Case Note & Summary
The dispute arose out of a simple mortgage deed executed on 17 January 1946 by Hazarilal (predecessor of respondents 1 to 5) and Jagat Narain in favor of the appellants for Rs. 50,000, with interest at 9% per annum and default interest at 1% per month. The mortgagors defaulted, and a suit was filed for enforcement by sale, claiming Rs. 76,692/9/8 after crediting Rs. 14,000 repayment. The trial court rejected the plea of excessive interest and passed a preliminary decree on 12 August 1953 for the full amount. Hazarilal alone appealed on 5 January 1954, seeking reduction of interest and future interest at 9%. During pendency of the appeal, the decree was made final on 3 April 1954. Meanwhile, sons of Hazarilal filed a separate suit for declaration that properties were ancestral and not saleable, obtaining temporary injunctions, but those proceedings were not directly relevant. On 8 June 1956, the Punjab Relief of Indebtedness Act was extended to Delhi under Section 2 of the Part C States (Laws) Act, 1950, amending Section 3 of the Usurious Loans Act, 1918 to make reopening of transactions mandatory and deeming interest excessive if exceeding 7.5% per annum simple. On 29 October 1958, the legal representatives of Hazarilal filed an application under the amended Section 3, claiming that interest beyond 7.5% could not be awarded. The High Court, on 15 October 1959, applied the amended provisions and reduced the interest by Rs. 15,027, modifying the preliminary decree, awarding interest up to date of suit at Rs. 11,665 by applying 7.5% simple and future interest at same rate. The decree-holders appealed to the Supreme Court by special leave, contending that Section 6 of the Punjab Relief of Indebtedness Act, which gave retrospective effect to Section 5 only for suits pending on or instituted after commencement, did not apply because the suit had ended in a preliminary decree and only an appeal was pending; moreover, the new law could not affect vested rights under the judgment. The respondents submitted that the word 'suit' includes appeal and the appellate court must apply the law as the trial court would. The Supreme Court held that the word 'suit' in Section 6 includes an appeal from the judgment in a suit, because an appeal only reviews and corrects proceedings in a cause already constituted but does not create the cause, and a preliminary decree does not terminate the suit. The court also observed that ordinarily a court of appeal cannot take into account a new law after judgment, but if the new law speaks in language which expressly or by clear intendment takes in pending matters, the court of trial and appellate court may give effect to it; Section 6 expressly gave retrospective effect. Further, the amended Section 3 is mandatory and requires reduction of excessive interest. Accordingly, the Supreme Court dismissed the appeal and affirmed the High Court's judgment.
Headnote
A) Interpretation of Statutes - Meaning of 'suit' includes appeal - Section 6 of Punjab Relief of Indebtedness Act applies to pending appeals as suits pending - Punjab Relief of Indebtedness Act, Section 6; Usurious Loans Act, 1918, Section 3 - The appellant contended that after a preliminary decree, the suit was no longer pending, but the Supreme Court held that 'suit' includes appeal because appeal only reviews and corrects proceedings in a cause already constituted but does not create the cause, and a preliminary decree does not terminate the suit; therefore the High Court was right in applying the amended provisions to the pending appeal. Held that the suit was pending within the meaning of Section 6. B) Statutory Interpretation - Retrospective Operation of Statutes - New law expressly or by clear intendment taking in pending matters can be applied by appellate court - Usurious Loans Act, 1918, Section 3; Punjab Relief of Indebtedness Act, Sections 5 and 6 - Ordinarily a court of appeal cannot take into account a new law after judgment appealed from, because rights are determined under law at date of suit, but matters of procedure are retrospective, and if the new law speaks in language expressly or by clear intendment taking in pending matters, the court of trial and appeal may give effect to it; Section 6 expressly gave retrospective effect to Section 5, so the appellate court could reduce interest even after preliminary decree. Held that the High Court correctly applied amended Section 3. C) Usurious Loans - Excessive Interest - Mandatory reopening of transactions when interest exceeds 7.5% per annum simple - Usurious Loans Act, 1918, Section 3 as amended by Punjab Relief of Indebtedness Act, Section 5 - The amended Section 3 is mandatory because it requires the court to reopen a transaction if there is reason to believe interest is excessive, and where rate exceeds 7.5% per annum simple, court must deem it excessive; in the mortgage suit, the High Court reduced interest to Rs. 11,665 by applying 7.5% simple, and future interest also at same rate. Held that the High Court's reduction was justified and appeal dismissed.
Issue of Consideration
Whether the High Court was right in reducing interest in a preliminary mortgage decree dated August 12, 1953 by applying Sections 5 and 6 of the Punjab Relief of Indebtedness Act, extended to Delhi on June 8, 1956, when an appeal from the decree was pending; whether the word 'suit' in Section 6 includes an appeal; and whether the appellate court could apply the amended Section 3 of the Usurious Loans Act retrospectively.
Final Decision
The Supreme Court dismissed the appeal and affirmed the High Court's judgment, holding that the High Court was right in applying Section 3 of the Usurious Loans Act (as amended) to the case, thereby reducing the interest in the preliminary mortgage decree.
Law Points
- Legal points not extracted
- Word 'suit' includes appeal from judgment in suit
- Appeal only reviews and corrects proceedings in a cause already constituted but does not create the cause
- Preliminary decree does not terminate suit
- Section 6 of Punjab Relief of Indebtedness Act applies to live suits whether in court of first instance or appeal court
- Court of appeal can apply new law expressly or by clear intendment taking in pending matters
- Matters of procedure are retrospective
- Court must deem interest excessive if exceeds 7.5 per cent per annum simple interest under amended Usurious Loans Act
- Amended Section 3 is mandatory
