1. This is an application for relief under the Bengal Money-lenders Act in respect of a mortgage loan taken on 25th September 1926. The loan was for Rs. 3,00,000. There was the usual preliminary decree passed on 12th December 1930, and a final decree on 8th December 1931. Thereafter, various adjustments were recorded between the parties. The last adjustment was on lst March 1938, whereby it was provided that the interest would be calculated at the rate of 61/2 per cent. per annum if the amount fixed was paid in terms of certain orders previously passed. The plaintiffs agreed not to proceed in execution for six years from 1st April 1938. I may mention that the interest payable according to the terms of the mortgage was 91/2 per cent. per annum with quarterly rests. The defendants have now applied for relief under the Bengal Money-lenders Act on the grounds, firstly, that they have paid interest beyond the limits specified in Section 30 of the Act; secondly, that they are entitled to recover Rs. 5750 paid by them by way of capitalist commission; and thirdly, that they are not bound to pay more than twice the principal of the original loan. They claim that the decree should be reopened and a new decree passed in accordance with the provisions of the aforesaid Act.
2. Mr. Ghose, on behalf of the plaintiffs, agrees that the defendants are entitled to relief on the first and third grounds, that he contends that the defendants are not entitled to get back any sum which they may have paid by way of capitalist commission. He admits that some amount was so paid, but he does not admit that it would amount to Rs. 5750. Next, he says that although the defendants may get relief under the Bengal Money-lenders Act, it will not be necessary for the Court to re-open the decree and pass a new one. I shall take up for consideration, the second point raised by Mr. Ghose. There can be no doubt that the defendants are entitled to get relief with respect to the interest which they have paid in excess of the limits set out in Section 30, Bengal Moneylenders Act. They are also entitled to claim that they shall not be liable to pay more than twice the amount of the principal of the original loan. Now, in order to give them these reliefs, I am of opinion that the decree passed in the suit must be re-opened. I am unable to appreciate how these reliefs can be granted without altering or affecting the decree passed; and if the decree passed has to be altered, then it must first be reopened. I have expressed my view on this question in two previous decisions : Suit No. 1680 of Mritunjoy Roy v. Netai Chand Dutt Reported in : AIR1942Cal123 and Civil Revision case No. 257 of Anath Nath Sarkar v. Rajendra Nath Bhattacharjee : AIR1942Cal120 . And I do not propose to deal in greater detail with this point. I hold that the decree must be re-opened. The next point for consideration is whether the defendants are entitled to claim the return of Rs. 5750 or any sum which they may have paid by way of capitalist commission. This claim is based on Section 33, Bengal Moneylenders Act, which is in the following terms:
Any agreement between a lender and a borrower or intending borrower for the payment to the lender of any sum on account of costs, charges or expenses incidental or relating to the negotiations for, or the granting of, the loan or proposed loan, shall be illegal, and if any sum is paid to a lender by the borrower or intending borrower as, for or on account of any such costs, charges or expenses, that sum shall be recoverable as a debt due to the borrower or intending borrower, or in the event of the loan being completed, shall, if not so recovered, be set oft against the amount actually lent and that amount shall be deemed to be reduced accordingly.
3. Mr. Ghose argues that retrospective effect to the section should not be given inasmuch as there is nothing in the section which indicates that such effect was intended. He points out that there are words in the section which indicate that only such agreements were contemplated in the section as were entered into between a borrower and a lender after the Act came into force. Mr. Banerji, on the other hand, contends, that there are no words in the section which would justify the Court in holding that it applied only to the agreements entered into after the Act came into force and he suggests that the section applies to agreements whether entered into before or after the Act came into force. In support of this contention he refers me to the case in West v. Gwynne (1911) 2 ch.D. 1 at pp. 11, 12 and 13. I need hardly state that in construing an Act the Court should not give it a retrospective effect unless such an intention is clear from the words of the Act. An agreement between a lender and a borrower, pursuant to which a sum is to be paid to the lender on account of costs, charges, or expenses incidental to the negotiations for the loan was a perfectly valid agreement before the Act came into force. If the Legislature wished to reopen a prior agreement which has already been performed then it should have clearly said so. I can see no reason why I should hold that an agreement already performed which was perfectly valid and legal before the Act came into operation should after the Act be considered as having been illegal.
4. The words used in the section are 'shall be illegal.' This indicates that the taint of illegality was to be attached to agreements entered into or subsisting as an agreement after the Act came into force. The words do not indicate that the intention was to convert agreements which have been performed before the Act and which were perfectly valid at the time of their being entered into into illegal agreements. Again, the words used are 'if any sum is paid to a lender.' The section does not say 'if any sum has been paid to a lender.' This again shows that the section was not intended to affect agreements which had been performed prior to its enactment. To interpret the section in the way suggested by Mr. Banerjee would be to give it retrospective effect but I can discern nothing in the section which would indicate that such an effect was intended. The case relied upon by Mr. Banerji, in my opinion, supports my interpretation of the section. The case related to the interpretation of Section 3, Conveyancing and Law of Property Act, 1892, and it was held that the section affected all leases whether they were executed before or after the Act. The reason given for this interpretation was that the Act was intended to interfere with the existing rights and that although the Act was not retrospective, it affected rights under existing leases. Where a lease is in existence, certain rights are continuing, and these rights would be affected by an Act like the Conveyancing Act, as the Act was intended to affect existing rights although it was not retrospective. But here we are not concerned with any existing agreement or continuing right. The agreement between the lender and the borrower has long been performed and discharged, no further rights or liabilities are outstanding which could be affected by an Act which is not retrospective. In distinguishing between what is meant by the retrospective operation of an Act, and an interference with existing rights, Buckley L.J., made the following observations:
To my mind the word 'retrospective' is inappropriate, and the question is not whether the section is retrospective. Retrospective operation is one matter. Interference with existing rights is another. If an Act provides that as at a past date the law shall be taken to have been that which it was not, that Act I understand to be retrospective. That is not this ease. The question here is whether a certain provision as to the contents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and scope of the Act, and not as to the date as from which the new law, as enacted by the Act, is to be taken to have been the law.
Numerous authorities have been cited to us. I shall not travel through them. To my mind they have but little bearing upon this case. Suppose that by contract between A and B there is in an event to arise a debt from B to A, and suppose that an Act is passed which provides that in respect of such a contract no debt shall arise. As an illustration, take the case of a contract to pay money upon the event of a wager, or the case of an insurance against a risk which an Act subsequently declares to be one in respect of which the assured shall not have an insurable interest. In such a case, if the event has happened before the Act is passed, so that at the moment when the Act comes into operation, a debt exists, an investigation whether the transaction is struck at by the Act involves an investigation whether the Act is retrospective. Such was the point which arose in Moon v. Durden (1848) 2 Ex. 22 and in Knight v. Lee (1893) 1 Q.B. 41. But if at the date of the passing of the Act the event has not happened, then the operation of the Act in forbidding the subsequent coming into existence of a debt is not a retrospective operation but is an interference with existing rights in that it destroys A's right in an event to become a creditor of B. As matter of principle an Act of Parliament is not without sufficient reason taken to be retrospective. There is, so to speak, a presumption that it speaks only as to the future, but there is no like presumption that an Act is not intended to interfere with existing rights. Most Acts of Parliament, in fact, do interfere with existing rights. To construe this section I have simply to read it, and, looking at the Act, in which it is contained, to say what is its fair meaning.
5. Applying the principles underlying that decision, I am of opinion that the rights between the parties so far as they relate to the payment by way of capitalist commission cannot be altered by Section 33, Bengal Money-lenders Act, unless it were retrospective and I have already held that it is not. In these circumstances, I hold that the defendants will not be entitled' to get back any sum paid by way of capitalist commission or to get credit for any such sum. The defendants alleged that in order to obtain the consent of the plaintiffs to one of the adjustments, they paid the sum of Rs. 8500 to the plaintiff on or about 1st February 1934 and they contend that they are entitled to get credit for this amount at the time when accounts are taken. Mr. Ghose on behalf of the plaintiffs says that he does not admit that Rs. 8500 was paid, but he agrees that if any sum was paid, the defendants would be entitled to get credit for that sum and that the amount payable by the defendants should be reduced by that amount. It will be for the Registrar to ascertain when taking accounts what sum if any was paid by the mortgagors on or about 1st February 1934.
6. The decree passed will have to be reopened and a new decree will have to be passed in accordance with the provisions of Section 34, Money-lenders Act. I direct that an account be taken by the Registrar in the light of the observations made above and in accordance with the provisions of s. Si, Bengal Money-lenders Act. Interest shall be calculated @ 8% per annum simple up to the date of this decree. The amount found due by the Registrar shall be payable in four equal annual instalments. The first instalment shall be paid within one month of the confirmation of the Registrar's report. In default of payment of any such instalment, the plaintiffs after giving the defendants one month's notice in the form prescribed may apply for a final decree in accordance with the provisions of Section 84(1)(a)(ii). I have considered the circumstances of the plaintiffs and the defendants, and I am of opinion that the defendants should be given four instalments. The defendants shall pay all costs incurred with respect to both the preliminary and final decrees which have been set aside and the costs of this application.