 per cent per annum. I decide issue No. 9 accordingly and I hold that the plaintiff is entitled to the principal sum of Rs. 35,000 with interest at 12 per cent per annum.
Issue No. 12 :
41. It is unnecessary to decide issue No. 12 having regard to my findings. The learned counsel appearing for the plaintiff has bitterly criticised the fact that in the written statement the College has admitted that it has become defunct. The person who signed the Warrant of attorney for the College and who signed and verified its written statement was the Secretary of the College. He is not the Secretary now but the present Secretary has not come forward at the trial. One Nag Chowdhury describing himself as a Matriculate landholder came to give evidence for the College as a member of its governing body but he failed to produce either the resolution which he said was there or any written authority to show that he was authorised to represent the college at the trial. Neither the present President, nor the present Secretary nor the present Accountant nor even any present office bearer has come forward to testify the present existence of the college. There is therefore a good deal of substance in the arguments of the learned counsel for the plaintiff that the defendant college is defunct. Having regard to my findings of facts on, other issues, it is unnecessary to pursue this matter except to state on this issue the facts I have just mentioned and the singular fact that the defendant college was admittedly taken over by the Government but the college has not produced any document of release by the Government to show that the Government handed over the college to those who are now pretending to defend on its behalf at the trial.
42. In the result, the plaintiff is entitled tothe usual mortgage decree as claimed under Order 84, Rule 4 for the sum of Rs. 69,135-0-3 up to thedate of the institution of the suit to which willbe added further interest at 12 per cent per annumas provided in the mortgage deed. The plaintiff isentitled to the costs of this suit. Certified for twocounsel.