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Mohunt Satyanarayan Giri Vs. Nanda Gopal Seth and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 16 of 1949
Reported inAIR1954Cal333
ActsDebt Law; ;Bengal Money-lenders Act, 1940 - Section 36(1)
AppellantMohunt Satyanarayan Giri
RespondentNanda Gopal Seth and ors.
Appellant AdvocateBijan Bihari Das Gupta and ;Ashutosh Ganguli, Advs.
Respondent AdvocateHemendra Kumar Das and ;Sushil Kumar Banerjee, Advs.
DispositionAppeal dismissed
Cases ReferredBibhuti Bhusan v. Manibala
- .....and whether the same is hit by the provisions contained in proviso (i) to section 35(1), bengal money-lenders act.2. the relevant facts necessary to appreciate the respective contentions of the parties may be shortly stated. the predecessors in interest of the plaintiffs respondents had advanced certain sums of money on different dates to one protap chandra giri who was the goswami of a certain debot-tar estate. after the death protap chandra giri, rudrananda giri goswami borrowed rs. 200/- on the 26th pous, 1325 b. s. on the 12th falugun 1325 b. s. (24-2-1919), there was an accounting between rudrananda and the plaintiffs, and it appeared that out of the total advance made to pro-tap of rs. 14494/8as. rs. 9571/14as. had been repaid leaving a balance of rs. 4922/10as; the interest.....

B.P. Mookerjee, J.

1. Tile only point which arises for decision in this appeal on behalf of the debtor is whether the registered bond on which the plaintiffs have filed the present suit had closed the previous dealings, and whether the same is hit by the provisions contained in proviso (i) to Section 35(1), Bengal Money-Lenders Act.

2. The relevant facts necessary to appreciate the respective contentions of the parties may be shortly stated. The predecessors in interest of the plaintiffs respondents had advanced certain sums of money on different dates to one Protap Chandra Giri who was the Goswami of a certain debot-tar estate. After the death Protap Chandra Giri, Rudrananda Giri Goswami borrowed Rs. 200/- on the 26th POUS, 1325 B. S. On the 12th Falugun 1325 B. S. (24-2-1919), there was an accounting between Rudrananda and the plaintiffs, and it appeared that out of the total advance made to Pro-tap of Rs. 14494/8as. Rs. 9571/14as. had been repaid leaving a balance of Rs. 4922/10as; the interest which had accumulated came up to Rs. 4834/6as. making a total of Rs. 9767/-; Rs. 200/-which had been borrowed by Rudrananda himself was added to the amount which was found due after accounting, as stated aforesaid.

3. The amounts advanced and the different sums paid back are admitted by both the parties. The plaintiffs claimed that the amount found due on 24-2-1919, was not a transaction which could not be reopened, and the plaintiffs were entitled to a decree on that, footing. On the other hand, the defence was that the adjustment or agreement between the parties on 24-2-1919, did not close the previous dealings and could not be taken to have created a new obligation which would attract the provisions contained in proviso (i) to Section 36(1), Bengal Money-Lenders Act. The learned Subordinate Judge rejected the defence and has allowed the plaintiffs' claim as made.

4. The circumstances under which the transaction is to be deemed to have closed the previous dealings and created new obligations have been considered.

5. In -- 'Jadunath v. Jagat Prasanna' : AIR1944Cal320 , Mitter and Akram, JJ. held that proviso (i) to Section 36(1), Bengal Money-Lenders Act covered only cases where the original obligation undertaken by the borrower at the time of the loan was completely superseded and a substituted obligation was created; it did not cover a case of mere taking account, nor an agreement to pay on the basis of the original obligation the sum found due on accounts being taken, nor an agreement by which the original obligation was kept alive, but only some of its terms were modified. On a scrutiny of the provisions of the mortgage bond it was held that the agreement was not one creating new obligations.

6. In -- 'Birbhadra Chandra v. Surendra Pra-sad' : AIR1944Cal303 Mitter and Akram, JJ. held that when after successive renewals of promissory notes a mortgage was executed to secure the outstanding amount the terms and conditions of the various transactions not being the same, the execution of the mortgage must be taken to have closed the previous transactions disentitling the Court from reopening the same; proviso (i) to Section 36(1), Bengal Money-Lenders Act would bar the transaction being reopened.

7. In -- 'Pramatha Nath v. Prativanath' : AIR1947Cal134 ; Mitter and Akram, JJ. were called upon to consider a case where the original dealings were on execution of promisory notes followed by a mortgage executed to secure the sum found due at the time of the execution of the latter. Subsequent to the execution of the mortgage a series of agreements were executed by the parties, the common feature of these documents being that the rate of interest was varied from time to time and the period for repayment of the mortgage bond was extended. In the agreements it was expressly stated that the mortgage security was kept alive and intact; the arrears of interest were capitalised and interest was made payable on the capitalised sum.

On an application being filed under Section 38, Bengal Money-Lenders Act it was held that in such proceedings the provisions of Section 36, Bengal Money-Lenders Act including proviso (i) to Sub-section (1) of Section 36 were attracted. It was observed that the transactions or dealings represented by the promissory notes had been closed by the mortgage and a new obligation was created by the latter; the principal of the loan must, therefore, be taken to be the sum treated as principal in the mortgage deed.

8. In -- 'Madhusudan v. Jnanendra Nath' AIR 1943 Cal 441 (D); Mitter and Akram, JJ. formulated the following rules for attracting the provisions contained in proviso (i) Sub-section (1) of Section 35, Bengal Money-Lenders Act. Two conditions must be fulfilled,-- (1) the previous dealings between the lender & the borrower must have been closed, and (2) a new obligation must have been created in substitution of and completely superseding the old one. For determining whether the new obligation had completely superseded the old one the Court must depend upon the intention of the parties. Such intention of the parties is to be gathered from the language used in the instrument concerned and. when there is no ambiguity, it is not permissible to refer to extraordinary circumstances or to their action. The question whether the previous documents had been returned by the lender to the borrower is a piece of evidence relating to the conduct of the parties, and only in the case of ambiguity such circum-stances may be referred to.

9. The successive transactions in this case were mortgages executed by the parties. The security furnished by the successive mortgages was not the same. In the later documents it having been specifically mentioned that the parties intended to keep in force the security created by the earlier bond, the Court held that there had been no extinguishment of the obligations originally undertaken in the earlier document. The adjustment and agreement contained in the subsequent deeds were not accordingly protected under proviso (i) to Section 35(1), Bengal Money-Lenders Act against being reopened.

10. In -- 'Durga Sankar v. Prafulla Chandra' : AIR1947Cal294 , Mitter and Chunder, JJ., the judgment being delivered by the latter, reiterated the propositions already referred to and pointed out that the proper test for the application of the proviso to Section 36(1), Bengal Money-Lenders Act was whether the obligations expressly undertaken by the borrower had been completely substituted by other express obligations, and the intention of the parties was gathered from the document itself, and in case of ambiguity from other sources, viz., external circumstances and the con-duct and the actions of the parties would have to be considered in this connection. In that case the subsequent promissory note was given by certain persons for money due as principal and interest on earlier promissory notes executed, some by their predecessors-in-interest, some by all of them, some by one or other of them, and the earlier notes had all been returned to the executant when the subsequent promissory notes were being executed. The execution of the subsequent promissory notes was accepted as having closed the previous dealings between the parties and having created a, new obligation within the proviso (i) to Section 36(1) Bengal Money-Lenders Act.

11. The same view was reiterated in -- 'Kumar-khali Banking Corporation Ltd., Krishnagar v. Bibhuti Bhusan Pal' : AIR1948Cal65 by Mitter and Ahmad, JJ.

12. It cannot be disputed that merely an adjustment of accounts as between the debtor and the creditor is not enough to attract the proviso unless a new obligation is created by that transaction. The circumstances under which a new obligation may be taken to have been created may be diverse according to the circumstances of particular cases. As was pointed out in -- 'AIR 1946 Cal 441 (D)', subsequent alteration of any of the terms of the original bond on which the loan had been advanced might in a sense be taken to create a new obligation for the contract so altered as would be different from the original one, but that by itself would not be sufficient to attract the proviso. Both the conditions -- (1) closing of previous dealings and (2) creation of new obligation -- must be the resultant effect of the transaction in question, -That transaction must have the effect of completely substituting the prior obligation.

13. In -- 'Bibhuti Bhusan v. Manibala', 51 C. W. N. 347 (G), at one stage the promissory notes were executed in favour of two persons, while at another stage it was in favour of one of them. It was pointed out that that fact alone would be sufficient to treat the transaction as creating new obligations and completely substituting the earlier obligation.

14. In this state of the law and the uniform interpretation accepted by this Court, it must be held that the transaction in the present case was a new transaction which had closed the previous dealings and had created new obligations. In the first place, the previous 'hatchita' had been executed by Protap Giri alone. With the amount found due on accounting after the death of Pro-tap Giri the amount advanced by Rudrananda was added up, and the principal amount which was accepted by Rudrananda in the 'hatchita' in 1919 created a new liability completely extinguishing the previous obligations as between the plaintiffs or their predecessor and Protap Giri on the one hand as also between the plaintiffs and Rudrananda on the other. The document by itself does not recite, as had been noticed in some of the decisions, that the previous security or obligation was being kept alive.

The intention of the parties, as may be ascertained from the document itself, shows that it was to create a new obligation by Rudrananda in favour of the plaintiffs. Even if it be held that there was any ambiguity, the uncontroverted allegation made on behalf of the creditor that the previous 'hatchita' had been returned would have been a relevant fact which would assist the Court in coming to the conclusion that the transaction in 1919 was a transaction closing the previous ones and creating new obligations.

15. It is further to be borne in mind the fact that the passing of the consideration which was the basis of the previous transactions being referable to support the later transactions would not disentitle a party from claiming the provisions of proviso (i) to Section 36(1), Bengal Money-Lenders Act being attracted. A clear distinction is made between the consideration which has passed and the obligation which is being created afresh in the subsequent transaction.

16. Under the circumstances the decision reached by the Trial Court must be affirmed and this appeal dismissed with costs, -- hearing fee being assessed at five gold mohurs.

Renupada Mukherjee, J.

17. I agree.

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