1981 (8) TMI 244 - HC - Indian Laws

Court Decree: LIC awarded Rs. 94,917.14; defendants to pay Rs. 1,10,694.65 expenses; interest at 7-1/2% p.a.

The court issued a preliminary decree in favor of the plaintiff, Life Insurance Corporation of India (LIC), for a total of Rs. 94,917.14 on principal and ... Rule of damdupat - application of Section 30 of the Punjab Relief of Indebtedness Act, 1934 - inclusive definition of 'debt' in Section 7(1) - narrow definition of 'debtor' in Section 7(2) - statutory protection against usury / limitation on decree to twice the amount advanced - mortgagee's entitlement to reimbursement of expenses and interest under mortgage deed and Order 34 Rule 4 CPCRule of damdupat - application of Section 30 of the Punjab Relief of Indebtedness Act, 1934 - inclusive definition of 'debt' in Section 7(1) - narrow definition of 'debtor' in Section 7(2) - Whether Section 30 of the Punjab Relief of Indebtedness Act, 1934 (the rule of damdupat) applies to the mortgage suit brought by Life Insurance Corporation, and whether the term 'debt' in Section 7(1) must be read independently of the narrower statutory definition of 'debtor' in Section 7(2). - HELD THAT: - The Court held that Section 30 attracts the rule of damdupat whenever a suit is in respect of a 'debt' as defined in Section 7(1), irrespective of whether the person owing the debt falls within the narrower statutory category of 'debtor' in Section 7(2). The Act's scheme shows Section 7(2) supplies a limited, exhaustive definition of 'debtor' for the purposes of Part IV (Debt Conciliation Boards), whereas Section 7(1)'s use of the word 'debt' is inclusive and of wider import. The High Court full bench decision in Mangat Rai v. Kidar Nath, affirmed by the Supreme Court, supports reading Section 7(1) broadly so that all persons who owe liabilities covered by that clause may invoke Section 30's protection. Consequently the Life Insurance Corporation, though an instrumentality of the State and mortgagee, is subject to Section 30's embargo on decrees exceeding twice the amount actually advanced less amounts received. [Paras 15, 16, 17, 19, 21]Section 30 applies: the term 'debt' in Section 7(1) is inclusive and attracts the rule of damdupat regardless of the limited definition of 'debtor' in Section 7(2); the decree cannot exceed twice the amount actually advanced less amounts already received.Statutory protection against usury / limitation on decree to twice the amount advanced - mortgagee's entitlement to reimbursement of expenses and interest under mortgage deed and Order 34 Rule 4 CPC - Quantification of amounts payable to the Corporation in view of Section 30 and the mortgage terms: the principal cap under Section 30 and the mortgagee's claim for expenses and interest. - HELD THAT: - Applying Section 30(2), the Court concluded that the decree in respect of the mortgage debt is limited to twice the amount actually advanced less amounts already received; on the parties' agreed computation that yields Rs. 94,917.14 payable on account of principal and interest to date. Separately, expenses incurred by the Corporation in managing the mortgaged property (agreed at Rs. 1,10,694.65) are recoverable, together with interest on those expenses at the rate stipulated in the mortgage deed (71/2% p.a.), and Order 34 Rule 4 CPC supports allowance of interest on such expenses. The Court therefore passed a preliminary decree for the capped debt and allowed recovery of expenses with interest, directed payment within six months with simple interest thereafter at the agreed rate, ordered turnover of the specified bank deposit to the Corporation (already accounted for in computations), and permitted defendants to claim a particular insurance refund from the insurer. [Paras 23, 24, 25, 26, 27]Preliminary decree entered for Rs. 94,917.14 (principal and interest within Section 30 cap); Corporation entitled to recover agreed expenses and interest thereon; deposit in court to be paid to Corporation; six months' time for payment with simple interest thereafter; defendants permitted to seek specified insurance refund.Final Conclusion: The Court applied Section 30 of the Punjab Relief of Indebtedness Act, 1934, holding that the inclusive definition of 'debt' in Section 7(1) attracts the rule of damdupat irrespective of the narrow 'debtor' definition in Section 7(2); consequently the decree on the mortgage is capped at twice the amount advanced less amounts received, the agreed computations yielded a preliminary decree for Rs. 94,917.14, the Corporation is entitled to recover management expenses and agreed interest, the specified bank deposit is to be paid to the Corporation, and defendants may claim the identified insurance refund. Issues Involved:1. Applicability of Section 30 of the Punjab Relief of Indebtedness Act, 1934.2. Definition and scope of the term 'debt' as per Section 7(1) of the Act.3. Definition and scope of the term 'debtor' as per Section 7(2) of the Act.4. Calculation of the amount due to the plaintiff.5. Entitlement to expenses and interest on expenses.6. Refund of fire insurance premium.Detailed Analysis:1. Applicability of Section 30 of the Punjab Relief of Indebtedness Act, 1934:The primary issue is whether Section 30 of the Punjab Relief of Indebtedness Act, 1934, as extended to Delhi, applies to the suit filed by the plaintiff, Life Insurance Corporation of India (LIC). The LIC contended that Section 30 does not apply, claiming interest at 7-1/2% p.a. with half-yearly rests as per the mortgage deed. Conversely, the borrowers argued that Section 30 forbids the court from passing a decree for a sum larger than twice the amount actually advanced, less any amount already received by the creditor. The court emphasized that Section 30 codifies the ancient doctrine of damdupat, which protects borrowers from oppressive exactions by lenders.2. Definition and Scope of the Term 'Debt' as per Section 7(1) of the Act:Section 7(1) defines 'debt' as inclusive of all liabilities of a debtor in cash or kind, secured or unsecured, payable under a decree or order of a civil court or otherwise, whether mature or not. The court clarified that the term 'debt' in Section 7(1) includes mortgage debts and is not limited by the narrower definition of 'debtor' in Section 7(2). The court affirmed that the rule of damdupat applies to all debts as defined in Section 7(1), irrespective of the status of the debtor.3. Definition and Scope of the Term 'Debtor' as per Section 7(2) of the Act:Section 7(2) defines 'debtor' as a person who owes a debt and fulfills one of three additional qualifications related to agriculture or limited assets. The court concluded that the term 'debtor' in Section 7(2) is a narrower definition intended for the purposes of Part IV of the Act, which deals with proceedings before Debt Conciliation Boards. This narrower definition does not restrict the application of Section 30, which is based on the broader definition of 'debt' in Section 7(1).4. Calculation of the Amount Due to the Plaintiff:The court determined that the amount advanced by the LIC was Rs. 3,18,335.67. Applying the rule of damdupat, the court could only pass a decree for twice the amount actually advanced, less any amount already received by the LIC. After accounting for payments received, the amount due to the LIC was Rs. 94,917.14. This calculation was based on an agreed statement marked as Annexure 'A' on the file.5. Entitlement to Expenses and Interest on Expenses:The LIC incurred expenses amounting to Rs. 1,10,694.65 during the management of the property. The court agreed that the LIC was entitled to interest on these expenses at the rate of 7-1/2% p.a., as provided in the mortgage deed and under Order 34, Rule 4 read with Rule 2 of the Civil Procedure Code. The interest on expenses amounted to Rs. 97,000.00.6. Refund of Fire Insurance Premium:The defendants paid Rs. 1020 to the Oriental Fire and General Insurance Company Ltd. for fire insurance premium, while the LIC also paid Rs. 476 for the same property. The court allowed the defendants to claim a refund of Rs. 1020 from the insurance company, as the LIC had no objection to this claim.Judgment:The court passed a preliminary decree for Rs. 94,917.14 on account of principal and interest till the date of judgment. The LIC was also entitled to Rs. 1,10,694.65 for expenses incurred and Rs. 97,000.00 as interest on these expenses. The defendants were given six months to pay the amount, with the LIC entitled to simple interest at 7-1/2% p.a. on the amounts of Rs. 94,917.14 and Rs. 1,10,694.65 till the date of payment. Additionally, Rs. 39,595.36 deposited with Grindlays Bank was to be paid to the LIC, and this amount was already accounted for in the calculations.