Jai Gobind Singh and Others vs Pachkauri Ram and Others

Chatterji, J.—This appeal arises out of a suit brought to enforce two simple mortgages executed by defendants 1 and 2, one on 4th October 1923, for Rs. 2500 carrying compound interest at Re. 1-1-0 per cent, per mensem with yearly rests and the other, on 24th April 1930, for Rs. 1800 carrying compound interest at 1 per cent, per mensem with yearly rests. Defendants 1, 2 and 3 are brothers. Defendant 4 is the son of defendant 1. Defendants 5 and 6 are the sons of defendant 3 and defendant 7 is the son of defendant 5. All these defendants are members of a joint Mitakshara family of which defendant 1 is the karta. Defendant 7 is a subsequent mortgagee. The suit was contested by defendants 3 to 7 mainly on the grounds that the mortgages were invalid for want of legal necessity and that the rate of interest was excessive. The learned Subordinate Judge who heard the suit has decreed it and defendants 3 to 7 have preferred this appeal.

The first point urged on behalf of the appellants is that there was no legal necessity for the execution of either of the mortgage bonds in suit. The first mortgage; bond, Ex.5, of which the consideration was Rs. 2500, recites that Rs. 1500 was required to pay off an earlier mortgage debt due to one Lal Bahadur Singh on a registered bond dated 3rd April 1922, and the remaining Rs. 1000 was due to the mortgagees (plaintiffs), after some remission on several bonds-and a hand note executed by defendant 1, The earlier mortgage in favour of Lal Bahadur Singh was executed by the three brothers, defendants 1, 2 and 3. So the debt due on that mortgage was antecedent debt binding on defendants 4 to 7. The plaintiffs have proved that this debt was satisfied on payment of Rs. 1500 out of the consideration of Ex.5 and they have produced the satisfied bond. Accordingly, all the defendants are liable under the mortgage bond Ex.5 so far as this sum of Rupees 1500 is concerned.

As regards the remaining Rs. 1,000, the plaintiffs have produced the earlier bonds Ex.2 series and hand note Ex.3, which were all executed by defendant 1. The debts due on these transactions do not come under the category of antecedent debt, and therefore the plaintiffs have got to establish legal necessity for the same. The genuineness of the documents has not been disputed. Plaintiff 2 (P.W.1) stated that defendant 1 borrowed money from him under simple bonds and hand note for meeting costs of gilandazi supplied by him and costs of Collectorate partition and also for cultivation expenses. This statement is supported by the recitals in the said bonds Ex. 2 series and hand note Ex.3. The only attack on the evidence of this witness is that in his cross examination he said that without looking to the bonds and hand-note he could not say for what particular purposes the loans were taken. This is quite natural because there were several transactions which took place many years ago.

The witness however did state the purposes for which the loans were taken, and his statement as I have already said, is supported by the recitals in the documents. Our attention has been drawn to the evidence of P.W.4 who stated that defendant 1 borrowed money under the bonds Exs.2 and 2 (a) for payment of Government revenue and for purchase of seeds as also for cultivation expenses whereas the recitals in these bonds show that the loans were taken for the cost of partition of village Kojhi. The different statements made by the witness in his cross examination show that he really knew nothing of those transactions though of course he attested the bonds. It is to be borne in mind that though the earlier bonds, Ex.2 series and hand note, Ex.3 were executed by defendant 1 alone, the mortgage bond, Ex.5 was executed by both defendant 1 and defendant 2.

If the loans under the bonds, Ex.2 series and hand note, Ex.3 were taken by defendant 1 for his own personal needs and not for family necessity, it is difficult to understand why defendant 2 would admit the liability for these loans. Taking this fact into consideration along with the evidence of P.W.1, I have no reason to doubt that the sum of Rs. 1,000 which was due to the plaintiffs on the earlier transactions represented the defendants'' family debt. Thus the entire consideration of the first mortgage (Ex.5) is proved to have been required for purposes binding on the joint family.

The next mortgage bond, Ex.5 (a) of which the consideration was Rs. 1,800 recites that the money was required for the marriage expenses of the daughter of defendant 1. P.W. 1 has stated in his evidence that defendants 1 and 2 required this money for payment of tilak in connexion with the marriage of the second daughter of defendant 1.P.W.5 however has made a statement to the effect that the marriage took place not about the time of the execution of the mortgage bond but at least three years later. Defendant 5 (D. W. 1), on the other hand has stated in his evidence that the marriage was performed about two years back. Relying on the aforesaid statement of P.W.5, it is contended that the daughter of defendant 1 was married some years after the execution of Ex.5 (a), and therefore the family could not have been under any necessity to borrow any money for the purpose at that time. Indeed this contention would have some force, if the statement of P.W.5 were to be accepted as perfectly accurate.

But some allowance must be made for the lapse of time after which he came to depose to the fact. What is important to be borne in mind is that in the bond itself, which was executed not by defendant 1 alone but also by defendant 2, there is a specific recital that the money was required for the marriage of the daughter of defendant 1. The defendants'' own evidence shows that they have got account books in which the expenses incurred in connection with the marriage were entered, but those accounts have not been produced. Among the contesting defendants defendant 3 would have been the most competent witness in the case but he has been withheld. In these circumstances, I am not prepared to differ from the learned Subordinate Judge''s finding that the sum of Rs. 1,800 was really for the expenses of the marriage of the daughter of defendant 1.

It has been strenuously argued by Mr. Khurshaid Husnain that the defendants have adduced evidence to show that the income of their family properties would be Rs. 5,000 to Rs. 6,000 a year, and therefore they were in fairly affluent circumstances so that there would be no necessity to bor. row any money for the marriage expenses. But to this contention the simple answer is that the accounts in the possession of the defendant which would have been the best evidence on the point have been withheld. It has been contended that the evidence of the defendants shows that Rs. 500 only was paid as tilak on the occasion of the marriage of the daughter of defendant 1. This contention is also met by the same answer.

The next contention raised related to the rate of interest. So far as the first mortgage, Ex.5 is concerned, it appears that the earlier mortgage in favour of Lai Bahadur carried compound interest at Re. 1-8-0 per cent. per mensem with yearly rests and the loans on the plaintiffs'' earlier bonds, Ex. 2 series''also carried compound ''interest at similar rate; and the loan on the hand-note Ex. 3, which was, for Rs. 50 only, carried simple interest at Re. 1-8.0 per mensem. It was, therefore quite prudent on the part of defendants 1 and 2 to create the mortgage, Ex. 5, on compound interest at Re. 1-1-0 per cent, per mensem with yearly rests. It should be observed here that in the plaint the plaintiffs have claimed compound interest at 1 per cent, and not Re. 1-1-0 per cent. As regards the second mortgage, Ex. 5 (a) the plaintiffs have adduced evidence to prove that the usual rate of interest varies from 1 per cent, to''2 per cent, per mensem compound-able every year. This evidence receives support from the earlier transactions commencing with the mortgage in favour of Lai Bahadur. There is no reliable evidence on the side of the defendants to prove that compound interest at 1 per cent, per mensem with yearly rests is excessive.

The next contention raised by Mr. Khurshaid Husnain is that upon a proper construction of the two mortgage bonds, Ex. 5 and Ex. 5 (a), there appear to be no provisions for payment of interest after the stipulated period. The relevant provisions in the bond, Ex. 5 are:

We declare that we shall repay Rs. 2600 aforesaid together with interest at Re. 1-1-0 per hundred rupees per month on the full moon day of Jeth 1332 in full and in one lump sum. We shall pay the interest whatever it may be on the said sum every year to the said creditors. In the event of non-payment, the said yearly interest shall he treated as principal and we shall also pay interest thereon at the above rate and till the date of payment the interest on compound interest shall continue to be treated as principal year after year and interest at the above rate shall continue to run thereon.

These words to my mind are plain enough and do not admit of any other construction than that the principal with interest at the stipulated rate was to be paid in one lump on the full moon day of Jeth 1332 and thereafter compound interest was to be calculated at the end of every year at the stipulated rate and the interest would run till repayment of the entire debt. Turning to the next bond, Ex. 5 (a), the provisions are as follows:

We do declare that we shall repay Rs. 180O aforesaid besides interest at percent. per mensem on full moon day of Baisakh 1338 Fasli. In the event of non-payment, we shall continue to pay the annual interest every year. In the event of nonpayment of interest, the annual interest shall every year be treated as principal and we shall pay interest and compound interest thereon also till the date of repayment.

Here again the words are so clear that it, is impossible to hold that there was no covenant for payment of interest, after the stipulated period. In this connexion Mr. Khurshaid Husnain has referred to a decision of the Judicial Committee in Chajmal Das v. Brij Bhukan Lal (1895) 17 All. 511, in which upon a construction of the terms of the mortgage bond before their Lordships it was held that there was no covenant for payment of interest after the stipulated period. The relevant provisions of that bond were as follows:

I promise that I shall pay the said money, with, interest at the rate of Re. 1-4-0 per cent, permensem, in two years; that interest shall be paid six-monthly; that in case of default in payment of interest on the expiry of any six months, it will be treated as principal and being included in the principal shall bear interest at the said rate; that the compound interest shall also be added six-monthly to the principal.

From these provisions, their Lordships held that the stipulation regarding payment of compound interest at the end of every six months applied to the period of two years which was fixed for the payment of the debt, and there was no provision for payment of any interest after the expiry of that period. In the present case, as I have already pointed out, there are clear provisions in both the bonds regarding payment of interest after the stipulated period. The next point raised by Mr. Khurshaid Husnain is that there is no legal proof of the attestation of the mortgage bonds, Exs. 5 and 5 (a). The bonds on their very face purport to be attested by more than two witnesses. One of the attesting witnesses to the first bond was Mahadeo Lal (P. W. 2). He proved its due execution and attestation and on his evidence it was marked Ex. 5 without objection. Jageshar Ram (P.W.3), an attesting witness to the other bond, proved its due execution and attestation, and on his evidence it was marked Ex. 5 (a), without objection.

Now, what happened was that Bansi Ram, another attesting witness to the first bond, Ex. 5 was examined as P.W.4 and he did not formally prove attestation. The obvious reason is that it was not thought necessary in view of the fact that the bond was already marked as Ex. 5 without objection on the evidence of P.W.2. The point taken by Mr. Khurshaid Husnain is that because Bansi Ram (P.W.4) did not speak of attestation of the bond, Ex. 5, it must be presumed that he did not in fact attest. There is no substance in this contention.''

The last point raised is that under the provisions of Section 11, Bihar Money-lenders Act (III of 1938) which came into force in July 1938 was expressly made retrospective in its operation, the plaintiffs are not entitled to recover as interest any sum exceeding the principal amount secured by the mortgage bonds in suit. But it has been held by a Full Bench of this Court in Sadanand Jha v. Aman Khan A.I.R (1939) Pat. 55, that in view of the provisions of Section 107, Government of India Act, 1935, Section 11, Bihar Money-lenders Act, being repugnant to the provisions of the Usury Laws Repeal Act (28 of 1855), is void to the extent of the repugnancy. Mr. Khurshaid Husnain has further urged that in any event u/s 12, Bihar Money-lenders Act, the account should be re-opened and relief should be given to the defendants but that Section gives a complete discretion to the Court in the matter. Upon the facts of this case there is nothing which would justify the Court, in the exercise of its discretion, in re-opening the accounts. All the contentions raised by the appellants fail and I would therefore dismiss the appeal with costs.

The learned advocate for the appellants prays for a certificate u/s 205(1), Government of India Act, 1935. As this case involves a substantial question of law as to the interpretation of that Act, let a certificate be granted for leave to appeal to the Federal Court.

Harries C.J.

I entirely agree.