1940 (3) TMI 12 - Other - Indian Laws

Summary

Issues Involved:
1. Applicability of the new Bihar Money-lenders (Regulation of Transactions) Act, 1939.
2. Interpretation of Section 7 of the new Act.
3. Validity of the certificate granted by the High Court.
4. Definition and scope of the term 'loan' and 'interest.'
5. Nature of the chithas and their impact on the case.
6. Scope of Section 8 of the new Act regarding reopening transactions.

Detailed Analysis:

1. Applicability of the new Bihar Money-lenders (Regulation of Transactions) Act, 1939:
The respondents argued that the new Act, which received the Governor-General's assent, cannot be impugned on the ground of repugnancy. However, they contended that the Federal Court should not apply the new Act to this appeal. The appellant had invoked Section 11 of the old Money-lenders Act but could not rely on the new Act before the High Court as the judgment and certificate were granted before the new Act was published. The appellant did rely on the new Section in his petition of appeal to the Federal Court. The court held that the appellant cannot be tied down to the grounds mentioned in his supplementary application to the High Court for obtaining leave.

2. Interpretation of Section 7 of the new Act:
The court noted that the new Section 7 prevents a court from passing a decree for an amount of interest in excess of that specified. The court emphasized that it should not ignore the new provisions, which would bind the High Court when the decree comes to be passed. The court also considered the case of Shyamakant Lal v. Rambhajan Singh, which stated that the court had the power to take the new Act into account.

3. Validity of the certificate granted by the High Court:
The respondents argued that the certificate granted by the High Court, which involved the interpretation of the Government of India Act and the validity of the old Bihar Money-lenders Act, was no longer maintainable as the old Act had been repealed. The court held that the certificate had not become void or inoperative due to the repeal and replacement of the old Act. The appellant's right to appeal to the Federal Court on that point accrued when the certificate was duly granted.

4. Definition and scope of the term 'loan' and 'interest':
The court discussed the definitions provided in the Bihar Money-lenders Act. 'Principal' is defined as the amount actually lent to the debtor, while 'interest' includes the return to be made over and above what was actually lent. 'Loan' is a broader term that includes advances in cash or kind, transactions on a bond bearing interest executed in respect of past liability, and any transaction that is substantially a loan. The court emphasized that the term 'loan' should bear the meaning given to it by its definition, but the definitions are subject to the condition "unless there is anything repugnant in the subject or context."

5. Nature of the chithas and their impact on the case:
The court examined the chithas, which are entries in the plaintiff's account books, and discussed whether they could be considered as a bond. The court concluded that the chithas were not a bond within the scope of the definition of 'loan' in Section 2(f). The court noted that the chithas were a series of entries that included acknowledgments of liability and adjustments of accounts, but they did not contain an express promise to pay the amount due. The court held that the amount entered in the last chitha could not be regarded as the minimum amount behind which the court could not go and which it must assume to be the loan.

6. Scope of Section 8 of the new Act regarding reopening transactions:
The appellant urged the court to reopen the transaction under Section 8 of the new Act. The court noted that this point, which was covered by Section 12 of the old Act, did not appear to have been pressed before the High Court. Without special leave of the Federal Court, as referred to in Section 205(2) of the Government of India Act, it could not be raised in appeal. Additionally, the point became unnecessary as the plaintiffs were to get a decree for the principal amount only and not for any interest.

Conclusion:
The court allowed the appeal, setting aside the decrees of the High Court and the trial court, except in so far as they related to costs. The High Court was directed to pass a revised decree in light of the court's directions, granting the plaintiffs a decree for the principal sum only, with pendente lite interest at six percent per annum and future interest on the consolidated amount at the same rate. The court emphasized the necessity of interpreting the new Act to do justice between the parties and prevent money-lenders from circumventing the Act's provisions.