# BULCHAND CHANDmAM OF BOMBAY v. BANK OF INDIA LTD., FORT, BOMBAY

- **Citation:** [1968] 3 S.C.R. 868
- **Court:** Supreme Court of India
- **Decided:** 1968-04-19
- **Case number:** Civil Appeal No. 690 of 1967
- **Bench:** Shah, V. Ramaswami, G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/bulchand-chandmam-of-bombay-v-bank-of-india-ltd-fort-bombay-4356
- **Pages:** 11

## Headnote

S
The Displaced Persons (Debt Adjustment) Act 70 of 1951, ss, 2(6),
17, 22, 29-'Renewal' of debt meaning of-lnSurance policies
whether
governed by s. 11-Apportionment of liabilities between
joint debtors
under s. 22-Award of interest under s. 29.
The appellant was a citizen of Pakistan and had come u; India on
June 6, 1950 on a temporary permit. During his absence the Pakistan
Government declared him to be an evacuee. In December 1950 he was
granted a Domicile Certificate and since then he continued to reside in
Bombay. On May 4, 1945 the appellant had opened an account with tho
Bank of India (Hyderabad, Sind Branch)
called the Cash Credit
Account. Tho amount was secured by an assignment of life insurance
policies on tho appellant's life and mortgage of certain immovable properties. In July 1949 the appellant took another loan of Rs. 1,25,()()() from
tho· Hyderabad Bank on the security of certain properties and the personal security of himself and his wife. On .July 22, 1952 the appellant
made an application under s. 5 of the Displaced Persons (Debt Adjust-·
ment) Act, 1951 for adjustment elf his debts against several creditors, but
pressed it only against tho Bank. Against the trial court's judgment. both
parties appealed to the High Court. The High· Court's judgment was
challenged by the appellant iri this Court. It was contended on behalf
of the appellant, inter alia : (i) That no interest should have been allowed
to the Bank from August 15, 1947 in view of the provisions of s. 29 of
.the Act; (ii) That the liability on the Cash Credit Account and on the
Loan Account was not the sole responsibility of the appellant but was a
joint liability and the High Court should have apportioned the joint debt
under s. 22, without· construing that section with the aid of s. 43 rlf the
Indian Contract Ac~ (iii) That the insurance policies did not fall under
s. 17 of the Act and the appellant was entitled to a refund of the amount
recovered from them; and (iv) That the High .Court erred in interpreting
the word 'renewal' occurring in the definition of s. 2(6).
HELD: (i) Proviso (b) to s. 29(1) of the Act confers a. dracretioo
oo !00 Tribunal to allow interest not exceeding 4 per cent pe!r annum for
the period from August IS, 1947 up to December 10, 1951, the date on
which the Act came into force in Bombay after taking into account the
paying capacity of the debtor as defined in s. 32. In the present case the
High Court had on the statement of the appellant himself found his pay..
ing capacity to be far in excess of the debts due •from him, and it was
tlterefore a fit case in which interest at 4 per cent should be allowed to
the Bank from August 15, 1947 to December 10, 1951. [876 A-DJ
(ii) Even assuming that s. 43 of the contract is not relev'ant for tne
construction of s. 22 of the Act the plea of the appellant •for apportionment of the debt must be rejected because from his own pleadings it was
apparent that the liability both on the Loan Acoount and on the Cash
Credit Account was undertaken solely by the appellant.
There was no
justification for interfering with the finding
of the High Court in !Iris
respect. [876 E-Hl
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BULCHAND v. BANK OF INDIA (Ramaswami, J.)
8G9
(iii) The insurance policies were 'movable property'
as defined in
s. 3 of the General Clauses Act. In the present case there was an absolllle assignment of the policies in favour of the Bank and the policies were
also in its possession. Section 17 of the Act therefore applied and unle""
realisation under the policies was in ex= of the debt due the appellant
was not entitled to refund. [877 F-0]
(iv) The confirmation or acknowledgement of indebtedness which includes both loan and interest and further advances l/ any, would not fall
within the ambit of the expression 'renewal' in the proviso to s. 2(6) of
1he Act. The liability referred to in the proviso is the liabili!}'. solely by
Way of renewal and the proviso to the section states that the ongi

## Text

866
BULCHAND CHANDmAM OF BOMBAY
A
v.
BANK OF INDIA LTD., FORT, BOMBAY
April 19, 1968
[J. C, SHAH, V. RAMASWAMI and G. K. MITTER, JJ.J
S
The Displaced Persons (Debt Adjustment) Act 70 of 1951, ss, 2(6),
17, 22, 29-'Renewal' of debt meaning of-lnSurance policies
whether
governed by s. 11-Apportionment of liabilities between
joint debtors
under s. 22-Award of interest under s. 29.
The appellant was a citizen of Pakistan and had come u; India on
June 6, 1950 on a temporary permit. During his absence the Pakistan
Government declared him to be an evacuee. In December 1950 he was
granted a Domicile Certificate and since then he continued to reside in
Bombay. On May 4, 1945 the appellant had opened an account with tho
Bank of India (Hyderabad, Sind Branch)
called the Cash Credit
Account. Tho amount was secured by an assignment of life insurance
policies on tho appellant's life and mortgage of certain immovable properties. In July 1949 the appellant took another loan of Rs. 1,25,()()() from
tho· Hyderabad Bank on the security of certain properties and the personal security of himself and his wife. On .July 22, 1952 the appellant
made an application under s. 5 of the Displaced Persons (Debt Adjust-·
ment) Act, 1951 for adjustment elf his debts against several creditors, but
pressed it only against tho Bank. Against the trial court's judgment. both
parties appealed to the High Court. The High· Court's judgment was
challenged by the appellant iri this Court. It was contended on behalf
of the appellant, inter alia : (i) That no interest should have been allowed
to the Bank from August 15, 1947 in view of the provisions of s. 29 of
.the Act; (ii) That the liability on the Cash Credit Account and on the
Loan Account was not the sole responsibility of the appellant but was a
joint liability and the High Court should have apportioned the joint debt
under s. 22, without· construing that section with the aid of s. 43 rlf the
Indian Contract Ac~ (iii) That the insurance policies did not fall under
s. 17 of the Act and the appellant was entitled to a refund of the amount
recovered from them; and (iv) That the High .Court erred in interpreting
the word 'renewal' occurring in the definition of s. 2(6).
HELD: (i) Proviso (b) to s. 29(1) of the Act confers a. dracretioo
oo !00 Tribunal to allow interest not exceeding 4 per cent pe!r annum for
the period from August IS, 1947 up to December 10, 1951, the date on
which the Act came into force in Bombay after taking into account the
paying capacity of the debtor as defined in s. 32. In the present case the
High Court had on the statement of the appellant himself found his pay..
ing capacity to be far in excess of the debts due •from him, and it was
tlterefore a fit case in which interest at 4 per cent should be allowed to
the Bank from August 15, 1947 to December 10, 1951. [876 A-DJ
(ii) Even assuming that s. 43 of the contract is not relev'ant for tne
construction of s. 22 of the Act the plea of the appellant •for apportionment of the debt must be rejected because from his own pleadings it was
apparent that the liability both on the Loan Acoount and on the Cash
Credit Account was undertaken solely by the appellant.
There was no
justification for interfering with the finding
of the High Court in !Iris
respect. [876 E-Hl
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BULCHAND v. BANK OF INDIA (Ramaswami, J.)
8G9
(iii) The insurance policies were 'movable property'
as defined in
s. 3 of the General Clauses Act. In the present case there was an absolllle assignment of the policies in favour of the Bank and the policies were
also in its possession. Section 17 of the Act therefore applied and unle""
realisation under the policies was in ex= of the debt due the appellant
was not entitled to refund. [877 F-0]
(iv) The confirmation or acknowledgement of indebtedness which includes both loan and interest and further advances l/ any, would not fall
within the ambit of the expression 'renewal' in the proviso to s. 2(6) of
1he Act. The liability referred to in the proviso is the liabili!}'. solely by
Way of renewal and the proviso to the section states that the onginal loan
and not the one for which the renewal is made is the debt within the
meaning of the section. But the proviso does not apply if the confirmation or acknowledgement is not solely by way of re11;ewal on accou~ ~f
loan or interest but includes further advance.
The High Court was JUStlfied in determining the appellant's debts on this view. [877 H; 878 A·B]
CIVIL APPELLATE JURISDICTION :
Civil Appeal No. 690
of 1967.
Appeal from the judgment and decree dated November 16,
1962 of the Bombay High Court in Cross Appeals Nos. 756 and
791 of 1957.
M. C. Chagla and B. R. Agarwala, for the appellant.
S. T. Desai, Bhuvnesh Kumari,
J. B. Dadachan;i. 0. C.
M11thur and Ravinder Narain, for the respondent.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought, by certificate, from the
judgment of the Bombay High Court dated November 16, 1962
in Cross Appeals Nos. 756 and 791 of 1957.
The appellant, Bulchand Chandiram was a citizen of Pakistan
and had come to India on June 6, 1950 on a temporary permit.
During his absence the Pakistan Government declared him to be
an evacuee. In December, 1950 he was granted a Domicile
Certificate and since then he has been residing in Bombay. On
May 4, 1945 the appellant had opened an account with the Bank
ef India. (Hyderabad Sind Branch) called the Cash Credit Account.
The account was secured by an assignment of life insurance policies
on the appellant's life of about Rs. 79,000 and mortgage of immoveable properties l to 5 in Sch. 'F'. Between March and
April 194 7 properties 4 and 5 were sold and the appellant
paid Rs. 35,000 to the Bank. In this account on December 31,
1949 the amount due to the Bank was Rs. 1,06,281-12-11 (Item
No. 36) and on April 22, 1950 the amount due was Rs. 1,07,969/
15/ ll (Item No. 44). In July 1949 ,tl!~ appellant took a loan of
Rs. 1,25,000 from the Hyderabad Branch on the security of properties mentioned in Sch. 'G' and the personal security of himself
and his wife.
In early 1948 this Branch was closed and so the
account was transferred to the Karachi Branch. In this account on
December 31, 1949 the amount due was Rs. 1,33,655/11/- and
\
870
SUPREME COUllT JUIPOllTS
(1968) 3 S.C.R.
as on April 22, 1950 the amount due was Rs. 1,35,735713/-
(ltem No. 45). On July 22, 1952 the appellant made an application under s. 5 of the Displaced Persons (Debts Adjustment)
Act, 1951 (Act No. LXX of 1951), hereinafter referred to as the
"said Act" for adjustment of his debts against several creditors.
During the hearing of the app1ication the appellant only pressed
the application against the Bank and not against his other creditots.
The appellant alleged that the Bank had realised two of the iasurance policies and had recovered some other amounts. It was
also said that the Bank had received the rent of the properties from
Pakistan after they were declared evacuee properties. The appellant claimed that the Bank was also not entitled to claim interest
after August 15, 194 7. He further alleged that the additional
security on property No. 6 in the Schedule was obtained by the
Billk by undue influence and coercion and hence the security to
that extent was illegal and inoperative. The Bank contested die
application on several grounds. According to the Bank the preperties of the appellant left in Pakistan were worth only
Rs. 4,00,000. The Bank also alleged that the value of the assets of
the appellant was not correctly shown. It admitted the realisation
of Rs. 24, 700 on the maturity of the policies and stated that it
had credited the appellant_ with the converted value in Pakistan
rupees since the amount was transferred to Karachi when the Bank
received the assent of the Controller of Foreign Exchange. The
Bank contended that on June 30, 1952 the amount due in r~spect
of the Cash Credit Account was Rs. 1,22,160/2/11 and in the
loan account Rs. 1,52,622/12/- with interest at on~~r cent O\'er
the Bank rate. It was contended for the Bank that if the appellant
was held entitled to the protection of the said Act the Bank chose
to act under s. 16 of the said Act to retain the security and will
also be entitled to full amount of the insurance policies. Upon
these rival contentions of the parties the trial court he!<! that the
appellant was a displaced person, that he was entltled to dispubl
the amount due even though acknowledgements were signed, that
the debts were liable to be adjusted a& joint debts and apportioned·
between the debtors, that the insurance policies were moveable
J>POPerties for the purpose of s. 22 of the said Act but not for the
purpose of s. 17 and that the aepellant was entitled to a credit ol
Rs. 17,126/9/4 in respect of tlie amount realised on the maturity
of the insural\CC policies. The trial Judge accordingly held as below
in respect of the Cash Credit Account :
.. Amount due as principal up to 10th Deoember 1951
Interest up to 10th December 1951
Expenses
Less rent realised and amount of reversed entrie.s
Rs.
a.
p .
89.Wl-11-11
::?0,496- 4- 0
240-13- 0
l,IO,lJ2-12-ll
860-1()- 0
1,0'J,472-- 2 11"'
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BULCHAND v. BANK OF INDIA (Ramaswami, I.)
871
A On apportionment the trial Judge held that a sum of Rs. 13,684/
2/ 11 was recoverable out of life policies and Rs. 95;7~8/- from
immoveable properties. The liability Of the appellant being 1/3rd,
the trial Judge held him liable for Rs. 36,490/11/11. In respect
Of the loan account the trial Judge held as follows :
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"The amount due in that account up to 10th December 1951
Interest up to 10th December 1951
BKpenses
Less rent received .
Rs.
a. p.
1.20,704-11--0
20,89~0
38~6---0
1,41,639-3--0
1,621-15--0
1,40,017--4--0"
The trial Judge held that the appellant was liable for
Rs. 70,008-10-0 there being two joint debtors. Against the decision
of the trial Judge the Bank preferred Appeal No. 756 of 1957
and the appellant Bulchand Chandiram preferred Appeal No. 791
of 1957 in the Bombay High Court. The High Court held that
D
on June 30, 1948 there was due to the Bank in the Cash Credit
Account a sum of Rs. 1,02,902/7/ll and after .the said date
there were renewals only or confirmations of liabilitx and there
was a Promissory Note in respect of the said liability dated
November l 8, 1947 to the extent of Rs. 1,09,000/- and the High
Court was not entitled to go behind that date. The High Court
E
further held that in respect of the lci:in account a loan to the extent
of Rs. 1,25,000 was taken on July 12, 1947 and there was a
Promissory Note in respect thereof dated June 19, 1947. The
High Court held that the trial court was justified in awarding
interest at 4 per cent from August 15, 1947 to December 10, 1951
which was the date of the commencement of the said Act, under
F
the pro~ions of s. 29 '?f the said Act. Regarding the questfon
of apportionment the High Court came to the conclusion, after
atamining the evidence, that the appellant was alone liable fer
the debts and no question therefore arose of apportionment of
liability .. The High Court also examined the provisions of s. 17
of the satd Act and held that the insurance policies were moveable
properties within the meaning of that section and there was a
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valid. pledge in respect thereof. The High Court ultimately held
that m respect of the Cash .Credit Account the Bank was entitled
to a sum of Rs. 1,09,273.65 and in respect of the loan account
the Bank was entitled to Rs. 1,47,068.49.
H
It is necessary at this stage to set out the material provisions
of the said Act. Section 2(6) defines a "debt'' as follows :
" 'debt' means any pecuniary liability, whether payable presently or in future, or under a decree or order of
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872
SUPREME COURT REPORTS
(1968) 3 S.C.R.
a civil or revenue court or otherwise, or whether ascerA
tained or to be ascertained, which-
.......... ·.· ......................... .
and includes
any pecuniary liability incurred before the commencement of this Act by any such person as is referred to in
this clause which is based on, and is solely by way of
renewal of, any such liability as is referred to fn subclause (a) or sub-clause (b) or sub-clause (c) :
Provided that in the case of a foan, whether in cash·
or in kind, the amount originally advanced and not the
amount for which !he liability has been renewed Shall be
deemed to be the extent of the liability;
"
Section 3 states :
"Over-riding effect of Act, rules and orders.- Save
as otherwise expressly provided in this Act, the provisions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other Jaw for the time
being in force, or in any decree or order of a court, or
in any contract between the panies."
Section 5 enables a displaced person to make an application for
adjustment of debts to the proper Tribunal. Section 15 presc!1Des
the consequences of an application by the displaced debtor and
states that no proceedings can thereafter be taken against him for
realisation of the debt. Section 16 gives an option to the creditor
to elect as to whether he would retain the security in West Pakistan,
and if he does so the section prescribes the consequences of such
election on the part of the creditor.
Th~ section gives a first charge
to the secured creditor on the amount of the compensation to
which the debtor would be entitled to be paid for .his properties
left in Pakistan. But the amount in respect of which charge is
given is in the same proportion of the debt as the actual compensation bears to the verified claim in respect of the properties. If
property is given in exchange then charge is given in respect of
the debt in the same proportion as the property given bears to
.the verified claim. Section 17 relates to the debt secured by the
pledge of moveable property and provides as follows :
"17. Debts secured on moveable property.-(1)
Where in respect.of a debt incurred by a displaced debtor
and secured by .the pledge of movable property belonging
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BULCHAND v. BANK OF INDIA (Ramaswami, l.)
to him, the creditor had been placed in possession of
such property at any time before the debtor became a
displaced person, the following rules shall regulate the
rights and liabilities of the creditor and the debtor,
namely :·-
(a) the creditor may, if he is still in possession of'
the pledged property, realise the sum due to him
by the sale of such property after giving to the
debtor reasonable notice of the sale;
(b) the creditor shall not be entitled, in any case
where the pledged property is no longer in his
possession or is not available for redemption by
the debtor, to recover from the debtor the debt
or any part thereof for which the pledged property was security;
(c) the debtor shall not be liable, in the case of a sale
by the creditor of any pledged property, whether
under clause (a) or otherwise, to pay the balance
where the proceeds of such sale-are less than
the amount of the debt due;
(d) the creditor shall, in any case where the proceeds of the sale of the pledged property are
greater than the amount of the debt due, pay over
the surplus to the debtor.
·
(2) Notwithstanding anything
contained in this
section, the creditor shall be entitled to receive, and to
give a valid discharge in respect of, any sum due under
this Act or under any other law for the time being in force
from an insurance company in respect of any claim arising out of the loss or destruction of the pledged property, but the creditor shall, in any case where the sum
received from the insurance company iS greater than the
amount of the debt due to him, pay o\ter the surplus to
the debtor."
873
Section 22 relates to apportionment of joint debts and reads as
follows :
i
"Where a debt is due from a displaced person jointly
with another person, the Tribunal shall, for the purposes
of this Act, apportion the liability between them according to the following rules, namely :-
(a) if the liability of each debtor is defined, then
according to the defined share of each;
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874
SUPREME COURT REPORTS
[1968] 3 s.c.R.
( b) if the debt. was taken for any trade or business of
the joint debtors, then according to the shares
held by each of the joint debtors in the trade or
business;
( c) if the debt was not taken in any defined shares
or for any trade or business in which the partners
have any defined share, the debt shall be apportioned into as. many parts as there are joint
debtors, and each joint debtor shall be liable
only for the part apportioned to him;
( d) if one joint debtor is a displaced person and another is not, the sum apportioned to the nondisplaced person shall not be deemed to be a debt
within the mefoing of this Act and the -creditor
may in respect of such debt seek any reinedy
open to him in a civil court or otherwise;
............................... • .
'• .....
(f) if the liability is secured by a mortgage of movable and immovable properties, the debt shall
be apportioned between the two properties in the
same proportion as the value of each property
bears to the total value of the properties;
(g) where the relationship between the joint debtors
is that of principal and surety, nothing contained
in this Act shall prevent the institution of a suit
for the recovery of the debt against the surety
but no decree shall be passed in such suit for an
amount in excess of the amount decreed or which
can be decreed against the principal debtor in
accordance with the provisions of this Act :
Provided that the total amount which may be recovered from the principal debtor and .the surety
shall not exceed the amount decreed or which can be
decreed by the Tribunal against the principal debtor in
accordance with the provisions of this Act."
Section 29 makes provision for cesser of accrual of interest. It
states :
"(1). On and from the 15th day of August, 1947,
no interest shall accrue or be deemed to have accrued
in respect of any debt owed by a displaced person, and
no Tribunal shall allow any future interest in respect of
any decree or order passed by it :
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BULCHAND v. BANK OF INDIA (Ramaswami, !.)
875
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Provided that-
(a) where the debt is secured by the pledge of shares,
stocks, Government securities or secunties of a
local authority, the Tribunal shall allow, for the
period commencing from the 15th day of j\ugust,
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194 7, and ending with the date of COil)Illence·
ment of this Act, interest to the creditor at the
rate mutually agreed upon or at a ~ate at which
any dividend or interest has been paid or is payable in respect thereof, whichever is less;
(b) in any other case the Tribunal may, if it thinks it
c
just and proper to do so after taking into
account the paying capacity of the debtor as
defined in section 32, allow, for the period ment
tioned in clause (a), interest at a rate not exceeding four per cent. per annum simple.
(2) Nothing in this section shall apply to the interest
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payable in respect of any monies advanced by a creditor,
..
including an insurance company, on the security of a
policy of life insurance of a displaced debtor in order
to keep it alive."
Section 49 reads as follows :
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"Past transactions not to be affected.-(!) If before
~
the commencement of this Act a displaced debtor has
satisfied or discharged any of his liabilities in any manner
whatsoever, such transactions shall not be affected by
anything contained in this Act.
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(2) Where the Tribunal has determined the amount
due in respect of any debt in accordance with the provisions of this Act, any payments (including payments
by way of interest) made by the . displaced debtor
towards the debt prior to such determination shall be
adjusted towards .the amount so determined :
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Provided that no creditor shall be called upon to
refund any amount paid to him if it is found that it is
in excess of the amount determined as being due to him
under this Act."
In support of this appeal Mr. Chagla contended, in the first
place, that no interest should have been allowed to the Bank from
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August 15, 1947 in view of the provisions of s. 29 of the said
~
Act. We are unable to accept this argument as correct. Proviso
(b) to s. 29(1) of the said Act confers a discretion on the Tri~
bunal to allow interest not exceeding 4 per cent. per annum for
876"
SUPREME COURT REPORTS
(1968) 3 S.C.R.
the period from August 15, 1947 up to December 10, 1951, the
date on which the said Act came into force in Bombay after
taking into account the paying capacity of the debtor as defined
in s. 32 of the Act. The expression "paying capacity of the
debtor" is defined in s. 32 of the said Act as follows :
"the aggregate of the mark.et value of all the attachable assets in India of the displaced debtor plus the
income which is likely to accrue to him for the next three
years succeeding, excluding from the computation of
such income a sum calculated at the rate of two hundred
and fifty rupees a month."
The High Court has observed, on the statement of the appellant
himself, that his paying capacity far exceeded the aggregate debt
due from him and it was therefore a fit case in which interest at
4 per cent, should be allowed to .the Bank from August 15, 1947
to December 10, 1951. In our opinion, the finding of the High
Court on this point is supported by proper evidence. We accordingly reject the argument of the appellant on this aspect of the
case.
We shall then proceed to consider the rtext co_ntention put
forward on behalf of the appellant, namely, than the liability on
the Cash Credit Account and on the Loan Account was not the
sole liability of the appellant alone but was a joint liability and
the High Court ought to have ·apportioned the joint debt under
s. 22 of the said Act between the appellant and the joint debtors.
It was argued on behalf of the appellant that the High Court fell
into an error in construing the provisions of s, 22 in the context
of s. 43 of the Indian Contract Act which states that "when two
or more persons make a joint promise, the promisee may, in the
absence of express agreement to the contrary; compe~ any one or
more of' such joint promisers to perform the whole of the promise". Mr. Chagla contended that this section has no application in view of the over-riding effect of s. 3 of the said Act. It is
not necessary, in our opinion, to decide this point in the present
case.
We shall assume in favour of the appellant that s. 43 of
the Indian Contract Act has no application.
Even upon that
assumption the plea of the appellant for apportionment of the
debt must be rejected because tbe High Court has found, upon
examination of the evidence, that the liability both on the Loan
Account and on the Cash Credit Account was undertaken solely
by the appellant. The finding of the High Court on this point
is supported by paragraphs 12 and 15 of the petition of the appellant. In these two paragraphs the appellant admitted that he had
opened the Cash Credit Account with the Bank and that he had
taken the loan against mortgaged securities mentioned in Sch. G
to the petition. We see no reason for differing from the finding
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BULCBAND v. BANK OF INDIA (Ramaswami, J.)
877
of the. High Court. The liability on the Loan Account and on
the Cash Credit Account was solely that of the appellant and
therefore the question of apportionment of the debt under s. 22
of the said Act does not arise,
The next question arising in this appeal is whether the appellant .is entitled to a refund of the amount recovered from the insurance policies.
It appears that there were 12 life policies menc
tloned in Sch. 'E' of the application out of which two policjes
matured in 1950 and 1951 and the rest matured during the pendency of the application of the appellant.
The Bank received
Rs. 1,000 and Rs. 23,700 on January 22, 1951 and July 9, 1952.
In 1948 the appellant had executed absolute assignment in respect of all the policies in favour of the Bank. Since the amounts
were due to the Karachi Branch, these were converted into
Pakistan rupees and repatriated. In respect of the other policies
the Bank recovered the additional amount of Rs. 25,684.56 P and
Rs. 15,560.99 P.
The trial court held that as regards the first
two policies, the appellant is not entitled to refund of excess amount
over the apportioned debt of Rs. 13,684/2/ 11 but in respect of
other policies the trial court held that the Bank was bound to
refund the excess amount. In appeal ·the High Court has, however, taken the view that s. 17 of tl!e said Act applied and the
appellant had no right to refund in respect of any of the in,surance policies unless it was shown that the realisation was in excess
of the debt due. It was argued by Mr. Chagla that the insurance
policies do not fall within s. 17 of the said Act. It is not possible
to accept this contention as correct.
Clause 36 of s. 3 of the
General Clauses Act (Act X of 1897) defines "movable property" to mean "property of every description, except immovable
property". Clause 26 of s. 3 of the General Clauses Act defines
"immovable property" to "include land, benefits to arise out of
land, and things attached to the earth, or permanently fastened
to anything attached to the earth". In the present case there is
the additional fact that the policies were assigned by the appellant
and his wife to the Bank and thereafter the insurance policies remained in possession of the Bank. In the present case therefore
there is an absolute assignment of the policies in favour of the
Bank and the policies were also in its possession. In our opinion,
s. 17 of the Act applies and unless realisation was in excess of the
d~bt due the appellant was not entitled to refund. We accordingly
re1ect the argument of the appellant on this aspect of the case.
It was also contended on behalf of the appellant that the High
Court had erred in interpreting the word "renewal" occurring in
the definition of the word "debt" in the said Act. In our opinion
there is no substance in this argument.
It is manifest that th~
confinnation or acknowledgement of indebtedness which includes
both loan and interest and further advances, if any would not fall
t
!
878
SUPREME COURT REPORTS
[1968) 3 S.C R.
within the ambit of the expression "renewal" in the proviso to
A
s. 2 ( 6) of the said Act. The liability referred to in the proviso is
the liability solely by way of renewal and the proviso to the sec1ioa
states that the original loan and not the 0ne for which the renew.al
is made is the debt within the meaning of the section. But the
proviso does not apply if the confirmation or acknowledgement ·jg
not solely by way of renewal on account of loan or interest but
B
includes further adv~. In our opinion, the High Court was
justified in coming to the conclusion that the debts ascertained by
it were the debts of the appellant within tile meaning of the said
Act. The High Court found that . the promissory note dated
November 18, 1947 for a sum of Rs. 1,09,000 represented the
debt of Rs. 1,09,000 in the Cash Credit Account and that the Pl1>
missory note dated June 19, 1947 fcir a sum of Rs. 1,25,000
C
represented the debt of Rs. 1,25,000 in the Loan Account which
was actually taken on July 12, 1947. As regards the Cash Credit
Account, the High Court awarded simple interest up to December
10, 1951at4 per cent. which worked out to Rs. 17,702.79 P and
held that an aggregate amount of Rs. 1,26,702.79 P ~as due by
the appellant in the said Cash Credit Account. As regards the
D
Loan Account, the High Court awarded simple interest at 4 per
cent. from July 12, 1947 up to December 10, 1951 and held that
an aggregate amount of Rs. 1,47,068.49 P was due by the appellant.
The debt in the Cash Credit Account was rciluced by a
deduction of Rs. 17,429.14 P (which represented the proportion
of the verified claim to the surrender value of the pOJicies) to
E
Rs. 1,09,273.65 P.
Lastly, Mr. Chagla · submittett that the appellant should have
been given credit of the amount of Rs. 10,000 paid to the Bank
as income of the mortgage properties in Pakistan. It wu
pointed out that the amount was received as income of the mortgaged properties by the Custodian of Evacuee Properties in Pa\.-isF
tan and the amount was paid by the Pakistan Government to the
Bank. It was argued that there was no justification for not allowing credit to. the appellant in respect of this amount. It is not
necessary for us to go into the merits of this question because
Mr. S. T. Desai on behalf of the resPondent-Bank said that be
had no objection if the amount of Rs. 10,000 was credited towards
G
the debt of the appellant as determined by the High Court. We
accordingly direct th~t the amount of Rs. 10,000 should be credited
towards the amount, of debt ascertained according to the High
Court judgment.
Subject to this modification we affinn the judgment and decree
of the Bombay High Court and dismiss this aopeal. There will
H
be no order as to costs of this appeal in this Court.
R.K.P.S.
Appeal dismissed.
L8S1JP.C.l./68-2,500-22-2-59-GTPF.