Ram Nandan Prasad Narayan Singh and another Versus Kapildeo Ramjee and others[SC 1951 January]

keywords: Constructive Resjudicata


AIR 1951 SC 155 : (1951) SCR 138


Ram Nandan Prasad Narayan Singh and another Appellant
Kapildeo Ramjee and others Respondent

(Before : M. H. Kania, C.J.I., M. Patanjali Sastri And N. Chandrasekhara Aiyar, JJ.)

Civil Appeals Nos. 98, 99, 100 and 101 of 1949, Decided on : 12-01-1951.

Civil Procedure Code, 1908—Section 11—Constructive res judicata—Interpretation of statute in previous litigation—Effect on subsequent litigation—The question that a party is entitled to take advantage of provision of statute is different from the interpretation of that statute itself—Such decision in previous litigation does not bar the interpretation of the statute in question in subsequent litigation.

Interpretation of Statutes—Acquiescence by legislature—Effect of—Obscure language of the statute—Interpretation put by the High Court not set right by the legislature—It must be inferred that the views expressed by the High Court is in accord with the intention of the legislature.

Counsel for the Parties:

Shri Shambhu Barmeshwar Prasad and Shri Ramanugrah Prasad, Advocates, instructed by Shri Tara Chand Brijmohanlal, Agent for Appellants

Shri R.J Umrigar, Advocate. instructed by Shri R. C. Prasad, Agent for Respondents.


Chadarasekhara Aiyar, J—The decision of these four appeals, which are connected with each other and which have arisen out of orders made by the H. C. of Patna in four misacllanous appeals, depends on the interpretation of S. 7, Bihar Money lenders (Regulation of Transpotions Act, 1939, The facts which have led to the appeals are found briefly states in the petn. filed by the present applts. in the 3rd Ct. of Sub Judge, Patna, and may be restated here for convenient reference:

“The father of the pettioners borrowed ` 40,000 from the guru (ancestor) of the decree- holder under mtge. bond, dated 11-1-1893.

Out of ` 40870-7-6 interest and compound interest Upto 4-1-1910, ` 32,370-7-6 was paid in cash and for the balance ` 8000 interest and ` 40,000 principal, i. e., for ` 48,000, a Mtge. Suit No. 14 of 1910 was filed in lst Ct. of the Sub-Judge, Patna, and in lieu of “the claim and cost of the said suit two fresh mtge. bonds were executed on 11-7-1910, viz., one for ` 40,000 and the other for ` 9488, and the latter bond was satisfied by payment of ` 15,835 in cash.

With respect to the above bond of ` 40,000 dated 11-7-1910 the pettioners paid ` 38,530-13-6 Mtge. Suit No. 110 of 1917 was brought in the 3rd Ct. of the Sub Judge, Patna, and a decree for ` 58,00-2.0 was passed on 9-7-1929, out of this ` 5000 was paid in cash and for the balance of ` 53,012-12-0 one mtge. bond dated 6-10-1931 was executed for ` 42,000 and on the same date two hand notes were executed. viz., one for ` 5000 and one for ` 6012-2-0.

One Suit No. 14 of 1983 for both the hand notes was brought in 3rd Ct. of the Sub-Judge and a decree for ` 15008-2-0 was passed on 28-2-1985. This decree is under execution.”

2. When the decree-holder sought to execute the money decree by attachment and sale of the judgment debtors’ properties stating that they were subject to a mtge. lien of ` 62-27-13-0 under the mtge. bond dated 6-10-1981, the two judgment-debtors, who are brothers, filed objections under Ss. 11 and 16 of the earlier Bihar Money-lenders Act, III [3] of 1938, and S. 47, C. P. 0. The petns. (two by each of them) were filed separately by the brothers. They urged that on a proper calculation under S. 11 no lien was subsisting on the properties owing to payments made towards the mtge. debt amounting to Rs 92,3942-0. The Subordinate Judge held that this plea of the judgment-debtors could not be entertained in the miscellaneous case before him relating to the execution and all that could be done was to notify the mtge. encumbrance without deciding anything as to the correctness of the amount claimed to be due under it:and this conclusion was partly based on the fact that S. 16 of the Act had been declared by the H. C. void. Appeals taken to the H. C. were dismissed. That judgment-debtors thereupon preferred an appeal to the P. C., contending that Ss. 7 and 13 of the new Act (corresponding to Ss. 7 and 11 of the old Act) were applicable and that it was the duty of the Ct. to estimate the value of the property after making the necessary calculations under. S. 7 with reference to the lien. The decision of the P. C:is reported in Ramnandan Prasad v. Goshwami Madhwanand, 1940 F. O. R. I. The case was remitted back to the H. C., giving liberty to the applts. to file an appln. under S. 13.

3. In answer to a fresh appln. for execution dated 2-7-1942, the two brothers filed the same objections as before. Miscellaneous Cases Nos. 45 and 46 of 1942 related to Ss. 7 and 13, Bihar Money-lenders Act and Misc. Cases. Nos. 50 and 52 of 1942 related to the objections under S. 47, C. P. C. The Subordinate Judge held that the amount of loan should be taken as the amount mentioned in the mtge deed of 1931 and not the amount advanced in 1893 and that a sum of ` 70,840 was still due on the bond. He determined the market-value of the several properties given as security, adopting 16 times the net income as the basis.

4. Appeals to the H. C. were numbered as M. A. 108 to 111 of 1943 and they were heard by Manohar Lal and Imam JJ. They modified the order of the lower Ct. in certain respects. Even according to them the amount of the loan was what was mentioned in the mtge bond of 6-10-1931 but as a sum of ` 11,855-3-0 had been repaid expressly towards the principal amount after the date of the bond that amount became reduced to ` 28,150. Adding an equal sum by way of interest which according to them was the maximum amount, permitted to be allowed under S. 7 of the Act, the total liability was stated to be ` 56300 and a charge was declared on the property for this amount. They also directed that the valuation of the property should be fixed at twenty times the net income and not sixteen times. It is from this order that the present appeals have been preferred.

5. Two points were urged on behalf of the applts. namely (a) that the decree-holder was barred by constuctive res judicata from contending that the construction placed upon S. 7 by the judgment-debtors was wrong; and (b) that in applying S. 7, we must consider the original amount of loan of ` 40,000 given in the year 1893 and allow the claim of interest only for that maximum sum, after taking into account all sums paid by the applts. and their predecessors towards interest since 1893.

6. The first point is entirely without substance. When the decree-holder contended that S. 11, Bihar Money-lenders Act, 1938 was declared void and ultra vires and that there fore S. 7 of the new Act which corresponded to S. 11 was also inapplicable, the judgment-debtors pleaded that they were entitled to the benefit of S. 7 of the new Act. The F. C. held in Ramnandan Prasad v. Goshwami Madhwanand, 1940 F. C. R. 1, that the judgment-debtors (present applts.) were entitled to claim the benefit of the provisions of the new Act when the executing Ct. proceeded under S. 13 to determine the value of the properties to be sold. The correct interpretation of S. 7 was not in question between the parties. To say that the applts. were entitled to take advantage of the provisions of S. 7 is entirely different from the contention that the interpretation sought to be put by them on S. 7 was the right one. The F. C. was not dealing with any question of interpretation at all. It is impossible to see where the doctrine of constructiveres judicata comes in, so as to be of help to the applts.

7. The second question raised on their behalf relates to the true meaning of S. 7, Bihar Money-lenders (Regulation of Transactions) Act, VII [7] of 1939, which is in these terms:

“7. Notwithstanding anything to the contrary contained in any other law or in anything having the force of law or in any agreement, no Court shall, in any suit brought by a money-lender before or after the commencement of this Act in respect of a loan advanced before or after the commencement of this Act or in any appeal or proceedings in revision arising out of such suit, 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 the Court or otherwise, is greater than the amount of loan advanced, or, if the loan is based on a document, the amount of loan mentioned in, or evidenced by such document.”

8. In the present case, the original loan of ` 40,000 was advanced as early as 11-1-1893. The applts. contend that for the purposes of calculating the interest to be decreed prior to the date of the suit the loan advanced must be taken to be the original sum and that if an account is taken of all the sums received by the creditor as interest from that date up to the date of the suit, there would be nothing due for interest. On the other hand, the decree-holder urges that having regard to the latter part of the section, the loan must be taken to be the amount mentioned in the mtge. bond dated 6-10-1931, namely ` 42,000. Whichever method of calculation is adopted, it must be remembered that it has to be made not for the purposes of passing any decree on the mtge. loan, but for estimating under S. 13 of the Act, the value of the properties to be brought to sale in execution of the money decree against the applts.

9. As pointed out by Sir Maurice Gwyer C. J. in Surendra Prasad v. Gajadhar Prasad, 1940 F. C. R. 39, “Section 7 of the Act of 1937 is no doubt extremely obscure and ill-drawn.” The true intention of the framers of the Act is somewhat difficult to gather. But the Patna H. C. has been consistently placing upon the section an interpretation which is opposed to the contention of the applts. in these proceedings.

10. The point came up expressly for decision in Singeshwar Singh v. Medni Prasad, (187 1. C. 339), where a mtge. bond was executed on 31-8-1922 for a sum of ` 2,000 which was the balance of the principal and interest due under a mtge. bond of the 11-10-1912, for ` 1391. The judgment-debtors raised the plea that the Ct. should go back to the earlier bond of 1912 and that as a sum of ` 1512 had been paid as and by way of interest towards that bond, no decree could be passed against them for more than the principal sum of Rs.1391. The learned Judges rejected this contention and took the amount stated in the document of 1922, namely ` 2,000 as the loan and they held that the plts. were entitled to get a decree for interest for a sum not larger than ` 2,000 as no payment had been proved to have been made after the execution of the bond. The same view was taken in Lal Singh v. Ramnarain Ram, (197 I. C. 659) and the pltfs. were awarded a decree on the basis that the loan was to be taken as ` 2,909-8-0 which was the amount for which the hand-note sued upon was executed and not ` 1,000 which was the original amount advanced upon an earlier hand-note of the year 1924. The case reported in Madho Prasad v. Mukutdhari Singh, 193 I. C. 661, lays down the same position. The F. B. decision in Deo Nandan Prasad v. Ram Prasad, 23 Pat. 618 reiterates the same view, pointing out the distinction between Ss. 7 and 8 of the Act and stating that while under S. 8 we can go to the original loan in spite of a later document, under S. 7 the loan must relate to the document on which the suit is based, that is, the final document and not the original one. In each one of these cases, the question of the true meaning of S. 7 was pointedly considered. This construction no doubt enables a creditor to circumvent the beneficent provisions of the Act by taking a document for the interest due and adding it to the principal amount. Gwyer C. J., points out this difficulty at p. 59 in case Surendra Prasad v. Gajadhar Prasad Sahu Trust Estate, 1940 F. C. R. 39. If the interpretation does not carry out the intentions of the framers of the Act by reason of unhappy or ambiguous phrasing, it is for the Legislature to intervene. But so far from doing so, it has acquiesced, during all these years, in the construction, which the Patna H. C. has been placing upon the section from the very next year after the enactment of the statute. Having regard to the great obscurity in the language employed in the relevant provisions and the inaction of the Legislature, it is, in our opinion, legitimate to infer that the view expressed by the Patna H. C. is in accord with the intention of the Legislature.

11. The appeals fail and are dismissed with costs only one set in all of them together.