Jisuk Ram and Others vs M. Subba Rao and Another

This is a second appeal by the defendants, which arises out of a suit brought by the plaintiff-respondent on the basis of a hand-note dated 3lst July 1930. The question raised in the appeal is whether certain provisions of the Orissa Money-lenders'' Act apply in the case of loans based on promissory notes. The Court of first instance had applied certain provisions of the Orissa Money lenders'' Act, and had reduced the principal and interest. The lower appellate Court has re. versed that decision of the Court of first instance, and has held that the Orissa Money, lenders'' Act does not apply to loans based on promissory notes. Hence the present second appeal by the defendants. The question raised is, in my opinion, concluded by the latest decision of the Federal Court in AIR 1945 2 (Federal Court) where their Lordships have reviewed the earlier decisions of the Federal Court as also of other High Courts on the subject, and have observed as follows:

It was contended on behalf of the appellant, that the Bengal Money-lenders'' Act interferes not merely incidentally but substantially with at least two of the matters enumerated in List I of Schedule 7, Constitution Act. By making Sections 30, 36 and 38 applicable to claims under promissory notes, it was said that the Act was an invasion of Entry 28..... In the view we take of the complaint of encroachment of Entry 28, it is not necessary for the decision of these appeals to deal with the argument advanced with reference to Entry 38. It was contended that the rules enacted in Sections 32, 79 and 80, Negotiable Instruments Act, were among the essentials of the law relating to promissory notes and that the provisions of Sections 30, 86 and 38 of the impugned Act affect them so substantially that it would be impossible to regard them as merely amounting to an incidental enoroachment on the law relating to promissory notes. This contention is in our judgment well-founded.

Their Lordships have further considered the distinction, which had been drawn in some previous cases, between the aspect of negotiability of promissory notes and the aspect of contractual relationship between the parties arising out of such promissory notes. Dealing with that distinction their Lordships have observed as follows:

He (the Advocate-General of Bengal) further con-tended that the rights as between the promisor and the promisee, including the right to interest, were only matters pertaining to the Law of Contracts and should not be held to be comprised in Entry 28 of List I. We are unable to accede to this argument. The entry expressly refers to ''cheques, bills of exohange and promissory notes'' and then adds ''and other like instruments.'' Whatever may be the result of construing these added words in the light of the ejusdem generis rule, we see no warrant for limiting the three specified categories of documents to instruments which are negotiable. Non-negotiable promissory notes are known to the law and are recognised by the Negotiable Instruments Act. Some of the provisions of the Negotiable Instruments Act specifically refer to ''negotiable instrument'' but other seotions refer to promissory note, bill of exchange or cheque'' and there is no justification for limiting these latter provisions to only such documents as are negotiable. Even if it were possible to limit entry 28 to negotiable instruments there is no justification for importing the further limitation that this entry relates to only so-much of the law as bears on the negotiability of such instruments and its consequences.

It is no doubt true that their Lordships were considering some of the provisions of the Bengal Money-lenders'' Act. The provisions of the Orissa Money-lenders'' Act are, however, similar to the said pro visions, of the Bengal Money-lenders'' Act, and the principles laid down by their Lordships would apply to similar provisions of the Orissa Money-lenders" Act. In view of that decision, the relevant provisions of the Orissa Money-lenders'' Act, on which the appellants rely for a reduction of principal and interest, cannot affect claims based on promissory notes.

The learned Advocate-General, who appears for the appellants has tried to distinguish the decision of the Federal Court in the following way. It appears that the plaintiff respondent had sued not merely the maker of the promissory note, but also the other members of the joint family of which the maker was stated to be the ''karta '' The learned Advocate-General has made a reference to Section 32, Negotiable Instruments Act, and has contended that it was only the maker of the promissory note who was bound to pay the amount thereof at maturity accordingly to the apparent tenor of the note. He contends that the suit against persons other than the maker was not really a suit on a promissory note, and the liability of the other members of the joint family arose out of the principles of Hindu law, and the Negotiable Instruments Act has made no provision regarding such persons. His contention is that there is no conflict between the Orissa Money-lenders'' Act and Negotiable Instruments Act so far as persons other than the maker of the promissory notes are concerned. In that view of the matter, so contends the learned Advocate-General, the Orissa Money-lenders'' Act should apply to a suit on a promissory note against persons other than the maker of the promissory note. This argument has no doubt certain subtle attractions; but I am unable to accept it as correct. The claim in the suit was essentially a claim based on the promissory note of 31st July 1930, as against all the defendants. Apart from Section 32, Negotiable Instruments Act, Section 79 of the said Act lays down that

when interest at a specified rate is expressly made payable on a promissory note interest shall be calculated at the rate specified, on the amount of principal money due thereon, from the date of the instrument, until tender or realisation of such amount, or until such date after the institution of the suit to recover such amount as the Court directs.

To allow a reduced decree after the application of the Orissa Money-lenders'' Act against persons other than the maker of the promissory note would be tantamount to con-traveling the provisions of Section 79, Negotiable Instruments Act. The contention of the learned Advocate-General is apparently based on the therry of what is known as the doctrine of occupied field; he contends that the Negotiable Instruments Act, not having occupied the field in which persons other than the maker of the promissory note have their play, there is no conflict between the Orissa Money-lenders'' Act and the Negotiable Instruments Act so far as persons other than the maker of the promissory note are concerned. As I have explained above, to apply the Orissa Money-lenders'' Act in such a case would amount to a contravention of Section 79, Negotiable Instruments Act. There cannot be two inconsistent decrees in the same suit, one against the maker of the promissory note and the other against persons other than the maker of the promissory note. Morever, the decision of the Federal Court, as I understand it, is that such legislation by the province affecting claims on promissory notes is an encroachment on the Federal Legislative list and, therefore, beyond the competence of the Provincial Legislature.

In view of the decision of the Federal Court referred to above, it is unnecessary for me to refer to other earlier decisions of several High Courts in India including this Court. On behalf of the appellants, reliance was placed on the case in Deo Nandan v. Ram Prasad AIR 1944 Pat. 303 a decision which has been noticed by their Lordships of the Federal Court in their latest pronouncement in AIR 1945 2 (Federal Court) referred to above. It has also been contended before me that if the appellants cannot be given any relief under the Orissa Money-lenders'' Act, they may be given some relief under the Usurious Loans Act. In the Courts below, no attempt was made to show that the appellants were entitled to any relief under the Usurious Loans Act. I think that it is too late in the day to raise this point in second appeal. Moreover, no materials have been placed before me which would lead me to think that the appellants are entitled to any relief under the Usurious Loans Act. The result, therefore, is that the contentions raised on behalf of the appellants fail, and the appeal is dismissed. In the peculiar circumstances of this case, and particularly in view of the fact that the Federal Court decision has been given long after the filing of the present appeal, there would be no costs of this Court.