PETITIONER: SMT. DAYAWATI AND ANOTHER Vs. RESPONDENT: INDERJIT AND OTHERS DATE OF JUDGMENT: 14/01/1966 BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. SUBBARAO, K. BACHAWAT, R.S. CITATION: 1966 AIR 1423 1966 SCR (3) 275 CITATOR INFO : F 1985 SC 111 (9) E&F 1989 SC1247 (24) RF 1991 SC1654 (44) ACT: Usurious Loans Act, 1918 (10 of 1918), s. 3, as amended by s. 5 of Punjab Relief of Indebtedness Act-Section 6 of latter Act making s. 5 applicable to "all suits pending or to be instituted after, the commencement of this Act"-Appeal filed against judgment in suit-Whether suit 'pending' within meaning of s. 6. HEADNOTE: Interest in excess of 7 1/2 per cent was awarded to the appellants by the trial court in a mortgage suit against the respondents. The respondents file before the High Court, where an appeal by them against the decree of the trial co= was pending an application under a. 3 of the Usurious Act, 1918 as amended by a. 5 of the Punjab Relief of Indebtedness Act. They claimed, by virtue of the latter provision, that interest in excels of 7 1/2 per cent could not be awarded- in the &Wt. The High Court having accepted the contention, the appellants cam 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 the meaning of a. 6 of the Punjab Act on the relevant date, and therefore a. 5 would not apply. HELD : (i) The word 'suit' includes an appeal from the judgment in between a suit. The only difference between a suit and an appeal is that an appeal "only reviews and corrects the proceedings 'in a cause already constituted but does not create the cause. 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 appeal is a part of the cause because the preliminary decree which 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 the 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 nothing 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, B] (iii)Ordinarily a court of appeal cannot take into account a new law, brought into existence after the Judgment appealed from has been rendered, because the rights of the litigants in an appeal are determined under the law in force at the date of the suit. Matters of procedure are however different and the law affecting procedure is. always retrospective. But it does not mean that there is an absolute rule of 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 may give effect to such a law even after the judgment of the court of first instance. The distinction between laws effacting procedure and those affecting vented rights does not matter when the court is invited by law to take away from a successful plaintiff what he has obtained under a judgment. [280 &H] 2 7 6 Quilter v. Maples`n, (1882)9 Q.B.D. 672, Stovin v. Fairbrass (1919)88 L.J. K.B. 1004 and Mukerjee (K.C.) v. Mst. Ramratan, 63 I.A. 47, referred to. JUDGMENT:
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
appellants.
N.C. Chatterjee, and H. P. Wanchoo, for respondents Nos.
1 to 5.
Tiryugi Narain, for respondent No. 6.
The Judgment of the Court was delivered by
Hidayatullah, J. In this appeal by special leave against the
judgment and decree of the Punjab High Court dated October
15, 1959 the only question is whether, in the facts to be
stated presently, the High Court was right in reducing
interest in a preliminary 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 mortgage 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 pet
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 passed for the full
claim on August 12, 1953. Hazarilal alone appealed 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.
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.0. 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 71 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.
(b)
(c)
(d)
278
(3)This section shall apply to any suit,
whatever its form may be, if such suit is
substantially one for the recoveryof 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 Indebtedness
Act, it was provided :-
“5. Amendment of the Usurious Loans Act,
1918.-
In section 3 of the Usurious Loans Act, 1918
(X of 1918)-
(i) for the word “and” in clause(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, 1934, or any banking company
registered under the Indian Companies Act,
1913 prior to the first day of April, 1937 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
provisions by enacting
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. 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 taken in the court below. R.F.A.
1-D of 1954 came up for hearing on October 15, 1959 before a
Divisional Bench and by the judgment 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. ‘Me Divisional Bench followed an earlier decision of
the same court reported in L. Ram Sukh Das v. Hafiz-ul-
Rahman and others.(1) It was held in that case that the
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 71 -per cent per annum con not be
awarded.
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 1/2` per cent. per annum simple and future interest was
awarded also 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 decree-holders filed this
appeal after obtaining special leave of this Court-
In this appeal it is contended on behalf of the decree
holder-& that s. 5 of the Punjab Relief of Indebtedness Act
can only apply to a suit instituted or pending after the
section comes -into force and ‘not in an appeal after the
suit has ended in a decree. It is farther; contended that
this will be all the more so, because the section itself is
made retrospective for suits pending on or instituted after
the commencement of the Act and thus cannot affect the
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. I.R. 1945 Lah. 177.
Sup.CI/6 5
280
of the Punjab Relief of Indebtedness Act could be invoked by
the Divisional Bench to reduce the interest as stated above.
The amended section 3 of the Usurious Loans Act is plainly
mandatory because it makes it obligatory for a court to re-
open a transaction if there is reason to believe that the
interest is excessive. Further, where the rate of interest
exceeds seven and a half, 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
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 ,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 ordi-
narily a court of appeal cannot take into account a new law,
brought into existence after the judgment appealed from has
been tendered, 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 Tights or affect pending
cases. Matters of procedure are, how,ever, different and
the law affecting procedure is always retrospective’. But
it does not mean that there is an absolute rule of
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 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. See Quilter v. Maple-
son(1) and Stovin v. Fairbrass,(2) which are instances of
new laws being applied. In the former the vested rights of
the landlord
(1) (1892) 9 Q.B.D. 672.
(2) [1919] 88 L.J. K.B. 1004.
281
to recover possession and in the latter the vested right of
the statutory tenant to remain in possession were taken away
after judgment. See also Maxwell’s Interpretation of
Statutes (11th pp. 211 and 213, and Mukerjee (K. C.) v.
Mst. Ramaraton,(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 Bihar Tenancy Amendment Act, 1934) were
clearly applicable’ to all cases without exception.
Section 6 of the Relief of Indebtedness Act is clearly
retrospective. Indeed, the heading of the section shows
that it lays down the retrospective effect. This being so,
the core of the problem 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 the 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
below.” -(Per Lord Westbury in Attorney General v.
Sillem(2). 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 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 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. 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 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 reason 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 would, therefore, appear that in
speaking of a pending suit, the legislature was thinking not
only in terms of the suit proper but also
(1) 63 I.A. 47, (2) 11 E.R.
1200 at 1209.
282
of those stages in the life of the suit which ordinarily
take place before a final executable document comes into
existence. The words of 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
to the rights or claims 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.
The appeal thus fails and it will be dismissed with costs.
Appeal dismissed.
283
