Decided on August 05,1960


Referred Judgements :-



- (1.)This appeal raises the question of interpretation of S. 15 of the United Provinces Encumbered Estates Act, 1934. On March 1, 1924, Sardar Nihal Singh, the predecessor of the appellant before us, borrowed a sum of Rupees one lakh from Raja Durga Narain Singh, predecessor of the Respondents on mortgage of a house in Butlergunj, Lucknow and also the entire Zamindari interest in a village Parsora. Interest was 8 per cent. per annum compound with six monthly rests. In 1932 Raja Durga Narain Singh brought a suit for recovery of Rs. 1,83,791-5-9 on account of principal and interest due on the mortgage, by sale of the mortgaged property. In this suit the Subordinate Judge, Lucknow, made a preliminary decree declaring the amount due to the plaintiff on the mortgage calculated upto the 29th day of March, 1935, to be Rs. 1,83,791-5-9 up to the date of the suit, Rs. 49,280-2-6 as the amount due on account of interest thereupon from March 19, 1932, the date of the suit to March 29, 1935, the date fixed for payment. A sum of Rs. 4,314-2-9 was awarded as the cost of the suit. The defendant was ordered to pay this total sum of Rs. 2,37,385-11-0 before the 29th day of March, 1935, with future interest at 6 per cent per annum simple on the principal sum of rupees one lakh. The amount not having been paid on that date, the Court on an application made by the mortgagee-decree-holder made a final decree on May 9, 1935, directing sale of the property for recovery of the sum of Rs. 2,37,503-5-6 with future interest as in the preliminary decree, (this sum being the total of Rs. 2,37,305-11-0 of the preliminary decree, Rs. 116-10-1 the interest from March 30, 1935, and rupee one the cost of the final decree). An application for revision under S. 115 of the Code of Civil Procedure in connection with this decree was rejected by the Chief Court of Oudh on April 20, 1937. Before this, on October 26, 1936, an application had been made by Sardar Nihal Singh under section 4 of the U. P. Encumbered Estates Act, requesting the provisions of the Act to be applied to him. After this application came before the Special Judge in accordance with the provisions of S. 6, the mortgagee-decree-holder Raja Durga Narain Singh filed a written statement of his claim on September 30, 1937, and stated that the amount due to him on the basis of his decree was Rs. 2,51,904-8-6 including Rs. 14,300 as interest subsequent to the final decree till September 30, 1937, and a sum of Rs. 51-3-0 the decree for costs in his favour by the Oudh Chief Court when rejecting the mortgagor's application for revision. He prayed that a decree for Rs. 2,51,904-8-6 be passed in his favour against the applicant Sardar Nihal Singh and his property. The applicant contested this claim pleading that the principal amount borrowed from the claimant being rupees one lakh the claimant was not entitled to recover any sum as interest thereupon in excess of the principal amount under S. 14 of the Encumbered Estates Act. This plea was rejected by the Special Judge who held that the claimant was entitled to Rs. 2,37,503-5-6 for which the final decree was passed, and also Rs. 51-3-0 as costs in the matter of revision application and further to 6 per cent per annum interest on rupees one lakh from May 29, 1935, the date of the final decree till the date of the application under the Encumbered Estates Act, i.e., October 26, 1936. Accordingly he gave the claimant a simple money decree for Rs. 2,46,338-8-6 with proportionate costs and future interest at the rate of 4 per cent. per annum simple from the date of application till realisation.
(2.)On appeal, the Chief Court of Oudh rejected the appellant's contention that the Special Judge was bound by S. 14 of the Act to limit the decree to a sum of rupees two lakhs only and held that in so far as the preliminary decree found Rs. 1,83,791-5-9 as the amount due on the mortgage on March 29, 1932, it was not inconsistent with S. 14 of the Encumbered Estates Act, and so the Special Judge was bound to accept this finding under S. 15. It held however that in so far as this decree allowed interest pendente lite on the above amount from March 19, 1932 to March 29, 1935, at 8% per annum, it was inconsistent with sub-s. 7 of S. 14. The Chief Court accordingly held that this interest pendente lite must be reduced to 4 1/4% simple. After saying that a sum of Rs. 4,314-2-9 would be added on account of costs, rupee one should be added on account of the costs of the final decree and Rs. 51-3-0 as costs of a revision application, the Court held that the principal amount of Rs. 1,00,000 shall carry interest from March 29, 1935, till the date of application under S. 4 of the Encumbered Estates Act, viz., October 26, 1936, and that the aggregate of these figures shall carry interest from October 27, 1936, till realisation at 4 per cent. per annum. It directed a decree for the sum thus found to be substituted for that passed by the Subordinate Judge. An application for leave to appeal to the Privy Council against this decree was made on January 13, 1947. This application was disposed of on April 14, 1953. Holding that the valuation of the suit was well over Rs. 20,000 and the value of the appeal to the Supreme Court was Rs. 41,971-2-9 the Chief Court gave, in view of the modification made by it in the lower court's decree, a certificate that the case fulfils the requirements of S. 110 of the Code of Civil Procedure and that the applicant had a right to appeal to the Supreme Court. On the strength of that certificate the present appeal was filed.
(3.)When the appeal came up for hearing before a Bench of four judges of this Court Mr. Andley, on behalf of the respondents stated that in this case he was raising a constitutional point. Thereupon the Court directed that the matter be posted before the Constitution Bench. That is how the appeal has come up for hearing and final disposal before us.

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.