JUDGMENT Bennett and Misra, JJ. - Applications Nos. 30 and 31 of 1941 u/s 25 of the Small Cause Courts Act have been referred to a Bench u/s 14(2) of the Oudh Courts Act as they raise an important question of law. 2. The suits out of which these applications arise were brought on instalment bonds executed in favour of the applicant's father for arrears of rent. In one suit the Plaintiff claimed Rs. 110 on a bond executed for Rs. 87-4-0 on the 29th June, 1937, and in the other he claimed Rs. 229 on a bond for Rs. 200 executed on the 24th July, 1937. 3. The question for consideration is whether these suits lie in view of the provisions of Act IV of 1937 and Act XVIII of 1939. The first Act is called the U.P. Stay of Proceedings (Revenue Courts) Act of 1937 and the second is called the Stayed Arrears of Rent (Remission) Act. The first came into force on the 25th September, 1937, and the second on the 17th February, 1940. 4. It is provided by Section 3 of the Stayed Arrears of Rent (Remission) Act that no Court shall entertain any suit or application for the recovery of arrears of rent which if instituted or made during the period in which the U.P. Stay of Proceedings (Revenue Courts) Act, 1937, is in force, would have been stayed under the provisions of that Act. 5. It was contended in the Court below that as these bonds were executed for arrears of rent a suit could not be brought to recover the money due upon them, the consideration being illegal, and this contention was accepted by the Judge of the Small Cause Court Act in each case, the suits being accordingly dismissed. The Judge of the Small Cause Court referred to the provisions of Sections 23, 25 and 62 of the Contract Act. Section 23 enacts that the consideration of an agreement is illegal if it is of such a nature that, if permitted, it would defeat the provisions of any law. He assumed that these bonds defeated the provisions of Act XVIII of 1939 and concluded that the contract were void. 6. He further held that since under this Act rent was remitted the bonds were without consideration and as such they were void u/s 25. 7.
He assumed that these bonds defeated the provisions of Act XVIII of 1939 and concluded that the contract were void. 6. He further held that since under this Act rent was remitted the bonds were without consideration and as such they were void u/s 25. 7. Section 62 provides that if the parties to a contract agree to substitute a new contract for it, or to rescind, or alter it, the original contract need not be performed, but, observed the Small Cause Court Judge, if the old contract--is in itself a void agreement novation cannot validate it. 8. The applicant's contention was that the arrears of rent no longer remained arrears of rent. On the execution of the bonds they were thereby discharged. There was novation u/s 62, and the suits were not barred by Section 3 of Act XVIII of 1939. 9. The question was considered by a learned single Judge of the Allahabad High Court in Mst. Ram Piari v. Daya Shanker 1941 A.W.R. (H.C.) 121 : O.A. (Sup) 194 : O.W.N. 452. The circumstances were similar to those of the cases under consideration. It was held that the provisions of the Act of 1939 were not applicable to a suit on a contract in a Civil Court, and that the contract having been executed before either that Act or the Stay of Proceedings Act of 1937 came into force, it could not be said that the object of consideration of the agreement was at that time of such a nature as would defeat the provisions of any law within the meaning of Section 23 of the Contract Act. The suit was therefore held to be maintainable. The same view was recently taken by one of us in a case not yet reported Baijnath v. Sri Nath Since reporded in 1944 O.A. (C.C.) 185 : A.W.R. (C.C.) 185 the decision in Mst. Ram Piari v. Daya Shanker being followed. 10. It is conceded that when the bonds were executed the consideration was not unlawful. We are unable to hold that it subsequently became unlawful on the enactment of these Acts of 1937 and 1939. All that is barred by the latter Act is the institution of a suit for arrears of rent.
Ram Piari v. Daya Shanker being followed. 10. It is conceded that when the bonds were executed the consideration was not unlawful. We are unable to hold that it subsequently became unlawful on the enactment of these Acts of 1937 and 1939. All that is barred by the latter Act is the institution of a suit for arrears of rent. The Act does not provide that payment of arrears of rent, or an agreement for payment of arrears of rent, is unlawful and neither payment nor agreement to pay defeats the provisions of either of these enactments. The consideration is not therefore unlawful. Further there is a clear novation of contract within the meaning of Section 62 of the Contract Act. The suits were not brought for arrears of rent: they were brought on a different cause of action, namely, the execution of bonds, and the fact that these bonds were executed in respect of arrears of rent is quite immaterial. 11. We are therefore of opinion that these suits were wrongly dismissed by the Court below. In one case the bond was admitted: in the other it was denied, but the lower Court found on the issue of its genuineness in favour of the applicant. 12. We accordingly allow the applications in each case, set aside the order passed and decree the suits with costs in both Courts.