# sm. DAYAWATI AND ANOTHER v. INDERJIT AND OTHERS

- **Citation:** [1966] 3 S.C.R. 275
- **Court:** Supreme Court of India
- **Decided:** 1966
- **Case number:** Civil Appeal No. 246 of 1964
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sm-dayawati-and-another-v-inderjit-and-others-3703
- **Pages:** 8

## Headnote

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sm. DAYAWATI AND ANOTHER
v.
INDERJIT AND OTHERS
I anuary 14, 1966
[K. SUBBA RAO, M. HIDAYATULLAH AND R. S. BACH>.WAT, JJ.l,
UsurloW1 Loans Act, 1918 (10 of 1918), s. 3, as amended bys. 5 of
Punjab Rellej oj Indebtedness Act-Section 6 of latter Act making s. S
applicable to "all suitJ pending or to be instituted after the COrnm<!lfC<-
ment of this Acf'-Appeal filed against judgment in suit-Whether suit
'pending' within meaning of s. 6.
Interest in excess of 7! per cent was awarded to the appellants by
the trial court in a mortgage suit against the respondents. The respondents
filed before the High Court, wbere an appeal by them against the decree
of the trial court was pending an application under s. 3 of the Usurious
Loans Act, 1918 as amended by s. S of the Punjab Relief of Indebtedness
Act.
They claimed, by virtue of the latter provision, that interest in
excels of 7i per cent could not be awarded in the suit.
The Hilh
Court having accepted the contention, the appellants came to this Court
by special leave and contended that an appeal having been filed against
the trial court's judgment in the suit, the said suit could not be said to be
pending' within tho meaning of s. 6 of the Punjab Act on the relevant
date, and therefore s. S would not apply .
HELD: (i) Tho word 'suit' includes an appeal from the judgment in
the suit.
The only difference between a suit and an appeal is that an appeal
"only reviews and corrects the proceedin8" in a cause already constituted
but dO<lS not create the cause." In the present Act the intention is to
g;..., relief in respect of excessive interest in a suit which is pendina and a
preliminary decree in a suit of this kind does not terminate the suit. The
appeal is a part of the cause because the preliminary decree which
emerges from the appeal will be the decree, which can become a final
decree.
(281 D-F)
(ii) The words of s. 6 speak of a suit pending on the commencement
of the Act and it means a live suit whether in tne court of first instance
or an appeal court where the judgment of ·the court of first instance is
being considered. It only excludes those suits in which nothina further
needs to be done in relation to the rights and claim litigated, because
an executable decree which may not be reopened is already in existence.
The decision of the High Court was right in applying s. 3 of the Usurious
Loans Act (as amended) to the case. (282 A, BJ
(iii) Ordinarily a court of appeal cannot take into account a new
law, brought into existence after the Judgment appealed from ha• been
rendered, because the rights of the litigants in an appeal are determined
under the law in force at the dste of the suit. Matters of procedure are
however different and the law affecting procedure is always retr05~ive.
But it does not mean that there is an absolute
rule of inviolab11ity of
mbstantive rights.
If the new law speaks in language, which expressly
or by clear lntendment, takes in even pending matters, the court of
trial as well as the court of appeal may give effect to such a law even
afler the judgment of the court of first instance, The distinction between laws
affecting procedure and tlto•e affecting vested rights does not matter wbea
the court is)nvited by law lo take away from a ~
plaintil!, what·
he has obtal!led under a judgment. (280 B-Hl
276
SllPRHIF COURT REPORTS
[ 1966] 3 S.C.R.
Quilter v. Mapleson, (1882)9 Q.B.D. 672, Slavin v. Falrbrass (1919)88
,.\
LJ. K.B. 1004 and Mukerjee (K.C.) v. Mst. Ramratan, 63 I.A. 47, refer·
red to.

## Text

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sm. DAYAWATI AND ANOTHER
v.
INDERJIT AND OTHERS
I anuary 14, 1966
[K. SUBBA RAO, M. HIDAYATULLAH AND R. S. BACH>.WAT, JJ.l,
UsurloW1 Loans Act, 1918 (10 of 1918), s. 3, as amended bys. 5 of
Punjab Rellej oj Indebtedness Act-Section 6 of latter Act making s. S
applicable to "all suitJ pending or to be instituted after the COrnm<!lfC<-
ment of this Acf'-Appeal filed against judgment in suit-Whether suit
'pending' within meaning of s. 6.
Interest in excess of 7! per cent was awarded to the appellants by
the trial court in a mortgage suit against the respondents. The respondents
filed before the High Court, wbere an appeal by them against the decree
of the trial court was pending an application under s. 3 of the Usurious
Loans Act, 1918 as amended by s. S of the Punjab Relief of Indebtedness
Act.
They claimed, by virtue of the latter provision, that interest in
excels of 7i per cent could not be awarded in the suit.
The Hilh
Court having accepted the contention, the appellants came to this Court
by special leave and contended that an appeal having been filed against
the trial court's judgment in the suit, the said suit could not be said to be
pending' within tho meaning of s. 6 of the Punjab Act on the relevant
date, and therefore s. S would not apply .
HELD: (i) Tho word 'suit' includes an appeal from the judgment in
the suit.
The only difference between a suit and an appeal is that an appeal
"only reviews and corrects the proceedin8" in a cause already constituted
but dO<lS not create the cause." In the present Act the intention is to
g;..., relief in respect of excessive interest in a suit which is pendina and a
preliminary decree in a suit of this kind does not terminate the suit. The
appeal is a part of the cause because the preliminary decree which
emerges from the appeal will be the decree, which can become a final
decree.
(281 D-F)
(ii) The words of s. 6 speak of a suit pending on the commencement
of the Act and it means a live suit whether in tne court of first instance
or an appeal court where the judgment of ·the court of first instance is
being considered. It only excludes those suits in which nothina further
needs to be done in relation to the rights and claim litigated, because
an executable decree which may not be reopened is already in existence.
The decision of the High Court was right in applying s. 3 of the Usurious
Loans Act (as amended) to the case. (282 A, BJ
(iii) Ordinarily a court of appeal cannot take into account a new
law, brought into existence after the Judgment appealed from ha• been
rendered, because the rights of the litigants in an appeal are determined
under the law in force at the dste of the suit. Matters of procedure are
however different and the law affecting procedure is always retr05~ive.
But it does not mean that there is an absolute
rule of inviolab11ity of
mbstantive rights.
If the new law speaks in language, which expressly
or by clear lntendment, takes in even pending matters, the court of
trial as well as the court of appeal may give effect to such a law even
afler the judgment of the court of first instance, The distinction between laws
affecting procedure and tlto•e affecting vested rights does not matter wbea
the court is)nvited by law lo take away from a ~
plaintil!, what·
he has obtal!led under a judgment. (280 B-Hl
276
SllPRHIF COURT REPORTS
[ 1966] 3 S.C.R.
Quilter v. Mapleson, (1882)9 Q.B.D. 672, Slavin v. Falrbrass (1919)88
,.\
LJ. K.B. 1004 and Mukerjee (K.C.) v. Mst. Ramratan, 63 I.A. 47, refer·
red to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 246 of
1964.
Appeal by special leave from the judgment and decree dated
October 15, 1959 of the Punjab High Court (Circuit Bench) at
Delhi in R.F.A. No. 1-D of 1954.
S. T. Desai, D. R. Prem and Mohan Beharilal, for the appel·
!ants.
N. C. Chatterjee, and H. P. Wanchoo, for respondents Nos.
to 5.
Tiry11gi Narain, for respondent No. 6.
The Judgment of the Court was delivered by
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Hidayalullah, J. In this appeal by special leave against the
judgment and decree of the Punjab High Court dated October 15,
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1959 the only question is whether, in the facts to be stated presently, the High Court was right in reducing interest m a preli·
minary mortgage decree dated August 12, 1953 by applying ss. 5
and 6 of the Punjab Relief of Indebtedness Act which were
extended to Delhi on June 8, 1956.
On January 17, 1946, Hazarilal (predecessor of respondents 1
to 5) and one Jagat Narain (respondent 6) executed a simple
mortgage deed for Rs. 50,000 with interest at 9% per annum or
in default of payment of interest for 3 months at Re. 1 per cent
per month for the period of default.
As the mortgagors made
default in payment of interest and also did not pay anything out
of the mortgaged amount a suit was filed for enforcement of
the mort!!age by sale of properties.
The claim was
for
Rs. 76,692/9/8, by calculating interest at 9 per cent per annum
for the first 3 months and at 12 per cent per annum till institution
of the suit and allowing credit for Rs. 14,000 as repayment. The
defendants admitted the mortgage and the
consideration
but
pleaded that the rate of interest was both penal and excessive.
This plea was not accepted and a preliminary decree was pa•sed
for the full claim on August 12, 1953.
Ha7.arilal alone anpealed
on January 5, 1954 (R.F.A. No. 1-D of 1954)' and asked for
reduction of interest by Rs. 7,900 and of the rate of future interest
to 9 per cent per annum. Court fee was paid on Rs. 7, 900.
During the pendency of this appeal the decree was made final on
April 3, 1954.
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DAYAWATI v. INDERJIT (Hldayatullah, /.)
277
Before the appeal was disposed of Inderjit and Satya Narain,
sons of Hazarilal, filed a suit for a declaration that the properties
were ancestral and belonged to a joint family.
They claimed that
the properties could not be sold and asked for a temporary injunction which was first granted and later vacated.
Against the order
vacating the stay they filed an appeal (F.A.O. 68-D of 1957) and
obtained temporary stay from the High Court.
The mortgagees
also filed in that appeal a petition ( S.M. 1318-D of 1957) for
vacation of the stay order.
On February 10, 1958 a conditional
stay order was passed by a learned single Judge of the High Court
but we need not trouble ourselves with it.
On October 29, 1958 the legal representatives of Hazarilal
(respondents 1 to 5) presented an application under s. ,3 of the
Usurious Loans Act, as amended by s. 5 of the Punjab Relief of
Indebtedness Act, when the latter Act was extended to Delhi on
June 8, 1956 under s. 2 of Part C States (Laws) Act, 1950 (30
of 1950) and claimed that interest in excess of 7t per cent per
annum could not be awarded in this suit.
We may, at this stage,
read the relevant sections.
Section 3 of the Usurious Loans Act,
in so far as it is material to our purpose, reads as follows :-
"3. Re-opening of transactions.
( 1) Notwithstanding anything in the Usuary Laws
Repeal Act, 1855, where, in any suit to which this Act
applies, whether heard ex parte or otherwise, the Court
has reason to believe,-
( a) that the interest is excessive; and
(b)
the Court may exercise all or any of the following
powers, namely, may,-
( i) re-open the transaction, take an account
between the parties, and relieve the debtor of all liability
in respect of any excessive interest;
(2) (a) In this section "excessive" means in excess
of that which the Court deems to be reasonable having
regard to the risk incurred as it appeared, or must be
taken to have appeared, to the creditor at the date of
the loan.
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(b)
(c)
(d)
278
SUPREME COURT ltEPOJlTS
[1966]3 S.C.R.
( 3) This section shall apply to any suit, whatever
its form may be, if such suit is substantially one for the
recovery of a loan or for the enforcement of any agreement or security in respect of a loan or for the redemption of any such security.
By s. 5 of the Punjab Relief of lndebtednes; Act, it WI!! p!'Ovidcd :-
"5. Amendment of the Usurious Loans Act,
1918.-
ln section 3 of the Usurious Loans Act, 1918 (X
of 1918)-
(i) for the word "and" in clausc(a) of sub-section
(i) the word "or" shall be substituted.
(ii) for the word "may" where it appears for the
first time in sub-section ( 1) the word "shall" shall be
substituted.
(iii) for the word "may" after the word "namely"
in sub-section ( 1) the word "shall" shall be substituted.
(iv) to sub-section (2) the following clause shall
be added, namely :-
.. ( e) The Court shall deem interest to be excessive
if it exceeds seven and-a-half per centum per annum
simple interest or is more than two per centum over the
Bank rate, whichever is higher at the time of taking the
loan, in the case of secured loans, or twelve and-a-half
per centum per annum simple interest in the case of
unsecured loans; Provided that the court shall not deem
interest in excess of the above rates to be excessive if
the loan has been advanced by the State Bank of India
or any bank included in the Second Schedule to the
Reserve Bank of India Act, t 934, or any banking
company registered under the Indian Companies Act,
19 t 3 prior to the first day of April, t 937 or any cooperative society registered under the Bombay Cooperative Societies Act, 1925, as extended to the State
of Delhi."
Section 6 of the Act gave retrospective effect to the above provi-
!rlons by enacting :-
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DAYAWATI v. lNDERJIT (Hldayamllah, J.)
279
"6. Retrospective effect.-·
The provisions of this part of the Act shall apply
to all ·suits pending on or instituted after the commencement of this Act."
The decree-holders opposed the application on several grounds.
B The main grounds (and they are the grounds urged in this Court)
were that s. 5 of the Punjab Relief of Indebtedness Act merely
amended s. 3 of the Usurious Loans Act, that neither section
applied to the facts of the case and that no such plea was ta~en
in the court below.
R.F.A. 1-D of 1954 came up for heanng
on October 15, 1959 before a Divisional Bench and by the judge ment under appeal the amount of interest in the mortgage was
reduced by Rs. 15,027 by applying the provisions of the Punjab
Relief of Indebtedness Act. The Divisional Bench followed an
earlier decision of the same court reported in L. Ram Sukh Das v.
Hafiz-u/-Rahman and others.(')
It was held in that case that the
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provisions of the Punjab Relief of Indebtedness Act applied to a
case in which a decree had already been passed and an appeal
was pending at the time the amendment was brought into force.
The Divisional Bench in this case held that on the date on which
they decided the appeal the provisions of the Punjab Relief of
Indebtedness Act had been extended to Delhi and they were
required to apply those provisions and interest in excess of 7! per
cem per annum could not be awarded.
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The preliminary decree was modified by reducing interest up
to the date of the suit to Rs. 11,665 by applying the rate of 7 t
per cent per annum simple and future interest was awarded als0>
at the same rate.
The judgment debtors who had applied in the·
High Court were ordered to make good the court fee on
Rs. 7,127.
After sundry unsuccessful proceedings which included·
an application for review and another for a certificate, the decreeholders filed this appeal after obtaining special leave of this Court.
In this appeal it is contended on behalf of the decree holders
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that s. 5 of the Punjab Relief of Indebtedness Act can only apply
to a suit instituted or pending after the section comes into forcec
and not in an appeal after the suit has ended in a decree.
It is
further contended that this will be all the more so, because the
seetion itself is made retrospective for suits pending on or instituted
after the commencement of the Act and thus cannot affect the
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vested right which the judgment had given to the appellants. We
have, therefore, to decide whether the provisions of ss. 5 and 6-
(1) A.T.R. 1945 Lah. 177.
Ml OS up. Cl/66-5
2110
SUPllEME COURT REPORTS
[1966] 3 S.C.R.
of the Punjab Relief of Indebtedness Act could be invoked by the
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Divisional Bench to reduce the interest as stated above.
Tho amended section 3 of the Usurious Loans Act is plainly
mandatory because it makes it obligatory for a court to rc-ope11
a transaction if there is reason to believe that the interest is oxcessive.
Further, where the rate of interest exceeds seven and a half
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percentum per annum simple, the court must hold that it is excessive.
Therefore if the amended section 3 of the Usurious Loans
Act applies to the case in hand, the High Court was right in
acting as it did.
To this Mr. S. T. Desai raises no exception.
He contends, however, that s. 6 of the Relief of Indebtedness
Act in giving retrospection to section 5 by which the amendments
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were made, limits it to suits pending on or instituted after the commencement of the Relief of Indebtedness Act and submits that
the suit here was neither pending on nor instituted after June 8,
1956 when that Act commenced in the Union Territories of Delhi.
The respondents in reply submit that the appeal court must apply
the provisions of the Relief of Indebtedness Act same as the court
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-of trial, because the word 'suit', where the section speaks of a
pending suit. includes an appeal from the decision in the suit.
Now as a general proposition, it may be admitted that ordinarily a court of appeal cannot take into account a new law,
brought into existence after the judgment appealed from has been
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rendered, because the rights of the litigants in an appeal are determined under the law in force at the date of the suit.
Even before
the days of Coke, whose maxim-a new law ought to be prospective, not retrospective in its operation-is oft-quoted, courts
have looked with disfavour upon laws which take away vested
rights or affect pending cases.
Matter~ of procedure are, howF
ever, different and the law affecting procedure is always retrospective.
But it does not mean that there is an absolute rule Qf
inviolability of substantive rights. If the new law
speaks
in
language, which, expressly or by clear intendment, takes in even
pending matters, the court of trial as well as the court of appeal
must have regard to an intention so expressed, and the court of
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:appeal may give effect to such a law even after the judgment of the
court of first instance.
The distinction between laws affecting
procedure and those affecting vested rights does not matter when
the court is invited by law to take away from a successful plaintiff,
what he has obtained under judgment.
Sec Quilter v.
Mapleson(') and Stl7Vi11 v. Fairbrass,(') which are instances of new
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laws being applied. In the former the vested rights of the landlord
(1) (1882) 9 Q.B D 672.
(2) (1919) 881..J. K.B. 1004.
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DAYAWATI v. INDERJIT (Hidayatu/lah, J.)
'.,llU
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to recover possession and in the latter the vested right of ~· ~
tutory tenant to remain in possession were taken away after Jl!ll8ment See also Maxwell's Interpretation of Statufi'.s (11th &Ill;)
pp. 211 and 213, and Mukerjee (K. C.) v. Mst. Ramratan,(1)
where no saving in respect of pending suits was implied when
s. 26(N) and (0) of the Bihar Tenancy Act (as amended;by
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Bihar Tenancy Amendment Act, 1934) were clearly applicable
to all cases without exception.
Section 6 of the Relief of Indebtedness Act is clearly re4'Qspective. Indeed, the heading of the section shows that it lays down
the retrospective effect.
This being so, the core of the problem
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really is whether the suit could be said to be pending on June 8,
1956 when only an appeal from the judgment in the suit was pending.
This requires the consideration whether the word
'suit'
includes an appeal from the judgment in thei suit.
An appeal has
been said to be "the right of entering a superior
court,
and
invoking its aid and interposition to redress the error of the court
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below." (Per Lord Westbury in Attorney General v. Sillem(').
The only difference between a suit and an appeal is this that an
appeal "only reviews and corrects the proceedings
in a cause
already constituted but does not create the cause."
As it is intended to interfere in the cause by its means, it is a part of it, and
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in connection with some matters and some statutes it is said that
an appeal is a continuation of a suit. In the present Act the intention is to give relief in respect of excessive interest in a suit
which is pending and a preliminary decree in a suit of this kind
does not terminate the suit. The appe;il is a part of the cause
because the preliminary decree which emerges from the appeal
F will be the decree, which can become a final decree.
Such an
appeal cannot have an independent existence. If this be not accepted for the purpose of the application of s. 3 of the Usurious
Loans Act (as amended) curious results will follow. The appeal
court in the appeal is not able to resort to the section but if the
suit were remanded the trial court would be compelled to apply
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it.
For although, in the appeal proper, that judgment must be
rendered which could be rendered by the court of trial, but if the
suit is to be reheard, then the judgment must be given on the
existing state of the law and that must include s. 5 by reasoa of
s. 6 of the Punjab Relief of Indebtedness Act. It is hardly to be
suggested that this obvious anomaly was allowed to exist. It
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would, therefore, appear that in speaking of a pending suit, the
legislature was thinking not only in terms of the suit proper but also
(I) 63 I.A. 47.
(2J 11 E.R. 12·10 at 1209.
282
SUPREME COURT REPORTS
[1966] 3 S.C.R.
of 'those stages in the life of the suit which ordinarily take place
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before a final executable document comes into existence. The words
df the section we are concerned with, speak of a suit pending on
the commencement of the Act and it means a live suit whether in
the court of first instance or in an appeal court where the judgment
of the court of first instance is being considered. It only excludes
those suits in which nothing further needs to be done in relation
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to the rights or claims litigated, because an executable decree which
may not be reopened is already in existence. The decision of the
High Coun wa~ right in applying s. 3 of the Usurious Loon~ Act
(as amended) to the case.
The appeal thus fails and it will be dismissed with costs .
.Appeal dismissed.
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