Decided on February 28,1973

Chargola Tea Co. Ltd. Appellant
The Assam Financial Corpn. Shillong And Others Respondents


P. K. Goswami, C. J. - (1.) THIS Miscellaneous First Appeal is directed against the judgment of the District Judge, Cachar whereby hp allowed the prayer of the Assam Financial Corporation, Respondent No. 1, (hereinafter "the Corporation") to enforce a registered mortgage under Section 31 of the State Financial Corporations Act, 1951 (briefly 'the Act').
(2.) THE facts briefly are as follows: The Corporation is established under Section 3 of the Act for carrying on business in the State of Assam with Head office at Shillong. Respondent No. 2 Messrs. Kalimpong Properties Limited borrowed a sum of Rs. 7,50,000/ - from the Corporation by executing a registered mortgage deed on 15th May, 1963 and the respondents 3 to 6 stood as guarantors jointly and severally. The appellant, Chargola Tea Company Limited (hereinafter 'the Company') is the transferee from the respondent No. 2 and is now admittedly answerable for the mortgage debt. The mortgage deed stipulated interest at the rate of 7 1/2 per cent per annum. It was further stipulated that in case of breach of any of the conditions of the loan, the entire amount due on account of the loan was at once to be repayable by respondents 2 to 6 jointly and severally. The said liability by transfer, has now devolved upon the appellant, which is the admitted position. It is also admitted that a default in payment of the stipulated installment has been made and when the debtors failed to make payment, even after notice, the Corporation filed an application under Section 31 of the Act before the District Judge to enforce the terms and conditions of the deed of mortgage of 15th May 1963, and for the realisation of Rs. 6,79,078.03, together with future interest. On a prayer of the Corporation, orders were passed in terms of Section 31 (1) of the Act. The appellant admitted the claim but contended that the application was not maintainable on certain legal grounds raised before the Court. One witness was examined on behalf of the Corporation and the Company did not examine any witness. The witness for the Corporation admitted receipt of Rs. 25,000/ - after filing of the application. It was contended before the District Judge that the application was not properly filed under Section 31 of the Act; secondly, it was contended that under Section 4 of the Assam Money Lenders' Act. 1934, charging of compound interest was illegal and hence the application should be rejected. The learned District Judge rejected both the contentions. Hence this appeal.
(3.) MR . J. P. Bhattacharjee the learned counsel for the appellant, confines his submission before us to only one point. He submits that under Section 4 of the Assam Money -Lenders' Act, which applies to the Corporation, any contract made before or after the commencement of that Act for the loan of money by a money -lender shall be illegal in so far as it provides directly or indirectly for the payment of compound interest. To the identical objection before the District Judge, it was submitted by the Corporation that under Section 2 clause (3) (c) a loan advanced by Life Insurance Corporation of India, Financial Corporation of India or any other Corporate body is exempted from the provisions of the Money -Lenders' Act. It is submitted that the loan advanced by the Corporation in this case does not therefore, attract, the provisions of the Assam Money -Lenders' Act. The District Judge repelled an objection of the Company that that clause is not retrospective.;

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