Karnani v. The Province of Bengal

A suit had been instituted by one Kumar Dakhi against Rameswar Malia, Rani Bhaba neswar Malia Sundari and others for partition of the Searsole Raj Estate. One Bhagabati Charan Mitra was appointed receiver of that estate in that suit. On August 10, 1908, the permission of the Court the said which had appointed him as mining leases, each for 999 years-one in respect of 5/16 share of the Malias in Mouza Monohar Bahal and the other in respect of 230 bigh:is in village Marich Kota-to a firm then carrying on business under the name and style of Laik Banerjee & Company. On the same day the said receiver with like permission mort- gaged these properties firm as security for to the said the due repayment of the loan of Rs. 100,000 advanced the receiver executing the aforesaid the mortgage. As a result of these transactions the firm of Laik Banerjee lessees for 999 years of the & Company became the two properties as well as the mortgagee of the lessors' interest in the same. By diverse processes not neces- to be de~ailed, the appellants have become the successors respondent Deva Prasanna Mukherjee has become the successor in interest of the mortgagee under the mort- gage. of August 10, 1908. firm. The Malias the mortgagors interest of leases and joined · • S.C.R. SUPREME COURT REPORTS 575 execution of On March 31, 1922, Deva Prasanna filed suit No. 78 of 1922 for enforcing the mortgage of 1908. Prelimi nary decree was passed in the last mentioned suit on July 31, 1928, and a final decree for sale was made on February 26, 1929. In this final decree the mortgaged properties were sold at a Court sale and were purchased by Deva Prasanna Rs. 59,000. This sale was confirmed by the Court on June 30, 1931. A remaining still due: to Deva Prasanna, he applied for, and 6n October 30, 1935, obtained a personal decree for Rs. 1,27,179-0-6 against Raja Pramatha Nath Malia who had by inheri tance acquired borrower. interest and become the lessors' large sum 1951 Kumar Pashupatinath Malia and Another v. Deba Prosanna Mukherjee Das J. In 1936, Deva Prasanna started execution case 118 of 1936 for execution of the personal decree No. and attached certain properties alleging that the same belonged to the Raja. The exact date of the attach the printed record. The ment does not appear from Raja as Sibait of a certain deity and his two sons, appellants before us, objected the attachment of these properties and filed a claim case. Negotations 30, for settlement .started and eventually, on January 1937, a petition (Ex. 2) was in the executing Court stating as follows:- "The talks and all the judgment debtor having made special settlement quests to the decree-holder for an amicable of the aforesaid execution case, the decree-holder has agreed to the same. But some time is required to settle terms etc. The judgment debtor has paid to . the decree holder the costs of this execu tion amounting to Rs. 76-14-0, and he having made requests for this execution case being struck off for the present on keeping the attachment in force, the decree holder has agreed to it. It is therefore, prayed that under the circumstances aforesaid, the Court may be pleased. to strike off this execution case keeping the attachment in fore~." Neither the original nor a certified copy of the order made on that date by the executing Court -1951 Kumar Pashupatinath Malla and Another v. Debo Prosanna Mukherjee .Da• J 576 SUPREME COURT REPORTS [1951] the order the parties have forthcoming but above petition is substantially and definitely agreed correctly entered in column 20 of Ex. F which is a certified copy of extract from the Register of applica for executions of decrees relating to execution Case No. 118 of 1936. The heading of column 20 is finally disposed "Date on which execution of and purport of final order." The entry in column 20 under that head is : case was "D. H. admits receipt of Rs. 76114/ - as costs of this case from the J. D. The execution case is dismissed for non-prosecution-the already effected in this case continuing. attachment 30th January 1937." The entry under column 11 of that very exhibit reads as follows :- "Claim case automatically drops as the execution therefore, rejected without is dismissed. any sort of adjudication. It is, 30th January 1937." In May 1937, the Searsole Raj Estate came under the charge of the Court of Wards. By a Kobala execu ted with the permission of the Board of Revenue Raja Pramatha Nath Malia and his sons Kumars Pashupati Nath Malia and Kshitipati Nath Malia represented by Kumar Kshitipati Nath Malia as the Manager of the Searsole Raj Wards Estate conveyed a property known as Seriapati Mahal to Deva Prasanna in full settlement of his claim under the personal decree against the Raja. By an agreement of even date, Deva Prasanna agreed reconvey Senapati if he was paid Rs. 90,000I - Mahal to the Kumars Senapati Mahal within that date. two years originally belonged to the Raja but had been ferred by him to his two sons. A creditor, however, filed-a suit under section 53 of the Transfer of Property Act challenging that transfer and had ac tually got a decree declaring that transfer as fraudu lent and void as against the creditors of the Raja. S.C.R. SUPREME COURT REPORTS 577 An appeal was filed by the Kwnars which was pend ing at the date of the Kobala of January 4, 1939, and, in the circumstances, it was considered safer to join in favour of the Raja Deva Prasanna. in the· last mentioned Kobala On June 2, 1939, a petition was filed in the Court of the Subordinate Judge, Asansole, on behalf of Deva Prasanna as the decree holder. It was headed "Money Execution Case No. 118 of 1936. The relevant por tions of this petition were as follows :-' · 1951 Kumar Pashupatinath Malia and Another v. Deba Prosanna ·Mukherjee DaaJ. / execution case was disposed of "That the above the 30th January 1937 with the attachment of the ·On the decree put into properties subsisting ; since execution in the above case has been adjusted after remission of a large amount of interest by the out and out sale of certain properties by a registered Kobala dated 4th January 1939 .............................. .. . . . . . . . . . . . . . . . . . . . . . . .. . . So there is no longer any need -0£ the said attachment remaining subsisting. It is, therefore, prayed that the attachment may be withdrawn.'1 On the same day the following order was made on • . . at pet1tton :- "Heard jointly ask me special order) case was dismissed. learned pleaders for They to cancel the attachment (existing by in Money Ex. 118 of 1936 though that the parties. Order The said attachment is cancelled and is recorded as adjusted as stated by the decree in learned question pleader for the decree-holder and pleader of the the adjustment mentioned ment-debtor according to-day. Make this petition of but not detailed necessary notes and send this petition to the District Record Room." In the remarks column No. 22 in Ex. F the following entry was made :- "The said attachment is cancelled and the decree in question is recorded as adjusted as stated ~y learned 1951 Kumar Pashupatinatlr Malia a_nd Another v. Deba Prosanna Mukherjee Dai J. 578 SUPREME COURT REPORTS (1951] pleader for the D. H. and the pleader of the Judgment Debtor according the adjustment mentioned but this petition of to.day. Dated 2nd not detailed in June 1939.'' The Raja died in August, 1940, leaving the two appellants as his sons and legal representatives. The (Bengal Act X of Bengal Money Lenders Act, 1940 1940) hereinafter called the Act, came into force on September l, 1940. On January 2, 1941, the appellants who, as the legal representatives of the Raja, became "borrowers" within the meaning of the Act filed the suit out of which the present appeal has arisen. law. The suit was filed by the appellants against respondent under section 36 of the Act praying for reopening the taking accounts and transactions and for release from all liabilities in excess of the limits In short, they asked the Court to specified by give them relief by exercising the powers given to the Court by section 36 of the Act. There was also a prayer for reconveyance of the Senapati Mahal. The respon dent filed his written statement setting up a variety of defences founded on merits as well as on legal pleas in bar. On May 8, .1941, the Subordinate Judge settled the issues and fixed June 9, 1941, "for a preliminary hearing of the suit and particularly of such of the issues as have been based on the pleas in bar." Eventually, the case was taken up for preliminary hearing on September 4, 1941, and by his judgment delivered on September 8, 1941, learned Subordinate Judge issue No. 2 which was as dismissed follows: the suit on "Does for the suit ?" the plaint disclose a valid cause of action The appellants preferred an appeal to the High Court at Calcutta. Although the High Court (R. C. Mitter and K. C. Chunder JJ.) did not accept all the reasonings on which the learned Subordinate Judge had based his decision, the appellants could get no relief as the decrees in suit No. 78 of 1922 could not be reopened, as they were not passed in they, however, agreed 1951 Kumar Pashupatinatll Malia and Another v. Deha Prosa11na Mukherjee. Da11 J. S.C.R. SUPREME COURT REPORTS 579 "a suit to which this Act applies" and consequently . dismissed ·the appeal. The. appellants have now come up on appeal before us after · having obtained a certi ficate from the High Court under · section 110 of the Code of Civil Procedure. in support of Learned Advocate appearing appeal before us has contended that the High Court was in error in holding that the decrees in Suit No. 78 of 1922 were not liable to be reopened under the second proviso to section · 36 (1). Learned advocate for the respondent while joining issue on this point also raised a point which, however, did not find favour with the High Court, namely; that the respondent as a bona fide assignee for value of the mortgage debt was protected by sub-section (5) of section 36. two points is decided against the appel if either of the fants, this appeal must fail. It is quite clear The main provisions of section 36 ( 1) are in the following terms :- "Notwiths_tanding anything contained in any for the time being in force, if in any suit to which this Act applies, or in· ·any suit brought by a borrower for relief under this section, whether ·heard ex parte or otherwise, the Court has reason exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following · powers as it may consider appro priate, namely, shall- to believe ( a) reopen any between the parties ; transaction and take an account (b) notwithstanding any agreement, purporting to close previous dealings and to create new obliga tions, r,eopen any account already taken between the parties ; ( c) release the borrower of all specified in clauses (1) and liability in excess (2) of of the Jimits section 30; (d) 4-10 S.C.India./67. if anything has been paid or .allowed account on or after the first day of January, 1939, in respect of the liability referred to in clause (c), order 580 SUPREME COURT REPORTS [1951] 19~1 Kumar Pa3hupatinoth Malia on4 Anothtr v. Deba Pro~an11iJ Mukherjee. Da> J, the. lender to repay any sum which the Court considers to be repayable in respect of such payment or allow ance in account as aforesaid ; ( e) set aside either wholly or in part or .revise or alter any security given or agreement made in respect of any loan, and . if the lender has parted with the security, order him . to indemnify the borrower in such manner and to such extent as it may deem just." It will be noticed (a) that the provisions of section apply notwithstanding anything contained in any law for the time being in force, (b) that the powers conferred on the Court or to he exercised either in any suit to which this Act applies or in any suit brought by a borrower for relief under the section and ( c) that the Court is called upon to exercise all or any of the powers conferred on it by the section if the Court has reason to believe that the exercise of one or more of In the the powers will give relief to present case instituted a substan tive suit for relief under section 36 and, there was nothing also in the section and the Court had the requisite belief, the Court could exercise all or any of the powers and give relief to the borrowers in terms of the prayers of the plaint. There arc, how (1) of section 36. ever, The relevant portion of the second proviso is expressed in the words following : the borrowers have two provisions the borrower. to sub-section therefore, "Provided that m exercise of these powers Court shall not- .. (i) (ii) do anything which affects any decree of a Court, other than a decree in a suit to which the Act applies which was not fully sati; fied by the first day • ." " of January, 1939, or * <! The proviso makes it quite clear that in exercise of the powers the Court cannot reopen or otherwise affect a decree of a Court unless such decree is one which suit to which this Act applies and was passed which was not fully satisfied by January 1, 1939. In decision of the Full Bench of the the light of in a 1951 Kumar Pashupati11ath Malia a11d Another v. Deba Prosanna Mukherjee Das J. S.C.R. SUPREME COURT REPORTS 581 in Mrityunjay Mitra· v. Satis Calcutta High Court Chandra Banerji(1) which was approved by the Privy Council Jadu Nath Roy V· Kshitish Chandra Acharyya(2), it has not been contended, in view of the fact that the personal decree for the balance remained unsatisfied on January 1, 1939, the decrees in Suit No. 78 of 1922 were fully satisfied within the Therefore, the on1y meaning of the above proviso. is whether the thing that remains to be ascertained decrees were passed in "a suit to which this Act applies." Section 2(22) of the Act is as follows : "2. In this Act, unless there is anything repugnant in the subject or context,- (22) "Suit to which this Act applies" means any suit or proceedi, ng instituted or filed on or after the 1st day of January, 1939, or pending on that date and includes a proceeding in execution- ( a) for the recovery of a loan advanced before or after the commencement of this Act ; the commencement of (b) for the enforcement of any agreement entered into before or after this Act, whether by way of settlement of account or otherwise, or of any security so advanced whether before or after the commencement of this Act ; or taken, in respect of any (c) for the redemption of any security given before or after the commencement of this Act in respect of any loan advanced whether before or after the com mencement of this Act." The words "instituted or filed on or after the 1st day of January, 1939, or pending on that date" have been read and understood the words "any as qualifying the beginning of the definition suit or proceeding" in as well as the words "proceeding in execution" occur ring further down: see per Spens C. J. in Bank of Com merce Ltd., v. Amulya Krishna(3). Accordingly, it has (l) I.L.R. (1944) 2 Cal. 376; 48 C.W.N. 361 (2) L.R. 76 I.A. 179 at p. 190. (3) (1944) F.C.R. 126; I.A.R. 1944 F.C. 18 1951 Kumar Pa•hupallnath Malia and Another •• Deba ProMnKa Mukherj.e. DaJ J. 582 SUPREME COURT REPORTS [1951] (2) which overruled been held in Ram Kumar De v. Abhoya Pada Bhatia> charjee (') that where a decree is such that the suit in terminated before January 1, which it was passed had 1939, and no proceeding in execution was started or was actually pending on or after that date it is not a decree in "a suit to which this Act applies" and cannot be reopened. The same view was upheld by a Special Bench of the Calcutta High Coutt in Aparna Kumari v. Girish Chandra two earlier decisions to the contrary. The construction put upon section 2 (22) by the Special Bench and th~ reasons In given by them appear to us to be well-founded. the case now before us, the Suit No. 78 of 1922 was insf1tuted and all the three decrees were passed before the specified date. The only question that has, therefore, to be considered is whether any proceeding The in execution was pending on or after that date. answer to this question wilt depend on meaning and effect of the orders made by the execut ing Court (i) on January 30, 1937, and (ii) on June 2, 1939. As to (i).:--It Is not disputed the order of January 30, 1937, was· made under Order XXI, rule 57, as amended by the Calcutta High Court. Order XXI, rule 57, is expressed in the following terms :- "Where any property has been attached in execu tion of a decree but by reason of the decree-hofder's default the Court is unable to proceed further with the either dismiss the it shall application for execution, reason adjourn the application or for any sufficient proceedings to a future date. Upon the dismissal of such application the attachment shall cease." The marginal note of the rule is determination of attachment. The reason why rule 57 was introduced in the Code of 1908 has been explained by Rankin C. J, in Shibnath Singh Ray v. Sheikh Saberuddin Ahmad (") · as follows :- (I) 46C.W.N.SS7; A.I.R.!942Cal.44l. (2) 48 C.W.N.,406. (3) 1.L.R. S6 Cal. 416 at pp. 421-422. 1951 Kumar Pash11patinath Malta and Another v. Deba Proaanna Mukherjee Da& J, s.c.R. SUPREME COURT REPORTS 583 is apt the Court, to require rule is to say "Rule 57 of Order XXI was a new provision in troduced in 1908. It is evident from the language of the rule itself, and it is still more evident from circumstances under which it was passed, that it was intended to provide a the grievance or remedy inconvenience which to arise, where, after an attachment in exec; ution, the application for execution cannot further be proceeded with by reason of decree-holder's default. This was, and still is, a very common case. The decree-holder makes some informal arrangement to give judgment-debtor time with out obtaining full satisfaction of the decree ; the appli cation for execution is not further prosecuted ; it is In these cir not withdrawn ; neither party attends. ~umstances, the object of the Court must make either an order for adjournment or an order of dismissal. The reason why it was neces if it did not adjourn a proceeding to a definite date, to dismiss the application for execution formally and definitely can be amply illustrated from the decided cases. the absence of a definite order of dismissal the the Courts became encumbered with a number of applications for execution which were water-logged and derelict, and a practice arose whereby such applications were ordered to be 'struck off.' This was a practice not justified by the Code and in cases where attachments in execu the question arose tion had already been entered, whether the effect of an order 'striking off' was that the attachment made upon application for execution was itself struck off or whether it remained notwith standing such an order. Many other awkward and important questions arose out of this practice and the object of rule 57 was to ensure that this illogical and inconvenient practice should be stopped. Applications if they for execution were to be definitely dismissed were not adjourned to a future date. The object of the last sentence in rule 57 is to settle the question whether, when missed, any attachment made , under should fall that application the ground or should · subsist, and the application In files of in execution is dis- · 1951 Kumar PtUhupat/nath Malia and Another v. Deba Projanna Mu/ohel'}ee Dai I. 584 SUPREME COURT REPORTS [1951] the legislature has provided ground." that it is to fall to the so many introduced The new rule two distinct courses open to the executing Court in the situation envisaged by the rule. Each course had its advantage as well as its disadvantage. Thus the adjournment of the execution proceedings kept the attachment alive without any special ~irection. While the adoption of this course helped bona fide arrangement between the decree-holder and the judgment-debtor as to the time and manner of satisfaction of the decree it was cal culated also to encourage desultory proceedings result fog in undesirable congestion in the files of the Execut. ing Court by keeping alive execution proceedings. On the other hand, while the dismissal of an application in the circumstances mentioned in the rule had the merit of preventing a congestion of the application by a the file by finally disposing of final order, it was to discourage deqee calculated holders from giving even reasonable accommodation to the judgment-debtor on account of the destruction of the attachment which left the judgment-debtor free to deal with the property to the detriment of the decree holder after the attachment ceased. It was evidently with a view the advantage of a dismissal and at the same "time to avoid the disadvantage of the rigid rule of cesser of the attachment that the Calcutta High Court amended rule 57 by adding the words "unless the Court shall make an order to the contrary" at the end of the last sentence of that rule. The rule thus amended leaves three courses open to the Execut ing Court in case it finds it difficult to proceed with the execution case by reason of decree-holder. It may (I) adjourn the proceedings for good reason which will automatically keep the attach ment alive or (2) simply dismiss the application which will automatically destroy (3) dismiss the application but specifically keep alive the attachment by an express order. The rule, as amended, therefore, contemplates three distinct forms of order, any one of which may be made by the Court in the the attachment or the default of to preserve 1951 Kumar PaJhupatinath Malia and Another v. Deba Prooanna Mukherjee Dao J. S.C.R. SUPREME COURT REPORTS 585 rule. The question circumstances mentioned before us is as to the category in which the order made on January 30, 1937, in Execution Case No. 118 of 19 36 falls. (Exhibit 2) the present" occurring in It will be noticed that the request of It will be recalled that the order of January 30, 1937, was made on a petition filed on that day in Execution Case No. 118 of 1936. Great stress was laid by the learned advocate for the appellants on the words "struck off for body of that petition. words formed part of judgment In the debtor which was being· recited in the petition. actual prayer portion the decree-holder did not use the words "for the present" but only asked the Court "to strike off the execution case keeping the attachment in from wh, at the parties wanted, force." Further, apart intention - clear in the very order the Court made its that it passed and which is entered in column ,20 of Exhibit F. The Court regarded the willingness of the the decree-holder to enter into a long and protracted negotiation with judgment-debtor as eviP,ence of unwillingness on the part of the decree-holder to dili gently accordingly dismissed for non prosecution but thought fit to expressly keep alive the attachment. that the Court made third kind mentioned above. The an order of three forms of order permissible under rule 57 as amended by the High Court are quite distinct ano there is no room for independent of each other and If the mere continuation of attach their overlapping. ment will automatically convert an express order of dismissal of the execution application which is a final order into an order of adjournment which is not a final order there was no point the High Court taking the trouble of amending rule 57 at all. The Court could by simply adjourning the proceedings attachment without automatically any express direction the Court gave an express direction that the attach in that behalf. The fact It is quite obvious execution case proceedings execution prosecute indicates continue continue should clearly 19SI Kumc.r P llShupatinath Malia and Another v. Deba Prolanna Mukherjee Das J. 586 SUPREME COURT REPORTS [1951] justification for Coun intended to make a final order of dismissal. Again, the heading of column 20 in Exhibit F clearly indicates that only a final order is to be entered in that the order was entered in that column. The fact that column affords some the conclu that the Court made a final order of dismissal. That the claim case was automatically dropped is yet another indication that the execution case was at an end. The fact that the judgment-debtor had paid the full costs of the execution case is also a feature which goes to show, to a certain extent at any rate if not finally the execution proceeding was decisively, disposed of by the order. The following endorsement appears on the petition Ex. 2(a), dated June 2, 1939: "Heard learned pleaders for the parties. They jointly ask me to cancel the attachment (existing by special order) in Money Ex. 118 of 1936 though that case was dismissed." least doubt in my mind This endorsement also clearly shows that the Court that it made on itself understood the order January .30, 1937, was a final order of dismissal and that the attachment had been continued by a special order. On a consideration of all these matters I have the order of not the January 30, 1937, was in form and in substance a final order of dismissal of the Execution Case No. 118 of 1936 and that the attachment was continued by a special order such as is contemplated and authorised bv the amendment made by the Calcutta High Court rule 57. Learned advocate for the appellants con tended that if the execution case came to an end the attachment could not be left hanging in the air. There is no substance this argument. Ordinarily an attachment is supported by an execution case and if the execution case is simply dismissed the attachment must fall with it. But rule 57, as amended, expressly empowers the Court to dismiss an execution applica the attach tion but at the same time ment by a special order. That is what was done in this case. Here the attachment docs not, to use the expression of the learned advocate for the appellants, to keep alive 1951 Kumar PaJhupatinath Malia and Another v. Deba Prosanna Mukherjee Das J. • S.C.R. SUPREME COURT REPORTS 587 judgment · the solid It rests upon re-attachment of the property. hang in the air. foundation of a special order which rule 57, as amended, in terms authorises the Court to make. The continuance of the attachment, in the circumstances, needs no· execution proceeding to support it. Take the case of an attach ment before judgment. Under Orders XXXVIII, rule 11, where after an order of attachment before a decree is passed in favour of the plaintiff, it is not necessary upon an application for execution of such a decree to apply for It means that the attachment continues and the judgment debtor cannot deal with the property to the disadvan tage of the decree-holder. After the decree is passed, the attachment continues but nobody will although there has been no application for the execu the decree-holder tion of is, nevertheless, an execution proceeding pend ing merely because the attachment continues. Here also the attachment subsists and rests only upon the rule 11, and without any terms of Order, XXXVI proceeding. called a proceeding in execution, initiated the decree was passed. judgment, the order of January 30, 1937, was a final order which brought the Execution Case No. 118 of 1936, to an end and the attachment continued, not because there was a pending execution proceeding but because a special order was made under Order XXI, rule 57, as amended by the High Court. for none was ever In my the decree at any cannot be attachment time by Such the proceedings came within As to (ii).-Lcarned advocate for the appellants then contended that the petition (Ex. 2a) dated June 2, 1939, amounted to a proceeding in execution and as that was instituted and was pending after January 1, 1939 section 2 (22) of "a suit to which this Act applies". I do not think this argument is sound. The petition (Ex. 2a) was not really an application at all. See Raja Shri Prakash Singh v. The Allahabad Bank Ltd. (1). In sub stance, it was nothing but a certification by the decree holder of the satisfaction of the decree. The mere fact the definition (I} 33 C.W.N. 267; A.l.R. !929 P.C. 19. 1951 Kumar Pashupat; natll Malia and Another v. Deba Pro1anna Mukherjee Das J. 588 SUPREME COURT REPORTS [1951] that the document was in the form of a petition could not convert what was really the usual certifying pro cedure into a proceeding in execution for recovery of a loan or for enforcement of any agreement. It was purely an intimation given to the Court by the decrec holder that the decree had been satisfied out of Court and the prayer for withdrawal of the attachment was merely consequential and would follow as a matter of course on full satisfaction of the decree being recorded. The order made on that petition also shows that the decree was recorded as adjusted and the attachment In my judgment, that petition (Ex. 2a) was cancelled. was not an application such as would initiate a proceed ing in execution for any of the purposes mentioned in clauses (a) or (b) or ( c) of section 2 (22) of the Act. For reasons stated above, the decrees sought to be reopened were not decrees made in "a suit to which this Act applies". Suit No. 78 of 1922 was neither instituted on or after January 1, 1939, nor was it pending on that date, all the three decrees having been passed long before that date. Nor was any proceedihg in execution such as is contemplated by section 2 (22) that date. The instituted or pending on or after Execution· Case No. 118 of 1936 was at an end on January 30, 1937, and the petition of June 2, 1939, was not an application at all and was certainly not a proceeding in execution within the meaning of sec tion 2 (22) o~ the Act. This conclusion is sufficient to dismiss consider the respondent on the strength of section 36 (5) of the Act and I ex press no opinion on that question. this appeal and it is not necessary for us the other question raised by The result is that this appeal must stand dismissed with costs and I order accordingly. K.1nia C. J. KANIA C. J.-1 agree, Patanjali Sa11r; J. PATANJALI SAsTRI J.-Thc facts bearing on the dis pute in this appeal arc fully stated in the judgment of my brother Das which I have had ~he advantage of reading and it is unnecessary to recapitulate them here. 1951 Kumar Pashupatinath MaUa and Another •• Deba Pro!anna Mukherjee Patan}ali Sa.•tri J. S.C.R. SUPREME COURT REPORTS 589 invokes the sub-mortgagee decree-holder The appellant mortgagor seeks in these proceedings the reliefs provided by the Bengal Money lenders Act, 1940 (hereinafter referred to as the Act) in respect of a decree debt payable by him. The respondent who re presents protection of two exemptions contained in the Act : (1) inter alia Section 36(1), proviso (ii), which exempts "any decree other than a decree in a suit to which this Act applies which was not fully satisfied by the first day of January, 1939". This respondent's decree was passed in a suit whether the (2) Section 36 (5) which to which the Act applies. exempts "the rights of any assignee or holder for value if the Court is satisfied that the assignment to him was bona fide and that he had not received the notice referred to (a) of sub-section ( 1) of sec tion 28". This raises the question whether a sub-mort gagee is an assignee within the meaning of the Act. raises a dispute as in clause advanced before On the first question, "a suit to which this Act ap plies" is defined in section 2(22) as meaning "any suit or proceeding instituted or filed on or after the 1st day of January, 1939, or pending on that date and includes a proceeding in execution for (among other things) the recovery of commencement of this Act." This definition has been construed as requiring that the "proceeding in execu therein should be pending on 1st tion" referred January, 1939, and the question accordingly arises whether the order of the executing court dated 30th January, 1937, which purported for non-prosecution while pondent's execution cc5ntinuing the attachment already effected, terminated the proceeding in execution which had resulted in the It was said that the order was made in attachment. accordance with Order XXI, rule 57, of the Civil Proce dure Code as amended by the Calcutta High Court and must, intended to put an end to the execution proceeding altogether I am not satisfied that such was the result of the dismissal. The amendment wliich added the words "unless the court shall make an order to the contrary" taken to have been therefore, be to dismiss 1951 Kumar Pa.Jbupalinath MJ/ia end .4n11flt6 "' Drflh11. Pmsantra.. Mi:kherj~~ Patanju/j s,ntrj J. 590 SUPREME COURT REPORTS [1951] itself Attachment the continuance, for execution" while at the same attachment notwithstanding proceeding attachment was rule envisages a dismissal of an at the end of the "application continuing a subsisting attachment. The dismissal of 30th January, 1937, must, therefore, be taken to be a dismissal of the execution application then before the court and cannot be taken to have any wider operation. in express terms, On the other hand, the dismissal, indicates resulted be carried forward later on by sale of the attached property. "proceeding in execution" and, so long as it subsists, the proceeding in execution can well be regarded as pending. In In re Clagett's Estate; Fordham v. Clagett(') Jessel M. R. declared that "a pending matte( in any court of justice means one in which some proceeding may still be The attachment was cancelled by the court taken". only on 2nd June, 1939, when the decree in question and then and not before, was recorded as adjusted could execution of the decree be properly considered In this view, a "proceeding in to have execution" was pending on the 1st day of January, taken to 1939, and the respondent's decree must have been passed "in a suit to which this Act applies'', that the respondent's claim to exemp with the result tion under proviso (ii) to sub-section (1) of section 36 of the Act must fail. terminated. a to the fide. Nor could he have received I am, however, of opinion that the respondent's claim to recover his decree debt is protected under section 36(5). There is no question here but that the sub respondent's predecessor in title was mortgage the . notlce referred to in clause (a) of sub-section (1) of section 28 as the transaction took place long before the Act was passed. that section 36(5) applies to pre-Act debts. [See Renula Bos-e v. Manmatha Nath Bose(')]. The only question, therefore, is whether the respondent as sub-mortgagee is an assignee within the meaning of sub-section (5) of section 36. The learned It is not disputed (I) 20 ch. D. 637, (2) L.R. 72 I.A. 156. S.C.R. SUPREME COURT REPORTS 591 Judges in the court below held that he was not, follow ing an earlier decision of their own court in Promode Kumar Roy v. Nikhi1 Bhusan Mukhopadhya(1). That decision, however, was reversed by the Privy Council in Promode Kumar Roy v. Nikhil Bhusan Mukho padhya (2) where their Lordships dealt with the ques tion now before us in the following terms :- 1951 Kumar Pa3hupatinath Malia and Another v. Deba Prosanna Mukherjee. - ! Patanjafi Sa3tri J. the rights of "It was suggested, in the judgment of Mitter J. (with which Waight J. agreed), and in the argument for the re; pondents that if a sub-mortgagee were an 'assignee' within section 36, sub-section (5), of the Act, certain di':fficulties and anomalies would result. Their Lord ships cannot agree with this suggestion. They express no view as to the position which arises if the sub-mort the original mortgage gage contains only a charge on debt, but when it contains an assignment of that debt, and of all the mortgagee, the position appears to be free from difficulty. Relief can be given to the original mortgagor as against the original mort gagee under section 36, but such relief must not affect the rights of the assignee by way of sub-mortgage. To take an imaginary case by way of illustration, let it be assumend that the amount due on the original mort gage, for principal and interest at the original rate, is Rs. 1,000, and the sum due on the sub-mortgage by interest at the original assignment, for principal and that if rate, relief could be given, and were given, under section 36 as against both mortgagee and sub-mortgagee, the sums due to them respectively would be Rs. 800 and Rs. 400. By reason of sub-section (5), the sub-mortgagee's rights. cannot be affected. He can therefore as assignee of the mortgage debt, claim his full Rs. 500, as against both mortgagor and original mortgagee. But if the court gives the mortgagor relief as against the original mort gagee, the mortgagor will only be liable to pay to the original mortgagee Rs. 300, the balance of the reduced debt aiteL paying the sub-mortgagee in full. is Rs. 500. Let it further be assumed As to contention (b), it is to read sub section (5) of section 36 as referring only to an assignee impossible (I) 50C.W.N.407. (2) L. R. 76 I.A. 74. 19SI Kumar Pa:Jhupatinat h Malia and Another v. D~ba Pro1anna Mukherjee. Patan}a/i Sajtrl J. 592 SUPREME COURT REPORTS [1951] of a mortgage decree. The words 'and that he had not received the notice referred to in clause (a) of sub section (1) of section 28' make it plain that an assignee the sub-section, since is within of a mortgage debt section 28, sub-section concerned only with assignment of debts" (pp- B-84). (1) The sub-mortgage here in question also contains an assignment of the debt due under the original mort gage debt and of "the entire interest" of the origioal mortgagee. After reciting tlieir original mortgage, the mortgagees proceed mortgage: the deed of to state "We mortgage ·all that is at present due and that will in future become due to us, the first, second, third and fourth parties, on account of the said one lakh of rupees together . with the entire interest taken by us on the basis of the under the mortgage respect of five annas share of the said Indenture in in respect of said Niskar Mouza Monoharbahal and sixteen annas of the surface and underground rights in the said Monza Marichkota and we make over the said Deed of Indenture to you" : interest and · The decision referred to above is, therefore, directly in point and rules the present case. It was suggested that the said decision was incon sistent with the earlier decisions of the same tribunal in Ram Kinkar Ban~riee v. Satya Charan Srimani(1) fagadamba Loan Co. v. Raia Shiba Prasad ). Stress was laid upon the expression "all the Singh ( 2 rights of the mortgagee" used by their Lordships in the passage quoted above, and it was pointed out that in the earlier decisions they held that in India a legal remained in the mortgagor even when the interest mortgage was form an English mortgage, and that the interest taken by the mortgagee was not interest. This proposition, it · was said, an absolute implied that in a sub-mortgage all the rights of the to the sub-mort original mortgagee are not assigned gagee and the mortgagee still retains a (I) 64 l. A. SO. 12) 68 I.A. 67. l9Sl Kumar Pashupatinath Malia and .Another v. Deha ProJanna Mukherjee. Patanjali Sa8fri J. S;C.R. SUPREME COURT REPORTS 593 interest leasehold considering interest for to whether the matter. In liable by privity of estate for interest in the original mortgage. This is a rather superficial view of the earlier cases their Lordships were the quantum of interest transferred ,by a mortgagor to a mortgagee in a mortgage of the purpose of determining whether or not there was privity If of estate between the landlord and the mortgagee. the mortgage could operate as an assignment of entire int~est of the mortgagor in the lease, the mort gagee would be If, on the other hand, it operated burdens of the lease. only as a partial assignment of the mortgagor's interest, no such result would follow. It was sin determining that issue that their Lordships held that no privity of estate arose in India because a legal interest remained in the taken by the mortgagee mortgagor and was not an absolute interest. These cases had no bear ing on the question, which arose in Promode Kumar Roy v. Nikhil, Bhusan Mukhopadhya(1) and arises in a sub-mortgagee the present case, as becom~s at). assignee of the mortgage debt and of the mortgagee's right to recover the debt from the original mortgagor. The Act affo.i:ds relief to certain classes of debtors by curtailing pro tanto the rights of the credi tors, subject to certain exceptions in regard to "assign ments of loans". In such a context the only relevant consideration could be whether the assignment is such as 10 establish a debtor and creditor relation between the assignee and the debtor so as to bring the case If the sub-mortgagee within the purview of the Act. obtained, by virtue of, the sub-mortgage, the right to sue the original mortgagor for recovery of the mortgage debt, to make him an assignee within the meaning of the Act. It was from this point of view that the question as to the nature of to a sub-mortgagee under his in Promode Kumar Roy sub-mortgage was considered v. Nikhil Bhusa11 Mukliopadli}w(1) as to be considered in the present case, and the reference to the sub-mortgage containing an assignment of ,if/ the rights that would seem transferred sufficient it has (l) 76 I. A. 74. 19SI Kumar Pa1hupatinath Malia and Another v. Deba ProJanna Mukherjee Patanfali Sastri J. 594 SUPREME COURT REPORTS [1951] of the mortgagee must, in that context, be understood with reference to the sufficiency of the right assigned to enable the sub-mortgagee to sue the original mort· gagor in his own right, so a~ to bring the relevant provisions of the Act into play as between them. The reservation made by their Lordships in the case of a sub-mortgage containing only a charge on the original mortgage is signification and supports this view. I do not consider, inconsistency between Promode Kumar Roy v. Nikhil Bhusan Mukhopadhya(') and the earlier decisions, and even if inconsistency it has no relevance to there be any such the present case. that there is any therefore, In the result I agree that the appeal fails and should be dismissed with costs. Appeal dismissed. Agent for the appellants : R. R. Biswas. Agent for the respondent : Sukumar Ghose. ' EASTERN INVESTMENTS LTD. v. COMMISSIONER OF INCOME-TAX, WEST BENGAL. [SHRI HARILAL KANIA c. J., PATANJALI SASTRI, S. R. DAs and VIVIAN BosE JJ.] Indian Income-tax Act (XI ·of 1922), s. 12(2)-Business expenditure-Interest on debentures-Reducing capital of company hy taking over shares and giving debentures to shareholder-Income of company reJucd-lnterest on Jebentures,.whether allowable. )acs of A private limited company formed for dealing in shares and rupees of which securities had a share capital of 250 shares of the face value of 50 lacs were held by A and the remaining shares were held by his nominee's. As the company was in need of money it was resolved, with the consent of A, to reduce the share capital by 50 lacs by the· oompany taking over the 50 lacs shares which were held by A and giving to A instead debentures of the face value of Rs. 50 lacs carrying interest at 5 per. cent. per annum. The Income-tax Appellate Tribunal and (I) 76 I. A. 74.