INDIAN & GENERAL INVESTMENT TRUST LTD. v. SHRI PURNA CHANDRA MARDARAJ & CO.

Citation: [1967] 2 S.C.R. 245; 1966 INSC 263

Court: Supreme Court of India

Bench: S.M. SIKRI , C.A. VAIDYIALINGAM

Judgment date: 1966-12-13

Case summary

1966 INSC 263. Supreme Court of India judgment dated 1966-12-13. INDIAN & GENERAL INVESTMENT TRUST LTD. v. SHRI PURNA CHANDRA MARDARAJ & CO. Read the...

Judgment text

A B c D E F G INDIAN & GENERAL INVESTMENT TRUST LTD. ". SHRI PURNA CHANDRA MARDARAJ & CO. December 13, 1966 (S. M. S! KRI AND C. A. VAIDIALINGAM, JJ. ] Orissa Esta/es Abolition Act 1951 (Act I of 1952), s. 20(1) Ir. (2), and Orissa Money Lenders Act 1939, ss. 10 & 11-Claims Oflic. r re- qwred under Abolition Act to determine amount of debt 'legally and ;ustly due'-ln doing so ·whether can take into account provisio115 of Money Lenders Act. The appellant company advanced a loan to the predecessor-in-title of the respondents against a mortgage of land in 1906. Jn 1953 the said land vested in the State of Orissa by virtue of a notification llllder s. 3 of the Orissa Estates Abolition Act 1951. Under s. 18 of the Act the appellant filed a claim in respect of the loan before the Claims Ollicer. The mortgagor contended that since the appellant bad realised more than double the amount of the loan as interest, the debt stood extinguish- ed according to ss.

10 and 11 of the Money Lenders Act 1939. The Claims Officer and the High Court held against the appellant thougll on different grounds. The appellant came to this Coun and contended that die proced•1re for dctermming a claim as provided 'in s. 20 of the Abolition Act was exhaustive and recourse to the provisions of the Money Lenders Act was unjustified. HELD : The Claims Officer cannot under s. 20(2) of the Abolliion Act determine the principal and interest due under a mortgage without considering the question as to whether the claim is true or whether it is barred by any other law, or whether the claim is still subsisting. These are all matters which properly arise for consideration by the Claims Officer. The expression 'legally and justly due' occurring in s. 20( 1) clearly indicates that the first and initial duty of the Claims Officer is to find out whether any principal amount is at all due to the creditor.

For this purpose he would, be perfectly justified i'l relyinjJ on any provisions of other statutes bearing upon that subject-in this praticular case the provisions of the Money Lender's Act. Taking section 10 and 11 of the latter Act into account it was clear that no amount was due to the appellants as they had· already received more than double the amount of ·the original loan. [2~A F; 225 A-DJ CIVIL APPELLATE Jl,TRISDICTION : Civil Appeal No. 850 of 1964. Appeal from the judgment and decree dated January 4, 1963 of the Orissa High Court in Misc. Appeal No. 94 of 1960. B. Sen and S. N. Mukherjee, for the appellant. H G. L. Sanghi, for respondent Nos. 1 and 2. Deepak Dutta Chaudhuri and R. ' N. Sachthey, for respondant No. 3. 24 1 . ~ SUPREME COURT REPORTS [ 1967] 2 s. c. R. The Judgment of the Court '"" tklivered hy Vaidialingam. J. This appe:il. on ccrtific~te. is directed ag:iinst th~ judgment 0f the Orissa High Court, dated Januarv 4.

1963, aPJ rendered in Miscellaneous Appeals Nos. 94 & 95o(1960. The circumstances, under which this a 1 1peal •rises, may be briclly stated. The predecessor-in-title of the respondents had ex:cutcd three mortgages in favour of the ap~llant-company, which is registered in Lo~don. The first mortgage was executed on Octo- ber 2-1. 1903. securing a sum of £1,35. 000/-. Inasmuch as. accord- ing to both parties. this mortgage has been completely redeemed in 1935. it is not necessary to make any further reference to this tran- sact ion. The second mortgage was executed on December 18, 1906, under which a sum of £77,500,'- was borrowed by the mort- gagor. Even according to the appellant, in respect of this mort- gage, the respondents had paid a total sum of £1,77,349/-, by way of interest which is more than twice the principal amount covered by the mortgage. The third mortgage was executed on October 21, 1935. under which a sum of £65,000/- was borrowed by the mortga- gor.

The appellant demanded the repavment of the amounts due under these mortgages, but the mortgagor, so far as the mortgage of 1906 was concerned, repudiated the same on the ground that the entire transaction had been wiped off, by virtue of s. IO of the Orissa Money-Lenders Act, 1939 (Orissa Act III of 1939) (hereinafter called the Money-Lenders Act): inasmuch as he had paid more than double the original principal amount, as admitted by the mortgagee. The appellant, however, did not accept this repudiation and, in consequence, the company took legal proceedings in London and obtained an ex parte decree. But attempts to execute the decree in India did not succeed, as will be seen from the decision of the Calcutta High Court in /. G. lmestment Trust v. Raja of Khalikote('). The High Court held that the decree obtained by the appellant in London was not executable in India.

In the meanwhile, the mortgaged properties vested in the State of Or'ssa, under the Orissa Estates Abolition Act, 1951 (Act I of 1952) (hereinafter called the Abolition Act), on June I, 1953, by virtue of the notification issued by the State Government under s. 3 thereof. Inasmuch. as the appellant had not realised the dues u'. lder the two later mortgages, they filed a claim petition before the Claims Officer, under s. 18 of the Abolition Act. Under s. 18(1) (a) of the Abolition Act, every crr:litor, whose debt is secured by the mortgage of, or is a charge on, any estate c>r (I) A. l. R. 1952 Cal. 508. B c D E Ji' G B ... iNVC.. t also arise for consi- deration, in this appeal. c So far as the mortgage of December 18, 1906, under which the mortgagor had borrowed a sum of £77,500/-. is concerned, in the claim petition the particulars of the properties mortgaged were all given in detail.

The appellant had also admitted having received, by way of interest, in respect of this mortgage, a sum of £1,77,349- 18-0 and he had given, in a statement, details of this receipt. The D ·rate of interest payable under the mortgage was 6% per annum. r G H It is also seen, from the said statement, that the appellant has given credit to payment of a sum of £29,000/- towards the princi- pal amount and, as such, a balance of £48,500/- remained due as principal. The appellant had claimed this amount, as well as the balance of interest payable, in the sum of £17,460/-, as being due upto May 1, 1953. The appellant had also claimed certain other amounts which, according to him, were payable as commission and premium as per the terms contained in the mortgage deed. The equivalent of all these amounts, in Indian currency, was also given by the appellant in the claim petition. The appellant, in conse- quence, prayed for payment of these amounts, stated to be due to him under this mortgage.

The mortgagor contested the claim of the appellant before the Claims Officer. He pleaded that the claim of the mortgagee, under the mortgage, was no longer subsisting and that the mortgage liabi- lity had been dLcharged by payments and by operation of law. The mortgagor pleaded that, inasmuch as the appellant had :ealised interest which is, admittedly, far greater than the amount of the original loan, the liability under the mortgage had become exting- uished, under s. 10 of the Money-Lenders Act. The mortgagor further contended that the mortgage liability mu5t be considered to have been extinguished, under s. 17 of the Money-Lenders Act, inasmuch as the mortgage, in question, is a possessory mortgage and the mortgagee had been in possession and enjoyment of the mortgaged security for a period of I 5 years. 248 SUPRBMB COURT REPORTS ( 196 7] 2 S. C. R.

There were also certain other objections, raised by the mortg~r,0r to the claim made by the morcgagee by way of conunission and pre- mium. The Claims Officer accepted the plea of the mortgagor that the mortgage of December 18, 1906, is a possessory mortgage and the mortgagees were in possession and enjoyment of the properties for 15 years from the date of the mortgage. In consequence, the Claims Officer held that, in terms of s. 17 of the Money-Lenders Act, the mortgage of 1906 should be deemed to have been extin- guished on the. expiry of 15 years from the date of the mortgage, i. e. , long before 1953, and even long before 1947, when the mort- gagor repudiated his liability under the mortgage. But the Qaims Officer was not prepared to accept the plea of the mortgagor that under ss. 10 and 11 of the Money-lenders Act, the transaction should be considered to have bct. n extingllished. So far as the appli- cability of ss.

10 ar;d 11 of the Money-Lenders Act is concerned, the view of the Claims Officer appears to be that those provisions can be invoked only when a claim is made by the mortgagee in a 'suit'. and when a 'Court' has to adjudicate upon the same. Aro:ir r Judicial Tribunal, will find recognition on the basis that it does not ;uffer from any legal infirmity. Jn this case, even according to the appellant, in respect of the principal amount of £77,500/- advanced under the mortga~e of December 18, 1906, admittedly, a sum of £1,77. 349-18-0 nas been received by him as interest. This amount is more thar. two times the principal amount advanced under this mortgage. If, in spite of this, the present claim had been made for recovery of further amounts, on the basis of this mortgage, by the appellant, in any Court, it is needless to state that the Court would have applied the provisions of the Money-Lenders Act. By applying ss.

10 and 11 of this Act, the Court would have come to the conclusion that the appellant is not entitled to recover any more amounts inasmuch as the entire claim must be considered to have been satisfied by the respondent, having naid a sum of £1,77,349-18-0 by way of interest. That means, the Court would have come to ;he conclu~ion that no further amounts, by way of principal, arr. 'legally and justly due' to the appellant; and, quite naturally, the further finding would be that no interest at all is due. If no Court •vould have recognized the present claim of the appellant, the same principles must be appli- cable when the Claims Officer is also called upon, under s. 20(1) of the Abolition Act, 'to determine the principal amount legally and justly due'.

For the purpose of determining whether the principal amount is 'legally and justly due', he would be perfectly justified in relying on any provisions of other statutes 'bearing upon that subject-in this particular case, the provisions of the Money-Lenders Act. Mr. B. Sen, learned counsel, has urged that in order to consider a claim made by the creditor, the jurisdiction of the Claims Officer is restricted, by the various provisions contained in clauses (a) to (f) of s. 20(2) of the Abolition Act. We are not inclined to accept this large eontention of the learned counsel for the appellant. For instance, if a plea of discharge is raised by a debtor in a claim pro- ceeding, or, if a plea is raised by a debtcr that the claim is barred by the law of Limitation, no provision is made in clauses (a) to (f) of s. 20(2) giving jurisdiction to the Claims Officer either to ente1tain such objection or to investigate the same. Ac.

:eptancc of the con- tentions of the learned counsel for the appellant, will lead tc this A B c D E F G H B c 0 E JNV~STMENT ~'RUST v. PUR:<:ACllANDRA & co. (Vau/ia/ingom, I. ) 25 5 conclusion that when a claim is made under the Abolition Act, the Claims Officer will h1vc, straight away, to determine the principal amount and interest under sub-s. ( 2) of s. 20 without considering the question as to wh~th~r the claim h true or whether it is barred by any other Jaw, or whether th~ claim is still subsisting. These are all matters which, in our opinion, prop~rly arise for consideration when a Oaims Officer has to determine the princip~I amount under s. 20{1) of the Abolition Act. The expression 'legally and justly due', occurring ins. 20(1), clearly indicates that the first and initial duty of the Claims Officer is to find out whether any principal amount is at all due to the creditor which he is entitled to recover either in law or justly.

It may be that, after arriving, on this aspect, at a conclusion, one way or the other, and depending upon that decision, the Claims Officer will have to adjudicate upon the rights of the parties, having due regard to the various matters mentioned in clauses (a) to (f) of sub-s. (2) of s. 20. We are therefore satisfied that the Board is correct when it held that the provisions of the Money-Lenders Act can be taken into account by the Claims Officer, under s. 20(1) of the Abolition Act. If the provisions of the Money- Lenders Act apply, as they have been applied by the Board, there is no contro-;ersy that the claim under the mortgage of December 18, 1906, must be considered to have been extinguished and that no further amounu will be due, as held by the Board. Th~ r~sult is that the appeal fails and is dismissed. In the circumstances of the case, there will be no order as to costs. G. C. Appeal dismissed.

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