TaxTMI 
TaxTMI 
1940 (3) TMI 12
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.... of objection, but this also was made before the last, mentioned date. The appellant did however rely on the new Section in his petition of appeal, dated 18th August 1939, lodged in the Federal Court, and therefore complied with Order 12, Rule 5, Federal Court Rules. In the circumstances the appellant cannot now be tied down to the grounds mentioned in his supplementary application to the High Court for obtaining the leave. 2. As regards the new Section 13, which the appellant can invoke in the first Court even if the Federal Court were not to interfere, it was pointed out in (1939) FCR 193 Shyamakant Lal v. Rambhajan Singh (1939) 26 AIR PC 74 at pp. 216-217, that although this Court was not bound to take the new Act into account, it had certainly power to do so. The wordings of the new Section 7 are more imperative and prevent a Court in any appeal or revision also from passing a decree for an amount of interest in excess of that specified. Although this Court would not itself pass a decree in this case, nevertheless, it may remit the case to the High Court with a declaration as to the judgment and decree which are to be substituted for the judgment and decree appealed from ; a....
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....n some other shorter ground. As a special case, the Federal Court has also power to grant leave for taking such a ground under Section 205(2), Government of India Act, and can also take account of the new Act suo motu. The High Court conceded, or at any rate assumed, that if the provisions of the old Section 11 had been applicable, the plaintiffs could not have got a decree for more than the principal amount because the total amount of the loan advanced had been about Rs. 3700 only while the amount repaid by way of interest was Rs. 4953. The plaintiff-respondent relies on the last words of Section 7, viz. no Court shall...pass a decree for an amount of interest...which... is greater than the amount of loan advanced, or if the loan is based on a document, the amount of the loan mentioned in, or evidenced by such document. 4. They contend that the suit is based on chithas and therefore the Court cannot go behind the amount of the loan mentioned in and evidenced by the last ehitha. The Bihar Money-lenders Act contains several definitions. 'Principal' is defined in Section 2(h) as meaning in relation to a loan the amount actually lent to the debtor ; whereas under Section....
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.... document on which the loan is based. 7. Unfortunately the expression "if the loan is based on a document" used in Section 7, is rather unhappy and liable to create an ambiguity. Ordinarily, one speaks of a claim being based on a document and not a loan being based on it. The concluding words however make the meaning clear as they refer to the amount of loan (i) mentioned in or (ii) evidenced by such document. Presumably by the expression "the loan based on a document" is meant the loan which has a document for its title deed, on which the suit may have to be brought to recover it. The words in the old Section 11, after the word 'document,' which have been deleted now, were "on which the suit is based." Those words were likely to suggest that for the purposes of the total amount of the loan, the document which created a fresh cause of action for the suit was conclusive. That would have included accounts stated and adjustments (which give rise to a fresh cause of action), though probably not acknowledgments. Presumably it was to remove the possibility of such a construction that the Legislature has deleted those words. The addition of the words "or evidenced by it" does n....
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....;bond' is sometimes taken in a wider sense, but there too the instrument must ordinarily bind the obligor for the payment of a sum of money to the obligee. In Mozley and Whitley's Law Dictionary, Edn. 5, 1930, p. 42, it is stated to mean an instrument under seal, whereby a person binds himself to do or not to do certain things. 11. In Stroud's Judicial Dictionary, Edn. 2, p. 204, 'bond' is stated to mean "an obligation by deed." On the other hand, in Wharton's Law Lexicon, Edn. 14, p. 137, a 'bond' is stated to mean "a written acknowledgment or binding of a debt under seal," and at p. 308, 'deed' is defined as "a formal document on paper or parchment duly signed, sealed and delivered." The definitions in the two Indian Acts make it still clearer that the instrument itself must oblige the obligor to the obligee, that is to say the language of the instrument itself must expressly create the obligation. Although the word 'bond' has not been defined in the Money-lenders Act, it is fair to infer that the word has been used in it in the sense commonly understood in this country in view of the definitions in the Indian Acts, and not in th....
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.... make the last portion of Section 7, applicable against the defendant, the plaintiffs have to argue that the document referred to in the Section must here mean the chitha on the last page of the defendant's account in the plaintiff's account book. As there were cross entries in the plaintiff's accounts, and the payments made were entered on the debit side and deducted from the amounts on the credit side, and then a final balance struck, it is obvious that the entry at the bottom of the last chitha was not a mere acknowledgment of liability like the endorsement at the top, but that it was a record of an adjustment and an account stated: AIR 1934 PC 144. Siqueira v. Noronha (1934) 21 AIR PC 144 It therefore follows that there was, by necessary implication, a promise to pay the amount due with interest, although with the exception of the words "due by me" there were no other words which could convey an express promise to pay: AIR 1934 PC 147. Bishun Chand v. Girdhari Lal (1934) 21 AIR PC 147 15. The point however is clear that in the year 1929, long before the Money-lenders Act was in contemplation, the intention of the parties was simply to adjust their accounts showin....
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....ntioned or evidenced by a document, if the loan is based on such a document and amounts to a transaction on a bond bearing interest and duly executed. But when a statement of account, not amounting to a bond, itself shows that the whole of the amount mentioned therein is not a loan, but part of it is professedly interest, that interest cannot be accepted conclusively as a part of the loan within the meaning of Section 7. 17. The question then simply resolves itself itself into this: Can the endorsement made by the defendant at the bottom of the last chitha be regarded as "a transaction on a bond bearing interest executed in respect of past liability"? It seems that such a construction would be contrary to the intention of the parties. The last chitha cannot, therefore, be treated as a bond within the scope of the definition of 'loan' in Section 2(f) Accordingly, the amount entered in the last chitha cannot be regarded as the minimum amount behind which the Court cannot go and which it must assume to be the loan. In this view the first portion of the Section comes into play and the Court is debarred from granting a decree for an interest in excess of the principal amount ....
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....39 (7 of 1939), which had been passed after the decision of this case in the High Court and had in substance reproduced the provisions of Section 11 of the Act of 1938 with retrospective effect. As the earlier case before this Court had been heard ex parte, the learned Counsel for the respondent desired, and was permitted, to urge certain contentions against the view taken in that case as to the right of a debtor in similar circumstances to claim the benefit of the new Act. A question was also raised as to the extent of the benefit which the defendants would be entitled to on the true construction of Section 7 of the new Act. 20. The objection to the right of the appellant to claim the benefit of the new Act in the proceedings before this Court was raised not only in this appeal, but in three other cases which were heard in course of January and February this year. With a view to facilitate a full argument of this objection, we agreed to defer pronouncing our judgment till all the four appeals had been heard. Some aspects of this objection have been dealt with in the judgment in case No. 13 of 1939 Subhanand Chowdhary v. Apurba Krishna Reported in (1940) 27 AIRFC 7 and in my lea....
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....swardhari Singh, but also by two of his undivided younger brothers, one of whom was the father of defendant 2. From this date, the interest payable on the account was, by agreement between the parties, increased from fourteen annas to one rupee per cent. per monsem. The accounts continued up to 12th October 1929, that is, the end of the Mahajani year corresponding to fasli 1336. Though the only subsequent advance by the creditor seems to be a sum of Rs. 5 paid in cash in fasli 1334, the receipt side of the accounts shows several items of payments from time to time. The way that the account books were maintained has been described in the judgment of the High Court as well as in the judgment just delivered by my learned brother. The result of the account was that though the total amount of the loan, including the unpaid balance of the purchase money, was only about Rs. 3700 and an amount of about Rs. 4953 had been paid by way of interest, the acknowledgment on 12th October 1929 showed that a sum of Rs. 11,249-9-9 was then due from the defendants to the creditor : vide entry marked Ex.1(z)(a). It may be mentioned in passing that it was stated before us by the learned Counsel for the r....
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....contention the learned Counsel for the respondents relied on the decisions of the Judicial Committee in (1934) AC 332 Siqueira v. Noronha (1934) 21 AIR PC 144 and 56 All 376 Bishun Chand v. Girdhari Lal (1934) 21 AIR PC 147 and on certain observations of the Lahore High Court in AIR 1925 Lab 75. Narain Das v. Miran Bukhat (1925) 12 AIR Lah 75 24. The authorities cited on behalf of the respondents themselves recognize the distinction between cases in which a statement of account signed by the debtor may be intended to be only an admission of the correctness of the account or a mere acknowledgment of a debt and cases in which it may be an "account stated" in the real sense. (See also the antithesis recognized in Order 20, Rule 8 of the English Supreme Court Rules.) Whether a particular statement of account falls in the one category or in the other is a question to be determined with reference to the circumstances of each case. An examination of the chithas, Ex. 1 series, in the present case leads me to think that the signed entry at the end of each year followed by a corresponding entry at the commencement of the next year could only have been intended to serve as an admission by ....
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....clude in the definition of "loan," documents executed in respect of a past liability (as distinguished from a contemporaneous advance), the Legislature used the expression "transaction on a bond ... executed in respect of a past liability." Here again the expression "transaction on a bond" is perhaps open to criticism and I am not sure if the word "bond" in this context was intended to be limited to a formal deed or to documents of the kind specified in the definition of "bond" in the Stamp Act. But I am unable to believe that mere debit entries or balance entries in accounts (even though signed by the debtor) could have been intended to be comprised in the expression "transaction on a bond." It seems to me at least necessary that the document relied on should have been intended to embody the contract between the parties and should ex facie show a promise or undertaking to pay before it can be spoken of as a "bond." The Indian law has clearly emphasized the distinction between a promise to pay and a mere statement or acknowledgment of liability : see the antithesis in Article 1, Stamp Act, and the way that an IOU is dealt with in the illustrations to Section 4, Negotiable Instrumen....
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....that statement, because, in either alternative, the amount to be taken note of is the amount of loan and the word "loan" must be understood in the light of the definition clause already referred to. It must also be borne in mind that in both the Acts this portion of the Section is introduced by the same opening words "if the loan is based on a document." 27. Even if it were possible to regard the accounts in this case as the document on which the loan is based, it does not seem to me possible or reasonable to confine our attention, as the learned Counsel for the respondents invited us to do, to the particular entry marked Ex. I (z) (a). The account books must be taken as a whole and as the entries therein clearly show what items represent principal and what items interest, the Court must arrive at the "amount of the loan" by excluding the items that represent only interest. The scheme of the Bihar Money-lenders Act emphasizes the distinction between liability in respect of the principal and liability in respect of the interest and whether a party relies on the words "mentioned in" or on the words "evidenced by" at the end of Section 7 of the Act of 1939, the "amount of loan" mus....