BIHAR STATE ELECTRICITY BOARD Vs. GAYA COTTON AND JUTE MILLS LTD

JUDGEMENT

(1.) The plaintiffs Bihar State Electricity Board and the State of Bihar have filed this suit for a decree for Rs. 235703.37 P. The defendant Gaya Cotton and Jute Mills is a limited company constituted under the Indian Companies Act. The defendant owned and possessed a power house for the purpose of generating electric energy required for running the Cotton and Jute Mills. It was in need of money and approached the State of Bihar, plaintiff No. 2, for a loan. On the 14th December, 1951, the State advanced a sum of Rs. 400000/- and interest payable on the loan was fixed at 4 per cent per annum. A deed of lease cum mortgage was executed whereby the property described in Schedule C to the document was mortgaged by way of security for recovery of the loan. A lease was created by the defendants company in favour of the State for the period 1st June, 1950, to 31st May, 1954, and it was stipulated that a consolidated annual rental of Rupees 24,472/- would be payable. The State had already taken the power house on lease before the execution of the document. This amount was equivalent to the interest at 4 per cent p. a. on a sum of Rupees 6,11,800/- which represented the value of the lease-hold property. It was also agreed upon between the parties that the State would get the plants repaired and a second turbine generating set established; but if the second turbine generating set was not fixed up, the rental would be Rs. 18,632/- only. The defendants company agreed to pay off the loan in three annual instalments beginning from 31st March, 1952, detailed in paragraph 8 of the document. In 1957, some of the mortgaged properties were sold to M/s. A. Ebrahim and Company of Bombay with the permission of the State for a sum of Rs. 2,02,500/- and out of the said amount, a sum of Rs. 1,98,501/- was paid to the State towards the principal and interest. The Bihar State Electricity Board was constituted under the provisions of the Electricity (Supply) Act 1948 and started functioning from 1-4-1958. On 15-1-1962, the suit was filed praying for a preliminary mortgage decree in favour of plaintiff No. 1 and/or plaintiff No. 2 for Rs. 2,35,703.37 P. and for a final decree after the period of grace was over. By the third relief, the plaintiffs prayed for liberty to apply for a decree for the balance, if the sale proceeds in the mortgage execution did not pay off the entire dues.

(2.) The defendants company filed a written statement pleading, inter alia, that the suit was barred under Order 2, Rule 2 of the Code of Civil Procedure, the suit was not maintainable in view of the provisions of Section 4 of the Bihar Money Lenders Act and the suit was not maintainable in view of an arbitration clause. It was also said that the second turbine generating set was not installed due to the default of the plaintiff-State and, therefore, the defendant could not be prejudiced thereby and would be entitled to a deduction of the annual rental at the rate of Rs. 24,472/-. Certain houses were said to have been taken possession of by the State and the defendants claimed the rent thereof. Certain other pleas were also raised by way of defence which were not pressed in the court below or in this Court.

(3.) The Court below rejected the defence pleas of Order 2, Rule 2 of the Code of Civil Procedure and the suit being barred by the arbitration clause. The Court also ruled that the defendants were not entitled to claim rent of certain houses by way of adjustment in the present case. These findings have not been challenged by the defendant in this Court. It is therefore, not necessary to give any details about them. It must, however, be mentioned that the court held that the defendant was entitled to a deduction of Rs. 30,000/- as against the plaintiffs' claim. This finding also has not been challenged by the plaintiffs in this appeal. The court further held that the defendants were entitled to the adjustment of the rental at the rate of Rs. 24,472/-. This finding also has not been challenged by the plaintiffs. The suit was, however, dismissed on the ground that it was barred by the provisions of the Bihar Money Lenders Act. The plaintiffs have appealed,