Mt. Bibi Shaima vs Bank of Bihar Ltd.

Wort, Ag. C.J.

Two points are raised by the appellant who is the mortgagor in this case: one is as to her liability for the mortgage moneys, and the other is as regards the rate of interest. As regards the first point the circumstances are as follows: The mortgagor purchased the property in question from the mortgagee. Not having the money to finance the transaction but only Rs. 500 of the Rs. 4000, the amount of consideration, Rs. 3500 remained on mortgage, which of course is a very common form of transaction. In other words, having had the property conveyed to her she mortgaged it back to her vendor for the unpaid balance of the purchase money. It appears that litigation ensued at the suit of another person in which litigation both the mortgagee and the mortgagor were parties, and in which it was decided that the mortgagee vendor had not 16 annas inter, est in the property but only 8 annas odd. The actual interest is immaterial for the purposes of the decision of this point. Now, having found that in this action the mortgagor wanted some sort of set-off or reduction in the mortgage moneys, it may be a somewhat hard case; but in my judgment it is impossible to give any relief to the mortgagor in this action. If the consideration has failed in any sense of the word in the transaction which is the subject matter of the appeal, it is a consideration which moving from the mortgagor has failed, and the mortgagee has suffered and not the mortgagor.

It is impossible to accept the contention that (although the transactions are so intermixed) they are anything but separate transactions, that is to say, the sale on the one hand and the mortgage on the other. Even supposing that some sort of right could be established, it is quite clear from the argument of the learned advocate on behalf of the appellant that the mortgagor does not seek to set aside the contract but merely to have some sort of abatement of the consideration of the mortgage; and that would undoubtedly be an unliquidated claim, and by Order 8, Rule 6 a set off of an unliquidated or unascertained amount is not liable. That disposes of that point.

I would add that if the mortgagor had any right in this respect I am afraid that in the state of law as it exists in India at this moment it must be the subject, matter of another action as no counter claim can be brought. As regards the question of the rate of interest, Mr. Sinha who appears on behalf of the appellant relies upon Section 12 of the recent Act (3 of 1938) known as the Bihar Money Lenders Act. Section 12 provides:

In any suit brought by a money lender in respect of a loan advanced before the commencement of the Act, the Court may exercise all or any of the following powers.

In the definition clause it is seen that a "suit" includes an "appeal." There are two aspects of the construction of this Section which Mr. Sinha claims to be retrospective. One suggested by the learned advocate is that although it is an appeal it arises out of a suit brought by the money lender; the other is that when the word ''suit'' is used, we should substitute for it the word ''appeal.'' If that is the proper method then the matter is clear. The Section would read ''any appeal brought by the money lender in respect of a loan advanced before the commencement of the Act.'' That puts the operation of Section 12 entirely out of Court in this case. I should suppose that the other construction so far as it goes would be the better one, and Section 12 could be read as referring to a matter which arises out of a suit brought by a money-lender.

But then we are met with two points, one the general canon of construction that a statute cannot be read as retrospective or affecting a pending litigation unless it is expressly so provided, and the second is the provision of the Act itself which says,

provided that, in the exercise of these powers, the Court shall not do anything which affects any decree of Court,

another way of expressing it is that the rights of the parties must be determined according to the state of law existing at the time the suit was brought. Now there can be no doubt about the proposition of law which I have stated. My learned brother and I reviewed the authorities on this question in a recent case in which we had before us Section 53-A, T.P. Act.

I am going to refer however to two cases only (1) in In re Joseph Suche & Co. Ltd. (1876) 1 Ch. D 48 and (2) a decision of their Lordships of the Privy Council in Doolubdass Pettambardas v. Ramloll Thackoorseydass (1851)5 M.I.A. 109. In the first case Sir George Jessel, M.R. was dealing with the Act which had just then come into force, the Judicature Act of 1875, which made provision with regard to companies in liquidation and it was contended that the Act must be taken to be retrospective as there were no words excepting from the operation of the Act the case of winding up commenced before the Act. This in substance is the argument, only of course in different words, which is presented to us in this case today. Sir George Jessel makes this observation :

I so decide because it is a general rule that when the Legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them.

Mr. Baron Parke in the second case reported in Doodubdass Pettambardas v. Ramloll Thackoorseydass (1851) 5 M.I.A. 109 made this observation at p. 126:

Their Lordships are of opinion that this Legislative Act is not to be construed as affecting existing contracts; at all events, not those contracts on which actions have already been commenced, for statutes are prima facie deemed to be prospective only ''nova constitutio futuris formam imponere debet, non prateritis'' and there are no words in this Act sufficient to show the intention of the Legislature to affect existing rights.

It is true that Section 12 refers to transactions or contracts before the passing of the Act, but we have to get over the principle namely, that it does not and cannot be taken to affect pending litigations. In my judgment the second point fails also and the mortgagor is not entitled to the provision of the Act with regard to the rate of interest charged.

In these circumstances the appeal fails and must be dismissed with costs.

Manohar Lall, J.

I agree. I desire to make a few observations regarding the construction to be placed upon certain Sections of the Bihar Money Lenders Act which is a most recent legislation and has not yet been the subject of interpretation before this Court. It was argued by the learned advocate for the appellant that in the circumstances of this case, which have been detailed in the judgment just delivered by my Lord the Chief Justice, the appellant is entitled to obtain relief u/s 12 of the Act. His argument is that the Act or rather Sections 1,2,9 to 17, 21 to 23 and 26 which have come into operation from 15th July 1938, must be held to be retrospective in accordance with a supposed scheme of that Act.

In particular he argues that by virtue of Section 2, Sub-clause (m) the word ''suit'' includes an appeal and therefore this Court has jurisdiction as an Appellate Court to grant the relief provided by Section 12, Sub-clause (1) and relieve the appellant from all liability in respect of interest due on this mortgage in excess of 9 per cent, simple interest. The tests which must be applied by a Court to determine whether a particular Act is retrospective or not were considered at great length in the case reported in Jagdamba Prasad Lalla and Another Vs. Anadi Nath Roy and Others, where my Lord the Chief Justice and myself had to decide whether Section 53-A, T.P. Act, was retrospective or not. At p. 350 I ventured to extract four canons of construction on a consideration of the leading authorities which are apposite to the present discussion in order to decide whether the Act is retrospective or not. Two cases have just been referred to in the judgment of my Lord the Chief Justice but I wish to refer to two more cases. The first is the case in Hitchcock v. Way (1837) 6 A. E 943 in which Denman C.J. stated the law as follows:

The law as it existed when the action was commenced must decide the rights of parties unless the Legislature expresses a clear intention to vary the relation of litigant parties to each other.

The second is the case in Attorney-General v. Theobald (1890) 24 Q.B.D. 557 in which Baron Pollock stated his view of the law as follows:

It certainly was considered in many cases that where a person had commenced an action, he had a vested right and that any subsequent statute ought not to be construed as retrospective so as to alter that right. This is not an inflexible rule and it does not apply if the language of the statute is clear and express.

These high authorities having laid down the attitude which the Courts must adopt in determining whether an Act is retrospective, I now proceed to consider the case before us. Section 12 so far as is relevant runs as follows:

In any suit brought by money-lender in respect of a loan advanced before the commencement of this Act, the Court may exercise all or any of the following powers.

It is necessary to remember that the suit which has given rise to the present appeal had been instituted by the money-lender respondent before the commencement of the present Act and it had also terminated in a decree before the same date. It was based necessarily upon a loan advanced before the commencement of the Act. The present appeal is not an appeal brought by the money lender and therefore Section 12 in its terms cannot apply if we substitute the word "appeal" for the word "suit" in the opening line of the Section. But this would not be a reasonable construction.

I prefer to adopt the argument of Mr. Sinha that the appeal before us may be treated as a continuation of that suit. The question then is, can it be said that this Section by reasonable interpretation of the language used therein applies where the suit (including an appeal) is pending before this Act was passed. In the Act as it stands I do not see any provision which would enable this Court to interfere with the decree passed in favour of a money-lender. The opening words of the Section quoted already are "In any suit brought by a money-lender." The Section is silent as to whether the suit brought was brought before or after this Act came into operation. Therefore we must assume that the Legislature has not taken away the vested right of the litigants in pending actions, be they at the trial stage or at the appellate stage: Doolubdass Pettambardas v. Ramloll Thackoorseydass (1851) 5 M.I.A. 109 quoted by the learned Chief Justice.

I reach the same conclusion by another consideration. On reading Section 10 it appears that the Legislature has been careful in interfering only with those contracts for compound interest by declaring them illegal which have been entered into after the commencement of the Act, and by Section 11 they have directed the Courts not to pass a decree for an amount of interest where the principal has been reached. To this extent only the Act is retrospective; but this matter is not directly before us.

In my opinion, the Legislature did not intend 4o interfere with those litigations which were pending when the Act was enforced and certainly not with those which had already culminated in a decree of the Court, whether of the trial Court or of the Appellate Court. It is to be noticed that the present suit was not only not pending at the time when the Act came into force but, as I have already stated, a decree had already been passed by the trial Court in favour of the plaintiff. A decree passed by a Court of competent jurisdiction remains a good decree until it is reversed or set aside on appeal. Such a decree cannot automatically become invalid merely because since the passing of the decree the law has been changed unless there is some clear provision in the new enactment to make it applicable to suits and appeals which were then pending.

18j. Mr. Sinha sought to rely upon the case in AIR 1936 49 (Privy Council) . But it seems to me, as I pointed out in the course of the argument, that the following observations of Sir George Rankin are completely destructive of the appellant''s argument. At p. 271 in AIR 1936 49 (Privy Council) . I find the following statement:

The Act (that is to say the Bihar Tenancy Amendment Act, 8 of 1934) contains no saving clause modifying the effect of Sections 26 IN) and 26(O)... Their Lordships are of opinion that no such saving can he implied. Section 26(N) is not a provision to the effect that no action shall lie in certain circumstances, nor has it any reference directly to litigation. Its provision is that every person claiming an interest as a landlord shall be deemed to have given his consent to every transfer made before 1st January 1923. This is retrospective: the question is not whether gene ral language shall be taken only in a prospective sense.

And then their Lordships proceeded to point out what the object of the Section was, thus: "the object of this Section can only be to quiet titles which are more than 10 years old." I therefore overrule the contention of Mr. Sinha and hold that we have no power to interfere with the decree passed by the trial Court so far as it concerns the amount of interest awarded to the respondent. The learned advocate on behalf of the respondent wanted to argue that the present Act is ultra vires of the Provincial Legislature. That question does not arise in the view we have taken of the applicability of Section 12 to the present case.

I therefore agree that the appeal fails and must be dismissed with costs.