Patna High Court
Ram Ram Sinha Chowdhury vs Nitai Chandra Ghose And Ors. on 31 March, 1949
Equivalent citations: AIR1951PAT407, AIR 1951 PATNA 407
JUDGMENT Nageshwar Prasad, J.
1. The facts out of which this civil revision application and the miscellaneous appeal arise are these. The plaintiffs-opposite party in this case, Nitai Chandra Ghose, had advanced a sum of rupees two thousand on two simple mortgage bonds dated 5-5-31 and 7-5-31 to the petitioner-defendant in this case. On the principal and interest not being paid, Nitai Chandra Ghose brought a suit on the basis of the said two bonds against the defendant-petitioner in the Court of 3rd Sub-Judge of Patna, for a sum of Rs. 8500. The reason why the suit was brought in Patna was that there was stipulation in the bonds that the money loaned to the defendant was to be paid in Patna and thus the Court at Patna got jurisdiction over this matter, though the bonds were executed in Murshidabad and a part of the contract was fulfilled there. After contest, there was a decree for rupees four thousand passed by the Court on 15-4-40 in favour of the plaintiffs against the defendant in accordance with the provisions of Bengal Money-lenders Act of 1933, according to which a sum not more than the principal was to be decreed for interest whatever the stipulations in the contract might have been. The plaintiffs-decree-holders executed the decree and the execution proceedings were transferred to the District Judge of Murshidabad, and execution was started in the Court of the Subordinate Judge at Berhampur, district Murshidabad. It appears that the execution proceedings there lingered on account of various objections and in 1943 the defendant-petitioner filed an application before the executing Court at Berhampur purporting to be Under Section 11 and 13, Bihar Money-lenders Act, and Section 36, Bengal Money-lenders Act (Act X [10] of 1940) which had come into operation on 1-9-1940. This application was rejected by the executing Court and an appeal was filed by the petitioner-defendant before the Calcutta High Court which by its judgment and order dated 12-4-1945 dismissed the appeal and held that the Bengal Courts had no jurisdiction to reopen the decree which was passed by a Bihar Court. On 8-6-1945 an application Under Section 34 and 36, Bengal Money-lenders Act (Act X [10] of 1940) was filed by the petitioner-defendant in the Court of the 3rd Sub-Judge at Patna. The gist of this application was that the petitioner-debtor sought further relief from the obligations of the decree by way of some further reduction in interest and thus an application was made to reopen the decree and request was made by this application to further reduce the interest and to fix instalments for payment of the reduced decretal amount. By its judgments dated 27-11-1946, the Court of the 3rd Sub-Judge at Patna rejected this application of the petitioner-judgment-debtor and hence an appeal and a revision have both been filed against the said judgment and order.
2. Before the lower Court both the parties agreed to the application of the provisions of the Bengal Money-lenders Act of 1940 to this case as the transaction had taken place within the province of Bengal and as the defendant was a resident of Bengal. Though the learned Subordinate Judge decided this case on the basis of the parties conceding on this point he expressed his doubts as to the correctness of the proposition. In this Court the learned advocate for the plaintiffs-decree-holders has urged that the Bengal Money-lenders Act cannot govern this case as the decree in this case has been passed by a Court in Bihar and it is the Bihar Money-lenders Act, which would give powers to a Bihar Court for scaling down decrees and note the Bengal Act. It may be noted that this petition was filed before the Court of the 3rd Sub-Judge at Patna Under Section 34 and 36, Bengal Money-lenders Act, and if that Act is found incapable of governing Bihar Courts the application has to be rejected. I propose, therefore, to consider this aspect of the matter also in spite of agreement between the parties in the Court below to have the matter decided according to the provisions of the Bengal Money-lenders Act. To my mind agreement on such points of law cannot by itself vest jurisdiction in a Bihar Court to apply the provisions of a law of the Bengal Legislature to the case. The learned advocate for the petitioner- judgment-debtor has cited before us the case reported in State Aided Bank of Travancore Ltd. v. Dhrit Ram A. I. R. (29) 1942 P. C. 6 : (I. L. R. (1942) Bom. 318), which says that in cases arising out of contract it is the place of contract which governs the law applicable to it and not the place where the suit is brought. That was a case in which the contract had been found to be fully entered into in the Native State of Travancore and the suit had been brought in Bombay. In order to determine the right and liabilities of the parties arising out of the contract it was held in that case that the law of the State of Travancore where the transaction-of the contract had been fully entered into was the proper law applicable to it. We have also been shown some observations in Westlake's Private International Law which says that the law of the country where the contract was entered into will govern cases arising out of the contract. Even if I were to agree to this principle of law, it appears, and it is conceded, that the contract entered into between the plaintiffs and the defendant on the basis of the two bonds was performed partly in the district of Murshidabad, namely in Bengal and partly it had to be fulfilled in Patna where the plaintiffs-decree-holders reside inasmuch as the stipulation in the bonds was that the repayment of the loans due on the bonds was to be made in Patna. That is why the Court at Patna got jurisdiction over this matter. Therefore, even applying the principles enunciated in the Privy Council case, cited before us, the Bihar Court had jurisdiction in this matter and it passed a decree apparently without objection on the question of jurisdiction. But this is not all. The analogy of a contract will hardly apply to the circumstances of this case. The decree in this case arising out of that contract based on the two bonds was passed on 15-4-1940 by the Court of the 3rd Subordinate Judge at Patna and whatever the rights and liabilities of the parties were based on that contract had already been decided by that judgment and decree and the contract had merged in the decree. There was nothing more about the rights and liabilities arising out of the contract to be decided. On 1-9-1940, a law came into force, passed by the Bengal Legislature, which Under certain circumstances gave rights to a debtor to apply before a Court, either before the passing of a decree or during execution proceedings, to move for scaling down of the decree and to fix periods of payment. This was a right given to the debtor not accruing to him from any contract but as a result of a special law which vested Courts with a jurisdiction to scale down decrees and to grant instalments for payment of the decrees on the request of the debtor. It cannot be said that this right arose because of the contract, and as such it cannot be said that the place of the contract was the determining factor in applying the law governing it. The Bengal Legislature had vested its Courts with special jurisdiction and responsibilities in the matter of scaling down decrees. Can the Bengal Legislature make special laws of this kind applicable to Bihar Courts and can they command the Bihar Courts to enforce the provisions laid down in their legislation in such cases ? This is an intricate question. The Bengal Moneylenders Act and the Bihar Money-lenders Act are special laws vesting their Courts with jurisdiction over reviewing and revising decrees already passed in the matter of scaling down of interest or fixing of instalments. To my mind such Provincial legislations can bind and affect Courts within their jurisdiction and a Court in Bihar cannot be forced to apply the Bengal Money-lenders Act to a decree which it had passed. A Bench of this Hon'ble Court has held Inder Chand v. Bansropan Sahu, A. I. R. (35) 1948 Pat. 245 : (26 Pat. 307) in a case where a decree was obtained in the original-side of the Calcutta High Court and it was transferred for execution to the Shahabad Court in the Province of Bihar that the transferee Court has to execute it in accordance with the law of procedure obtaining in the Courts in Bihar but it has to determine the rights and liabilities of the parties in accordance with the substantive law obtaining in the Court which passed the decree, that is, the transferor Court. In that case the judgment-debtors had made an application Under Section 13 and 14, Bihar Moneylenders Act, and they applied to the Court to fix a valuation about the properties of the judgment-debtors and to sell only a small portion of the judgment-debtors' properties which are rights given to a judgment-debtor under the Bihar Money-lenders Act (Act VII [7] of 1939). The Bengal Money-lenders Act excepts commercial loans from the operation of the Bengal Money-lenders Act and the question in that case was whether the Bengal Act or the Bihar Act would apply. The Subordinate Judge in that case had held that the Bihar Moneylenders Act applied to the transaction and in appeal Meredith and Sinha JJ. reversed the decision of the Subordinate Judge and held that in matter where the question was about the determining of the rights and liabilities of the parties the law of the land which passed the decree was to govern. Meredith J. has observed the following in his judgment :
"In my opinion, it is quite impossible to regard Section 13 and 14, Bihar Money-lenders Act, taken together as merely prescribing rules of procedure for execution. On the contrary, a substantive right is enacted by those provisions for the protection of the judgment-debtor. It is a matter of the substantive rights of the parties, that is of substantive law. As such the current of authority seems to be that in such matters the law of the province where the decree was passed will be applicable, and not the law of the province in which the decree is being executed."
In my opinion, the Bengal Money-lenders Act and the Bihar Money-lenders Act create substantive rights of parties and Courts which have to decide such rights are to be governed by the law enacted in their Province. In this view of the matter the application made by the judgment-debtor-petitioner before the 3rd Subordinate Judge at Patna must be rejected and, therefore, the civil revision and the appeal filed here fail.
3. In this view of the matter, it is unnecessary to decide whether Under Section 36, Clause (6) (a) (i), Bengal Money-lenders Act, it was open to the lower Court to scale down the decree when no proceedings in execution were pending before it; or whether Under Section 34 it was competent for the lower Court to fix instalments under the Bengal Money-lenders Act. I would, therefore, dismiss this application for civil revision and the miscellaneous appeal with costs to the decree-holders-opposite party. There will be no separate hearing-fee for this civil revision.
Das, J.
4. The principal question for decision in these two cases is if the petitioner, who is also the appellant in the miscellaneous appeal, is entitled to any benefit under the provisions of the Bengal Money-lenders Act (x [10] of 1940), hereinafter to be referred to as the Bengal Act. If the Bengal Act does not apply, then it follows that he is not entitled to the benefit of the provisions of that Act. If, however, the Bengal Act applies, then the further question arises if the particular provisions under which he wants relief apply in the present case.
5. I agree with my learned brother that the Bengal Act does not apply in the present case, but in view of the importance of the question raised, I should like to explain my reasons very briefly. The principle for which Mr. Bhabanand Mukherji appearing for the petitioner-appellant has contended, was expressed most succinctly by Turner L. J. in delivering the judgment of the Privy Council in Peninsular and Oriental Steam Navigation Co. v. Shand, (1865) 3 Moo. P. C. (N. S.) 272 at p. 290 : (12 L. T. 808) :
"The general rule is that the law of the country where a contract is made governs as to the nature, the obligation, and the interpretation of it. The parties to a contract are either the subjects of the power there ruling, or as temporary residents owe it a temporary allegiance; in either case equally they must be understood to submit to the law there prevailing, and to agree to its action upon their contract."
Those observations were made in connection with a case in which a contract was made between British subjects in England, substantially for safe carriage of goods from Southampton to Mauritius. The performance was to commence in an English vessel, in an English port; to be fully completed in Mauritius, and the question was whether the English law would apply, or the French law which was in force at Mauritius. The decision was based on the ground "that the actual intention of the parties must be taken clearly to have been to treat this as an English contract, to be interpreted according to the rules of English law."
Mr. Bhabanand Mukherji, therefore, contends that the law of the place of contract, which was in Bengal, will govern the present case. He has placed reliance on State Aided Bank of Travancore, Ltd. v. Dhrit Bam, A. I. R. (29) 1942 P. C. 6 : (I. L. R. (1942) Bom. 318), where the law on the subject was thus stated:
"The law which governs a contract depends upon the intention of the parties express or implied. There is no intention expressed in these documents and the Courts are left to infer the intention by reference to considerations where the contract was made and how and where it was to be performed."
Their Lordships came to the finding "that not only the place where the contract was made, but also the place where the contract was to be performed was Travancore; therefore the law of that State governed the transaction."
In the case before us the contract was made in Bengal, but it had to be fulfilled in Bihar. It cannot, therefore, be said for certainty that the intention of the parties was that the law of the place of contract should govern the transaction. In cases of this nature, where the contract is made at one place, but has to be fulfilled at another, there is "a competition between the lex loci contractus celebrati and the law of the place of fulfilment, intending by the latter the law of that jurisdiction which would be the forum contractus according to true Roman principles" (see Westlake's Private International Law, Edn. 5, p. 301).
There have been dicta of English Judges, some on the side of the former and some in favour of the place of fulfilment. It would have been necessary to go into this question more thoroughly and examine the decisions in favour of one principle or the other, if this case really turned upon contract or the intention of the parties express or implied in that contract. When the suit was brought in Patna, the parties agreed that the Bengal Money-lenders Act, 1933, would apply, and the Court applied the provisions of that Act so far as they were relevant. At that stage the question was still in the region of contract, depending on the intention of the parties express or implied in the contract. But after the passing of the decree, the rights of the parties arising out of the contract have already been adjudicated on and merged in the decree. The rights and liabilities which now arise, arise not out of the contract but out of the decree. A similar view was expressed by the Federal Court in Subrahmanyan Chettiar v. Muttuswami Goundan, 1940 F. C. R. 188 : (A. I. R. (28) 1941 F. C. 47), where their Lordships had to consider the validity of the Madras Agriculturists' Belief Act, 1938. At p. 202 of the report, Gwyer C. J., said as follows:
"It was then contended that, even if not wholly invalid, either the Act was invalid in part, in so far as it did or might affect promissory notes, or that it ought to be construed as not applying to promissory notes at all. But these questions do not, in my opinion, arise in the present case, because the liability on which the Act operated was a liability under a decree of the Court passed before the commencement of the Act. It had ceased to be a debt evidenced by or based on the promissory note, for that had merged in the decree and had become a judgment-debt; nor could the appellant any longer have sued upon the note."
In the case before us also the debt on which learned counsel for the petitioner-appellant wishes the Bengal Act to operate is a judgment-debt. If the rights and liabilities of the parties now arise out of the decree or the judgment-debt, there is no room for the application of the principle that the law of the place of contract should govern those rights and liabilities. Mr. Bhabanand Mukherji has stated that he wants relief Under Section 34 (1) (b) (ii) and Section 36 (6) (a) (i) of the Bengal Act. The former provision relates to the granting of instalments by the Court and the latter to a re-opening of the decree. It is clear that these are special powers given to the Bengal Courts which have nothing to do with the intention of the parties express or implied in a contract. Such powers cannot be exercised by the Bihar Courts in respect of a decree which was passed in Bihar, unless the Bihar Money-lenders Act gives such powers. Mr. Bhabanand Mukherji has conceded before us that if the Bihar Money-lenders Act applies, his client is entitled to no relief at this stage. For these reasons I would agree with the view of my learned brother that the Bengal Act does not apply at this stage.
6. I may further state that, in my opinion, i the petitioner-appellant is entitled to no relief Under Section 36 (6) (a) (i) or Under Section 34 (1) (b) (ii) of the Bengal Act, even if we were to hold that the Bengal Act applied. Section 36 (6) (a) (i) does not apply because there is no proceeding in execution of the decree pending before the Patna Court in which the application for relief was made. Mr. Bhabanand Mukherji has relied on some decisions, such as, Dwarkadas Gobind-ram, Firm v. Saligram Rekhraj, Firm, 17 Pat. 617 : (A. I. R. (26) 1939 Pat. 144), where in an entirely different set of facts and in connection with an entirely different question an observation was made to the effect that "a Court which transfers a decree for execution does not thereby altogether lose control over the decree and is quite competent to recall it.
" The point which has been urged by Mr. Mukherji is concluded by a decision of the Calcutta High Court in Dr. S. Roy v. Karuna Kishore Kar, A. I. R. (32) 1945 Cal. 452 : (I. L. R. (1944) 2 Cal. 70). It was observed in that case as follows:
"The Sub-section does not say that the Court which passed the decree may exercise the powers, granted by Sub-section (1) and (2) whenever execution proceedings are pending anywhere. The order must be passed in execution proceedings, and not in any other proceeding. This means that execution proceedings must be pending before the Court which is asked to exercise such powers. One Court cannot pass orders in execution proceedings pending before another Court. Orders must be passed by a Court in its own proceedings. As no execution proceedings are pending before this Court which passed the decree, no application lies to this Court Under Section 36.(6) (a) (i)."
7. As to the relief Under Section 34 (1) (b) (ii), I am of the opinion that having regard to the words used in the Sub-section, it is a matter of discretion for the Court concerned whether to allow instalments or not, this is so in spite of the fact that the word "shall" is used at the beginning of the Sub-section and also in cl. (ii). If the matter is one of discretion, the circumstances are such that the petitioner-appellant is not entitled to the exercise of such discretion, in his favour.
8. It was also contended before us that the application for relief Under Section 36 (6) (a) (i) should be treated as a suit for relief Under Section 36 (1) of the Bengal Act. Reliance was placed on the decision of Bhupendra Nath v. Sushil Chandra, A. I. R. (32) 1945 Cal. 370 : (49 C. W. N. 542). Having regard to the circumstances of this case, I do not think the application should be allowed to be treated as a suit. It is, however, unnecessary to examine these matters in detail in view of the findings that the Bengal Act does not apply.
9. For these reasons I agree that the application in revision and the miscellaneous appeal must be dismissed with costs to the decree-holders-opposite party.