Patna High Court
Sk. Abdul Sattar vs Sitaram Sah And Anr. on 21 May, 1987
Equivalent citations: AIR1988PAT233, AIR 1988 PATNA 233
JUDGMENT S.K. Jha, J.
1. On the 13th of May, 1981, a learned single Judge of this Court directed that this case be referred to a Division Bench for hearing. It has been stated in the order of reference that one of the questions involved in this appeal is as to whether the mortgages (Exts. 1 and 1/a) in question are usufructuary mortgages and this relates to the interpretation of the documents. Since the documents have to be read and interpreted, the learned single Judge was pleased to refer it to a Division Bench. So, this appeal before us.
2. The crux of the question involved in this appeal is as to whether the mortgages in question stand redeemed by virtue of the provisions of Section 12 of the Bihar Money Lenders Act. 1974 (Bihar Act 22 of 1975) (hereinafter referred to as 'the Act' for the sake of brevity and easy reference). If the intent and purpose of Section 12 of the Act has already been served, the appeal is bound to succeed; otherwise not. Before embarking upon this question, it is relevant to state at the outset that the Act was brought on the statute book to consolidate and amend the law relating to regulation of money-lending transactions and to grant relief to the debtors in the State of Bihar. Before I proceed any further, however, I think it worthwhile to observe that the legislation regarding regulation is a concept, which has dawned upon the wisdom of the legislature too late all the world over. All the Ulsurious Loans Acts were enacted either in England or in this country or. for that matter, in any other country in the world reminds me of a terse passage in the first scene of Volpone where Ben Johnson summarises the ways to wealth :
I glory More in the cunning purchase of my wealth Than in the glad possession, since I gam No common way; I use no trade, no venture; I wound no earth with ploushares, I far no beasts To feed the shambles; have no mills for iron. Oil, corn, or men. to grind them intopowder; I blow no subtle glass, expose no ships To threatnings of the furrow-faced sea; I turn no moneys in the public bank, No usure private.
Each way of gain is reviewed in turn; 'trade', 'the earth', 'usure' -- and each is placed and dismissed, first together, in the phrase 'no common way', and then successively, for trade is linked with Venture' and the threatenings of the sea; the earth is 'wounded' as it produces grain for the humanity at large and supports the beasts; banks and 'usure private' are equally condemned as the 'turning of moneys'. From such a mosaic of small details in themselves insignificant, the dating and context has to be determined. The 'contemporary relevance' is of great importance. The greater, then, is our obligation to be clear about the intellectual and emotional limits within which we have to handle these questions. Gone are the days when the treatment of usury, debt and interest were ambiguous. The argument is oblique justification of interest and usury is not the crux of the matter. The Greek and Latin background is summarised by Julius Paulus, writing at the beginning of the third century A. D. Usury, usurers and the law concerning loans are called 'fenabris' from the word 'teams', since money on loan gives birth to money : for the same reason the Greeks call this process TO KOS [a word that could carry the diverse senses of childbirth, offspring of animals or men and (metaphorically, in both Plats and Aristophanes) interest on a loan.] But, there must be an objective approach including the detached irony of the subject-matter with which we are dealing this case. We respond gravely to the nature of usury and to the contrasts of charity, compassion, and equity. Sometimes our deepest intuitions are flatly contradicated concerning a strange and complex situation. A superficial reading, a perfunctory performance remains at that level more often than not. This is the background in which I am scrutinising the provisions of Section 12 of the Act. The relevant portion of Section 12 of the Act is that --
"Notwithstanding anything to the contrary contained in any other law or in anything having the force of law or in any agreement the usufructuary mortgage of any agricultural land by any agriculturist shall not be valid, unless under the terms of the mortgage all dues including principal and interest are to be fully satisfied by the usufruct of the mortgaged property during a fixed term not exceeding seven years and the mortgaged property is to be re-delivered to the mortgagor after expiry of the said term."
The claim that stands for law assumes many questions : What is the legal substance and spirit of the mischief to avoid any substantial injustice between men ? What form may mercy take, if it is not to destroy the necessary rigours of justice ? With what right may imperfect men, by their office, passjudgment on other little or no worse than they ? As Shakesphere has invited us to look to his famous book 'King Lear' (IV. 6. 152-4) to 'See how yond justice rails upon yond simple thief.....change places and, handy-dandy, which is the justice, which is the thief?' If some people are so wicked as to believe in usury as a venture, what may one hope of them, when they have neither faith nor law, but their rapine and usuries? The most righteous Judge, to consider all these circumstances, having pity of him who doth wholly submit himself unto the Court's clemency.
3. Gordon Graig's comment is just and has a more universal application than our immediate concern. His work was the natural realistic link between the unimaginative and the imaginative. In the immediate tomorrow comes the next link in which the accessories shall be not correct in data but correct in spirit; when we shall not interpret the law.
4. But, in a fairness, I must state that even under Hindu Dharmashastra, the business was sanctioned and the businessmen were permitted to make fortune to share their acquisitions in public welfare in building Dharmashalas and other charitable institutions. They took pleasure in feeding the poor. Of late, on the contrary persons who have amassed fortune and have been gloring therein by earning larger fortune for their own personal benefits as was done in Volpone quoted above. But, things began to change shape from the time when Jeremy Bentham advocated for complete freedom of money-lending in his book entitled 'Defence of Usury'. In course of time, however, personal liberty yielded place to social welfare, but at aslow pace. The House of Commons brought the Money-lenders Act late in the Nineteenth century on the statute book. Athough this Act did not put any restriction on the rate of interest chargeable, but it authorised the Court to reopen the transaction and take accounts in suits brought by money-lenders when the Court found that there was evidence showing that the rate of interest was excessive or that the transaction was oppressive and unconscionable. The Court of equity also saved heirs and reversioners from unreasonable exactions, and the Moneylenders Act gave the matter a statutory recognition. It was followed by Betting and loans (Infant) Act, 1892. It protected the interest of infants taking loan from professional money-lenders. Later, in this regard, the British Parliament passed the Money-lenders Act, 1927. In this country, it was passed through the process at a quick pace on the eve of independence.
The legislative Assemby of Bihar in the year 1937, enacted Act III of 1938 and received the Governor's assent on 24-6-1938. After its emergence, the Act was challenged from time to time in Courts of law. In order to obviate the difficulties arising from inconsistency of judicial opinion, the legislature, in order to guarantee the relief foreshadowed in Bihar Act III of 1938 broke up into two parts : The first part related to the provisions concerning registration, keeping of accounts and registrs by the moneylenders and provisions of penalties for contravention thereof : the second part held out relief to the debtors and judgment-debtors which ultimately culminated in the Moneylenders (Regulation of Transactions) Act, 1939 (Act VII of 1939) which repealed and substituted the remedial provisions incorporated in Act III of 1938. The assent of the Governor-General was also obtained on the 15th of April. 1939. and all the provisions of the said Act were enforced from 3rd May, 1939, excepting Section 15 which came into force from the 17th January. 1940. Various Acts, thereafter, were enacted including the law of Dumdumpat ultimately culminating in the Bihar Act, 1974, the relevant part of Section 12 whereof has already been quoted above.
5. It seems, perhaps, the wisdom has dawned upon the legislature after hundreds of centuries in realising the Deuteronomic law from exacting usury from a fellow citizen who was under no such obligation in financial dealings with a Gentile within the Jewish community could claim to participate in the seventh-year remission of debts known as the 'jubilee.' Section 12 of the Act is in essence, putting on the statute book what was known as the 'Jubilee' in the third century B.C. I am afraid, it is too long a background of the legislative history culminating in Section 12 of the Act, which in letter and spirit, hairsplitting apart, contemplates that if a moneylender has advanced money to a debtor under distress or otherwise and seized his properties by way of mortgage and taking possession thereof and has utilised the usufruct thercol for seven continues years, the mortgage stands automatically redeemed, call it by the name of usufructuary mortgage or an anomalous mortgage or mortgage of a ny other type. The term 'usufructuary' has not been defined in the Act, but for me it is essential to warn in the background set forth above that call it by the name of usufructuary mortgage or any other sort of mortgage depriving the debtor of the possession of his property, enjoying the usufruct of his property for seven years disentitles the money-lender from retaining the land any further under any sort of mortgage. It is not, therefore, necessary that the term 'usufructuary mortgage' as defined in Section 12 of the Act must be strictly equated with the term 'usufructuary mortgage' as defined in Section 52 of the Transfer of Property Act. This is what I have meant by observing before hand when I talk of usury in the Greek and Latin background as summarised by Julius Baulus, writing at the beginning of the third century A.D. and about objective approach including a detached irony, there is a seven year remission of debts known as the 'Jubilee' aforementioned.
6. Keeping this in mind, the relevant facts of this case have to be narrated in a few words.
One of the two defendants has come up in second appeal to this Court against a judgment of reversal. The suit was filed by the plaintiff-respondent No. 1 or his predecessor-in-interest and was registered as Title Suit No. 276/28 of 1974/77. which was dismissed by the trial Court. The action was one for realisation of Rs. 1.535/- on the basis of two mortgage deeds (Exts. 1 and 1/a) executed on the same date, namely, 29/30-1-1960 each for Rs. 700. The mortgagee was put in possession of the lands mortgaged. One of the defendants is the appellant here and the other respondent No. 2. A further prayer has been made in the suit to direct the defendants to pay the decretal amount with costs within the time as fixed by the Court and in the event of non-payment, the property mentioned in Schedule I of the plaint as well as other properties of the defendants including that of the appellant be auction-sold to satisfy the decree. This suit was dismissed by the trial Court by judgment and decree, dated 25-7-1977 on the ground that under the provisions of Section 12 of the Act, the mortgage debt and all dues with respect to the same shall be deemed to have been fully satisfied as the plaintiff-respondent No. 1 had already enjoyed the usufruct of the mortgaged land in lieu of the loan advanced for seven years and thereby the right of redemption was ipso jure extinguished. The lower appellate Court has reversed the judgment and decree of the trial Court merely on the ground that Section 12 of the Bihar Money-Lenders Act affects usufructuary mortgages only and nothing else and since the mortgage deeds (Exts. 1 and 1/a) were not usufructuary mortgages; rather anomalous mortgages, the suit did not come within the purview of Section 12 of the Act. The trial Judge had, on a consideration of the deeds appreciating them in the right perspective, held them to be usufructuary mortgages. The learned District Judge, sitting in appeal, decreed the suit of the plaintiff respondent No. 1.
7. While agreeing with the interpretation of the trial Judge with regard to the usufructuary nature of the two deeds, I must point out that the question of the mortgage being of usufructuary in nature or of an anomalous one pales into iasignificance on the plain language of the statute which I have already quoted above. The senction plainly speaks with a non obstante clause that notwithstanding anything to the contrary contained in any other law or in anything having the force of law or in any agreement the usufructuary mortgage of any agricultural land by any agriculturist shall not be valid, unless under the terms of the mortgage all dues including principal and interest arc to be fully satisfied by the usufruct of the mortgaged property during a fixed term not exceeding seven years and the mortgaged property is to be re-delivered to the mortgagor after expiry of the said term. The mortgage deeds relied upon by the learned counsel tor the plaintiff-respondent no. 1 read thus --
in the terms describing them as mortgage rehan bonds under Exhibit-1, the amount of rehan money is Rs. 700/- only and under Exhibit 1/a, it is again for a sum of Rs. 700/-. Both of them have been executed on the same day i.e. the 29th/30th January. 1960. The terms of both the deeds are mutatis mutandis the same. I may quote by way of sample the relevant portion only from one of the mortgage deeds i.e. Exhibit 1. The relevant part of the deed says that --
"1. the executant, requested the claimant to get four kitas of Rehan Bonds executed by me, the excutant, for convenience in payment of cost covered by the aforesaid suit. Accordingly the aforesaid request of me, the executant, has been accepted for getting the Rehan Bonds executed. Now it is expedient for me. the executant, to execute the Rehan Bonds. Therefore, I the executant, of my own accord and free-will in enjoyment of my proper senses took a zar-peshgi loan of Rs. 700/- bearing interest thereon at the rate of Re. 1/-per hundred rupees per month and received the same from the person entered in column No. 2 above with this detail that the aforesaid entire money was set off on account of portion of the dues for the cost and damages of the above-mentioned suit and thus, I the executant, have received the entire Rehan Money. It is desired that the aforesaid claimant should file a petition of Compromise in the above suit, and get it dismissed. In lieu of the satisfaction of the interest of the aforesaid peshgi money occupancy Kast land measuring 14 Kathas, 13 Dhors as entered in column No. 5 which is in possession and occupation of me, the executant, has been let out on Rehan from this day till the full-moon day of Baisakh, 1368 Fasli i.e. for a period of one year in the name of the aforesaid Rehandar and I, the executant, put the aforesaid Rehandar in possession and occupation of the Rehan property. It is desired that the aforesaid Rehandar should enter into and remain in possession and occupation of the Rehan property* and should appropriate its produce in lieu of satisfaction of interest of the aforesaid peshgi money. 1, the executant, hereby declare that when I shall repay the amount of loan in cash in one lump sum on the 30th Bajsakh 1368 Fasli. I. shall take back this document and shall bring the Rehan land in my khas possession. If on due date of repayment the aforesaid Rehan money is not paid in that circumstance the possession and occupation of the Rehandar shall precisely remain intact and in force till the repayment of the Rehan Money and there will be no need of executing any fresh document,* I, the executant, shall be liable to pay the rent of the Rehan property. In case of default in payment by me, the executant, if the Rehandar has to pay (the rent) with a view to save the Rehan properly, then in such circumstance when I, the executant, shall repay the aforesaid Peshagi money I shall repay the amount of rent paid by him. on verifying other proof of payment, with its interest and only then 1 will be competent to take back the Rehan land in my Khas possession.* With these stipulations the Rehan property is mortgaged, hypothecated and made liable with the Rehandar. Till the repayment of Rehan money, I shall not execute any document either original or farzi in favour of any person in respect of the rehan property. If any such document is executed against the stipulations of this deed, the same shall be treated as null and void in face of this document. The Rehan property is by all means clear and free and there is no encumbrance of any kind on the Rehan properly".
8. On the findings of fact, the rehandar I money-lender) has remained in possession of property all-through for more than seven years. On the facts of this case, even if there be a personal bond for redemption of the same on the due date or any time thereafter. the moment we come to the conclusion that the rehandar (plaintiff-respondent No. 1) has remained in seven-years' possession of the mortgaged property and enjoyed the usufruct thereof in satisfaction of the loan, both principal and interest, his bond stands redeemed by virtue of the operation of the statutory and munificent mandate of the provisions as engrafted in Section 12 of the Act. For all practical purposes, the deeds in question are usufructuary in nature and not anomalous and the 'label' is of no consequence.
9-10. Learned counsel for the appellant relied upon two Division Bench decisions of this Court. In the case of Jang Bahadur Singh v. Baidyanath Prasad, AIR 1985 Patna 190, it was held while interpreting Section 12 of the Act that even in cases of redemption of mortgage and anomalous mortgages for five years if the possession of the mortgaged property has been given to the mortgagee, then notwithstanding the deed containing personal covenant of redemption of mortgage money, the mortgagor was entitled to the benefit of automatic redemption under Section 12 on expiry of a period of seven years as provided in Section 12 of the Act. The question of the mortgage being anomalous in nature or usufructuary was held to be of no consequence. I. for one, fail to understand as to how this case helps the appellant and can be pressed into service in his aid. W hife reference was made to another Division Bench decision in the case of Kapildeo Narain Singh v. Deputy Collector, Land Reforms, 1985 BBCJ (HC) 119 : (AIR 1985 Patna 183), it has been made clear therein that the provision of automatic redemption applies to all cases of mortgage where the creditors are put in possession for appropriating the income of the property in lieu of the debt. The recital regarding payment of consideration by the mortgagor is made by all debtors including a usufructuary mortgagor. It has further been held that the Statute must be interpreted, if that is permissible by its language, in a manner which will uphold its validity. The money-lender lost in that case. So is he going to lose this case also.
11. The long and short of the whole matter is this -- he has given by way of loan to the appellant and respondent No. 2 a sum of Rs. 1,400/- in all under Exhibits 1 and 1/a; he has remained in possession of the land mortgaged or put in rehan for more than seven years. As a necessary corollary, the mortgage stands redeemed under Section 12 of the Act irrespective of the fact that there is stipulation of personal bond for repayment of the amount of loan advanced by way of Peshagi. In essence and spirit as well as in letter, the ingredients of Section 12 of the Act nave been sufficiently complied with. That being the position here, the plaintiff respondent No. 1 has, I am constrained to hold, to be non-suited. But, before I come to the operative portion of this judgment, I am reminded once again of Shakespeare's well known saying--
"Neither a borrower nor a lender be.
For loan oft loses both itseli and friend And borrowing dulls the edge of husbandry."
Beware the lenders (not caveat emptor), the legislature has awakened after a deep slumber,
12. In these circumstances, this appeal is allowed with costs throughout against the plaintiff-respondent No. 1.
S.S. Sandhawalia, C.J.
13. I have had the privilege of perusing the remarkable judgment recorded by my learned Brother. Whilst I deeply admire the same as a piece d'art, I find myself somewhat hesitant to concur in totality with all that has fallen from his Lordship's pen as a precise statement of the law which would bind this Court and those below.
14. Whilst agreeing with the conclusion of my learned Brother that the appeal must be allowed with costs, with profound respect I find myself unable to agree with the larger and broader legal observations with which the said conclusion has been reached I ndeed, it appears to me that with the passage of time which has elapsed betwixt the hearing of the appeal before us in the Division Bench, the issue is now more authoritatively covered by the Full Bench in Sri Bhuneshwar Prasad Sharma v. Smt. Suryamukhi Devi and others Civil Writ Jurisdiction Case No. 787 of 1986, decided on 30th January, 1987). Therein after an exhaustive discussion of principle and the existing precedent within this Court, it was concluded as under : --
"To conclude on this aspect, it must be held that the definition of a 'usufructuary mortgage' in Section 58(d) of the Transfer of Property Act is not applicable in strictitude to Section 12 of the Bihar Money Lenders Act. Consequently the answer to the question posed at the outset is rendered in the negative and it is held that a term of personal covenant to pay the mortgage amount in a deed of usufructuary mortgage would not convert it into an anomalous one lor the purposes of Section 12 of the said Act."
Following the above, I respectfully agree with the conclusion of my learned Brother that this appeal be allowed with costs throughout against plaintiff-respondent No. 1.