Smt. Dayawati & ANR Vs. Inderjit
& Ors  INSC 11 (14 January 1966)
14/01/1966 HIDAYATULLAH, M.
CITATION: 1966 AIR 1423 1966 SCR (3) 275
CITATOR INFO :
F 1985 SC 111 (9) E&F 1989 SC1247 (24) RF
1991 SC1654 (44)
Usurious Loans Act, 1918 (10 of 1918), s. 3,
as amended by s. 5 of Punjab Relief of Indebtedness Act-Section 6 of latter Act
making s. 5 applicable to "all suits pending or to be instituted after,
the commencement of this Act"-Appeal filed against judgment in
suit-Whether suit 'pending' within meaning of s. 6.
Interest in excess of 7 1/2 per cent was
awarded to the appellants by the trial court in a mortgage suit against the
respondents. The respondents file before the High Court, where an appeal by
them against the decree of the trial co= was pending an application under a. 3
of the Usurious Act, 1918 as amended by a. 5 of the Punjab Relief of
Indebtedness Act. They claimed, by virtue of the latter provision, that
interest in excess of 7 1/2 per cent could not be awardedin the &Wt. The
High Court having accepted the contention, the appellants cam to this Court by
special leave and contended that an appeal having been filed against the trial
court's judgment in the suit, the said suit could not be said to be. pending'
within the meaning of a. 6 of the Punjab Act on the relevant date, and
therefore a. 5 would not apply.
HELD : (i) The word 'suit' includes an appeal
from the judgment in between a suit.
The only difference between a suit and an
appeal is that an appeal "only reviews and corrects the proceedings 'in a
cause already constituted but does not create the cause. In the present Act the
intention is to give relief in respect of excessive interest in a suit which is
pending and a preliminary decree in a suit of this kind does not terminate the
suit. The appeal is a part of the cause because the preliminary decree which
decree.[281 D-F] (ii)The words of s. 6 speak of a suit pending on the
commencement of the Act and it means a live suit whether in the court of first
instance, or an appeal court where the judgment of the court of first instance
is being considered.
It only excludes those suits in which nothing
further needs to be done in relation to the rights and claim litigated, because
an executable decree which may not be reopened is already in existence. The
decision of the High Court was right in applying s. 3 of the Usurious Loans Act
(as amended) to the case. [282 A, B] (iii)Ordinarily a court of appeal cannot
take into account a new law, brought into existence after the Judgment appealed
from has been rendered, because the rights of the litigants in an appeal are
determined under the law in force at the date of the suit. Matters of procedure
are however different and the law affecting procedure is. always retrospective.
But it does not mean that there is an absolute rule of inviolability of
substantive rights, If the new law speaks in language, which expressly or by
clear intendment, takes in even pending matters, the court of trial as well as
the court of appeal may give effect to such a law even after the judgment of
the court of first instance. The distinction between laws effecting procedure
and those affecting vented rights does not matter when the court is invited by
law to take away from a successful plaintiff what he has obtained under a
judgment. [280 &H] 2 7 6 Quilter v. Maples`n, (1882)9 Q.B.D. 672, Stovin v.
Fairbrass (1919)88 L.J. K.B. 1004 and Mukerjee (K.C.) v. Mst.
Ramratan, 63 I.A. 47, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 246 of 1964.
Appeal by special leave from the judgment and
decree dated October 15, 1959 of the Punjab High Court (Circuit Bench) at Delhi
in R.F.A. No. 1-D of 1954.
S.T. Desai, D. R. Prem and Mohan Beharilal, for
N.C. Chatterjee, and H. P. Wanchoo, for
respondents Nos. 1 to 5.
Tiryugi Narain, for respondent No. 6.
The Judgment of the Court was delivered by
Hidayatullah, J. In this appeal by special leave against the judgment and
decree of the Punjab High Court dated October 15, 1959 the only question is
whether, in the facts to be stated presently, the High Court was right in
reducing interest in a preliminary mortgage decree dated August 12, 1953 by
applying ss. 5 and 6 of the Punjab Relief of Indebtedness Act which were
extended to Delhi on June 8, 1956.
On January 17, 1946, Hazarilal (predecessor
of respondents 1 to 5) and one Jagat Narain (respondent 6) executed a simple
mortgage deed for Rs. 50,000 with interest at 9% per annum or in default of
payment of interest for 3 months at Re. 1 per cent per month for the period of
default. As the mortgagors made default in payment of interest and also did not
pay anything out of the mortgaged amount a suit was filed for enforcement of
the mortgage by sale of properties.
The claim was for Rs. 76,692/9/8, by
calculating interest at 9 per cent per annum for the first 3 months and at 12
pet cent per annum till institution of the suit and allowing credit for Rs.
14,000 as repayment. The defendants admitted the mortgage and the consideration
but pleaded that the rate of interest was both penal and excessive. This plea
was not accepted and -a preliminary decree was passed for the full claim on
August 12, 1953. Hazarilal alone appealed on January 5, 1954 (R.F.A. No. 1-D of
1954) and asked for reduction of interest by Rs. 7,900 and of the rate of
future interest to 9 per cent per annum. Court fee was paid on Rs.
7,900. During the pendency of this appeal the
decree was made final on April 3, 1954.
277 Before the appeal was disposed of
Inderjit and Satya Narain, sons of Hazarilal, filed a suit for a declaration
that the properties were ancestral and belonged to a joint family.
They claimed that the properties could not be
sold and asked for a temporary injunction which was first granted and later
vacated. Against the order vacating the stay they filed an appeal (F.A.0. 68-D
of 1957) and obtained temporary stay from the High Court. The mortgagees also
filed in that appeal a petition (S.M. 1318-D of 1957) for vacation of the stay
order. On February 10, 1958 a conditional stay order was passed by a learned
single Judge of the High Court but we need not trouble ourselves with it.
On October 29, 1958 the legal representatives
of Hazarilal (respondents 1 to 5) presented an application under s. 3 of the Usurious
Loans Act, as amended by s. 5 of the Punjab Relief of Indebtedness Act, when
the latter Act was extended to Delhi on June 8, 1956 under s. 2 of Part C
States (Laws) Act, 1950 (30 of 1950) and claimed that interest in excess of 71
per cent per annum could not be awarded in this suit.
We may, at this stage, read the relevant
sections. Section 3 of the Usurious Loans Act, in so far as it is material to
our purpose, reads as follows :"3. Re-opening of transactions.
(1)Notwithstanding anything in the Usuary
Laws Repeal Act, 1855, where, in any suit to which this Act applies, whether
heard ex parte or otherwise, the Court has reason to believe,(a) that the
interest is excessive; and (b) the Court may exercise all or any of the
following powers, namely, may,(i)re-open the transaction, take an account
between the parties, and relieve the debtor of all liability in respect of any
(2)(a) In this section "excessive"
means in excess of that which the Court deems to be reasonable having regard to
the risk incurred as it appeared, or must be taken to have appeared, to the
creditor at the date of the loan.
(b) (c) (d) 278 (3)This section shall apply
to any suit, whatever its form may be, if such suit is substantially one for
the recovery of a loan or for the enforcement of any agreement or security in
respect of a loan or for the redemption of any such security.
By s. 5 of the Punjab Relief of Indebtedness
Act, it was provided: "5. Amendment of the Usurious Loans Act, 1918.In
section 3 of the Usurious Loans Act, 1918 (X of 1918)(i) for the word
"and" in clause(a) of subsection (i) the word 'or" shall be
(ii)for the word "may" where it
appears for the first time in sub-section (1) the word "shall" shall
(iii)for the word "may" after the
word "namely" in sub-section (1) the word 'shall" shall be
(iv)to sub-section (2) the following clause
shall be added, namely:"(e) The Court shall deem interest to be excessive
if it exceeds seven and-a-half per centum per annum simple interest or is more
than two per centum over the Bank rate, whichever is higher at the time of
taking the loan, in the case of secured loans, or twelve and-a-half per centum
per annum simple interest in the case of unsecured loans;
Provided that the court shall not deem interest
in excess of the above rates to be excessive if the loan has been advanced by
the State Bank of India or any bank included in the Second Schedule to the Reserve
Bank of India Act, 1934, or any banking company registered under the Indian
Companies Act, 1913 prior to the first day of April, 1937 or any cooperative
society registered under the Bombay Cooperative Societies Act, 1925, as
extended to the State of Delhi." Section 6 of the Act gave retrospective
effect to the above provisions by enacting 279 "6. Retrospective effect.The
provisions of this part of the Act shall apply to all suits pending on or
instituted after the commencement of this Act." The decree.-holders
opposed the application on several grounds. The, main grounds (and they are the
grounds urged in this Court) were that s. 5 of the Punjab Relief of
Indebtedness Act merely amended s. 3 of the Usurious Loans Act, that neither
section applied to the facts of the case and that no such plea was taken in the
court below. R.F.A.
1-D of 1954 came up for hearing on October
15, 1959 before a Divisional Bench and by the judgment under appeal the amount
of interest in the mortgage was, reduced by Rs. 15,027 by applying the
provisions of the Punjab Relief of Indebtedness Act. 'Me Divisional Bench
followed an earlier decision of the same court reported in L. Ram Sukh Das v.
Hafiz-ulRahman and others.(1) It was held in that case that the provisions of
the Punjab Relief of Indebtedness Act applied to a case in which a decree had
already been passed and an appeal was pending at the time the amendment was
brought into force. The Divisional Bench in this case held that on the date on
which they decided the appeal the provisions of the Punjab Relief of
Indebtedness Act had been extended to Delhi and they were required to apply
those provisions and interest in excess of 71 -per cent per annum con not be
The preliminary decree was modified by
reducing interest up to, the date of the suit to Rs. 11,665 by applying the
rate of 7 1/2` per cent. per annum simple and future interest was awarded also
at the same rate. The judgment debtors who had applied in the High Court were
ordered to make good the court fee on. Rs. 7,127. After sundry unsuccessful
proceedings which included. an: application for review and another for a
certificate, the decree-holders filed this appeal after obtaining special leave
of this CourtIn this appeal it is contended on behalf of the decree
holder-& that s. 5 of the Punjab Relief of Indebtedness Act can only apply
to a suit instituted or pending after the section comes -into force and 'not in
an appeal after the suit has ended in a decree. It is farther; contended that
this will be all the more so, because the section itself is made retrospective
for suits pending on or instituted after the commencement of the Act and thus
cannot affect the vested' right which the judgment had given to the appellants.
We have therefore, to decide whether the provisions of ss. 5 and 6 (1) A. I.R.
1945 Lah. 177.
Sup.CI/6 5 280 of the Punjab Relief of
Indebtedness Act could be invoked by the Divisional Bench to reduce the
interest as stated above.
The amended section 3 of the Usurious Loans
Act is plainly mandatory because it makes it obligatory for a court to reopen a
transaction if there is reason to believe that the interest is excessive.
Further, where the rate of interest exceeds seven and a half, percentum per
annum simple, the court must hold that it is excessive. Therefore if the
amended section 3 of the Usurious Loans Act applies to the case in hand, the
High Court was right in acting as it did.
To this Mr. S. T. Desai raises no exception.
He contends, however, that s. 6 of the Relief of -Indebtedness Act in giving
retrospection to section 5 by which the amendments were made, limits it to
suits pending on or instituted after the commencement of the Relief of
Indebtedness Act and submits that the suit here was neither pending on nor
instituted after June 8 1956 when that Act commenced in the Union Territories
of Delhi. 'The respondents in reply submit that the appeal court must apply
,the provisions of the Relief of Indebtedness Act same as the court ,of trial,
because the word 'suit', where the section speaks of a -pending suit, includes
an appeal from the decision in the suit.
Now as a general proposition, it may be
admitted that ordinarily a court of appeal cannot take into account a new law,
brought into existence after the judgment appealed from has been tendered,
because the rights of the litigants in an appeal are determined under the law
in force at the date of the suit. Even before the days of Coke, whose maxim-a new
law ought to be prospective, not retrospective in its operation-is oft-quoted,
courts have looked with dis favour upon laws which take away vested Tights or
affect pending cases. Matters of procedure are, however, different and the law
affecting procedure is always retrospective'. But it does not mean that there
is an absolute rule of inviolability of substantive rights. If the new law
speaks in language, which, expressly or by clear intendment, takes in even
pending matters, the court of trial as well as the court of appeal must have
regard to an intention so expressed, and the court of appeal may give effect to
such a law even after the judgment of the ,court of first instance.
The distinction between laws affecting
procedure and those affecting vested rights does not matter when the court is
invited by law to take away from a successful plaintiff, what he has obtained
under judgment. See Quilter v. Mapleson(1) and Stovin v. Fairbrass,(2) which
are instances of new laws being applied. In the former the vested rights of the
landlord (1) (1892) 9 Q.B.D. 672.
(2)  88 L.J. K.B. 1004.
281 to recover possession and in the latter
the vested right of the statutory tenant to remain in possession were taken
away after judgment. See also Maxwell's Interpretation of Statutes (11th pp.
211 and 213, and Mukerjee (K. C.) v. Mst. Ramaraton,(1) where no saving in
respect of pending suits was implied when s. 26(N) and (0) of the Bihar Tenancy
Act (as amended by Bihar Tenancy Amendment Act, 1934) were clearly applicable'
to all cases without exception.
Section 6 of the Relief of Indebtedness Act
is clearly retrospective. Indeed, the heading of the section shows that it lays
down the retrospective effect. This being so, the core of the problem really is
whether the suit could be said to be pending on June 8, 1956 when only an
appeal from the judgment in the suit was pending. This requires the
consideration whether the word 'suit' includes an appeal from the judgment in
the suit. An appeal has been said to be "the right of entering a superior
court, and invoking its aid and interposition to redress the error of the court
below." -(Per Lord Westbury in Attorney General v.
Sillem(2). The only difference between a suit
and an appeal is this that an appeal "only reviews and corrects the
proceedings in a cause already constituted but does not create the cause."
As it is intended to interfere in the cause by its means, it is -a part of it,
and in connection with some matters and some statutes it is said that an appeal
is a continuation of a suit. In the present Act the intention is to give relief
in respect of excessive interest in a suit which is pending and a preliminary
decree in a suit of this kind does not terminate the suit. The appeal is a part
of the cause because the preliminary decree which emerges from the appeal will
be the decree, which can become a final decree. Such an appeal cannot have an
independent existence. If this be not accepted for the purpose of the
application of s. 3 of the Usurious Loans Act (as amended) curious results will
follow. The appeal court in the appeal is not able to resort to the section but
if the suit were remanded the trial court would be compelled to apply it. For
although, in the appeal proper, that judgment must be rendered which could be
rendered by the court of trial, but if the suit is to be reheard, then the
judgment must be given on the existing state of the law and that must include
s. 5 by reason of s. 6 of the Punjab Relief of Indebtedness Act. It is hardly
to be suggested that this obvious anomaly was allowed to exist. It would,
therefore, appear that in speaking of a pending suit, the legislature was
thinking not only in terms of the suit proper but also (1) 63 I.A. 47, (2) 11
1200 at 1209.
282 of those stages in the life of the suit
which ordinarily take place before a final executable document comes into
existence. The words of the section we are concerned with, speak, of a suit
pending on the, commencement of the Act and it means a live suit whether in the
court of first instance or in an appeal court where the judgment of the court
of first instance is being considered. It only excludes those suits in which
nothing further needs to be done in relation to the rights or claims litigated,
because an executable decree which may not be reopened is already in existence.
The decision of the High Court was right in
applying s. 3 of the Usurious Loans Act (as amended) to the case.
The appeal thus fails and it will be
dismissed with costs.