# [1967] 2 S.C.R. 245

- **Citation:** [1967] 2 S.C.R. 245
- **Court:** Supreme Court of India
- **Decided:** 1966-12-13
- **Case number:** CIVIL APPELLATE Jl,TRISDICTION : Civil Appeal No. 850 of 1964
- **Bench:** S. M. S!Kri, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1967-2-s-c-r-245-3932
- **Pages:** 11

## Headnote

Orissa Esta/es Abolition Act 1951 (Act I of 1952), s. 20(1) Ir. (2),
and Orissa Money Lenders Act 1939, ss. 10 & 11-Claims Oflic.r reqwred under Abolition Act to determine amount of debt 'legally and ;ustly
due'-ln doing so ·whether can take into account provisio115 of Money
Lenders Act.
The appellant company advanced a loan to the predecessor-in-title
of the respondents against a mortgage of land in 1906.
Jn 1953 the
said land vested in the State of Orissa by virtue of a notification llllder
s. 3 of the Orissa Estates Abolition Act 1951. Under s. 18 of the Act
the appellant filed a claim in respect of the loan before the Claims Ollicer.
The mortgagor contended that since the appellant bad realised more
than double the amount of the loan as interest, the debt stood extinguished according to ss. 10 and 11 of the Money Lenders Act 1939.
The
Claims Officer and the High Court held against the appellant thougll on
different grounds. The appellant came to this Coun and contended that
die proced•1re for dctermming a claim as provided 'in s. 20 of the
Abolition Act was exhaustive and recourse to the provisions of the Money
Lenders Act was unjustified.
HELD : The Claims Officer cannot under s. 20(2) of the Abolliion
Act determine the principal and interest due under a mortgage without
considering the question as to whether the claim is true or whether it is
barred by any other law, or whether the claim is still subsisting. These
are all matters which properly arise for consideration by the Claims
Officer.
The expression 'legally and justly due' occurring in s. 20( 1)
clearly indicates that the first and initial duty of the Claims Officer is
to find out whether any principal amount is at all due to the creditor.
For this purpose he would, be perfectly justified i'l relyinjJ on any
provisions of other statutes bearing upon that subject-in this praticular
case the provisions of the Money Lender's Act. Taking section 10 and
11 of the latter Act into account it was clear that no amount was due
to the appellants as they had· already received more than double the amount
of ·the original loan. [2~A F; 225 A-DJ
CIVIL APPELLATE Jl,TRISDICTION : Civil Appeal No. 850 of
1964.
Appeal from the judgment and decree dated January 4, 1963
of the Orissa High Court in Misc. Appeal No. 94 of 1960.
B. Sen and S. N. Mukherjee, for the appellant.
H
G. L. Sanghi, for respondent Nos. 1 and 2.
Deepak Dutta Chaudhuri and R.' N. Sachthey, for respondant
No.3.
24
1.~
SUPREME COURT REPORTS
[ 1967] 2 s.c.R.
The Judgment of the Court '"" tklivered hy
Vaidialingam. J. This appe:il. on ccrtific~te. is directed ag:iinst
th~ judgment 0f the Orissa High Court, dated Januarv 4. 1963,
aPJ rendered in Miscellaneous Appeals Nos. 94 & 95o(1960.
The circumstances, under which this a11peal •rises, may be
briclly stated. The predecessor-in-title of the respondents had
ex:cutcd three mortgages in favour of the ap~llant-company, which
is registered in Lo~don. The first mortgage was executed on October 2-1. 1903. securing a sum of £1,35.000/-. Inasmuch as. according to both parties. this mortgage has been completely redeemed in
1935. it is not necessary to make any further reference to this transact ion. The second mortgage was executed on December 18,
1906, under which a sum of £77,500,'- was borrowed by the mortgagor.
Even according to the appellant, in respect of this mortgage, the respondents had paid a total sum of £1,77,349/-, by way
of interest which is more than twice the principal amount covered by
the mortgage. The third mortgage was executed on October 21,
1935. under which a sum of £65,000/- was borrowed by the mortgagor.
The appellant demanded the repavment of the amounts due
under these mortgages, but the mortgagor, so far as the mortgage
of 1906 was concerned, repudiated the same on the ground that the
entire transaction had been wiped off, by virtue of s. IO of the Orissa
Money-Lenders Act, 1939 (Orissa Act III of 1939) (hereinafter
called the Money-Lenders Act): ina

## Text

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INDIAN & GENERAL INVESTMENT TRUST LTD.
".
SHRI PURNA CHANDRA MARDARAJ & CO.
December 13, 1966
(S. M. S!KRI AND C. A. VAIDIALINGAM, JJ.]
Orissa Esta/es Abolition Act 1951 (Act I of 1952), s. 20(1) Ir. (2),
and Orissa Money Lenders Act 1939, ss. 10 & 11-Claims Oflic.r reqwred under Abolition Act to determine amount of debt 'legally and ;ustly
due'-ln doing so ·whether can take into account provisio115 of Money
Lenders Act.
The appellant company advanced a loan to the predecessor-in-title
of the respondents against a mortgage of land in 1906.
Jn 1953 the
said land vested in the State of Orissa by virtue of a notification llllder
s. 3 of the Orissa Estates Abolition Act 1951. Under s. 18 of the Act
the appellant filed a claim in respect of the loan before the Claims Ollicer.
The mortgagor contended that since the appellant bad realised more
than double the amount of the loan as interest, the debt stood extinguished according to ss. 10 and 11 of the Money Lenders Act 1939.
The
Claims Officer and the High Court held against the appellant thougll on
different grounds. The appellant came to this Coun and contended that
die proced•1re for dctermming a claim as provided 'in s. 20 of the
Abolition Act was exhaustive and recourse to the provisions of the Money
Lenders Act was unjustified.
HELD : The Claims Officer cannot under s. 20(2) of the Abolliion
Act determine the principal and interest due under a mortgage without
considering the question as to whether the claim is true or whether it is
barred by any other law, or whether the claim is still subsisting. These
are all matters which properly arise for consideration by the Claims
Officer.
The expression 'legally and justly due' occurring in s. 20( 1)
clearly indicates that the first and initial duty of the Claims Officer is
to find out whether any principal amount is at all due to the creditor.
For this purpose he would, be perfectly justified i'l relyinjJ on any
provisions of other statutes bearing upon that subject-in this praticular
case the provisions of the Money Lender's Act. Taking section 10 and
11 of the latter Act into account it was clear that no amount was due
to the appellants as they had· already received more than double the amount
of ·the original loan. [2~A F; 225 A-DJ
CIVIL APPELLATE Jl,TRISDICTION : Civil Appeal No. 850 of
1964.
Appeal from the judgment and decree dated January 4, 1963
of the Orissa High Court in Misc. Appeal No. 94 of 1960.
B. Sen and S. N. Mukherjee, for the appellant.
H
G. L. Sanghi, for respondent Nos. 1 and 2.
Deepak Dutta Chaudhuri and R.' N. Sachthey, for respondant
No.3.
24
1.~
SUPREME COURT REPORTS
[ 1967] 2 s.c.R.
The Judgment of the Court '"" tklivered hy
Vaidialingam. J. This appe:il. on ccrtific~te. is directed ag:iinst
th~ judgment 0f the Orissa High Court, dated Januarv 4. 1963,
aPJ rendered in Miscellaneous Appeals Nos. 94 & 95o(1960.
The circumstances, under which this a11peal •rises, may be
briclly stated. The predecessor-in-title of the respondents had
ex:cutcd three mortgages in favour of the ap~llant-company, which
is registered in Lo~don. The first mortgage was executed on October 2-1. 1903. securing a sum of £1,35.000/-. Inasmuch as. according to both parties. this mortgage has been completely redeemed in
1935. it is not necessary to make any further reference to this transact ion. The second mortgage was executed on December 18,
1906, under which a sum of £77,500,'- was borrowed by the mortgagor.
Even according to the appellant, in respect of this mortgage, the respondents had paid a total sum of £1,77,349/-, by way
of interest which is more than twice the principal amount covered by
the mortgage. The third mortgage was executed on October 21,
1935. under which a sum of £65,000/- was borrowed by the mortgagor.
The appellant demanded the repavment of the amounts due
under these mortgages, but the mortgagor, so far as the mortgage
of 1906 was concerned, repudiated the same on the ground that the
entire transaction had been wiped off, by virtue of s. IO of the Orissa
Money-Lenders Act, 1939 (Orissa Act III of 1939) (hereinafter
called the Money-Lenders Act): inasmuch as he had paid more
than double the original principal amount, as admitted by the
mortgagee.
The appellant, however, did not accept this repudiation and, in
consequence, the company took legal proceedings in London and
obtained an ex parte decree.
But attempts to execute the decree in
India did not succeed, as will be seen from the decision of the
Calcutta High Court in /. G. lmestment Trust v. Raja of Khalikote(').
The High Court held that the decree obtained by the appellant in
London was not executable in India.
In the meanwhile, the mortgaged properties vested in the State
of Or'ssa, under the Orissa Estates Abolition Act, 1951 (Act I of
1952) (hereinafter called the Abolition Act), on June I, 1953, by
virtue of the notification issued by the State Government under s. 3
thereof. Inasmuch. as the appellant had not realised the dues u'.lder
the two later mortgages, they filed a claim petition before the
Claims Officer, under s. 18 of the Abolition Act.
Under s. 18(1) (a) of the Abolition Act, every crr:litor, whose
debt is secured by the mortgage of, or is a charge on, any estate c>r
(I) A.l.R. 1952 Cal. 508.
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iNVC..<TMESf TRVST v. PURNACHANDRA & co. (Vaidialinga1r., /.) 24,
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part thereo~. which has vested in the Stale Government under s. 3,
has to file a claim within the period mentior.cd therein, to the Claims
Officer, for the purpose of determining the amount of debt 'legally
and justly payable to each such creditor in respect of his claim'.
Though the claim included the third mortgage dated October 21,
1935, also, there does not appear to have been much of a serious
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contest about the liability under that mortgage and. therefore, both
the Claims Officer, as well as the High Court, on appeal, have
substantially accepted the claim of the appellant. Therefore, the
rights of the partieHmder that mortgage, do nr>t also arise for consideration, in this appeal.
c
So far as the mortgage of December 18, 1906, under which the
mortgagor had borrowed a sum of £77,500/-. is concerned, in the
claim petition the particulars of the properties mortgaged were all
given in detail. The appellant had also admitted having received,
by way of interest, in respect of this mortgage, a sum of £1,77,34918-0 and he had given, in a statement, details of this receipt. The
D ·rate of interest payable under the mortgage was 6% per annum.
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It is also seen, from the said statement, that the appellant
has given credit to payment of a sum of £29,000/- towards the principal amount and, as such, a balance of £48,500/- remained due as
principal. The appellant had claimed this amount, as well as the
balance of interest payable, in the sum of £17,460/-, as being due
upto May 1, 1953. The appellant had also claimed certain other
amounts which, according to him, were payable as commission and
premium as per the terms contained in the mortgage deed. The
equivalent of all these amounts, in Indian currency, was also given
by the appellant in the claim petition. The appellant, in consequence, prayed for payment of these amounts, stated to be due to
him under this mortgage.
The mortgagor contested the claim of the appellant before the
Claims Officer. He pleaded that the claim of the mortgagee, under
the mortgage, was no longer subsisting and that the mortgage liability had been dLcharged by payments and by operation of law. The
mortgagor pleaded that, inasmuch as the appellant had :ealised
interest which is, admittedly, far greater than the amount of the
original loan, the liability under the mortgage had become extinguished, under s. 10 of the Money-Lenders Act.
The mortgagor further contended that the mortgage liability
mu5t be considered to have been extinguished, under s. 17 of the
Money-Lenders Act, inasmuch as the mortgage, in question, is a
possessory mortgage and the mortgagee had been in possession and
enjoyment of the mortgaged security for a period of I 5 years.
248
SUPRBMB COURT REPORTS
( 196 7] 2 S.C.R.
There were also certain other objections, raised by the mortg~r,0r to
the claim made by the morcgagee by way of conunission and premium.
The Claims Officer accepted the plea of the mortgagor that the
mortgage of December 18, 1906, is a possessory mortgage and the
mortgagees were in possession and enjoyment of the properties for
15 years from the date of the mortgage. In consequence, the
Claims Officer held that, in terms of s. 17 of the Money-Lenders
Act, the mortgage of 1906 should be deemed to have been extinguished on the.expiry of 15 years from the date of the mortgage,
i.e., long before 1953, and even long before 1947, when the mortgagor repudiated his liability under the mortgage. But the Qaims
Officer was not prepared to accept the plea of the mortgagor that
under ss. 10 and 11 of the Money-lenders Act, the transaction
should be considered to have bct.n extingllished. So far as the applicability of ss. 10 ar;d 11 of the Money-Lenders Act is concerned, the
view of the Claims Officer appears to be that those provisions can
be invoked only when a claim is made by the mortgagee in a 'suit'.
and when a 'Court' has to adjudicate upon the same. Aro:ir<ling
to the Claims Officer, he is not a 'Court' and the proceedings before
him, initiated by the mortgagee, by way of a claim, rnder the Abolition Act, is not a 'suit', so as to attract the provisions of ss. 10
and 11.
Therefore, the Claims Officer held that ss. 10 and 11, of the
Money-Lenders Act, did not apply.
But, inasmuch as he held in
favour of the mortgagor, applying s. 17 of the Money-Lenders Act,
that the mortgage claim had been extinguished, no relief was granted in favour of the appellant, so far as this transaction was
concerned.
Both the appellant and the respondents, had filed appeals under
s. 21 of the Abolition Act to the Board, which, in this case, was the
High Court, as provided under s. 22 of the Abolition Act. The
appellant had challenged the rejection of his claim, in respect
of this mortgage, by the Claims Officer, .relying upon s. 17
of the Money-Lenders Act. Certain other reliefs, which had
been denied by the Claims Officer, were also the subject of this
appeal. The respondents had filed their appeal, similarly, regarding certain claims which had been allowed in favour of the appellant; and, in particular, challenged the decision of the Claims Officer regarding the non-applicability of ss. 10 and 11 of the Moneylenders Act, to this transaction.
Both the appeals have been disposed of by the Board, by a
common judgment, dated January 4, 1963.
So far as this mortgage is concerned, the Board has held that the view of the Claims
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J!\VF.5TJ\.IENT TRU'.;T v. Pl.!R:"'\,\CHANDRA & co. (Vo.idialinga1n, /.) 249
Officer, that it has been extinguished, in view of s. 17 of the MoneyLenders Act, is not correct. The Board has. after a consideration
of the evidence on record, come to the conclusion that the mortgagee
has not been in possession for the requisite period referred to in
s. 17 and that, on the o~her hand, the mortgagor himself had been
in possession. Therefore, the Board, differing from the conclusions
arrived at by the Claims Officer, has held that the mortgage cannot
be considered to have been discharged under s. 17 of the MoneyLenders Act.
But, the mortgagor, pressed before the Board the contention
that, applying ss. IO and l l of the Money-Lenders Act, the mortgage claim, in any event, must be considered to have been extinguished. Though this contention, as we have pointed out, did not
find acceptance at the hands of the Claims Officer, the Board,
ultimately, upheld this plea of the mortgagor. No doubt, the Board
was of the view that the Claims Officer, though not a 'Court', could
exercise larger powers and grant relief to the mortgagor, because
it is a tribunal and its jurisdiction must be considered to be wider.
On this basis, the Board, after reference to s. 20(1) of the Abolition
Act, was of the view that, in considering the question whether the
amount was 'legally and justly due', to the appellant, the Claims
Officer could have due regard to the provisions contained in the
Money-Lenders Act. In this view, the Board, ultimately, held that
inas1t1uch as, even according to the appellant, the mortgagee had
paid a sum of £1,77,349/-, the entire balance of principal and interest claimed by the mortgagee should be considered to have been
fully paid. The Board was also of the view that certain claims made,
by way of premium and commission, had also been paid off by the
excess amounts paid by the mortgagor. Therefore; the Board,
like the Claims Officer, ultimately held that no amount at all was
payable under the second mortgage.
It will be seen that both the Claims Officer, as well as the Board
have come to an identical conclusion in favour of the mortgagor,
viz., that no amount is payable under the mortgage of December
18, 1906. While the Claims Officer came to the conclusion by applying s. 17 of the M0ney-Lenders Act, the Board, on the other hand,
reached the same conclusion, by applying ss. 10 and 11 of the
Money-Lenders Act read withs. 20(1) of the Abolition Act. The
mortgagee-appellant has come to this Court, challenging this decision of the Board that no amounts are due by the mortgagor under
the mortgage of December 18, 1906.
Though, in this Court, on behalf of the mortgagors-respondents, Mr. G. L. Sanghi, learned counsel, has challenged the correctness of the decision of the Board about the non-applicability of
s. 17 of the Money-Lenders Act, we do not think it necessary to go
25 0
SUPREME COUllT
REPOllTS
[1967) 2 S.C.R.
into that aspect, because we arc accepting his contention that the
Board was justified in holding that the mortgage has been extinguished under ss. 10 and 11 of the Money-Lenders Act.
B~fore we advert to the contentions of Mr. B. Sen, learned counsel for the arpellant, it is necessary to refer fo the material provisions
of the two Acts, referred to above ..
The Money-Lenders Act has been enacted in 1939; and the
preamble says that it was found expedient, hy the Legislature, to
regulate money-lending transactions and to grant relief to debtors in
the State of Orissa. Section 9 provides the maximum rates at which
interest may be decreed.
Sub-ss. (I) and (2) of s. IO, which are
relevant for our purpose, are as follows :
"10. (I) Notwithstanding anything to the contrary
contained in any othc1 law or in anything having the
force of law or in any other contract, no Court shall,
in any suit, whether brought by a money-lender or by
any other person, in resrcct of a loan advanced before or
after the commencement of this Act, pass a decree for an
amount of interest for the period preceding the institution
of the suit which, together with any aMount already
realised as interest through Court or otherwise, is greater
than the amount of the loan origina1ly advanced.
(2) Where, in any suit, as is referred to in sub-section
(I), it is found that the amount already realised as interest
through Court or otherwise, for the period preceding the
institution of the suit, is greater than the amount of the
loan originally advanced, so much of the said amount of
interest as is in excess of the loan shall be appropriated
towards the satisfaction of the loan and the Court shall
pass a decree for the payment of the balance of the loan,
if any."
_Sub-s. (3) of s. IO gives jurisdiction to the executing Court
to grant similar appropriate relief.
Section I l, again, enables
the Court to re-open the transaction and appropriate excess interest
towards the loan.
In particular, it will be seen, that under suD-s. (L) of s. 10,
extracted above, if it is found that the amount already realised as
interest through Court, or otherwise, for the period preceding the
institution of the suit, is greater than the amount of the loan originally advanced, it is necessary to appropriate towards the satisfaction of the loan, so much of the said amount of interest as is in
ex=s of the loan, and the Court can pass a decree only for the payment of the balance of the loan, if any.
Pausing here for a moment,
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INVESTME'iT TRUST I'. PURNACllANDRA & co. (Vaidia/ingan;, J.) 251
it may be stated that. in this case, the mortgagor, \\•hen a demand
was made for payment of the amount by the mortgagee. has, by his
Jetta dated September 14, 1947, repudiated his liability, relying
on these provisions of the Money-Lenders Act.
Coming to the Abolition Act, s. 18 provides for a creditor.
whose debt is secured by a mortgage or is a charge on any estate or
any part thereof vested in the State Government, to apply to the
Claims Officer for determining the amount of debt 'legally and justly
payable' to each such creditor in respect of his daim. Sub-sections
(ll and (2). of s. 20, of the Abolition Act, which arc material, are
as follows :
"20. (I) The Claims Officer, shall, in accordance
with the rules prescribed, determine the principal amount
legally and justly due to each creditor and the interest (if any)
due at the date of such determination in respect of
such. principal amount.
(2) In determining the principal amount and interest
under sub-section (!), the Claims Officer shall, notwithstanding the provisions of any agreement or law to the
contrary, proceed in the following manner :-
(a) he shall ascertain the amount of the principal
originally advanced in each case, irrespective of the closing
of accounts, execution of fresh bonds, or decree or order of
a Court;
(b) he shall ascertain the amount of the interest already
paid or realised and shall set off towards the amount of
the principal any amount paid or realised as simple interest
in excess of six per centum per annum or the stipulated .
rate of interest whichever is lower;
( c) he shall separately specify the amount of the
principal and the amount of the interest, if any, due to
the creditor, such interest being calculated at the rate
mentioned in clause (b) and being limited to the amount of
the principal originally advanced;
(d) if he finds that in any case the creditor has received or realised by way of interest an amount equal to or
more th':n the amount of the principal, he shall not allow
any further interest to run on such principal;
Explanation : In the case (If a usufructuary mortgage,
or a lease executed in lieu of an advance made of an ·estate
or in the case of possession of such estate or part thereof
by a widow in lieu of her dower debt, the net amount of
rents and profits accruing from such estate shall be deemed
to be tbe interest for the purposes of this ·section.
252
SUPREME COURT REPORTS
[ 1967] 2 S.C.R.
(e) in other cases, the amount of the principal ascertained to be due to the claimant shall carrv interest at
such rate not exceeding six per centum per a~num as may
be prescribed by the State Government;
(f) no future interest shall run on any interest ascertained to be due to a creditor."
Mr. B.,.Sen, learned counseffor the appe;:ant, atiacks the order
of the Board, applying the provisions ofss. IO arid 11 of the MoneyLenders Act, to the transaction in question. According to the
learned counsel, these provisions do not apply, when a claim is made
by a secured credit.:ir before a Claims Officer, and which claim is
adjudicated upon by that Officer exercising his special jurisdiction
under the Abolition Act. According to learned counsel, the
Abolition Act is a self-contained Code and, in particular, has very
elaborately laid down, in s. 20, the various matters. which alone
could be taken into account, by the Claims Officer, in determining
the principal amount and interest that is paphle to a creditor.
Counsel points out that the Claims Officer, exercising jurisdiction
under this special enactment, riz., the Abolition Act, can have,
and should have, recourse only to the provisions of that statute.
Mr. Sen also points out that there is absolutely no indication in the
Abolition Act that the Claims Officer can take into account provissions contained ir the Money-Lenders Act.
Inasmuch as the
Legislature has not made the provisions of the M"ney-Lenders
Act applicable to proceedings under the Abolition Act, Mr. Sen
points out, the Board has acted illegally in applying the provisions
of the Money-Lenders Act and, in consequence, holding in favour
of the mortgagor. Counsel also points out that the provisions in
the two statutes cannot be applied in respect of the same transaction;
because, the provisions regarding the adjudication of a claim under
the Money-Lenders Act will have to be done on a basis entirely different from that contained in the Abolition Act. Therefore, the
short contention, of the learned counsel, is that ss. I 0 and 11 of the
Money-Lenders Act should not have been applied at all so as to
non-suit his client.
Mr. Sanghi, learned counsel for the respor.dents, on the other
hand, pointed out that the mortgagor had, as early as 1947, repudiated his liability under the mortgage, relying or. the provisions of the
Money-Lenders Act.
In the absence of any indication in the Ab0lition Act that a debtor cannot avail himself of relief granted to him
under othe1 ameliorative measures-in this case. the Money1..enders Act-the Board, accordil}g lo the learned counsel, was
perfectly justified in applying ss. 10 and 11 of the Money-Lenders
Act to find out whether at all any principal amount "as due to the
mortgagee. Counsel also points out that the object of a claim being
filed by a creditor, like the appellant is, as indicated ins. te:t)(a)
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INVESTMENT TRUST v. PliRNACHANDRA & co. (Vaidialingam, /.)253
of the Abolition Act, for the purpose of determining the amount of
debt, 'legally and justly payable, to each such creditor in respect
of his claim'. Counsel further points out that, even under s. 20( I)
of the Abolition Act, the duty of the Claims Officer is to determine
the principal amount 'legally and justly due' to each creditor. For
the purpose of adjudicating on the claim of the appellant, and finding out what is the principal amount, 'legally and justly due to him',
the Board was perfectly justified in relying upon the provisions of
the Money Lenders Act. Counsel also points out that if, by applying the provisions of the Money-Lenders Act, the liability of the
mortgagor is extinguished, that, certainly, will clearly show that
there is no principal amount 'legally and justly due' to the appellant.
If the appellant had instituted a suit in the Orissa Courts to enforce
his claim on this mortgage, the Courts would have certainly applied
the provisions of the Money-Lenders Act and held that the appellant's claim had been satisfied. Because of the fact that the claim
is made under the Abolition Act, counsel points out that it could not
have been the intention of. the Legislature to make the position
of creditors, like the appellant, better than it is under the MoneyLenders Act.
Though we are not inclined to accept the reasons given by the
Board for applying the provisions of ss. JO and 11 of the MoneyLenders Act, we are, nevertheless, in agreement with the views
expressed by the Board that those provisions can be applied· If so,
the conclusion arrived at by the Board, that the mortgage liability
has been extinguished, is correct. We do, no doubt, see force in
tne contention of the learned counsel, for the appellant, that there is
no specific provision in the Abolition Act making any reference to
the Money-Lenders Act. We are also conscious that the Abolition
Act does lay down·some principles in clauses (a) to (f) of sub-s. (2)
of s. 20, as to how exactly the calculation has to be made. There
is also a slight difference in the method of calculation adopted by
the Money-Lenders Act and the Abolition Act. But, notwithstanding these circumstances, we are of opinion that, in order to determine
'the principal amount legally and justly due to each creditor' as laid
down in s .. 20(1) of the Abolition Act, it is the duty of the Claims
Officer to find out whether, in respect of a claim that is .made by a
creditor, there is a legal impediment for recognising the same, i.e,,
whether the claim is such which will be recognised by a JUdicial
Tribunal.
The legislature emphasises upon this aspect even in s. 18(J)(a)
of the Abolition Act. The purpose of a claim being made by a
secured creditor, under s. 18(1)(a) is, as we have already pointed
out, 'for the purpose of determining the amount of debt legally and
justly payabfe to each creditor in respect of his Claim'. The same
idea is, again, reiterated by the legislature in s. 20(1) of the Aboli-
254
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llEPO!l.TS
[196 7] 2 S.C.R.
tion Act when it makes it obligatory on the Claims Officer 'to determine the principal amount, legally and justly due to each creditor'.
;\o rules, as contemplated under$. 20(1) of the Abolition Act, have
been brought to our notice. The expression 'legally and jusdy due'
must, certainly, in our opinion, mean that before a claim is recognized by the Claims Officer he must 1'e satisfied thnt the principal
amount covered hy that claim:; 'legally and justly due' i.e., that such
a claim, if sought to be enforced in a Court <>r Judicial Tribunal,
will find recognition on the basis that it does not ;uffer from any
legal infirmity.
Jn this case, even according to the appellant, in respect of the
principal amount of £77,500/- advanced under the mortga~e of
December 18, 1906, admittedly, a sum of £1,77.349-18-0 nas been
received by him as interest. This amount is more thar. two times the
principal amount advanced under this mortgage. If, in spite of
this, the present claim had been made for recovery of further
amounts, on the basis of this mortgage, by the appellant, in any
Court, it is needless to state that the Court would have applied the
provisions of the Money-Lenders Act.
By applying ss. 10 and 11
of this Act, the Court would have come to the conclusion that the
appellant is not entitled to recover any more amounts inasmuch as
the entire claim must be considered to have been satisfied by the
respondent, having naid a sum of £1,77,349-18-0 by way of interest.
That means, the Court would have come to ;he conclu~ion that no
further amounts, by way of principal, arr. 'legally and justly due' to
the appellant; and, quite naturally, the further finding would be that
no interest at all is due. If no Court •vould have recognized the
present claim of the appellant, the same principles must be applicable when the Claims Officer is also called upon, under s. 20(1)
of the Abolition Act, 'to determine the principal amount legally and
justly due'. For the purpose of determining whether the principal
amount is 'legally and justly due', he would be perfectly justified in
relying on any provisions of other statutes 'bearing upon that
subject-in this particular case, the provisions of the Money-Lenders
Act.
Mr. B. Sen, learned counsel, has urged that in order to consider
a claim made by the creditor, the jurisdiction of the Claims Officer
is restricted, by the various provisions contained in clauses (a) to
(f) of s. 20(2) of the Abolition Act.
We are not inclined to accept
this large eontention of the learned counsel for the appellant. For
instance, if a plea of discharge is raised by a debtor in a claim proceeding, or, if a plea is raised by a debtcr that the claim is barred by
the law of Limitation, no provision is made in clauses (a) to (f) of
s. 20(2) giving jurisdiction to the Claims Officer either to ente1tain
such objection or to investigate the same. Ac.:eptancc of the contentions of the learned counsel for the appellant, will lead tc this
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JNV~STMENT ~'RUST v. PUR:<:ACllANDRA & co. (Vau/ia/ingom, I.) 25 5
conclusion that when a claim is made under the Abolition Act, the
Claims Officer will h1vc, straight away, to determine the principal
amount and interest under sub-s. ( 2) of s. 20 without considering the
question as to wh~th~r the claim h true or whether it is barred by
any other Jaw, or whether th~ claim is still subsisting. These are all
matters which, in our opinion, prop~rly arise for consideration when
a Oaims Officer has to determine the princip~I amount under s. 20{1)
of the Abolition Act. The expression
'legally and justly due',
occurring ins. 20(1), clearly indicates that the first and initial duty
of the Claims Officer is to find out whether any principal amount is
at all due to the creditor which he is entitled to recover either in
law or justly. It may be that, after arriving, on this aspect, at a
conclusion, one way or the other, and depending upon that decision,
the Claims Officer will have to adjudicate upon the rights of the
parties, having due regard to the various matters mentioned in
clauses (a) to (f) of sub-s. (2) of s. 20. We are therefore satisfied
that the Board is correct when it held that the provisions of the
Money-Lenders Act can be taken into account by the Claims Officer,
under s. 20(1) of the Abolition Act. If the provisions of the MoneyLenders Act apply, as they have been applied by the Board, there
is no contro-;ersy that the claim under the mortgage of December
18, 1906, must be considered to have been extinguished and that no
further amounu will be due, as held by the Board.
Th~ r~sult is that the appeal fails and is dismissed. In the
circumstances of the case, there will be no order as to costs.
G.C.
Appeal dismissed.