# 108 2 K. MANICKCHAND & ORS v. ELIAS SALEH MOHAMED SAIT & ORS

- **Citation:** [1969] 2 S.C.R. 1082
- **Court:** Supreme Court of India
- **Decided:** 1968-12-03
- **Bench:** J. M. Shbi.At, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/108-2-k-manickchand-ors-v-elias-saleh-mohamed-sait-ors-4556
- **Pages:** 7

## Headnote

Mysore Money Lenders Act 13 of 1939 s. 17-"Principal amouni of
original loan", meaning of-Interest
under-Code of <7ivil Procedure
A
B
(Act 5 of 1908), 0. 34, r. 11 application of-Mysore Usurious Loans
C
Act (Mys. Act 19 of 1923); determination of fair rate of interest under.
The predecessor-in-inter<~! of the appellants filed a imit under two
mortgages claiming as principal and interest in respect of the first mortgage a sum of Rs. 51,200 and in respect of the second mortgage a sum
of Rs. 60,200. The trial court applying s. 17 of the Mysore Money
Lenders Act, 1939 held that the principal amount of the loan in the case
of the first mortgage deed was the consideration shown therein, namely
Rs. 20,000, and similarly the principal amount under the second mortgage was Rs. 24,000. Accordingly the trial court passed a decree for
the amount of Rs. 44,000 towards principal under the two mortgages
and an equal amount as laid down in the aforesaid s. 17, to,wards interest.
The High Court in appeal held that the principal amount of the original
loan was Rs. 15,017-8-0 in respect of the first mortgage and Rs. 22,954
in respect of the second mo11gage the aggregate being Rs. 37,971.50 Np.
The High Court therefore passed a decree for Rs.
37,971.50 Np.
as
principal and the same amount as interest. The High Court further held
that this would be the arrears of interest to which the appellants would
be entitled up to the date fixed 'for payment of the redemption money
by its judgment. The High Court also made a direction that the principal amount would carry interest at 6% per annum from the · date
fixed for redemption till realisation. The
appellant in appeal to
this
Court by certificate urged : (i) that the High Court was wrong in reopening the accounts in respect of loans prior to the two mortgage deeds
which formed the consideration for the two mortgage deeds in suit and
it should have held, like the trial court, that the principal amount was
Rs. 44,000 for the mortgages; (ii) that the arrears of interest under
s .. 17 of the Act should he interpreted to mean arrears only up to the
date of the institution of the suit, and the High Court should have
granted future interest subst"!uently instead of granting it only
with
effect from the date fixed for redemption. The Court also had to consider whether there was a conflict between 0. 34 r. 11 df the Code of
Civil Procedme and s. 17 of the Act.
HELD : ( i) Section 17, in prescribing the
maximum amount
of
arrears of interest to be allowed, refers to "the principal of the original
loan·" and not "the principal of the loan". If the latter expression had
been used, it could have been argued in the present case that the sums
of Rs. 20,000 and Rs. 24,000 which purported
to be !he principal
amounts of the two loans evidenced by the two mortgage-deeds in s~t,
were the principal amounts df the loans to be taken into
account m
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MANICKCHAND v. MOHD. SAIT (Bhargava, J.)
1083
working out the maximum amount of interest permissible under s. 17
of the Act.
The expression "the principal of the original loan" makes.
it clear that, in determining the amount of arrears of interest allowable,
the court must go behind the transaction of the loan and found out what
was the actual cash originally advanced as principal and ignore all the
interest that may have been added subsequently to that original advance
in order to make up the consideration for the loans in suit. In the present case therefore the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out
what
were the
actual cash amounts originally advanced which, together
with interest
and after adjustment of accounts formed the principal amounts for the
two mortgage-deeds.
(ii) Section 17 is in the form of a directive to a Court not to pass a
decree on account of arrears of interest
for a sum greater than
the
principal df the original loan.
Obviously, the directive is to be carried

## Text

108 2
K. MANICKCHAND & ORS.
v.
ELIAS SALEH MOHAMED SAIT & ORS.
December 3, 1968
[J. M. SHBI.AT AND V. BHARGAVA, JJ.]
Mysore Money Lenders Act 13 of 1939 s. 17-"Principal amouni of
original loan", meaning of-Interest
under-Code of <7ivil Procedure
A
B
(Act 5 of 1908), 0. 34, r. 11 application of-Mysore Usurious Loans
C
Act (Mys. Act 19 of 1923); determination of fair rate of interest under.
The predecessor-in-inter<~! of the appellants filed a imit under two
mortgages claiming as principal and interest in respect of the first mortgage a sum of Rs. 51,200 and in respect of the second mortgage a sum
of Rs. 60,200. The trial court applying s. 17 of the Mysore Money
Lenders Act, 1939 held that the principal amount of the loan in the case
of the first mortgage deed was the consideration shown therein, namely
Rs. 20,000, and similarly the principal amount under the second mortgage was Rs. 24,000. Accordingly the trial court passed a decree for
the amount of Rs. 44,000 towards principal under the two mortgages
and an equal amount as laid down in the aforesaid s. 17, to,wards interest.
The High Court in appeal held that the principal amount of the original
loan was Rs. 15,017-8-0 in respect of the first mortgage and Rs. 22,954
in respect of the second mo11gage the aggregate being Rs. 37,971.50 Np.
The High Court therefore passed a decree for Rs.
37,971.50 Np.
as
principal and the same amount as interest. The High Court further held
that this would be the arrears of interest to which the appellants would
be entitled up to the date fixed 'for payment of the redemption money
by its judgment. The High Court also made a direction that the principal amount would carry interest at 6% per annum from the · date
fixed for redemption till realisation. The
appellant in appeal to
this
Court by certificate urged : (i) that the High Court was wrong in reopening the accounts in respect of loans prior to the two mortgage deeds
which formed the consideration for the two mortgage deeds in suit and
it should have held, like the trial court, that the principal amount was
Rs. 44,000 for the mortgages; (ii) that the arrears of interest under
s .. 17 of the Act should he interpreted to mean arrears only up to the
date of the institution of the suit, and the High Court should have
granted future interest subst"!uently instead of granting it only
with
effect from the date fixed for redemption. The Court also had to consider whether there was a conflict between 0. 34 r. 11 df the Code of
Civil Procedme and s. 17 of the Act.
HELD : ( i) Section 17, in prescribing the
maximum amount
of
arrears of interest to be allowed, refers to "the principal of the original
loan·" and not "the principal of the loan". If the latter expression had
been used, it could have been argued in the present case that the sums
of Rs. 20,000 and Rs. 24,000 which purported
to be !he principal
amounts of the two loans evidenced by the two mortgage-deeds in s~t,
were the principal amounts df the loans to be taken into
account m
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MANICKCHAND v. MOHD. SAIT (Bhargava, J.)
1083
working out the maximum amount of interest permissible under s. 17
of the Act.
The expression "the principal of the original loan" makes.
it clear that, in determining the amount of arrears of interest allowable,
the court must go behind the transaction of the loan and found out what
was the actual cash originally advanced as principal and ignore all the
interest that may have been added subsequently to that original advance
in order to make up the consideration for the loans in suit. In the present case therefore the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out
what
were the
actual cash amounts originally advanced which, together
with interest
and after adjustment of accounts formed the principal amounts for the
two mortgage-deeds.
(ii) Section 17 is in the form of a directive to a Court not to pass a
decree on account of arrears of interest
for a sum greater than
the
principal df the original loan.
Obviously, the directive is to be carried
out by the court at the time of passing the decree and, consequently, it
would be at that time that the court will see how much it is awarding
for arrears of interest. The maximum prescribed for
the
arrears of
interest must, therefore be held to be the maximum amount in respect
•f interest payable up to the date of the decree when the court carries
out the directive laid down in this section.
The decree of an appellate court takes effect 'from the date of the
decree of the original court, so that no question
can arise of holding
that the arrears of interest under s. 17 of the Act must be computed up
to the date on which the High Court passed the decree.
(iii) There is no conflict between 0. 34 r. 11 C.P.C. and s. 17 of
the Act.
Section 17 confines itself to laying
down the maximum of
arrears of interest to be allowed up to the date df the decree and is not
concerned with the interest that is to be allowed for the period thereafter.
Admittedly the Code of Civil Procedure was
aoplicable to the
pre.ent suit and consequently
interest subsequent to the date of the
decree had to be awarded in accordance with 0. 34 r. 11 C.P.C.
The interest unde·r the
mortgage-deeds
was
payable @ 1 % per
mensem but under the provisions of the Act read with the provisions of the Usunous Loan, Act (Mys. Act ix of 1923) the fair interest
payable on the lo"'! would be @ 9 per cent per annum,
[The Court
gave appropriate direclions 'for the calculation of interest.]
CIVIL APPELLATE JURISDICTION: Civil Appeal No 441 of
1965.
.
Appeal from the judgment and decree dated September 19
1958 of the Mysore High Court in Regular Appeals Nos 154 and
196 of 1952-53.
·
S. Govind Rao and K. Rajendra Chaudhuri, for the appellants.
C. B. Aggarwala and R. Gopa/akrishnan, for the respondents.
1084
SUPREME COURT REPORTS
(1969] 2 S.C.R.
The Judgment of the Court was delivered by
Bhargava, J. One Khanmull, whose legal representatives are
the appellants in the present appeal, instituted Original Suit No.
59 of 1949-50 on 10th January, 1950 for recovery of amounts
due to him on the basis of two simple mortgages dated 12th J anuary, 1937 and 14th June, 1937 in the Court of the District Judge,
Civil Station, Bangalore. Both these mortgages were executed by
three brothers, Ahmed Saleh Mohamed Sait (since deceased), Elias
Saleh Mohamed Sait (respondent No. 1), and Mohamed Saleh
Mohamed Sait (respondent No. 2), while their mother Rahamatbai alias Bhayabai joined them in the execution of the mortgage-
.deed of 14th June, 1937. In the suit, in addition to respondents
1 and 2, Hajirabai widow of the deceased brother Ahmed Saleh
Mohamed Sait, and their sisters, Ameenabai and Hanee:fabai, were
also impleaded as defendants 3, 4 and 5.
Further, Khan Saheb
Abdul Gani Saheb, and Khan Saheb Abdul Shakoor Saheb were
impleaded as defendants 6 and 7 in their capacity of purchasers of
the equity of redemption from the mortgagors.
On 1he foot of
the first mortgage, the amount claimed was Rs. 51,200/- as principal and interest, while, on the foot of the second mortgage, the
amount claimed as principal and interest was Rs. 60,200/-. The
contractual rate of interest was 1 per cent per mensem. The trial
court decreed the suit on 27th March, 1952, after applying the
provisions of section 17 of the Mysore Money Lenders Act No. 13
of 1939 (hereinafter referred to as "the Act"). For the purpose of
giving effect to the provisions of s. 17 of the Act, the trial court
held that the principal amount of the two loans was Rs. 44,000/-,
being the aggregate of the consideration shown in the two mortgage-deeds, and, consequently, allowed as arrears of interest the
·sum of Rs. 44,000/-. The preliminary decree was, therefore, grant-
·ed for a sum of Rs. 88,000/- composed of Rs. 44,000/- as principal and Rs. 44,000/- as interest. The excess interest claimed
at the contractual rate of 1 per cent per mensem was disallowed
on the ground of the maximum limit for the grant of the total
amount of interest laid down <in section 17 of the Act Thereupon, both the parties filed appeals in the High Court of Mysore.
The High Court held that the trial court had wrongly treated the
amounts of Rs. 20,000/- and Rs. 24,000/- as the principal amount3
of the original loans; and recorded a finding that the principal
amounts, in fact, were Rs. 15,017-8-0 in respect of the first
mortgage-deed, and Rs. 22,954/- in respect of the second mortgage-deed. The High Coμrt, thus, worked out the ag!\regate of
Rs. 37,971/50 P as the principal amount of the two loans adYanced under these two mortgage-deeds and, applying s. 17 of
the Act, granted a decree for this amount as principal together
with the same amount as interest. The High Court further held
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MANICKCHAND V. MOHD, SAIT (Bhargava, J.)
I 08 5
that this would be the arrears of interest to which the appellants
would be entitled up to the date fixed for payment of the redemption money by the judgment of !he High Court, that date being
the 19th March, 1959. The High Court also made a direction
that the principal amount will carry interest at 6% per annum
from the date fixed for redemption till realisation. The appellants
have now come up against this decree passed by the High Court
by certificate granted by that Court.
In this appeal, Mr. Govinda Rao, learned counsel for the
appellants, raised only two points.
The first point urged was
that the High Court was wrong in re-opening the accounts in
respect of loans prior to the two mortgage-deeds which formed the
consideration for the two mortgage-deeds in suit, and that the
High Court should have held that the principal amount was Rs.
44,000/- for the two mortgages as decided by the trial Court.
The second point urged by learned counsel was that the High
Court was wrong in fixing the dates up to which the arrears of
interest could be calculated for being included in the decree and
for prescribing future rates of interest.
It was urged that the
arrears of interest envisaged by s. 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the
suit, and the High Court should have granted future interest subsequently instead of granting future interest only with effect from
the date fixed for redemption.
·
So far as the first point raised by learned counsel is concerned,
it appears to us that it is totally misconceived, because the language of s. 17 of the Act plainly justifies the view taken by the
High Court.
Section 17, in prescribing the maximum amount
of arrears of interest to be allowed, refers to "the principal of
the original loan" and not "the principal of the loan". If the
latter expression had been used, it could have been argued in the
present case that the sums of Rs. 20,000/- and Rs. 24,000/-
which purported to be the principal amounts of the two loans
evidenced by the two mortgage-deeds in suit, were the principal
amounts of the loans to be taken into account in working out the
maximum amount of interest permissible under s. 17 of the Act
The expression "the principal of the original loan" makes it clear
that, in determining the maximum amount of arrears of interest
allowable, the Court must go behind the transaction of the Joan
and find out what was the actual cash originally advanced as principal and !g!lore all inter~st that may have been added subsequently
to that ongmal advance m order to make up the consideration for
the l?an~ in s_uit.
I~ the present case, therefore, the High Court
was 1ust1fied m lookmg at the transactions prior to the two mortgage-deeds to find out what were the actual cash amounts origi-
1086
SUPREME COURT REPORTS
[1969) 2 S.C.R.
nally advanced which, together with interest and after adjustment
of accounts, formed the principal amounts for the t~o mortgage·
deeds.
It was admitted by counsel for both parl!es before us
that the figures accepted by the High Court as the principal
amounts of the two Joans are correct, if the original cash ad·
vances are treated as the principal amounts of the original loans.
It is, therefore, clear that, on the plain language of 1;. 17 of the
Act, the High Court was right in holding that the aggregate of
the principal amounts of the
original loans was only
Rs. 37,971/50 P and not Rs. 44,000/- and, consequently, in
awarding arrears of interest only to the exten~ of the same amount
and not a larg.~r amount.
On the second question, we are unable to agree with the view
of the High Court that the arrears of interest mentioned in s. 17
of the Act mean interest calculated up to the date foi:ed for redemption. At the same time, we are also unable to accept the
submission made on behalf· of the appellants that the arrears of
interest in this section mean arrears of interest up to the date of
the suit. It is to be noticed that the section is in the form of a
directive to a Court l!]ot to pass a decree on account of arrears of
interest for a sum greater than the principal of the original loan.
This language clearly gives an indication of the intention of the
Legislature. Obviously, the directive is to be carried out by the
court at the time of passing the decree and, consequently, it would
be at that time that the court will see how much it is awarding for
arrears of interest. The maximum prescribed for the arrears of
interest must, therefore, be held to be the maximum amount in
respect of interest· payable up to the date of the decree when the
court carries out the directive laid down in this section.
Iu the
present case, the trial Court passed the decree on the 27th March,
1952 and, consequently, the amount of Rs. 37,971/50 P awarded as arrears of interest must be the arrears of intere~t du~ up
to that date. The High Court, in our opinion, was not correct
in holding that these arrears of interest will cover interest due up
to the date fixed for redemption by the High Court.
In this connection, learned counsel for the respondents urged
that the arrears of interest envisaged by s. 17. of the Act should
be held to include interest due up to the date of the decree by
the High Court, because that is the effective decree granting interest to the mortgagees; but this arguments overlooks the prilJ.ciple of law that the decree of an appellate Court.takes effect from
the date of the decree of the original court. In this case, therefore, even though the High Court passed the appellate decree at
a later date, that decree has to be deemed to have come into
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MANICKCHAND V. MOHD. SAIT (Bharg11Va, J.)
1087
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effect from 27th March, 1952 which was the date of the decree
/.-~
of the trial Court, so that no question can arise of holding that
the arrears of inter.est under s. 17 of the Act must be computed
up to the date on which the High Court passed the decree.
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The further point that arose was as to the interest which the
appellants could claim after the date of the decree,
viz., 27th
March, 1952, on the amount decreed. On behalf of the appellants reliance was placed on Order 34, r. 11 of the Code of
Civil Procedure and it was urge,d that interest-5hould be allowed
after that date in accordance with the provisions of that rule.
The High Court has expressed the opinion that, if interest is
allowed under r. 11 of Order 34, C.P.C., it would be in conflict
with s. 17 of the Act; but we are unable to see any such conflict.
Section 17 of the Act confines itself to laying down the maximum
of arrears of interest to be allowed up to the date of the decree
and is not concerned with the interest that is to be allowed for
the period thereafter. Admittedly, the Code of Civil Procedure
was applicable to this suit and, consequently, interest subsequent
to the date of the decree had to be awarded in accordance with
Order 34, r. 11, .C.P.C. Under r. ll(a)(i), interest would be
payable on the principal amount found or declared due on the
mortgage, from the date of the decree up to the date fixed for
payment, at the rate payable on the principal, or, where no
such rate is fixed,. at such rate as the Court may deem reasonable. In this case, the date of the decree by the trial Court was
27th March, 1952, while the date fixed for payment became
19th March, 1959 as a result of the decree of the High Court.
The interest for this period has to be calculated in accordance
with r. ll(a)(i) of Order 34, C.P.C., on the principal amount of
Rs. 37,971/50 P.
A~ regards the.rate, it is true that, U(!lder the
mortgage-deeds, the ~nterest was payable @ 1 % per mensem;
but, under the provis10ns of the Act read with the provisions of
the Usurious Loans Act (Mysore Act IX of 1923), the fair interest payable on the loan would be @ 9 per cent per annum and
it. is at this rate that the interest must be calculated on this principal amount for this period. In addition, under r: ll(a)(ii) of
0.34, C.P.C., interest @ 6% per annum has to be allowed on
the amount decreed for costs, charges and expenses incurred by
th.e ap_Pellants ~p to the date of the preliminary decree. A further
drrec!lon f!lat 1s necessary is that interest under r. 11 (b) of 0.34,
C.P.C., will be payable up to the date of realisation or actual
payment on the aggregate of the two principal sums just mentioned @ 6% per annum which must be deemed to be reasonable as interest at that rate is ordinarily awarded in all decrees in
respect of future periods.
1088
SUPREME COURT REPORTS
[1969] 2 S.C.R.
The result is that the decree passed by the High Court will
have to be amended in respect of calculation of interest in the
manner indicated by us above. The appeal is partly allowed to
this extent. In the circumstances of this case, we direct parties to
bear their own costs of this appeal.
G.C.
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L 6 $,pP· CJ/69-2,500-Sec.VI-24-1-70-GIPF.
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Appeal partly allowed.
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