Appeal No 441 of 1965
Appeal from the judgment and decree dated September 19 1958 of the Mysore High Court in Regular Appeals Nos 154 and 196 of 1952 53
section Govind Rao and K Rajendra Chaudhuri for the appellants
CB Aggarwala and R Gopalakrishnan for the respondents 1084 The Judgment of the Court was delivered by Bhargava J
One Khanmull whose legal representatives are the appellants in the present appeal instituted Original Suit No 59 of 1949 50 on 10th January 1950 for recovery of amounts due to him on the basis of two simple mortgages dated 12th January 1937 and 14th June 1937 in the Court of the District Judge Civil Station Bangalore
Both these mortgages were executed by three brothers Ahmed Saleh Mohamed Sait since deceased Elias Saleh Mohamed Sait respondent No 1 and Mohamed Saleh Mohamed Sait respondent No 2 while their mother Rahamatbai alias Bhayabai joined them in the execution of the mortgagedeed of 14th June 1937
In the suit in addition to respondents 1 and 2 Hajirabai widow of the deceased brother Ahmed Saleh Mohamed Sait and their sisters Ameenabai and Haneefabai were also impleaded as defendants 3 4 and 5
Further Khan Saheb Abdul Gani Saheb and Khan Saheb Abdul Shakoor Saheb were impleaded as defendants 6 and 7 in their capacity of purchasers of the equity of redemption from the mortgagors
On the foot of the first mortgage the amount claimed was Rs 51200 as principal and interest while on the foot of the second mortgage the amount claimed as principal and interest was Rs 60200 
The contractual rate of interest was 1 per cent per mensem
The trial court decreed the suit on 27th March 1952 after applying the provisions of section 17 of the Mysore Money Lenders Act No 13 of 1939 hereinafter referred to as the Act
For the purpose of giving effect tothe provisions of section 17 of the Act the trial court held that the principal amount of the two loans was Rs 44000  being the aggregate of the consideration shown in the two mortgage deeds and consequently allowed as arrears of interest the sum of Rs 44000 
The preliminary decree was therefore granted for a sum of Rs 88000 composed of Rs 44000 as principal and Rs 44000 as interest
The excess interest claimed at the contractual rate of 1 per cent per mensem was disallowed on the ground of the maximum limit for the grant of the total amount of interest laid down in section 17 of the Act
Thereupon both the parties filed appeals in the High Court of Mysore
The High Court held that the trial court had wrongly treated the amounts of Rs 20000 and Rs 24000 as the principal amounts of the original loans and recorded a finding that the principal amounts in fact were Rs 15017 8 0 in respect of the first mortgage deed and Rs 22954 in respect of the second mortgage deed
The High Court thus worked out the aggregate of Rs 3797150P as the principal amount of the two loans advanced under these two mortgage deeds and applying section 17 of the Act granted a decree for this amount as principal together with the same amount as interest
The High Court further held 1085 that this would be the arrears of interest to which the appellants would be entitled up to the date fixed for payment of the redemption money by the judgment of the High Court that date being the 19th March 1959
The High Court also made a direction that the principal amount will carry interest at 6 per annum from the date fixed for redemption till realisation
The appellants have now come up against this decree passed by the High Court by certificate granted by that Court
In this appeal Mr Govinda Rao learned counsel for the
appellants raised only two points
The first point urged was that the High Court was wrong in re opening the accounts in respect of loans prior to
the two mortgage deeds which formed the consideration for the two mortgage deeds in suit and that the
High Court should have held that the principal amount was Rs 44000 for the two mortgages as decided by the trial Court
The second point urged by learned counsel was that the High Court was wrong in fixing the dates up to which the arrears of interest could be calculated for being included in the decree and for prescribing future rates of interest
It was urged that the arrears of interest envisaged by section 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the suit
and the High Court should have granted future interest subsequently instead of granting future interest only with effect from the date fixed for redemption
So far as the first point raised by learned counsel is concerned it appears to us that it is totally misconceived because the language of section 17 of the Act plainly justifies the view taken by the
High Court
Section 17 in prescribing the maximum amount of arrears of interest to be allowed refers to the principal of the original loan and not the principal of the loan
If the latter expression had been used it could have been argued in the present case that the sums of Rs 20000 and Rs 24 000which purported to be the principal amounts of the two loans evidenced by the two mortgage deeds in suit were the principal amounts of the loans to be taken into account in working out the maximum amount of interest permissible under section 17 of the Act
The expression the principal of the original loan makes it clear that in determining the maximum amount of arrears of interest allowable the Court must go behind the transaction of the loan and find out what was the actual cash originally advanced as principal and ignore all interest that may have been added subsequently to that original advance in order to make up the consideration for the loans in suit
In the present case therefore the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out what were the actual cash amounts origi 1086 nally advanced which together with interest and after adjustment of accounts formed the principal amounts for the two mortgagedeeds
It was admitted by counsel for both parties before us that the figures accepted by the High Court as the principal amounts of the two loans are correct if the original cash advances are treated as the principal amounts of the original loans
It is therefore clear that on the plain language of section 17 of the Act the High Court was right in holding that the aggregate of the principal amounts of the original loans was only Rs 3797150 P and
not Rs 44000 and consequently in awarding arrears of interest only to the extent of the same amount and not a larger amount
On the second question we are unable to agree with the view of the High Court that the arrears of interest mentioned in section 17 of the Act mean interest calculated up to the date fixed for redemption
At the same time we are also unable to accept the submission made on behalf of the appellants that the arrears of interest in this section mean arrears of interest up to the date of the suit
It is to be noticed that the section is in the form of a directive to a Court not to pass a decree on account of arrears of interest for a sum greater than the principal of the original loan
This language clearly gives an indication of the intention of the Legislature
Obviously the directive is to be carried out by the court at the time of passing the decree and consequently it would be at that time that the court will see how much it is awarding for arrears of interest
The maximum prescribed for the arrears of interest must therefore be held to be the maximum amount in respect of interest payable up to the date of the decree when the court carries out the directire laid down in this section
In the present case the trial Court passed the decree on the 27th March 1952 and consequently the amount of Rs 3797150 P awarded as arrears of interest must be the arrears of interest due up to that date
The High Court in our opinion was not correct in holding that these arrears of interest will cover interest due up the date fixed for redemption by the High Court
In this connection learned counsel for the respondents urged that the arrears of interest envisaged by section 17
of the Act should be held to include interest due up to the date of the decree by the High Court because that is the effective decree granting interest to the mortgagees but this arguments overlooks the principie of law that the decree of an appellate Court takes effect from the date of the decree of the original court
In this case therefore even though the High Court passed the appellate decree at a later date that decree has to
be deemed to have come into 1087 effect from 27th March 1952 which was the date of the decree of the trial Court so that no question can arise of holding that the arrears of interest under section 17 of the Act must be computed up to the date on which the High Court passed the decree
The further point that arose was as to the interest which the appellants could claim after the date of the decree viz 27th March 1952 on the amount decreed
On behalf of the appellants reliance was placed on Order 34 r 11 of the Code of Civil Procedure and it was urged that interest
should be allowed after that date in accordance with the provisions of that rule
The High Court has expressed the opinion that if interest is allowed under r 11 of Order 34 CPC it would be in conflict with section 17 of the Act but we are unable to see any such conflict
Section 17 of the Act confines itself to laying down the maximum of arrears of interest to be allowed up to the date of the decree and is not concerned with the interest that is to be allowed for the period thereafter
Admittedly the Code of Civil Procedure was applicable to this suit and consequently interest subsequent to the date of the decree had to be awarded in accordance with Order 34 r 11 CPC
Under r 11ai interest would be payable on the principal amount found or declared due on the mortgage from the date of the decree up to the date fixed for payment at the rate payable on the principal or where no such rate is fixed at such rate as the Court may deem reasonable
In this case the date of the decree by the trial Court was 27th March 1952 while the date fixed for payment became 19th March 1959 as a result of the decree of the High Court
The interest for this period has to be calculated in accordance with r 11ai of Order 34 CPC on the principal amount of Rs 3797150 P As regards the rate it is true that under the mortgage deeds the interest was payable  1 per mensem but under the provisions of the Act read with the provisions of the Usurious Loans Act Mysore Act IX of 1923 the fair interest payable on the loan would be  9 per cent per annum and it is at this rate that the interest must be calculated on this principal amount for this period
In addition under r 11aii of 034 CPC interest  6 per annum has to be allowed on the amount decreed for costs charges and expenses incurred by the appellants up to the date of the preliminary decree
A further direction that is necessary is that interest under r 11 b of 034
CPC will be payable up to the date of realisation or actual payment on the aggregate of the two principal sums just mentioned  6 per annum which must be deemed to be reasonable as interest at that rate is ordinarily awarded in all decrees in respect of future periods
1088 The result is that the decree passed by the High Court will have to be amended in respect of calculation of interest in the manner indicated by us above
The appeal is partly_ allowed to this extent
In the circumstances of this case we direct parties to bear their own costs of this appeal
GC Appeal partly allowed


Summary:
The predecessor in interest of the appellants filed a suit under two mortgages claiming as principal and interest in respect of the first mortgage a sum of Rs 51200 and in respect of the second mortgage a sum of Rs 60200
The trial court applying section 17 of the Mysore Money Lenders Act 1939 held that the principal amount of the loan in the case of the first mortgage
deed was the consideration shown therein namely Rs 20000 and similarly the principal amount under the second mortgage was Rs 24000
Accordingly the trial court passed a decree for the amount of Rs 44000 towards principal under the two mortgages and an equal amount as laid down in the aforesaid section 17 towards interest
The High Court in appeal held that the principal amount of the original loan was Rs 15017 8 0 in respect of the first mortgage and Rs 22954 in respect of the second mortgage the aggregate being Rs 3797150 Np
The High Court therefore passed a decree for Rs 3797150 Np
as principal and the same amount as interest
The High Court further held that this would be the arrears of interest to which the appellants would be entitled up to the date fixed for payment of the redemption money by its judgment
The High COurt also made a direction that the principal amount would carry interest at 6 per annum from the date fixed for redemption till realisation
The appellant in appeal to this Court by certificate urged i that the High Court was wrong in reopening the accounts in respect of loans prior to the two mortgage deeds which formed the consideration for the two mortgage deeds in suit and it should have held like the trial court that the principal amount was Rs 44000 for the mortgages ii that the arrears of interest under section 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the suit and the High Court should have granted future interest subsequently instead of granting it only with effect from the date fixed for redemption
The Court also had to consider whether there was a conflict between O 34 r 11 of the Code of Civil Procedure and section 17 of the Act
HELD i Section 17 in prescribing the maximum amount of arrears of interest to be allowed refers to the principal of the original loan and not the principal of the loan
If the latter expression had been used it could have been argued in the present case that the sums of Rs 20000 and Rs 24000 which purported to be the principal amounts of the two loans evidenced by the two mortgage deeds in suit were the principal amounts of the loans to be taken into account in 1083 working out the maximum amount of interest permissible under section 17 of the Act
The expression the principal of the original loan makes it clear that in determining the amount of arrears of interest allowable the court must go behind the transaction of the loan and found out what was the actual cash originally advanced as principal and ignore all the interest that may have been added subsequently to that original advance in order to make up the consideration for the loans in suit
In the present case therefore the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out what were the actual cash amounts originally advanced which together with interest and after adjustment of accounts formed the principal amounts for the two mortgage deeds
ii Section 17 is in the form of a directive to a Court not to pass a decree on account of arrears of interest for a sum greater than the principal of the original loan
Obviously the directive is to be carried out by the court at the time of passing the decree and consequently it would be at that time that the court will see how much it is awarding for arrears of interest
The maximum prescribed for the arrears of interest must therefore be held to be the maximum amount in respect of interest payable up to the date of the decree when the court carries out the directive laid down in this section
The decree of an appellate court takes effect _from the date of the decree of the original court so that no question can arise of holding that the arrears of interest under section 17 of the Act must be computed up to the date on which the High Court passed the decree
iii There is no conflict between O 
34 r 11 CPC and section 17 of the Act
Section 17 confines itself to laying down the maximum of arrears of interest to be allowed up to the date of the decree and is not concerned with the interest that is to be allowed for the period thereafter
Admittedly the Code of Civil Procedure was applicable to the present suit and consequently interest subsequent to the date of the decree had to be awarded in accordance with O 34 r 11 CPC
The interest under the mortgage deeds was payable  1 per mensem but under the provisions of the Act read with the provisions of the Usurious Loans Act Mys
Act ix of 1923 the fair interest payable on the loan would be  9  per cent per annum
The Court gave appropriate directions for the calculation of interest