Case: Bulchand Chandiram of Bombay Vs. Bank of India Limited, Bombay

Sch. G to the petition. We see no reason for differing from the finding of the High Court. The liability on the Loan Account and on the Cash Credit Account was solely that of the appellant and therefore the question of apportionment of the debt under s. 22 of the said Act does not arise.8. The next question arising in this appeal is whether the appellant is entitled. to a refund of the amount recovered from the insurance policies. It appears that there were 12 life policies mentioned in Sch. E of the application out of which two policies matured in 1950 and 1951 the rest matured during the pendency of the application of the appellant. The Bank received Rs. 1, 000 and Rs. 23, 700 on January 22, 1951 and July 9, 1952. In 1948 the appellant had executed absolute assignment in respect of all the policies in favour of the Bank. Since the amounts were due to the Karachi Branch, these were converted into Pakistan rupees and repatriated. In respect of the other policies the Bank- recovered the-additional amount of Rs. 25, 684.56 P and Rs. 15, 560.99 P. The trial court held that as regards the first two policies, the appellant is not entitled to refund of excess amount over the apportioned debt of Rs. 13, 684/2/11 but in respect of other policies the trial court held that the Bank was bound to refund the excess amount. In appeal the High Court has, however, taken the view that s. 17 of the said Act applied and the appellant had no right to refund in respect of any of the insurance policies unless it was shown that the realisation was in excess of the debt due. It was argued by Mr. Chagla that the insurance policies do not fall within s. 17 of the said Act. It is not possible to accept this contention as correct. Clause 36 of s. 3 of the General Clauses Act (Act X of 1897) defines "movable property" to mean "property of every description, except immovable property". Clause 26 of s. 3 of the General Clauses Act defines "immovable property" to "include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth". In the present case there is the additional fact that the policies were assigned by the appellant and his wife to the Bank and thereafter the insurance policies remained in possession of the Bank. In the present case therefore there is an absolute assignment of the policies in favour of the Bank and the policies were also in its possession. In our opinion, s. 17 of the Act applies and unless realisation was in excess of the debt due the appellant was not entitled to refund.9. We accordingly reject the argument of the appellant on this aspect of the case.It was also contended on behalf of the appellant that the High Court had erred in interpreting the word "renewal" occurring in the definition of the word "debt" in the said Act. In our opinion, there is no substance in this argument. It is manifest that the confirmation or acknowledgement of indebtedness which includes both loan and interest and further advances, if any would not fall within the ambit of the expression "renewal in the proviso to s. 2 (6) of the said Act. The liability referred to in the proviso Is the liability solely by way of renewal and the proviso to the section states that the original loan and not the one for which the renewal is made is the debt within the meaning of the section. But the proviso does not apply if the confirmation or acknowledgement is not solely by way of renewal on account of loan or interest but includes further advance. In our opinion the High Court was justified in coming to the conclusion that the debts ascertained by it were the debts of the appellant within the meaning of the said Act. The High Court found that the promissory note dated November 18, 1947 for a sum of Rs. 1, 09, 000 represented the debt of Rs. 1, 09, 000 in the Cash Credit Account and that the promissory note dated June 19, 1947 for a sum of Rs. 1, 25, 000 represented the debt of Rs. 1, 25, 000 in the Loan Account which was actually taken on July 12, 1947. As regards the Cash Credit Account, the High Court awarded simple interest up to December 10, 1951 at 4 per cent. which worked out to Rs. 17, 702.79 P and held that an aggregate amount of Rs. 1, 26, 702.79 P was due by the appellant in the said Cash Credit Account. As regards the Loan Account, the High Court awarded simple interest at 4 per cent. from July 12, 1947 up to December 10, 1951 and held that an aggregate amount of Rs. 1, 47, 068.49 P was due by the appellant. The debt in the Cash Credit Account was reduced by a deduction of Rs. 17, 429.14 P (which represented the proportion of the verified claim to the surrender value of the policies) to Rs. 109, 273.65 P.Lastly, Mr. Chagla submitted that the appellant should have been given credit of the amount of Rs. 10, 000 paid to the Bank as income of the mortgage properties in Pakistan. It was pointed out that the amount was received as income of the mortgaged properties by the Custodian of Evacuee Properties in Pakistan and the amount was paid by the Pakistan Government to the Bank. It was argued that there was no justification for not allow respect of this amount.10. It is not necessary for us to go into the merits of this question because Mr. S. T. Desai on behalf of the respondent-Bank said that he had no objection if the amount of Rs. 10, 000 was credited towards the debt of the appellant as determined by the High Court.

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

Explanation:
0[ds]In support of this appeal Mr. Chagla contended, in the first place, that no interest should have been allowed to the Bank from August 15, 1947 in view of the provisions of s. 29 of the said Act. We are unable to accept this argument as correct. Proviso, (b) to s. 29(1) of the said Act confers a discretion on the Tribunal to allow interest not exceeding 4 per cent. per annum for the period from August 15, 1947 up to December 10, 1951, the date on which the said Act came into force in Bombay after taking into account the, paying capacity of the debtor as defined in s. 32 of the Act. The expression "paying capacity of the debtor", is defined in S. 32 of the said Act asaggregate of the market value of all-the attachable assets in India of the displaced debtor plus the income which is likely to accrue to him for the next three years succeeding, excluding from the computation of such income a sum calculated at the rate of two hundred and fifty rupees aHigh Court has observed, on the statement of the appellant himself, that his paying capacity far exceeded the aggregate debt due from him and it was therefore a fit case in which interest at 4 per cent, should be allowed to the Bank from August 15, 1947 to December 10, 1951. In our opinion, the finding of the High Court on this point is supported by proper evidence. We accordingly reject the argument of the appellant on this aspect of the case.Chagla contended that this section has no application in view of the over-riding effect of s. 3 of the said Act. It is not necessary, in our opinion, to decide this point in the present case. We shall assume in favour of the appellant that S. 43 of the Indian Contract Act has no application. Even upon that assumption the plea of the appellant for apportionment of the debt must be rejected because the High Court has found upon examination of the evidence, that the liability both on the Loan Account and on the Cash Credit Account was undertaken solely by the appellant. The finding of the High Court on this point is supported by paragraphs 12 and 15 of the petition of the appellant. In these two paragraphs the appellant admitted that he had opened the Cash Credit Account with the Bank and that he had taken the loan against mortgaged securities mentioned in Sch. G to the petition. We see no reason for differing from the finding of the High Court. The liability on the Loan Account and on the Cash Credit Account was solely that of the appellant and therefore the question of apportionment of the debt under s. 22 of the said Act does notappears that there were 12 life policies mentioned in Sch. E of the application out of which two policies matured in 1950 and 1951  the rest matured during the pendency of the application of the appellant. The Bank received Rs. 1, 000 and Rs. 23, 700 on January 22, 1951 and July 9, 1952. In 1948 the appellant had executed absolute assignment in respect of all the policies in favour of the Bank. Since the amounts were due to the Karachi Branch, these were converted into Pakistan rupees and repatriated. In respect of the other policies the Bank- recovered the-additional amount of Rs. 25, 684.56 P and Rs. 15, 560.99appeal the High Court has, however, taken the view that s. 17 of the said Act applied and the appellant had no right to refund in respect of any of the insurance policies unless it was shown that the realisation was in excess of the debt due. It was argued by Mr. Chagla that the insurance policies do not fall within s. 17 of the said Act. It is not possible to accept this contention as correct. Clause 36 of s. 3 of the General Clauses Act (Act X of 1897) defines "movable property" to mean "property of every description, except immovable property". Clause 26 of s. 3 of the General Clauses Act defines "immovable property" to "include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth". In the present case there is the additional fact that the policies were assigned by the appellant and his wife to the Bank and thereafter the insurance policies remained in possession of the Bank. In the present case therefore there is an absolute assignment of the policies in favour of the Bank and the policies were also in its possession. In our opinion, s. 17 of the Act applies and unless realisation was in excess of the debt due the appellant was not entitled to refund.We accordingly reject the argument of the appellant on this aspect of the case.It was also contended on behalf of the appellant that the High Court had erred in interpreting the word "renewal" occurring in the definition of the word "debt" in the said Act. In our opinion, there is no substance in this argument. It is manifest that the confirmation or acknowledgement of indebtedness which includes both loan and interest and further advances, if any would not fall within the ambit of the expression "renewal in the proviso to s. 2 (6) of the said Act. The liability referred to in the proviso Is the liability solely by way of renewal and the proviso to the section states that the original loan and not the one for which the renewal is made is the debt within the meaning of the section. But the proviso does not apply if the confirmation or acknowledgement is not solely by way of renewal on account of loan or interest but includes further advance. In our opinion the High Court was justified in coming to the conclusion that the debts ascertained by it were the debts of the appellant within the meaning of the said Act. The High Court found that the promissory note dated November 18, 1947 for a sum of Rs., 000 represented the debt of Rs. 1,000 in the Cash Credit Account and that the promissory note dated June 19, 1947 for a sum of Rs. 1,000 represented the debt of Rs. 1,25, 000 in the Loan Account which was actually taken on July 12, 1947. As regards the Cash Credit Account, the High Court awarded simpleup to December 10, 1951at 4 per cent. which worked out to Rs. 17, 702.79 P and held that an aggregate amount of Rs. 1, 26, 702.79 P was due by the appellant in the said Cash Credit Account. As regards the Loan Account, the High Court awarded simple interest at 4 per cent. from July 12, 1947up to December 10, 1951and held that an aggregate amount of Rs. 1, 47, 068.49 P was due by the appellant. The debt in the Cash Credit Account was reduced by a deduction of Rs. 17, 429.14 P (which represented the proportion of the verified claim to the surrender value of the policies) to Rs. 109, 273.65 P.Lastly, Mr. Chagla submitted that the appellant should have been given credit of the amount of Rs. 10, 000 paid to the Bank as income of the mortgage properties in Pakistan. It was pointed out that the amount was received as income of the mortgaged properties by the Custodian of Evacuee Properties in Pakistan and the amount was paid by the Pakistan Government to the Bank. It was argued that there was no justification for not allow respect of thisis not necessary for us to go into the merits of this question because Mr. S. T. Desai on behalf of the respondent-Bank said that he had no objection if the amount of Rs. 10, 000 was credited towards the debt of the appellant as determined by the High Court.