1935 (11) TMI 25 - HC - Indian Laws

Summary

Issues:
Enforcement of mortgage dated February 27, 1911 in Sonthal Parganas - Interpretation of Section 6 of the Sonthal Parganas Settlement Regulation (III. of 1872) restricting interest on debts - Allowance of interest after the date of the decree and pendente lite - Applicability of Section 34 of the Civil Procedure Code to mortgage decrees - Compliance with the provisions of the Regulation of 1872 regarding interest on the decretal amount.

Analysis:
The consolidated appeals before the High Court PRIVY COUNCIL involved a suit for the enforcement of a mortgage dated February 27, 1911, in Sonthal Parganas. The plaintiffs, as mortgagees, sought to enforce the mortgage against the principal defendant, the mortgagor's representative. The suit was transferred to the Subordinate Judge of Bagalpur, who passed a preliminary mortgage decree assessing the mortgage debt at &8377; 4,12,662-13, including costs and interest at 6% per annum until realization.

The main issue revolved around the interpretation of Section 6 of the Sonthal Parganas Settlement Regulation (III. of 1872), which restricted interest on debts in the region. The Regulation limited interest on debts exceeding one year to two percent per month and capped total interest at one-fourth of the principal sum. The Subordinate Judge applied these provisions, restricting the interest recoverable to the original advances by the mortgagees, totaling &8377; 3,34,153-2-9.

The High Court affirmed the Subordinate Judge's decision, allowing interest on the decretal amount at 6% until realization. The Court held that post-decree interest falls under the domain of judgment, not contract, and is governed by Section 34 of the Civil Procedure Code. The Court rejected arguments that the allowance of interest contravened the Regulation of 1872, stating that post-decree interest does not exceed the principal and is a result of the decree merging the debt into a judgment.

The PRIVY COUNCIL dismissed the appeals, upholding the decisions of the Indian Courts. The Council agreed that Section 34 of the Civil Procedure Code applies to mortgage decrees and authorizes the allowance of interest on the decretal amount. The Council emphasized that post-decree interest is a matter of judgment, not contract, and does not violate the Regulation of 1872. The judgment highlighted the transition of rights from contract to judgment after the decree, affirming the correctness of the Indian Courts' decisions.