Biraj Kumar Banerjee and Others vs Indu Bala Gupta

S.R. Das Gupta, J.—This is an appeal against a decision of the District Judge, Jalpaiguri, upholding the decision of the Subordinate Judge, Jalpaiguri, in Miscellaneous Case No. 28 of 1948. There are three appellants before us and the appeal arises out of a proceeding started u/s 38 of the Bengal Money Lenders Act. On the 12th April, 1928, the respondent Indu Bala Gupta had pledged certain tea shares in favour of appellant No. 1 for Rs. 1500 which she borrowed from the said appellant. The due date for the payment of the said loan which carried interest at 15 p.c. per annum was 13th April, 1930. On the 31st March, 1983, according to the case of appellant No. 1, the amount due to him was Rs. 2125-8-0 and on that date he sold the pledged shares after giving due notice to the respondent. As there were no other purchasers ready to bid up to the amount of his claim the appellant No. 1 and his two brothers, Appellants Nos. 2 & 3 purchased the said shares for the said amount of Rs. 2,1258- After the said purchase, the appellants got their names registered in the company''s register. On the 28th July, 1948, the respondent filed the present application u/s 38 of the Bengal Money Lenders Act. Originally, the application was filed only against the appellant No. 1 who was the lender, but subsequently the other two appellants were made parties to the said proceedings. The question raised before the lower Courts was whether or not the two other appellants, that is, appellants Nos. 2 and 3, were benamdars of appellant No. 1 in the matter of the said purchase; in other words, the contention of the respondent in the Courts below was that appellant No. 1 was the real purchaser and he purchased it in the names of his said two brothers. The trial Courts came to the conclusion that the other two appellants were benamdars for appellant No. 1 and on that basis made a preliminary order u/s 38 of the Bengal Money Lenders Act and appointed a commissioner to take accounts between the lender and the borrower of the transaction in question. The District Judge affirmed the decision of the said Court and it is against that decision that the present appeal has been filed to this Court.

A preliminary objection was taken by the respondent as to the maintainability of this appeal. It was contended by Mr. Bose that there was no right of appeal against the order passed by the Courts below. He pointed out that section 38(3) has made a provision for appeal, but that is against the declaration made under the said section. But as against a preliminary order passed under the said section, whereby a commission is appointed, there is no provision for any appeal. He therefore contended that this appeal should he dismissed on this ground.

This very question as to whether or not an appeal lies from an order of this kind made u/s 38 of the Bengal Money Lenders Act came up for consideration before a Division Bench of this Court. In the case of Satish Chandra Nag v. Riyasat Hossain, (1) [I.L.R. (1949) 1 Cal. 487], this Court held that although section 38(3) of the Bengal Money Lenders Act did not provide for any right of appeal against an order of this nature, an appeal would lie from such an order on the principles laid down in the Full Bench decision of the Madras High Court in Kamaraju v. The Secretary of State for India, (2) (I.L.R. 11 Mad. 309). The principle, on which their Lordships held an appeal would lie from such a decision, was that where a civil court has given a decision which comes within a definition of a decree, an appeal would lie, although the proceedings began by reason of the provisions of a special Act, unless there is some provision in the Special Act which takes away by express terms or by necessary implication the right of appeal conferred under the general law. "In view of these principles", Mitter, J., observed-

We hold that an appeal lies to this Court under the general law, viz., the Code of Civil Procedure, although the proceedings were originated in the Civil Court in the case before us not on a plaint, but on an application. The case of Secretary of State for India v. Chelikani Rama Rao. (3) ILR 39 Mad. 617, supports us in the view that we are taking.

Their Lordships in coming to the said conclusion took into consideration a large number of decisions touching this point and, if I may say so with respect, gave a carefully considered judgment.

The true position in law, according to their Lordships, was that where a legal right is in dispute and the ordinary Courts of the country are seised of such a dispute, the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies, if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not in terms confer a right of appeal. I respectfully agree with the view taken by their Lordships in that case and, in my opinion, the plea taken, viz., that there is no right of appeal against an order of this kind, can not be accepted.

The learned Advocate appearing for the respondents placed before us the case of Hub Lal Shaw v. Prem Raj Lalla, (4) (56 C.W.N. 381), decided by a Division Bench of this Court. In that case Mr. Justice Das Gupta and Mr. Justice Bachawat held that there was no right of appeal against an order refusing to make a declaration u/s 38 of the Bengal Money Lenders Act. The decision of Mitter and Chunder, JJ., does not appear to have been placed before Mr. Justice Das Gupta and Mr. Justice Bachawat for their Lordships'' consideration. In any event the case before their Lordships was not one in which an order of a preliminary nature was made u/s 38 of the Bengal Money Lenders Act appointing a commissioner to take accounts and their Lordships were not called upon to decide as to whether or not an appeal would lie against such an order. In my opinion, the decision in the case of Hub Lal Shaw v. Prem Raj Lalla, (4) is not contrary to the view taken in the case of Satish Chandra Nag v. Riyasat Hossain (1). The learned Advocate then referred to certain observations made by the Supreme Court in the recent case of Ashalata Debi v. Jadu Nath Roy (5) (1954) S.C.A. 635. The particular observation on which the learned Advocate relied is as follows:

The Calcutta High Court considered these applications as applications in the suit for a special remedy given under a special law and held that the rules of the CPC applied and an appeal lay against the orders because they were decrees within the definition of section 2(2) of the Code of Civil Procedure. We cannot accept these reasonings.

It appears to me that the matter which was before their Lordships of the Supreme Court was one relating to section 36(2) of the Bengal Money Lenders Act and the question which arose for their Lordships'' consideration was whether or not an appeal lay against an order made on an application by the decree-holder for restoration of properties following default after a new decree had been passed u/s 36(2) of the Bengal Money Lenders Act. Their Lordships held that an appeal did lie against such an order, because, in their Lordships'' opinion such an application was in truth and in substance an application for execution of the new decree which had been passed in favour of the mortgagors. The question as to whether or not an appeal would lie against an order of this nature passed in an application u/s 38 of the Bengal Money Lenders Act did not arise for their Lordships'' consideration and the observation to which reliance has been placed cannot be held as having been made with reference to such an application. Besides, it does not appear from the said observation as to which particular decision their Lordships had in mind or whether their Lordships were making the said observation with reference to this decision. In my opinion it cannot be said from the said observation of their Lordships of the Supreme Court that the view taken up by Mitter and Chunder, JJ., in the case to which I have referred has been overruled. In the result, therefore, I hold that an appeal lies against an order of the nature passed in an application u/s 38 of the Bengal Money Lenders Act. This contention of the learned Advocate for the respondent must therefore fail.

The learned Advocate for the appellant then urged before us that the enquiry as to the benami character of the purchase of the shares in question cannot be gone into in a proceeding u/s 38 of the Bengal Money Lenders Act. He contended that the rights of the third parties cannot be investigated in such a proceeding. Section 38 of the Bengal Money Lenders Act, according to him contemplates a proceeding only between a borrower and a lender. In my opinion, this contention is sound and should be accepted. The appellant No. 1 was the original lender and the appellants Nos. 2 and 3 have been made parties to the said proceeding u/s 38 on the allegation that they are benamdars of the Appellant No. 1 and the question as to whether or not they are benamdars of Appellant No. 1 cannot be investigated in a proceeding u/s 38 of the Bengal Money Lenders Act. It would be convenient at this stage to set out the provision of the said section. Section 38 reads as follows:

Section 38. (1) Any borrower may make an application at any time to a Court which would have jurisdiction to entertain a suit by the lender for the recovery of the principal and interest of a loan made before or after the commencement of this Act for taking accounts and for declaring the amount due to the lender. Such application shall be in the prescribed form and shall be accompanied by a fee of one rupee, and on receipt of such application the Court shall cause a notice thereof to be served on the lender.

(2) The Court shall thereafter take an account of the transactions between the parties and shall declare the amounts, if any,--

(a) payable and already due,

(b) payable but not yet due by the borrower to the lender, whether as principal or interest or both. In taking accounts under this section the Court shall follow the same procedure as it does in regard to civil suits and, so far as may be, the provisions of Chapters IV, VI and VII.

(3) A proceeding under this section shall be deemed to be a suit for the purposes of section 11 of the Code of Civil Procedure, 1908, and a declaration under this section shall be subject to appeal, if any, as if it were a decree of the Court, and every decision in appeal shall be subject to appeal to the High Court in the same manner as a decree passed in appeal.

The provisions of the said section to my mind makes it quite clear that what the Court can do if an application is made under the said section is to determine the amount payable by the borrower to the lender and for that purpose the Court can direct accounts to be taken and after each accounts have been taken, make a declaration as contemplated in the said section. In making such an enquiry the Court can not determine the rights of a third party. In this case, the Court cannot, in my opinion, determine in the said proceedings the question as to whether or not the appellants Nos. 2 and 3 were benamdars of Appellant No. 1. In other words, the Court cannot determine the rights of appellants Nos. 2 and 3 in a proceeding u/s 38 of the Bengal Money Lenders Act. As observed by Mitter, J., in the case to which I have already referred, section 38 gives a special remedy to the borrower which was not available to him before the said section came to be enacted. His Lordship held as follows:-

Before section 38 was introduced into the statute, a borrower could not institute a suit against the lender, where the loan was secured by a mortgage or charge with a simple prayer for accounts and without a prayer for redemption. All that section 38 has done is to give that remedy to borrower. In the case of a secured loan, a borrower need not pray for redemption, he can, by means of an application made u/s 38 of the Act, ascertain what at the moment is due from him.

What is said by His Lordship seems to me to be the real scope and object of section 38 of the Bengal Money Lenders Act. The Court can certainly make a declaration, after taking accounts, of the amount due and payable by the Appellant No. 1 to the respondent although no suit for redemption has been filed but the Court "cannot in a proceeding u/s 38 of" the Bengal Money Lenders Act determine the question relating to the right of a third party, as for example, the question of benami. Such a question, in my opinion, can be gone into in a properly constituted suit or, may be, in a proceeding under section. 36 of the Bengal Money Lenders Act.

In the result, therefore, I hold that the appellants Nos. 2 and 3 have been wrongly made parties to the present proceeding and they should be dismissed from the same. The order of the lower Courts should stand so far as the appellant No. 1 is concerned. In other words, so far as appellant No. 1 is concerned, the order of appointment of Commissioner to take accounts of the amount due and payable by the respondent to him should remain. We also make it clear that the final declaration which would be made in this proceeding as to the amount payable by the respondent to the Appellant No. 1 would be binding in any future proceedings that may have to be instituted by the respondent for redemption as against all parties to this appeal. The finding as to the benami character of the sale is set aside and the said finding will not be binding upon the appellants Nos. 2 and 3 in any future proceedings.

Subject as aforesaid the appeal so far as the appellant No. 1 is concerned is dismissed. So far as the appellants Nos. 2 and 3 are concerned: the appeal is allowed and they will be dismissed from the proceeding u/s 38 of the Bengal Money Lenders Act. The finding of the lower Courts as to the benami character of the purchase in question as against them is set aside, as in our opinion such a question cannot be gone into in a proceeding u/s 38 of the Bengal Money Lenders Act. Having regard to the circumstances of this case, each party will bear and pay its own costs in this appeal and we further order that the appellants Nos. 2 and 3 will not be made liable to pay the costs of the lower Courts also.

Mallick, J.

I agree.