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1969 (4) TMI 105 - SC - Indian LawsInterest exceeding the principal of the loan - Held that - Section 9 of Madhya Pradesh Money Lenders Act 13 of 1934 prohibits the Courts from awarding interest exceeding the principal of the loan. Counsel for the appellants contends that if all the amounts deposited from time to time by the debtors be aggregated it will appear that an amount exceeding the loan was paid. But the prohibition of the statute is against the making of a decree for arrears of interest exceeding the amount of loan. In the present case the decree awards interest amounting to 746-30 whereas the principal is 33, 866-51. The Court is concerned at this stage to pass a decree absolute for sale in a mortgage suit. It is not concerned to determine the respective rights of the mortgagees inter se. The mortgagees interest is fully represented before the Court. Whether or not the Custodian of Evacuee Property is entitled to the money or that the evacuees have a subsisting interest is a matter which cannot be decided in this appeal. That was made clear by the judgment of the High Court in the application filed by the Custodian of Evacuee Property by order dated November 12 1962 when the High Court observed. Appeal dismissed.
Issues:
1. Appropriation of payments towards principal and interest under a mortgage decree. 2. Calculation and award of interest at different rates by Trial Court and High Court. 3. Prohibition on awarding interest exceeding the principal under the Madhya Pradesh Money Lenders Act. 4. Entitlement of Custodian of Evacuee Property to claim a decree absolute for sale in a mortgage suit. Appropriation of Payments: The case involved a dispute regarding the appropriation of payments made by mortgagors towards principal and interest under a mortgage decree. The mortgagors claimed that specific directions were given for crediting payments towards the principal, but the Court found insufficient evidence to support this claim. The Court emphasized the normal rule that unappropriated payments are first applied towards interest and then towards the principal. The mortgagors failed to prove any agreement with the mortgagees regarding the conditional nature of the payments, leading to the rejection of their contentions. Calculation and Award of Interest: Another issue addressed was the calculation and award of interest at different rates by the Trial Court and the High Court. The High Court modified the original decree to award interest at a higher rate, leading to a dispute regarding the correct rate of interest applicable. The Court analyzed the orders passed by the High Court and clarified that the interest was correctly calculated and awarded as per the directions given in the judgment, dismissing the contention raised by the mortgagors. Prohibition on Interest Exceeding Principal: The Madhya Pradesh Money Lenders Act was invoked to argue against the award of interest exceeding the principal amount of the loan. The mortgagors contended that the total amounts deposited exceeded the loan amount, but the Court clarified that the prohibition under the Act was against decreeing interest exceeding the principal. Since the interest awarded was less than the principal, this argument was deemed futile and rejected by the Court. Entitlement of Custodian of Evacuee Property: The final issue revolved around the entitlement of the Custodian of Evacuee Property to claim a decree absolute for sale in a mortgage suit. The Court clarified that at the decree stage, the Court's concern is to pass a decree absolute for sale without determining the internal rights of the mortgagees. The Court highlighted that the Custodian's entitlement to the money or the evacuees' interests were matters beyond the scope of the current appeal, as confirmed by the High Court's previous judgment. Therefore, the contention challenging the Custodian's entitlement was deemed futile, and the appeal was dismissed with costs. In conclusion, the Supreme Court addressed various complex issues related to the mortgage decree, appropriation of payments, interest calculation, statutory prohibitions, and the Custodian's entitlement, providing detailed analyses and clarifications on each aspect before dismissing the appeal.
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