Case: Sardar Samsher Singh Vs. Raja Sardar Narain And Others

whatever the interest due on the contract may amount to, it will be limited to the amount of the principal found still remaining due, on the date of the application. When the Legislature goes further and provides that if prior to the application a decree has been made on the basis of the loan the findings of the Court which passed the decree shall be accepted but forbids such acceptance if such finding is inconsistent with the provisions of S. 14, the intention clearly is that the fact that there has been a decree will not make any difference as regards the duty of the Special Judge to give the applicant the benefit of the provisions of S. 14. When the Court passed the decree, there was no application under the Encumbered Estates Act, and so, there could be no question of the Court then complying with the provisions of S. 14(4) (a). Even so, when the Special Judge has to reject such of the findings as are "inconsistent" with S. 14, he must find out the effect of the several findings of the Court to ascertain whether there is such inconsistency. 11. Where the consequence of the finding of the court which passed the decree is that court which passed the decree is that the provisions of S. 14(4) (a) about the amount of interest due on the date of the application not exceeding the unpaid principal on that date are contravened, the finding should be held to be inconsistent with those provisions. In saying that if in the decree the court did not allow interest as on the date of the suit to exceed the principal then remaining due there is no inconsistency with S. 14(4) (a), the respondents counsel is in effect asking us to read for the words "in so far as they are inconsistent with the provisions of S. 14" the words "in so far as they would have been inconsistent with the provisions of S. 14, if the date of the institution of the suit be deemed to be the date of the application under S. 4". For this we cannot find any justification. Not only would this defeat the beneficial purpose of the legislation under S. 14(4)(a); but this will also not be the natural meaning of the words "in so far as they are inconsistent with the provisions of S. 14." 12. The Chief Courts view that the Special Judge has merely to see whether the Civil Court that passed the decree could have passed the decree which it did pass if that court had to apply the provisions of S. 14, treating the date of the institution of the suit as the date of the application cannot therefore be accepted as correct.The same view had been taken by the Chief Court of Oudh in an earlier decision, of Ramsagar Prasad v. Mst. Shayama, AIR 1939 Oudh 75. A Full Bench of the Allahabad High Court had in Rukun Uddin v. Lachmi Narain ILR (1945) All 307 : (AIR 1945 All 113 ) to consider the question whether a finding in a decree made by a civil court that the creditor is entitled to interest only at the rates specified in U. P. Agriculturists Relief Act was in consistent with the provisions of S. 14 of the U. P. Encumbered Estates Act and was therefore not binding on the Special Judge hearing an application under the U. P. Encumbered Estates Act. They held that such a finding must be held to be inconsistent with the provisions of S. 14 and could therefore not be binding on the Special Judge. There can be no doubt about the correctness of this view, for, as has been pointed out above S. 14(4) (c) provides that the provisions of the U. P. Agriculturists Relief Act shall not be applicable to proceedings under the Encumbered Estates Act. One of the learned Judges Mr. Justice Verma referred with approval in the course of his judgment to the view taken in Ramsagar Prasads Case, AIR 1939 Oudh 75.For the reasons mentioned earlier however we are of opinion that the view in Ramsagar Prasads Case, AIR 1939 Oudh 75 which has been followed by the Chief Court in the present case is wrong. 13. Our conclusion therefore is that the Special Judge is even where there has been a decree by a civil court in respect of a loan bound to follow the provisions of S. 14(4)(a) of the Act so that the amount of interest which he can hold to be due on the date of the application must not exceed the portion of the principal found to be due on the date of the application. Accordingly in the present case the Special Judge should have held the amount of interest due on the date of the application, i.e., October 26, 1936, to amount to rupees one lakh only, that being the principal which was still due on that date. Under the provisions of sub-S. 7 of S. 14 the Special Judge has to "pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in S. 27."It was in view of this provision that the special Judge and High Court allowed interest at the rate of 4 per cent per annum. The proper decree the Special Judge should have passed therefore was one for rupees two lakhs for the loan with permissible interest, plus Rs. 4,314-2-9, Rs. 51-3-0 and rupee one on account of costs, that is, for a total sum of Rs. 2,04,366-5-9 with proportionate costs with interest pendente lite and future interest at the rate of 4 per cent. per annum simple from the date of the application, i.e., October 26, 1936, till realisation.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]On behalf of the decree-holder-claimant it is contended that all that is necessary to save inconsistency with Section 14(4) (a) is that the principle that the amount of interest shall not exceed the amount of the unpaid principal has been followed, in passing the decree and the fact that the result of the finding would be that on the date of the application u/s. 4 of the Act the interest due would exceed the portion of the principal unpaid on such date is of no consequenceThis contention cannot in our opinion be accepted10. The requirement of sub-s. 4(a) of S. 14 is that "the amount of interest held to be due on the date of the application shall not exceed that portion of the principal which may still be found to be due on the date of the application". The words "on the date of the application" cannot be ignored. There can be no doubt that these words "on the date of the application" were deliberately used in the sub-section for the purpose of benefiting the landlord applicant to this extent that whatever the interest due on the contract may amount to, it will be limited to the amount of the principal found still remaining due, on the date of the application. When the Legislature goes further and provides that if prior to the application a decree has been made on the basis of the loan the findings of the Court which passed the decree shall be accepted but forbids such acceptance if such finding is inconsistent with the provisions of S. 14, the intention clearly is that the fact that there has been a decree will not make any difference as regards the duty of the Special Judge to give the applicant the benefit of the provisions of S. 14. When the Court passed the decree, there was no application under the Encumbered Estates Act, and so, there could be no question of the Court then complying with the provisions of S. 14(4) (a). Even so, when the Special Judge has to reject such of the findings as are "inconsistent" with S. 14, he must find out the effect of the several findings of the Court to ascertain whether there is such inconsistency11. Where the consequence of the finding of the court which passed the decree is that court which passed the decree is that the provisions of S. 14(4) (a) about the amount of interest due on the date of the application not exceeding the unpaid principal on that date are contravened, the finding should be held to be inconsistent with those provisions. In saying that if in the decree the court did not allow interest as on the date of the suit to exceed the principal then remaining due there is no inconsistency with S. 14(4) (a), the respondents counsel is in effect asking us to read for the words "in so far as they are inconsistent with the provisions of S. 14" the words "in so far as they would have been inconsistent with the provisions of S. 14, if the date of the institution of the suit be deemed to be the date of the application under S. 4". For this we cannot find any justification. Not only would this defeat the beneficial purpose of the legislation under S. 14(4)(a); but this will also not be the natural meaning of the words "in so far as they are inconsistent with the provisions of S. 14."12. The Chief Courts view that the Special Judge has merely to see whether the Civil Court that passed the decree could have passed the decree which it did pass if that court had to apply the provisions of S. 14, treating the date of the institution of the suit as the date of the application cannot therefore be accepted as correct.The same view had been taken by the Chief Court of Oudh in an earlier decision, of Ramsagar Prasad v. Mst. Shayama, AIR 1939 Oudh 75. A Full Bench of the Allahabad High Court had in Rukun Uddin v. Lachmi Narain ILR (1945) All 307 : (AIR 1945 All 113  ) to consider the question whether a finding in a decree made by a civil court that the creditor is entitled to interest only at the rates specified in U. P. Agriculturists Relief Act was in consistent with the provisions of S. 14 of the U. P. Encumbered Estates Act and was therefore not binding on the Special Judge hearing an application under the U. P. Encumbered Estates Act. They held that such a finding must be held to be inconsistent with the provisions of S. 14 and could therefore not be binding on the Special Judge. There can be no doubt about the correctness of this view, for, as has been pointed out above S. 14(4) (c) provides that the provisions of the U. P. Agriculturists Relief Act shall not be applicable to proceedings under the Encumbered Estates Act. One of the learned Judges Mr. Justice Verma referred with approval in the course of his judgment to the view taken in Ramsagar Prasads Case, AIR 1939 Oudh 75.For the reasons mentioned earlier however we are of opinion that the view in Ramsagar Prasads Case, AIR 1939 Oudh 75 which has been followed by the Chief Court in the present case is wrong13. Our conclusion therefore is that the Special Judge is even where there has been a decree by a civil court in respect of a loan bound to follow the provisions of S. 14(4)(a) of the Act so that the amount of interest which he can hold to be due on the date of the application must not exceed the portion of the principal found to be due on the date of the application. Accordingly in the present case the Special Judge should have held the amount of interest due on the date of the application, i.e., October 26, 1936, to amount to rupees one lakh only, that being the principal which was still due on that date. Under the provisions of sub-S. 7 of S. 14 the Special Judge has to "pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in S. 27."It was in view of this provision that the special Judge and High Court allowed interest at the rate of 4 per cent per annum. The proper decree the Special Judge should have passed therefore was one for rupees two lakhs for the loan with permissible interest, plus Rs. 4,314-2-9, Rs. 51-3-0 and rupee one on account of costs, that is, for a total sum of Rs. 2,04,366-5-9 with proportionate costs with interest pendente lite and future interest at the rate of 4 per cent. per annum simple from the date of the application, i.e., October 26, 1936, till realisation.