s Nos 98 99 100 and 101 of 1950
139 Appeals from the orders of the High Court of Judicature at Patna Manohar Lall and Imam JJ in Miscellaneous Ap peals Nos
108 to 111 of 1948
Shambhu Barmeswar Prasad and Ramanugrah Prasad for the appellants
HJ Umrigar for the respondents
January 12
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J
The decision of these four ap peals which are connected with each other and which have arisen out of orders made by the High Court of Patna in four Miscellaneous Appeals depends on the interpretation of section 7 of the Bihar Moneylenders Regulation of Transac tions Act 1939
The facts which have led to the appeals are found brief ly stated in the petition filed by the present appellants in the 3rd Court of Sub Judge Patna and may be re stated here for convenient reference  The father of the petitioners borrowed Rs 40000 from the guru ancestor of the decree holder under mortgage bond dated 11 1 1893
Out of Rs 40370 7 6 interest and compound interest up to 4 1 1910 Rs 32370 7 6 was paid in cash and for the balance Rs 8000 interest and Rs 40000 principal ie for Rs 48000 a Mortgage Suit No 14 of 1910 was filed in1st Court of the Sub Judge Patna and in lieu of the claim and cost of the said suit two fresh mortgage bonds were executed on 11 7 1910 viz one for Rs 40000 and the other for Rs 9488 and the latter bond was satisfied by payment of Rs 15835 in cash
With respect to the above bond of Rs 40000 dated 11 7 1910 the petitioners paid Rs 38530 13 6
Mort  gage Suit No 110 of 1927 was brought in the 3rd Court of the Sub Judge Patna and a decree for Rs 58012 20 was passed on 9 7 1929
Out of this Rs 5000 was paid in cash and for the balance of Rs 53012 12 0 one mortgage bond dated 6 10 1931 was executed for Rs 42000 and on the same date two 140 hand notes were executed viz one for Rs 5000 and one for Rs 6012 2 0
One Suit No 14 of 1933 for both the hand notes was brought in 3rd Court of the Sub Judge and a decree for Rs 15008 2 0 was passed on 28 2 1935
This decree is under execution
 When the decree holder sought to execute the money decree by attachment and sale of the judgmentdebtors  properties stating that they were subject to a mortgage lien of Rs 62272 13 0 under the mortgage bond dated 6 10 1931 the two judgment debtors who are brothers filed objec tions under sections 11 and 16 of the earlier Bihar Money lenders Act III of 1938 and section 47 of the Civil Procedure Code
The petitions two by each of them were filed separately by the brothers
They urged that on a proper calculation under section 11 no lien was subsisting on the properties owing to payments made towards the mort gage debt amounting to Rs 92394 2 0
The Subordinate Judge held that this plea of the judgment debtors could not be entertained in the Miscellaneous case before him relating to the execution and all that could be done was to notify the mortgage encumbrance without deciding anything as to the correctness of the amount claimed to be due under it and this conclusion was partly based on the fact that section 16 of the Act had been declared by the High Court void
Ap peals taken to the High Court were dismissed
The judgment debtors thereupon preferred an appeal to the Feder al Court contending that sections 7 and 13 of the new Act corresponding to sections 7 and 11 of the old Actwere applicable and that it was the duty of the court to estimate the value of the property after making the necessary calcu lations under section 7 with reference to the lien
The decision of the Federal Court is reported in Ramnandan Prasad Narain Singh and Another vs Kulpati Shri Mahanth Goshwarni Madhwanand Ramji1
The case was remitted back to the High 1 141 Court giving liberty to the appellants to file an applica tion under section 13
In answer to a fresh application for execution dated 2 7 1042 the two brothers filed the same objections as before
Miscellaneous Cases Nos 45 and 46 of 1942 related to sections 7 and 13 of the Bihar Money lenders Act and Miscellaneous Cases Nos 50 and 52 of 1042 related to the objections under section 47 of the Code of Civil Procedure
The Subordinate Judge held that the amount of the loan should be taken as the amount mentioned in the mortgage deed of 1931 and not the amount advanced in 1893 and that a sum of Rs 70840 was still due on the bond
He determined the market value of the several properties given as security adopting 16 times the net income as the basis
Appeals to the High Court were numbered as MA 108 to 111 of 1943 and they were heard by Manohar Lall and Imam JJ
They modified the order of the lower Court in certain re spects
Even according to them the amount of the loan was what was mentioned in the mortgage bond of 6 10 1931 but as a sum of Rs 11855 3 0 had been repaid expressly towards the principal amount after the date of the bond that amount became reduced to Rs 28150
Adding an equal sum by way of interest which according to them was the maximum amount permitted to be allowed under section 7 of the Act the total liability was stated to be Rs 56300 and a charge was declared on the property for this amount
They also directed that the valuation of the property should be fixed at twenty times the net income and not sixteen times
It is from this order that the present appeals have been preferred
Two points were urged on behalf of the appellants namely a that the decree holder was barred by construc tive res judicata from contending that the construction placed upon section 7 by the judgmentdebtors was wrong and b that in applying section 7 we must consider the origi nal amount of loan of Rs 40000 given in the year 1893 and allow the claim 142 of interest only for that maximum sum after taking into account all sums paid by the appellants and their predeces sors towards interest since 1893
The first point is entirely without substance
When the decree holder contended that section 11 of the Bihar Money lenders Act 1938 was declared void and ultra vires and that therefore section 7 of the new Act which corresponded to section 11 was also inapplicable the judgment debtors pleaded that they were entitled to the benefit of section 7 of the new Act
The Federal Court held in Ramnandan Prasad Narain Singh and Another vs Kulpati Shri Mahanth Goshwami Madhwanand Ramji1 that the judgment debtors present appellants were entitled to claim the benefit of the provi sions of the new Act when the executing court proceeded under section 13 to determine the value of the properties to be sold
The correct interpretation of section 7 was not in question between the parties
To say that the appellants were entitled to take advantage of the provisions of section 7 is entirely different from the contention that the inter pretation sought to be put by them on section 7 was the right one
The Federal Court was not dealing with any question of interpretation at all
It is impossible to see where the doctrine of constructive res judicata comes in so as to be of help to the appellants
The second question raised on their behalf relates to the true meaning of section 7 of the Bihar Moneylenders Regulation of Transactions Act VII of 1939 which is in these terms 7
Notwithstanding anything to the contrary con tained in any other law or in anything having the force of law or in any agreement no Court shall in any suit brought by a money lender before or after the commencement of this Act in respect of a loan advanced before or after the com mencement of this Act or in any appeal or proceedings in revision arising out of such suit pass a decree for an amount of interest for the period preceding the institution of the suit 1 143 which together with any amount already realised as interest through the court or otherwise is greater than the amount of loan advanced or if the loan is based on a document the amount of loan mentioned in or evidenced by such document
 In the present case the original loan of Rs 40000 was advanced as early as 11 1 1893
The appellants j contend that for the purposes of calculating the interest to be decreed prior to the date of the suit the loan advanced must be taken to be the original sum and that if an account is taken of all the sums received by the creditor as interest from that date up to the date of the suit there would be nothing due for interest
On the other hand the decree holder urges that having regard to the latter part of the section the loan must be taken to be the amount mentioned in the mortgage bond dated 8 10 1931 namely Rs 42000
Whichever method of calculation is adopted it must be remembered that it has to be made not for the purposes of passing any decree on the mortgage loan but for estimating under section 13 of the Act the value of the properties to be brought to sale in execution of the money decree against the appellants
As pointed out by Sir Maurice Gwyer CJ in Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Otherse Section 7 of the Act of 1937 is no doubt extremely obscure and illdrawn
 The true intention of the framers of the Act is somewhat difficult to gather
But the Patna High Court has been consistently placing upon the section an interpretation which is opposed to the contention of the appellant in these proceedings
The point came up expressly for decision in Singhesh war Singh and Others vs Madni Prasad Singh Others2 where a mortgage bond was executed on 31 8 1922 for a sum of Rs 2000 which was the balance of the principal and inter est due under a mortgage bond of the 11th of October 1912 for 1 2ATR 1940 Pat
65 19 144 Rs 1391
The judgment debtors raised the plea that the court should go back to the earlier bond of 1912 and that as a sum of Rs 1512 had been paid as and by way of interest towards that bond no decree could be passed against them for more than the principal sum of Rs 1391
The learned Judges rejected this contention and took the amount stated in the document of 1922 namely Rs 2000 as the loan and they held that the plaintiffs were entitled to get a decree for interest for a sum not larger than Rs 2000 as no payment had been proved to have been made after the execution of the bond
The same view was taken in Lal Singh vs Ramnarain Ram and Others1 and the plain tiffs were awarded a decree on the basis that the loan was to be taken as Rs 2909 8 0 which was the amount for which the hand note sued upon was executed and not Rs 1000 which was the original amount advanced upon an earlier hand note of the year 1924
The case reported in Madho Prasad Singh vs Mukutdhari Singh and Others2 lays down the same position
The Full Bench decision in Deo Nandan Prasad vs Ram Prasad 3 rei terates the same view pointing out the distinction between sections 7 and 8 of the Act and stating that while under section 8 we can go to the original loan in spite of a later document under section 7 the loan must relate to the document on which the suit is based that is the final document and not the original one
In each one of these cases the question of the true meaning of section 7 was pointedly considered
This construction no doubt enables a creditor to circumvent the beneficent provisions of the Act by taking a document for the interest due and adding it to the principal amount
Gwyer CJ points out this difficulty at page 59 in the case Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Others4
If the interpretation does not carry out the intentions of the framers of the Act by reason of unhappy or ambiguous phrasing it is for the Legis lature to intervene
But far from doing so it has 1  Patna 618
2 1941 193 IC661
4 1940 FCR39
145 acquiesced during all these years in the construction which the Patna High Court has been placing upon the section from the very next year after the enactment of the statute
Having regard to the great obscurity in the language em ployed in the relevant provisions and the inaction of the Legislature it is in our opinion legitimate to infer that the view expressed by the Patna High Court is in accord with the intention of the Legislature
The appeals fail and are dismissed with costs only one set in all of them together
Appeals dismissed
Agent for the respondent  RC Prasad


Summary:
Where a fresh document is executed for the amount remaining due on account of principal and interest under a loan ad vanced prior document and a suit is brought for recovery of the amount due under the later document with interest due thereunder the amount of loan mentioned in or evidenced by such document for the purposes of section 7 of the Bihar Money Lenders Regulations and Transactions Act 1939 is the amount mentioned or evidenced by the later document and not that mentioned in the original document which was renewed and the court can pass a decree for an amount of interest for the period preceding the institution of the suit which together with any amount realised as interest after the date of the later document is not greater than the amount of loan mentioned in the later document
The maximum amount that can be so decreed is not the amount which together with the interest realised from the date of the original loan does not exceed the original loan
Singheswar Singh and Other s vs Nadni Prasad Singh and Others AIR 1940 Pat
65 Lal Singh vs Ramnarain Ram and Others AIR 1942 Pat 138 Madho Prasad Singh vs Mu kutdheri Singh and Others  Deo Nandan Prosad vs Ram Prasad ILR 23 Pat 618 Ram Nandan Prasad Narain Singh vs Kulpati Shri Mahanth Goshwami Madhwanand Ramji 1940 FCR 1 Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Others 1940 FCR 39 referred to