TaxTMI 
TaxTMI 
1997 (5) TMI 428
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....at they are borrowers and are being made to pay in excess of the limit prescribed by this section in respect of a loan to them and this they are not liable to do. The question that arises on this contention is whether what the appellants are sought to be made liable to pay is in respect of a loan within the meaning of the Act. 2. The litigation but of which this appeal arises started in 1923 and the proceedings in it have been exceedingly numerous. For the purpose of this appeal, however, it is necessary to refer to a very few of those proceedings. The respondent Durga Prasad Chamria--purchased at a Court sale in execution of a decree a property in Howrah in West Bengal for a sum of Rs. 8,61,000. He paid 1/4th of the price, namely Rs. 2,15,250 on July 14, 1920, which perhaps was the date of the purchase and the balance, Rs. 6,45,750, on August 20, 1920. Later on in the same year an agreement was arrived at between him and the appellants Radha Kissen Chamria and Moti Lal Chamria and their mother Anardeyi Sethani since deceased for the sale of the property to the latter for the same sum at which he had purchased it himself, namely, Rs. 8,61,000 but with interest at 6 3/4% per a....
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....the said property shall remain charged with payment thereof. But the plaintiff will be at liberty at his option to have the decree executed without enforcing the charge. 4. It is declared that the said property shall belong to Anardeyi Sethani from the date of the decree. 5. The Receiver appointed in this suit will be discharged at once and will pass his accounts before this Court. 6. Each party will bear his or her own costs and expenses of and incidental to this suit. The Schedule 'A' above referred to. Date of payment by the plaintiff Amount. 14th July, 1920 Rs. 2,15,250-0-0 20th August, 1920 &nbs....
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....s also claimed under the Act a refund of this excess. The contentions of the appellants were rejected by the Trial Judge. The appellants then went up in appeal to the High Court at Calcutta but the appeal also failed. From the judgment of the High Court this appeal to us has been preferred. 4. The question is whether the appellants are entitled to the benefit of Section 30 of the Bengal Money Lenders Act. Section 30 states that no borrower shall be liable to pay any sum in excess of the limit therein specified. The appellants have, therefore, first to establish that they are borrowers. The term borrower has been defined in Sub-section (2) of Section 2 of the Act as follows : "Borrower" means a person to whom a loan is advanced and includes a successor-in-interest or surety;" We are not here concerned with a successor-in-interest or a surety. The appellants have, therefore, to show that they are persons to whom a loan was advanced. Section 30 also says that the protection given by it is in respect of a loan. So again the appellants have to establish that they are being made to pay moneys in respect of a loan advanced to them. 5. Now a "loan" has been defined in Section 2....
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....the purchasers. All that we have here is an agreement by the vendor to accept payment of a portion of the moneys payable under the agreement for sale immediately and the balance in certain instalments and to be paid interest on the purchase money at the same rate which was provided in the agreement for sale. The compromise decree, no doubt, vested the property agreed to be sold in one of the purchasers and created a charge on it for the purchase money unpaid for the time being. The vendor under the agreement for sale had thus been converted into an unpaid vendor who had conveyed to the purchasers the property agreed to be sold and had been given a charge on the property for the unpaid purchase money. An unpaid vendor who has transferred the property has a similar charge Under Section 55(4)(b) of the Transfer of Property Act. The only thing that was new in the compromise decree was that the moneys were payable in a number of instalments instead of at once. That cannot show that the price due had become a loan. The compromise decree does not in our opinion therefore alter the intrinsic nature of the moneys due to the vendor. They were and remained unpaid purchase moneys and had....
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.... consideration. If the conclusion be that it was really an interest bearing investment it would be a loan." Having set out the tests for determining what made a transaction in substance a loan the learned Judge proceeded to examine the facts of the ease to see if the tests were satisfied and observed as follows: "I will now examine the facts of the case we have before us, Fateh Chand Mahesri is admittedly a money lender. The interest which is provided for in Ex. 2 (Mortgage for securing Rs. 2,330) is the interest which he usually charged in money lending transactions. It is 15 per cent. per annum with yearly rests--a rate which he charged in his first mortgage (Ex. 1) for Rs. 7,000 which admittedly represented a loan transaction. In his books of account he entered the transaction as a loan transaction. The unpaid price was shown in these accounts to have been wiped off by the advance from the loan account. In these circumstances I think that it can be held that the price was paid off by a notional advance made by Fateh Chand to Akimuddin, the real intention of the former being investment of money at his usual rate of money-lending. I accordingly hold that the mortgage Ex. 2 a....