Gama Gurunadha Rao v. Dasarathi Sahu — 1952 DIGILAW 84 (ORI)

Judgement MOHAPATRA, J. :- The plaintiffs suit is one for recovery of a sum of Rs.17,785-10-0 on the basis of a simple mortgage transaction, Ex.2, dated 22-6-1934. The mortgage bond, in suit, was executed in the following circumstances. The plaintiff and two other co-sharers being the joint owners of certain lands and houses in the village of Sapuvapalli in Chatrapur Taluk executed a sale deed on 7-5-1929 in respect of the said properties for a sum of Rs.42,500 to late Paramananda Sahu and others; the vendees having died, the present defendants are their survivors. Out of the said sum of Rs.42,500, the plaintiffs share is Rs.14,168/10/8. The vendees in the said transaction paid Rs.1,166/10/8, and for the balance of unpaid purchase money of Rs.13,000, the alienees, on behalf of the joint family, executed a simple mortgage bond on that very day, that is on 7-5-1929, in favour of the plaintiff in respect of the properties sold in the aforesaid sale deed as well as a new item of property which has been described in Item No.2 of the plaint schedule. The family of vendees sold the said lands to some other persons as they received a heavier sum and executed a second simple mortgage bond, Ex.2, that is, the bond, in suit, on 22-6-1934, in renewal of the 1st mortgage transaction in respect of the lands which are fully described in the plaint schedules and which are other than those covered by the sale deed. It is to be noticed that the defendants, after execution of the first mortgage transaction, were making payments towards interest from time to time. On the date when the second mortgage transaction was executed, the interest having been paid off in full, they executed the mortgage bond, in suit, for the principal sum of Rs.13,000/-. The plaintiffs present suit is for enforcing the mortgage transaction dated 22-6-1934. 2. The defence is one seeking protection under S.10, Orissa Money-Lenders Act, that the plaintiff is not entitled to any sum beyond Rs.26,000/-taking into account all the payments made by them since the date of the first mortgage transaction, that is, 7-5-1929. 3. The learned Court below having accepted the defence contention has granted a decree in favour of the present plaintiff to the extent that the defendants are to pay Rs.10,519/12/- and costs of Rs.1,486/11/-, in all Rs.12,003/7-. 3. The learned Court below having accepted the defence contention has granted a decree in favour of the present plaintiff to the extent that the defendants are to pay Rs.10,519/12/- and costs of Rs.1,486/11/-, in all Rs.12,003/7-. The defts are to pay the amount in two equal annual instalments, the first instalment is payable 6 months hence and the second one year after the first instalment. In default of payment of the first instalment, however, plaintiff might apply to make the decree final. 4. The Court below has found that both Exs.1 and 2, the first and the second mortgage transactions constitute loans as defined in the Orissa Money-Lenders Act (sic) runs as follows: "Loan means an advance whether of money or in kind on interest made by a money-lender and shall include a transaction on a document, bearing interest executed in respect of past liability and any transaction which in substance is a loan." The Court below has construed the first document as a transaction in respect of past liability. As Ex.1, that is, the first mortgage bond, bears interest he has held it to be a loan. He observes: "Ex.1 purports to be a mortgage bond. By no stretch of imagination it can be said that mortgage money is not a loan." In our opinion the learned Court below is wrong in construing the first mortgage (sic) is in respect of the unpaid purchase money due to the plaintiff on the basis of a deed of sale executed by the plaintiff on that very day, that is, 7-6-1929, in favour of the defendants predecessor-in-interest. It cannot, therefore, be transaction in respect of past liability. We are now, therefore, to examine if it can come as a loan, as being an advance whether of money or in kind on interest made by a money-lender, or a transaction which, in substance, is a loan. Exactly, a similar case in respect of unpaid purchase money came up before their Lordships of the Calcutta High Court in - Kunja Behari v. Satyen-dra Nath, AIR 1941 Cal 689 (A). It was a case under the Bengal Money-lenders Act. The word loan has been defined under S.2(12) of the Act as an advance either of money or in kind made on condition of payment with interests and includes any transaction which in substance is a loan. It was a case under the Bengal Money-lenders Act. The word loan has been defined under S.2(12) of the Act as an advance either of money or in kind made on condition of payment with interests and includes any transaction which in substance is a loan. The second clause in our Act, viz., that, in respect of a transaction regarding past liability is absent in the Bengal Act; but the other two clauses of our Act, which we are now considering are to be found in the Bengal Act. Their Lordships observed: "In every case the Court has got to look to the substance or the essential nature of the transaction for the purpose of determining as to whether or not it is a loan within the meaning of the Act. If a vendor of property feeling unable to rely on the personal credit of the purchaser merely takes a bond or security from him in respect of the unpaid purchase money the transaction by itself cannot rank as a loan because there is no element of advance involved in it." After considering the definition their Lordships have laid down the broad outlines that: "There may not be actual advance in a particular case as for example when an old bond is renewed but still it would rank as a loan within the meaning of the Act as in substance it can be treated as an advance." They further observed: "We think that we may concede so far, that circumstance might exist under which the transaction by which a bond or security is taken in respect of unpaid purchase money might come within the definition of a loan as laid down in S.2, Cl.(12)." But their Lordships are distinctly of opinion that merely because a security bond has been taken in respect of an unpaid purchase money, it cannot be treated to be a case of loan. The matter came up again before the same High Court in a later case of - Fateh Chand v. Akimuddin Chaudhuri, AIR 1943 Cal 108 (B), wherein their Lordships followed the principle laid down in the case reported in - AIR 1941 Cal 689 (A). The matter came up again before the same High Court in a later case of - Fateh Chand v. Akimuddin Chaudhuri, AIR 1943 Cal 108 (B), wherein their Lordships followed the principle laid down in the case reported in - AIR 1941 Cal 689 (A). Mitter, J., observes: "In my opinion the right principle has been formulated in the case of - Kunja Behari v. Satyendra Nath, (A)." But his Lordship further observes: "It cannot be contended that in no circumstances can a bond ostensibly given for securing the unpaid price be regarded as one for a loan." On this his Lordship examined the circumstances in that case and being impressed with the following circumstances came to the conclusion that it was a case of loan; (i) the plaintiff Fateh Chand is a money-lender; the interest is provided for in the mortgage transaction is the rate which he usually charges in money-lending transaction, that is, 15 per cent. per annum; and (ii) in his books of account he entered the transaction as a loan transaction and the unpaid price was shown in those accounts to have been wiped off by the advance from the loan account. Finding the real intention of the plaintiff being of investment of money at his usual rate of money-lending, his Lordship found the transaction to be a loan. On a consideration of these authorities, we are definitely of the view that even though there may be circumstances as above on account of which a mortgage transaction in respect of unpaid purchase money between the vendor and the purchaser may be taken to be a loan, it is absolutely clear that merely because there has been a mortgage security given by the vendee in respect of unpaid purchase money wherein there is a stipulation of interest and there is a stipulation also of personal liability, it cannot be taken to be a case of loan as defined in the Orissa Moneylenders Act. 5. Now, therefore, let us examine in the present case whether the first transaction can be construed as a case of loan. The main circumstance that distinguishes Ex.1 of our case from that before their Lordships in the ease reported in - AIR 1943 Cal 108 (B), is that there is no intention of any investment of Rs.13,000/- which was due to the present plaintiff by the vendees. The main circumstance that distinguishes Ex.1 of our case from that before their Lordships in the ease reported in - AIR 1943 Cal 108 (B), is that there is no intention of any investment of Rs.13,000/- which was due to the present plaintiff by the vendees. The clear recital in Ex.1 is to the effect that "being unable to secure money, we have executed in your favour this deed of mortgage for the amount of Rs.13,000...........In consideration of the above sum of Rs.13,000/- due to you by us, we hereby mortgage to you without possession the following properties." The vendees being unable to pay the money which they are bound to pay, under the provisions of S.55, T.P. Act, they furnished the security in respect of their promise to pay the unpaid price. There was, therefore, no question of any investment; by no stretch of imagination can it be deemed as a notional advance. 6. Mr. Chatterji, appearing on behalf of the respondents, has drawn our attention to a passage in the judgment of their Lordships of the Federal Court in the case of - Surendra Prasad v. Gajadhar Prasad Sahu Trust Estate, AIR 1940 FC 10 (C). The passage runs thus: "The third category of any transaction which, in substance, is a loan may for instance possibly include a promise to pay unpaid purchase money or promise to pay a sum of money for some other good consideration, but not a mere acknowledgment of interest due, unless it also amounts to a renewal of a bond." This observation, as it appears is only by way of illustration and even then the view that we have taken is in no way inconsistent with the illustrative observation, inasmuch as we have indicated above that in suitable circumstances a transaction in respect of unpaid purchase money may come out to be a loan as in the case reported in - AIR 1943 Cal 108 (B). Mr. Chatterji also relies upon some observations made by Sulaiman, J., of the Federal Court in the case reported in - Jaigobinda Singh v. Lachmi Narain Ram, AIR 1940 FC 20 (D). Mr. Chatterji also relies upon some observations made by Sulaiman, J., of the Federal Court in the case reported in - Jaigobinda Singh v. Lachmi Narain Ram, AIR 1940 FC 20 (D). His Lordship observes: "Where the parties settle accounts in respect of a pre-existing liability and agree that money borrowed under a later transaction, even from the same creditor, should be applied in discharge of that pre-existing liability, the later transaction should in law be regarded as a loan by itself, though cash did not actually pass between the parties by way of lending and repayment." With great respect, we agree with the view expressed therein that in order to constitute a loan, cash payment is not essential. A notional advance is quite sufficient tor the purpose of getting the benefits under the Money-Lenders Act. But this decision in no way helps the respondents or supports their contention that the first transaction is a loan. 7. But different considerations do arise in respect of second transaction of the year 1934 which is Ex.2. Manifestly this being a transaction carrying interest in respect of past liability, it comes within the second clause of the definition of loan. That apart, on perusal of the recitals of the document, we find that even though there was no cash payment of Rs.13,000, it is a case of notional advance. The pertinent recitals are to the effect: "The principal sum of Rs.13,000 thirteen thousand only remains outstanding for payment by us to you at present under the above mortgage bond. We hereby execute this bond in your favour in consideration of the aforesaid sum. We, therefore, agree to pay you interest on this at 12 annas per hundred per month. We further agree to repay you the principal and interest in full within two years from this date." The further important recital which was conspicuously absent in the first transaction but present in the second is "We have accordingly received the consideration in the aforesaid manner in full". This recital, taken along with the earlier one, that we have quoted above, inclines us to hold that there was a notional advance. This recital, taken along with the earlier one, that we have quoted above, inclines us to hold that there was a notional advance. Our view gets support from another consideration also that this mortgage bond of the year 1934 is not in respect of the self-same properties which were the subject matter of sale in the year 1929; but those properties having been sold away by the vendees-mortgagors in the meantime, they have, in this transaction of the year 1934, given security in respect of other items of properties. In view of the position, therefore, that the parties consider the above amount of Rs.13,000 as principal and the mortgagors having expressed themselves as receiving the said amount as consideration of the transaction, in question, and they having executed the transaction in respect of properties other than those which were the subject matter of the sale-deed even though it was a renewed transaction, it contemplates a notional advance of the principal amount of Rs.13,000 in favour of the mortgagors-defendants. In this view of the matter, we are definitely of the view that the defendants are entitled to protection under S.10, Orissa Money-Lenders Act, and the suit is to be taken as a suit based upon the loan advanced for Rs.13,000 in the year 1934 on the basis of the second transaction and it has got to be construed that the loan originally advanced is the sum of Rs.13,000 in the said year. 8. Mr. B. Mohapatra, appearing on behalf of the appellant, very strongly relies upon a Full Bench decision of our High Court reported in - Siba Prasad v. Mt. Nurabati, AIR 1949 Orissa 37 (FB) (E) in support of his contention that when there is no cash payment of any money by the creditor either in the year 1934 or earlier, the defendants are not entitled to protection under S.10 at all inasmuch as, he contends, their Lordships of the Full Bench case have definitely decided the position that the words "in respect of loan advanced" and "of the loan originally advanced" bear the same meaning that the money actually paid in cash and that when there is merely a notional advance the debtor is not entitled to seek in his aid the provisions of S.10. He relies upon an observation at page 42, running to the effect: "The primary meaning of the word advanced in relation to monetary transaction is paid. Loan advanced must, therefore, mean sum advanced as a loan and not sum not actually advanced but deemed by an agreement as advanced." Also at page 44: "In this view of the matter the words loan advanced before or after the Act and loan originally advanced used in the section mean the same thing, that is, the sum actually lent even though loan is a general term and includes all kinds of liabilities enforceable in law." 9. These observations, even though apparently may support the contention of Mr. Mohapatra, have got to be understood in the context in which they appear and with reference to the facts in the case and the position which was to be decided by their Lordships. Their Lordships had to deal with two cases of the similar facts, the facts of one of them being that the original sum advanced was Rs.700 in the year 1921. There were some payments towards interest thereon. In the year 1936 the parties adjusted their accounts and came to an agreement that the said sum of Rs.700 together with the outstanding interest of Rs.600 should be consolidated into and treated as the principal for a fresh transaction. In pursuance of this agreement, a pro-note for Rs.1300 was executed carrying interest at certain rate. The plaintiff brought a suit for recovery of Rs.2200 on the basis of the transaction of Rs.1300 after adjusting some payment of interest after 1936. The plaintiffs contention, on reading S.10, Orissa Moneylenders Act, was to the effect that the plaintiff was entitled to a decree for the principal sum of Rs.1300. Under the provisions of S.10, the plaintiff would not be entitled to get more than Rs.700, the sum originally advanced, as interest; in other words, the Court could not limit the decree to a sum less than Rs.2000. The plaintiffs contention in that case was that once the parties agreed to role to previous interest as principal in the fresh transaction, the Court had no power to reopen it and had got to treat it as principal. The plaintiffs contention in that case was that once the parties agreed to role to previous interest as principal in the fresh transaction, the Court had no power to reopen it and had got to treat it as principal. The construction in that case which was intended to be put by the plaintiffs advocate on S.10 was that the words loan advanced appearing in the first part of the section connote a different meaning from the words loan originally advanced appearing in the last part of the section. According to them, the loan originally advanced was Rs.700 even though the suit was based upon Rs.1300 as the loan advanced. This contention of the plaintiff was negatived. Their Lordships found: "It would be anomalous and unreasonable to argue that advanced has been used in two widely divergent senses in the same section and with reference to the same subject." In their Lordships view if there has been a cash payment by the creditor to the debtor and even though by subsequent agreement the interest has been renewed, the suit brought for recovery of money must be deemed to be a suit on the loan which was actually paid and the plaintiff is not entitled to get interest more than the sum originally advanced and the Court is entitled to reopen the renewed transaction and make calculations on the basis of this construction of S.10. It appears in that case that their Lordships were impressed with the position "obviously in a suit based on this document no relief worth the name can be granted to the debtor if the Court is powerless to touch any part of the agreed principal. This would not only defeat the object of the legislation but it would be very easy for the creditor to circumvent the law." As we understand the position, their Lordships in that case were far from laying down the proposition as is contended by the appellants advocate that in a suit based upon a notional advance where the creditor did not pay any cash at any time the debtor is not entitled to the provisions of S.10, or that S.10 will apply only in cases where there is actual payment of money. On the contrary, the decision means only that when there was originally a cash payment in favour of the debtor and subsequently the transaction is renewed, the interest due being capitalised as principal, the suit contemplated under S.10 will mean a suit on the money actually advanced on the earlier occasion and that the debtor will not be liable to pay as interest any amount heavier than the money actually lent in spite of there being a subsequent transaction acknowledging past liability and renewing the same, and that the Court can go behind the renewed transaction for the purpose of making calculation on the basis of the provisions of S.10, Orissa Money-lenders Act. This view of ours is strengthened by the following observations which appear at p.43: "The next thing to be attended to is whether the act of attributing its primary meaning to the word advanced bars the remedy of debtors who have entered into transactions and undertaken fresh liabilities in renewal of past ones. My answer to this is Emphatic No. In interpreting the section in its relation to the present controversy the key words are- In any suit brought......in respect of loan advanced.......... In my judgment it would be doing no violence to the language of the section to construe the language quoted above to mean or refer to suits based upon agreements that constitute a loan within the Act; the agreement also includes the liability accruing from the original loans advanced. The suit for enforcement of the agreement cannot be conceived of without reference to the source of liability, that is the loan advanced. Such a suit based on a document executed in respect of past liabilities is a suit in respect of loan advanced meaning the loan originally advanced or sum actually lent." 10. In this view of the matter, therefore, the plaintiff is entitled to a decree on the calculation on the basis that the suit is based upon the loan of Rs.13000 evidenced by the second transaction of the year 1934 (dated 22-6-1934) and he is not entitled to interest more than the sum originally advanced, that is, the said loan of Rs.13,000, which was the subject matter of the said transaction dated 22-6-1934. Payments towards interest previous to that date will not be calculated inasmuch as we have found that the first transaction of the year 1929 is not a loan. Payments towards interest previous to that date will not be calculated inasmuch as we have found that the first transaction of the year 1929 is not a loan. On this calculation, therefore, the plaintiff is entitled to decree to the extent of Rs.16,380 (rupees sixteen thousand three hundred and eighty) which is as follows: Principal is ...................... Rs.13,000/- Maximum interest chargeable is.... Rs.13,000/- Total ............ Rs.26,000/- Deduct payment to the extent of Rs.9,620/- _________ Net payable...... Rs.16,380/- 11. The appeal is, therefore, allowed in part, and the decree of the learned Court below is modified to the extent as indicated above. The appellant is entitled to proportionate costs. The plaintiff is also entitled to pendente lite interest at 9 (nine) per cent and the decretal amount will carry interest at 6 (six) per cent till the date of realisation. A preliminary decree be framed that the defendants are to pay the decretal amount within six (6) months from the date of judgment, failing which the plaintiff will apply for final decree for sale of mortgaged properties. 12. Panigrahi, J.: I agree. But in view of the importance of the points raised, I would like to add a few observations of my own. 13. The facts are not in controversy. The first mortgage bond (Ex.1) executed by the predecessors-in-title of the defendants on 7-5-1929 was in respect of unpaid purchase-money due by the mortgagors. On the same day and simultaneously with the deed of mortgage, the plaintiff executed a deed of sale conveying the lands to the defendants ancestors who mortgaged the very same properties purchased by them. The mortgage bond recites as follows: "Part of the consideration money due to your share is Rs.14,166-10-8. Out of "this amount a sum of Rs.1166-10-8 has been paid to you in cash at the time of registration of the sale deed. Thus the balance of the consideration money due to be paid to you is Rs.13,000/-. Being unable to secure the money we have executed in your favour this deed of mortgage for the sum of Rs.13,000/-." Then follows the stipulation about interest which is fixed at 8 per cent per annum for the first year and at 8 per cent per annum for the subsequent years. Being unable to secure the money we have executed in your favour this deed of mortgage for the sum of Rs.13,000/-." Then follows the stipulation about interest which is fixed at 8 per cent per annum for the first year and at 8 per cent per annum for the subsequent years. The mortgagors further agreed to pay interest of each year at the end of that year and discharge the entire debt within two years from the date of the mortgage deed. 14. The first point before us is whether this transaction is hit by the provisions of the Orissa Money-lenders Act so as to constitute a loan as defined therein. 15. The suit is based on the second mortgage bond which was executed by the defendants on 22-6-34 (Ex.2) for Rs.13000/- by which the earlier mortgage bond was cancelled as fully discharged. It is admitted that by then the plaintiff had received the entire amount of interest due under the earlier bond. This bond recites as follows: "The interest relating to your mortgage-bond No.1527/1929, has been paid to you in full. The principal sum of Rs.13,000/- remains outstanding for payment by us to you, at present under the above mortgage bond. We hereby execute this bond in your favour in consideration of the aforesaid sum. We, therefore, agree to pay you interest on this at 12 annas per cent per month." The bond provides for payment of compound interest at 9 per cent per annum, with yearly rests, till the entire dues are paid. The mortgagors acknowledge receipt of consideration by the discharge of the earlier bond and say: "We have accordingly received consideration in the aforesaid manner in full." Under this document some properties other than the properties purchased by the mortgagors from the plaintiff were mortgaged. 16. The second question raised before us, therefore, is whether this document does not amount to a renewal of past liability. Loan is defined as "an advance whether of money or in kind, on interest, made by a money-lender and shall include a transaction on a document bearing interest, executed in respect of past liability and any transaction which, in substance, is a loan." The definition therefore contemplates an advance of money and an agreement to pay interest by the borrower. Loan is defined as "an advance whether of money or in kind, on interest, made by a money-lender and shall include a transaction on a document bearing interest, executed in respect of past liability and any transaction which, in substance, is a loan." The definition therefore contemplates an advance of money and an agreement to pay interest by the borrower. The second part of the definition is of wider import and includes any transaction, in renewal of loans and documents executed in respect of past liability. The third part of the definition is even wider and it takes in a transaction which though not in form, yet, in substance, may be a loan. In the case of a sale of land there is no advance either of money or in kind. Title passes on the completion of the sale and the transaction is not a mere "advance". It is urged, however, that if the parties agree that the unpaid purchase money should be regarded as an investment bearing interest, the transaction, in substance, is a loan. The use of the words "in substance" in the definition leaves it open to the Court to determine in a particular case whether the transaction really amounts to a loan whatever be the form. This would depend upon the surrounding circumstances, the intention of the parties, and the nature of the transaction. It is impossible to lay down any rule defining the limits or the circumstances in which a transaction may, in substance, be regarded as a loan. It cannot be said that retention of unpaid purchase-money by the purchaser may not amount to an advance so as to constitute a loan in certain circumstances. I am not prepared to lay down, as a proposition of general application, that because of the mere fact that consideration is the unpaid purchase money, the transaction may not amount to a loan. As has been observed by Sulaiman J. in - AIR 1940 FC 10 (C) - at page 12 - "The third category of any transaction which in substance is a loan may for instance possibly include a promise to pay the unpaid purchase money or a promise to pay some money for some other good consideration". As has been observed by Sulaiman J. in - AIR 1940 FC 10 (C) - at page 12 - "The third category of any transaction which in substance is a loan may for instance possibly include a promise to pay the unpaid purchase money or a promise to pay some money for some other good consideration". It must, therefore, depend upon the facts of the case and the surrounding circumstances, before a transaction can be regarded as, in substance, a loan, so as to be hit by the Moneylenders Act. For instances of cases where unpaid purchase-money was held to be not a loan see - Saradindu Sekhar v. Lalit Mohan, AIR 1941 Cal 538 (F), where the purchaser executed a bond agreeing to pay the purchase money in two instalments and their Lordships observed that the purchase money due to the plaintiffs was a debt due to him but was not a loan, nor a transaction which, in substance, was a loan. In - Kunja Behari v. Satyendra Nath, (A) another Division Bench case reported in the same volume at page 689, the view taken in the earlier case was adopted, with approval, and it was held that if a vendor of property does not choose to rely upon the personal credit of the purchaser merely, but takes a bond or security from him in respect of the unpaid purchase money, the transaction by itself cannot rank as a loan because there is no element of advance involved in it. In - Satinath v. Bhupendra Narayan, AIR 1944 Cal 14 (G), the same view was adopted, and it was held that if a debt does not originally come within the definition of loan a bond subsequently taken in respect of it may, in certain circumstances, amount to a loan; but the mere fact that there is an undertaking to pay interest would not, by itself, be sufficient to convert a debt into a loan. The cases on the other side of the line may also be considered. The circumstances in which a similar transaction can be regarded as a loan have also been the subject-matter of some reported decisions. In - Nirode Barani v. Sisir Kumar, AIR 1942 Cal 616 (H) the transaction started with the execution of handnote for the balance of unpaid purchase money. The hand-note was renewed by another handnote in the year 1928. The circumstances in which a similar transaction can be regarded as a loan have also been the subject-matter of some reported decisions. In - Nirode Barani v. Sisir Kumar, AIR 1942 Cal 616 (H) the transaction started with the execution of handnote for the balance of unpaid purchase money. The hand-note was renewed by another handnote in the year 1928. This handnote, in. turn, was renewed by yet another handnote executed by the purchasers heirs and was the basis of the claim in the suit. - Saradindu Sekhars case (F) was distinguished on the ground that that was not a case of a renewed handnote and secondly, as the interest charged was at the rate of 37 per cent the plaintiff was held to be a moneylender. Another case on the point is reported in - AIR 1943 Cal 108 (B). - Kunja Beharis case (A) was cited with approval but on the facts it was held that the transaction was a loan because Fateh Chand was admittedly money-lender and the interest of 15 per cent stipulated in the suit document wag a rate which he had charged in his first mortgage which, admittedly, represented a loan transaction. It was also found, in that case, that he had entered it in his books of account as a loan transaction. The unpaid purchase price was shown in this account to have been wiped off by the advance from the loan account. In such circumstances, it was held that the price was paid off by a notional advance made by Fateh Chand to Aquimuddin, and the real intention of the former being an investment of money at his usual rate of money lending. 17. Mr. Chatterji laid considerabla stress on the fact that the earlier transaction in the present case was, in a scene, a national advance of money. Undoubtedly, there is force i this contention, for as was pointed out in - Lyle v. Chappell, (1932 1. 17. Mr. Chatterji laid considerabla stress on the fact that the earlier transaction in the present case was, in a scene, a national advance of money. Undoubtedly, there is force i this contention, for as was pointed out in - Lyle v. Chappell, (1932 1. K. B. 691 (I)- "it ought not to make any difference to the validity of a transaction by way of renewal of a loan whether the parties go through the form of payment by the borrower of the whole amount due and a re-lending of the same amount by the money-lender; or the transaction is carried out without any such payment by treating the amount of principal and interest still due, as a debt acknowledged by the borrower, together with an undertaking by the borrower to pay the amount of the agreed debt." As observed by Mellish, L.J. in - Spargos case, (1873) 8 Ch A 407 (J), it is a general rule of law that in every case where a transaction resolves itself into paying money by A to B and then handing back by B to A, if the parties met together and agreed to set one demand against the other, they need not go through the form and ceremony of handing money backwards and forwards. 18. It will, however, be noticed that this principle applies only to the renewal of a loan and this is covered by the second part of the definition of loan in the Orissa Moneylenders Act. The Act makes provision for notional advances bearing interest executed in respect of past liability. I am not convinced that the use of the word "advance" in the first part of the definition would include a notional advance where no money is actually paid. This view of mine gains support from the definition of the word "principal" occurring in the Act. Section 2(e) defines "principal" as follows "Principal means, in relation to a loan, the amount actually lent to the debtor". The defendants certainly became debtors to the plaintiff in respect of the unpaid purchase money but that money was not actually lent to the debtors. The liability arose out of the failure of the purchaser to pay the price of the lands purchased by them. The defendants certainly became debtors to the plaintiff in respect of the unpaid purchase money but that money was not actually lent to the debtors. The liability arose out of the failure of the purchaser to pay the price of the lands purchased by them. The sale deed has not been exhibited, and I am unable to say whether the receipt of consideration for the sale was acknowledged to have been paid in cash at the time of the sale. Different considerations arise where a seller acknowledges receipt of money in consideration of the sale and subsequently purports to lend it, to the purchaser, on interest. In such a case, it may be possible to contend that what was actually paid to the seller was subsequently lent to the purchaser. But such a contention does not arise in this case as the mortgage bond expressly recites that the balance of the consideration money was "due to be paid" and that the purchasers were unable to secure money. 19. The essence of the first transaction therefore is not that it was a loan advanced, but that it was a security given for the unpaid purchase-money and a mortgage deed executed for an existing debt. Section 58 of the Transfer of Property Act says that a mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced, or to be advanced, by way of loan or for an existing debt. The mere fact that a mortgage deed was taken would not imply that money is advanced by way of a loan: for, an existing debt may also be good consideration for a mortgage. Admittedly, there was no transaction between purchaser and seller before the date of the sale and the entire liability of the purchaser arose out of the sale transaction. The liability of the purchaser to pay, and his failure to do so constituted a debt which remained a statutory charge upon the property sold and it was left to the parties to enter into a contract as to how that debt was to be discharged. The liability of the purchaser to pay, and his failure to do so constituted a debt which remained a statutory charge upon the property sold and it was left to the parties to enter into a contract as to how that debt was to be discharged. Under Section 55(4) of the Transfer of Property Act the seller is entitled to a charge upon the property in the hands of the buyer, the transferee without consideration or any transferee with notice of non-payment for the amount of purchase-money as well as for interest on such amount. Any purchaser of property mortgaged to the plaintiff would be aware that the defendants had not paid the purchase money to the plaintiff and they would be affected with notice of non-payment and, consequently, of the statutory charge upon the property. When therefore, the defendants wanted to sell the properties, they had to redeem the charge on them. The defendants, therefore, thought it necessary to release these properties from the charge and discharge the liability for the debt due for the unpaid purchase money and execute a fresh bond (Ext.2) on 22-6-1934 whereby different properties were mortgaged. The fact that there was no relationship of debtor and creditor between the parties prior to the date of sale, that the plaintiff was not a professional money-lender, and that he merely took security for the unpaid purchase-money in respect of which he was entitled to a statutory charge, are all circumstances which would take the case out of the definition of loan. The mere fact that a certain rate of interest was stipulated would not make any difference, particularly having regard to the fact that a very reasonable rate of 8 per cent per annum for the first year and 9 per cent per annum simple for the subsequent years was claimed. The first mortgage therefore does not constitute a loan within the meaning of the Act. 20. I have however no doubt that the shadow cast by the Money-lenders Act on the second transaction of 22-6-34 is real and that the mortgage bond in suit constituted a loan as it was executed to discharge a past liability, and was in substance, a loan. The mortgagors expressly recite that they "received the consideration in the aforesaid manner in full" and that the amount of Rs.13,000/- is treated as the "principal sum". The mortgagors expressly recite that they "received the consideration in the aforesaid manner in full" and that the amount of Rs.13,000/- is treated as the "principal sum". The parties accordingly stipulated that the debt of Rs 13,000/- which remained unpaid should be regarded as principal and that the provision for compound interest as well as the fact that new properties were mortgaged goes to show that the transaction was, in substance a loan. Mr. Mohapatra contended that Section 10 would not apply to the case as there was no loan "originally advanced". If the earlier bond does not constitute a "loan originally advanced" it is contended that Section 10 would not apply. Reliance was placed upon the observations of Ray, C.J., in - AIR 1949 Orissa 37 at p.42(E). I am unable, however, to find anything in that judgment to support the contention of learned counsel. Much of the confusion created by that Section is due to the fact that the same word "loan" is used twice with, apparently, two different meanings. That Section says: "No Court shall in any suit......in respect of any loan advanced..............pass a decree for an amount of interest for the period preceding the institution of the suit which, together with any amount already realised as interest, through Court or otherwise, is greater than the amount of loan originally advanced." The Section makes a difference between interest and loan. Secondly, it creates a distinction between a suit "in respect of a loan advanced" and a "loan originally advanced". A suit may be based upon a renewed bond and would be, nonetheless a suit based in respect of a loan advanced. But the expression "amount of loan originally advanced" occurring later in the Section has to be distinguished from the interest. As I understand the Section "loan originally advanced" means the sum which has actually been lent to the debtor and which is defined as "principal" in the Act. The sum of Rs.13,000/- is regarded by both the parties as the principal and the receipt of that sum is acknowledged on the date of the second mortgage. Section 10 would, therefore, bar the realization of interest exceeding the amount of the principal recited in the suit bond. 21. I would accordingly hold that the second mortgage evidenced by Ex.2 is not saved from being hit by the provisions of the Money-lenders Act. Section 10 would, therefore, bar the realization of interest exceeding the amount of the principal recited in the suit bond. 21. I would accordingly hold that the second mortgage evidenced by Ex.2 is not saved from being hit by the provisions of the Money-lenders Act. The plaintiff would therefore not be entitled to claim more than Rs.13,000/- by way of interest. Deducting the payment of Rs.9620/- the plaintiff is entitled to have a decree for Rs.16,380/-/- (Rs.13,000/- plus Rs.13,000/-: Rs.26,000/- minus Rs.9620/-), as calculated by my learned brother, together with proportionate cost. Appeal partly allowed.