Signed account entry does not control loan amount; recovery under Bihar money-lenders law is limited to principal and revised interest.

The Bihar Money-lenders (Regulation of Transactions) Act, 1939 could be applied in a pending Federal Court appeal, allowing retrospective cognizance of the new legislation. A signed chitha or balance entry was not treated as the governing document for fixing the loan under Section 7 because it recorded an acknowledgment of balance due and interest, but did not contain an express undertaking to pay or constitute a fresh bond. Recovery was therefore confined to the principal amount, with interest revised within the statutory limit and the broader claim for past interest disallowed.

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Issues: (i) Whether the new Bihar Money-lenders (Regulation of Transactions) Act, 1939 could be taken into account in the appeal and applied to the pending proceedings; (ii) whether the signed chitha entry constituted the document on which the loan was based, or a bond executed in respect of past liability, so as to fix the amount recoverable under Section 7; (iii) whether the defendants were entitled to relief restricting the decree to the principal amount with interest recalculated accordingly.

Issue (i): Whether the new Bihar Money-lenders (Regulation of Transactions) Act, 1939 could be taken into account in the appeal and applied to the pending proceedings.

Analysis: The new Act came into force after the High Court judgment, but before the appeal was finally disposed of in the Federal Court. The appeal remained competent, and the Court could take cognizance of the retrospective legislation to do justice between the parties. The appellant was not confined to the grounds stated before the High Court where the new enactment was not then in existence.

Conclusion: The new Act could be applied in the appeal.

Issue (ii): Whether the signed chitha entry constituted the document on which the loan was based, or a bond executed in respect of past liability, so as to fix the amount recoverable under Section 7.

Analysis: Section 7 distinguishes between the loan advanced and interest, and its reference to a loan based on a document must be read with the definition of loan in Section 2(f). A mere account entry or statement of balance, even if signed by the debtor, does not by itself become a bond unless it contains an express undertaking to pay. The chitha here showed a yearly adjustment of accounts and an acknowledgment of the balance due, including interest, but not a fresh bond or a document embodying the loan for purposes of Section 7. The amount stated in that entry could not therefore control the statutory ceiling as a loan amount.

Conclusion: The chitha entry was not the governing document for fixing the loan amount under Section 7.

Issue (iii): Whether the defendants were entitled to relief restricting the decree to the principal amount with interest recalculated accordingly.

Analysis: Since the amount already realized as interest exceeded the principal advanced, further interest could not be decreed beyond the statutory limit. The decree below had to be modified so that recovery was confined to the principal amount, with pendente lite and future interest at the rate directed by the Court. The broader claim for past interest was disallowed.

Conclusion: The defendants obtained partial relief and the decree was reduced accordingly.

Final Conclusion: The appeal succeeded only to the extent of restricting recovery to the principal sum and revising the interest component, with the lower courts' decrees set aside to that extent and the matter remitted for a revised decree.

Ratio Decidendi: For purposes of Section 7 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, a mere signed account statement or balance entry does not amount to a bond or to the document on which the loan is based unless it itself embodies an express obligation to pay; the statutory limit is therefore determined by the principal loan amount and not by a balance that includes accrued interest.

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