Sudhanya Mohan Basak v. Priya Shankar Sen — 1940 DIGILAW 198 (CAL)

JUDGMENT 1. The Plaintiffs-Appellants instituted a suit against the original Defendant Manorama Gupta to recover moneys due to them on two mortgages. In this appeal we are concerned with one of the said two mortgages, namely, Ex. 4, dated April 19, 1916. The claim of the Plaintiffs on this mortgage, as laid in the plaint, is Rs. 3,995 for principal and Rs. 2,505 for interest up to date of the suit, after relinquishment of their claim to interest to the extent of about Rs. 1,500, total Rs. 6,500. 2. On June 19, 1903, the Defendant borrowed Rs. 2,000 from Sarat Chandra Basak, the father of the Plaintiffs, and to secure the said loan executed a mortgage, Ex. 1, on that date. Interest stipulated was simple interest at the rate of Rs. 9-12 per cent, per annum. Some interest due under it was paid. On April 19, 1916, there was an adjustment of accounts and a sum of Rs. 1,995 was found due on account of interest. On that date the. mortgage bond in suit, Ex. 4, was executed by the Defendant in favour of the Plaintiffs, their father Sarat Chandra Basak having died some time, before. The mortgage bond recited the fact that the Defendant had borrowed Rs. 2,000 from Sarat Chandra on Asdrh 4, 1310 (June 19, 1903) on a mortgage (Ex. 1) and that the sum of Rs. 1,995 was then due for interest on the said loan of Rs. 2,000. The interest then due was capitalized and the mortgage, Ex. 4, was executed. The rate of interest provided for was the same as in Ex. 1. The properties included in Ex. 1 were charged and some more properties were given by the mortgagor as additional security. Some payments were made towards interest before suit, but the aforesaid sum of Rs. 2,505 remained due (after relinquishment of about Rs. 1,500 for interest) on account of interest at the date of the suit calculated on the basis that the principal was, as stated in Ex. 4, Rs. 3,995. The defence, which is material to the appeal, was that the Plaintiffs cannot recover more than Rs. 4,000 on the basis that Rs. 2,000, and not Rs. 3,995 is to. be considered to be "the principal of the loan" within the meaning of Section 4 of the Bengal Money-lenders Act (VII of 1933). 4, Rs. 3,995. The defence, which is material to the appeal, was that the Plaintiffs cannot recover more than Rs. 4,000 on the basis that Rs. 2,000, and not Rs. 3,995 is to. be considered to be "the principal of the loan" within the meaning of Section 4 of the Bengal Money-lenders Act (VII of 1933). This defence has been given effect to by the learned Subordinate Judge, who has passed a decree in favour of the Plaintiffs for Rs. 4,000 only. The Plaintiffs have filed this appeal. They admit, that Section 4 of the Bengal Money-lenders Act (VII of 1933) applies, but contend, firstly, that the "principal of the loan" must be taken to be what has been stated to be and treated as principal in Ex. 4, the bond sued upon, namely, Rs. 3,995, and not Rs. 2,000, the actual advance, and secondly, that, even if Rs. 2,000, the actual advance, be treated as "the "principal of the loan" u/s 4 of the said Act, the amount of interest recoverable in the suit was to be limited to Rs. 2,000, which, however, must be added to Rs. 3,995, the amount at which their dues were settled on April 19, 1916, when Ex. 4 was executed. According to their first contention, they would have been entitled, but for the relinquishment of a portion of their claim for interest, to a decree for Rs. 3,995 (principal) + Rs. 3,995 (interest) = Rs. 7,990; and, according to their second contention, they would be entitled to a decree for Rs. 3,995 (principal) + Rs. 2,000 (interest) Rs. 5,995. We cannot accept any of these contentions and are of opinion that the decree passed by the learned Subordinate Judge is right. The questions raised depend upon the interpretation of Section 4 of the said Act. 3. The language employed by the legislature is that a money-lender cannot recover by suit as interest an amount greater than "the principal of the loan", subject to an exception which is not material in this appeal. In terms the section or the Act does not deal with recovery of the principal of the loan. But the intention of the legislature is clear. In terms the section or the Act does not deal with recovery of the principal of the loan. But the intention of the legislature is clear. The, money-lender cannot recover more than twice the amount of the principal of the loan", where his claim, according to the contract, exceeds the same, namely "the "principal of the loan" plus an amount for arrears of interest not exceeding the "principal of the loan". For making the decree the principal of the loan must be taken to represent the same sum, not one sum for considering the claim for interest and for limiting it u/s 4 and another sum for considering the claim for- principal. We cannot, therefore, accept the second contention of the Appellants. They can get a decree limited to Rs. 4,000 if "the principal of the "loan" is to be taken as Rs. 2,000, the sum that was actually advanced, or limited to Rs. 7,990 (leaving out of consideration for the present the amount of interest they have relinquished) if the principal of the loan is to be taken to be what is mentioned in the bond in suit, Ex. 4, namely, Rs. 3,995. The real question, therefore, is what is "the. principal of the loan"-the phrase used in Section 4 in the case of a renewed bond. The question, so far as we are aware, has not been discussed in detail in any case in this Court. In an unreported decision of Mukherjea J., in which the learned Chief Justice concurred, it was held definitely that "the principal of the loan" is the amount actually advanced, although in that judgment the reasons for the said conclusion are not specifically stated: Nasaruddin Sarkar v. Nanda Lal Sen (1938) A.O.D. 82 of 1936, decided on June 29. 4. The word "principal of the loan" or the word "principal" has not been defined in the Act (VII of 1938). Apart from any other consideration in the case of a renewed bond it may mean the money actually advanced-the original loan-or the capitalized sum, the amount of the original loan added to the arrears of interest by agreement between the creditor and the debtor. The learned advocate for the Appellants contends for the second meaning. Apart from any other consideration in the case of a renewed bond it may mean the money actually advanced-the original loan-or the capitalized sum, the amount of the original loan added to the arrears of interest by agreement between the creditor and the debtor. The learned advocate for the Appellants contends for the second meaning. His contention is, firstly, that, for the purposes of Section 4, the principal of the loan must be taken to be what has been agreed upon between the creditor and debtor to be the principal for the purpose of producing or yielding interest or income, in future. He says that, if that position is not accepted, what had been settled by the parties would be unsettled. He, accordingly, says that, as the sum of Rs. 3,995 was to yield interest or income, the interest at the rate of 9-3/4 per cent, was to be calculated according to contract on the sum of Rs. 3,995 and not on Rs. 2,000, the original sum lent, from after Ex. 4, that sum of Rs. 3,995 is to be regarded as the principal of the loan for the purposes of Section 4 of the Act. His second contention is that Section 4 in substance gives statutory force to the. Hindu law of Damdupat and makes it applicable to the whole province of Bengal. In cases where the Hindu law of Damdupat was applied the capitalised amount in the renewed bond and not the amount originally lent has been taken to be the principal. In support of this lastmentioned proposition he relies upon the decision of Jenkins C.J. and Candy J. in Sukalal v. Bapu Sakharam ILR (1899) Bom. 305. 5. When analyzed, his first argument rests on the foundation that the sanctity of contract between parties must be respected by Courts. That is no doubt a good principle on which Courts proceed normally, but that principle cannot be availed of in construing the Bengal Money-lenders Act or any other Act of the like kind. The object of that Act is to give relief to debtors by relieving them partially of the effect of their contracts. That is no doubt a good principle on which Courts proceed normally, but that principle cannot be availed of in construing the Bengal Money-lenders Act or any other Act of the like kind. The object of that Act is to give relief to debtors by relieving them partially of the effect of their contracts. It cannot, therefore, be held that "the principal of the loan" is the amount which the creditor and debtor had agreed to call as principal, what was to be treated by agreement to be the principal for the purpose, of producing future income or interest to the creditor. 6. The second contention of Mr. Sen Gupta is that Section 4, subject to the exception provided therein, embodies what is known as the rule of Damdupat, that, in any event, we. should construe the words "principal of the loan" occurring in the section in the same way as the word "principal" has been constrned in reference to the rule of Damdupat and the decision in Sukalal's case (supra) is relied in support. We cannot hold that the legislature has merely adopted the Hindu law of Damdupat. There is no such indication in the Act itself. We will have to construe Section 4 by giving effect to every word. Its provisions are not ambiguous and we cannot add any word or cut out any. The object of the Act will, however, have to be taken into consideration. Sukalal's case cannot in our judgment furnish an analogy, for Jenkins C. J. made it quite clear from the quotations he made from the smritis and commentaries of the Hindu jurists that those jurists considered as principal for the purpose of the rule of Damdupat, the capitalised amount, the amount of principal plus the accrued interest, which was stated by agreement to be principal in the renewed bond. 7. In the Oxford Dictionary the word "principal" in reference to a loan is defined as what constitutes- The primary or original sum, that is the main capital sum invested or lent and yielding interest or income. 8. The word "loan" is defined as- Something the use of which is allowed for a time on the understanding that it shall be returned or an equivalent given, especially a sum lent on these conditions and usually at interest. 9. 8. The word "loan" is defined as- Something the use of which is allowed for a time on the understanding that it shall be returned or an equivalent given, especially a sum lent on these conditions and usually at interest. 9. And the word "lend" thus:- To grant the temporary possessions of a thing on conditions or in expectation of the return of the same or its equivalent. 10. In view of these definitions, the phrase "the "principal of the loan" according to its dictionary meaning in the case of a money transaction is the sum of money which the creditor parts with, which he puts into the possession of the debtor. The phrase must, accordingly, mean the sum actually advanced, and not the sum actually advanced plus what is not actually advanced-the possession of which is not parted by the creditor, namely the capitalized' interest. This is the definition which is given in the. other sister Act, e.g., the English Money-lenders Act (17 & 18 Geo. V, C. 21, S. 15) and would follow from the definition of interest contained in Section 2 of the Usurious Loans Act (X of 1918). The acceptance of the definition of that phrase as contended for by the Appellants would enable a money-lender to defeat the object of the Bengal Money-lenders Act arid the provisions of Section 4 would have no controlling effect. A money-lender is usually in an advantageous position SO far as his debtor is concerned and all that he need do in that case, is to take successive renewals from his debtors by capitalizing interest in arrears. We, accordingly, hold that the phrase "principal of the loan" in Section 4 means the amount actually advanced or parted with by the money-lender, the original loan and not what is stated as the principal in the renewed bond and which is made up of the original loan or balance thereof and the arrears of interest capitalized. We, accordingly, hold that the learned Subordinate Judge is right and this appeal must be dismissed with costs hearing fee being assessed at 3 gold mohurs.