1973 (5) TMI 101 - HC - Indian Laws

Summary

Issues Involved:

1. Validity and execution of mortgage bonds.
2. Paramount title of defendants 4, 5, and 6 over the mortgaged properties.
3. Impact of mortgage bonds on the rights of defendants 4, 5, and 6.
4. Applicability of Sections 4 and 5 of the Bihar Money Lenders Act.
5. Purpose of mortgage bonds: legal necessity or immoral debts.
6. Liability of minor defendants.
7. Misjoinder of parties.
8. Reliefs entitled to plaintiffs.

Detailed Analysis:

1. Validity and Execution of Mortgage Bonds:
The court examined whether the mortgage bonds were validly executed and attested, and whether consideration had passed. The court found that the bonds were duly executed and attested, and that defendant No. 1 had received full consideration for the bonds. This was supported by the testimony of witnesses and the evidence presented, including receipts acknowledging the payments.

2. Paramount Title of Defendants 4, 5, and 6:
The court found that the story of partition put forward by the plaintiffs was correct. After the partition, the entire mortgaged properties were allotted to defendant No. 1 alone, who had exclusive possession. Defendants 4 to 6 had no concern with the suit properties after the partition. Therefore, defendants 4 to 6 had no paramount title over any portion of the mortgaged properties.

3. Impact of Mortgage Bonds on Rights of Defendants 4, 5, and 6:
The court found that the mortgage bonds did not affect the rights, title, and interest of defendants 4, 5, and 6 in the mortgaged properties, as they had no interest in the properties after the partition.

4. Applicability of Sections 4 and 5 of the Bihar Money Lenders Act:
The court examined whether the suit was barred by Section 4 of the Act, which prohibits courts from entertaining suits by money lenders not registered under the Act. The court found that the plaintiffs were casual money lenders and not professional money lenders, based on the evidence of P.Ws. 14 and 15. However, the court also found that the plaintiff firm had a money lending license, as evidenced by Ext. 26, a public document showing registration under the Act.

5. Purpose of Mortgage Bonds: Legal Necessity or Immoral Debts:
The court found that the mortgage bonds were executed for legal necessities such as paying off previous dues, rebuilding a house, and meeting marriage expenses. The court rejected the defendants' claims that the money was borrowed for immoral purposes.

6. Liability of Minor Defendants:
The court found that minor defendants 2 and 3 were not liable for the debts under the mortgage bonds, as they were not born at the time of the execution of the bonds. The court held that defendant No. 1 was the sole owner of the properties and could dispose of them as he liked.

7. Misjoinder of Parties:
The court found no misjoinder of parties, as defendants 4 to 6 were impleaded to avoid future litigation due to their false claims over the suit properties.

8. Reliefs Entitled to Plaintiffs:
The court found that the plaintiffs were entitled to full interest claimed over the principal sum for the period prior to the suit. The court decreed the suit on contest against the defendants with costs and pleader's fee at the minimum contested scale. Interest pendente lite and future interest till realization were allowed at the rate of 6% per annum, but the total interest was not to exceed the principal amount of Rs. 18,000. The court modified the judgment and decree to limit the plaintiffs' claim to the loan advanced under Ext. 7, as the loan under Ext. 7/a was not supported by a valid money lending license.

Conclusion:
The court accepted all findings of the learned Subordinate Judge except for the finding that the plaintiffs were casual money lenders and the alternative finding under issue No. 4. The court held that plaintiff No. 8 had a money lending license in his individual capacity, effective for five years from January 18, 1940. The plaintiffs could succeed only with regard to the loan advanced under Ext. 7. The judgment and decree were modified accordingly, and the appeal was allowed in part. Parties were directed to bear their own costs.