JUDGMENT
1. The appellant-bank has filed the present appeal against the judgment dated October 16, 1982, delivered by Shri Pannalal Rathore, Additional Judge to the Court of the District Judge, Sehore. By virtue of the said judgment the suit filed by the plaintiff-bank was only partially decreed and the remaining claim of the plaintiff-bank was disallowed.
2. Mathura Prasad (defendant No. 1) and Prabhulal (defendant No. 2) who are son and father, respectively, obtained a loan of Rs. 62,000 for purchasing a tractor and trolley from the plaintiff-bank. The said tractor and trolley was purchased by the defendent-bank for and on behalf of defendants Nos. 1 and 2 and possession of the said tractor and trolly was delivered to defendants Nos. 1 and 2. Defendants Nos. 3 and 4 stood surety for repayment of the said loan to the plaintiff-bank. The application for advancing the loan (exhibit P-13), the certificate issued by the co-operative society, Khajuriekela (exhibit P-14), the promissory note (exhibit P-16), the hypothecation and surety deed (exhibit P-18), the affidavits (exhibits P-19 and P-20), the receipts issued by Patel brothers (exhibits P-21, 22, 23), the tractor delivery challan (exhibit P-26), invoice (exhibit P-27), revival letters (exhibits P-28 and P-29) and the document of balance confirmation (exhibit
P-1) bear the signature of Mathura Prasad. These facts were not and are not in dispute.
3. The plaintiff’s contention was that Shri Prabhakar Gajanan Padhey was the branch manager of the relevant branch of the plaintiff-bank which advanced the said loan to defendants Nos. 1 and 2, He is competent to file the present suit. Defendants Nos. 1 and 2 duly executed the relevant documents after receiving the entire amount of loan and after fully understanding the terms and conditions of the said documents. The defendants were, as per the said agreement, liable to pay interest at 1/2 per cent. more than the rate of the interest of the State Bank of India or at the minimum rate of interest at 13 per cent. per annum with half-yearly rest. The said loan was repayable in instalments but the defendants committed default in making payments of the said instalments. The defendants repaid only an amount of Rs. 10,128.25. Thus, on the date of the suit the defendants were liable to pay Rs. 1,41,041.70.
4. Defendants Nos. 1 and 2 submitted that they signed some blank printed forms without understanding the contents of the said documents. The rate of interest charged by the plaintiff is usurious and penal. The suit filed by the plaintiff is barred by limitation. The plaintiff is not entitled to recover the entire amount in lump sum. The plaintiff-bank has filed yet another suit in the Court of the Civil Judge, Class I, Sehore, also. Therefore, the present suit is barred under the provisions of Order 2, rule 2 of the Civil Procedure Code. The plaintiff has not disclosed as to how much amount it has claimed towards the principal amount and how much amount is claimed towards the interest. On this ground also the present suit is not maintainable.
5. Defendants Nos. 5 and 4 submitted that they had stood surety for the loan obtained by defendants Nos. 1 and 2 on the representation and assurance that the amount would be recovered only from the property of defendants Nos. 1 and 2. The plaintiff-bank had further assured defendants Nos. 3 and 4 that merely for the sake of performance of formality, the signatures of defendants Nos. 3 and 4 were being obtained on the relevant documents. After obtaining the said loan from the plaintiff-bank, defendants Nos. 1 and 2 started selling their immovable property. Defendants Nos. 3 and 4 gave information regarding the said facts to the plaintiff and in spite of it, the plaintiff-bank did not take any action against the said defendants. Therefore, defendants Nos. 3 and 4 are not liable to pay the outstanding amount against the defendants Nos. 1 and 2.
6. After recording evidence in the case, the learned Additional Judge in the Court of the District Judge, Sehore, decreed the suit of the plaintiff only to the extent of Rs. 53,525 plus interest at the rate of 10 per cent. per annum and the remaining claim made by the plaintiff in the suit was disallowed. The plaintiff has filed this appeal against the said dismissal of the remaining claim made by it,
7. It has been argued for the plaintiff-bank that it was not even the case of the defendants that the defendants had not obtained Rs. 62,000 from the plaintiff-bank. On the other hand, there was clear admission that defendants Nos. 1 and 2 had received Rs. 62,000. Further the trial court has disallowed the claim of the interest at the contractual rate on the basis of entirely wrong premises. Therefore, the suit filed by the plaintiff ought to have been decreed in full.
8. In reply it has been submitted for the defendant-respondents that the trial court has correctly held that only Rs. 53,525 were advanced to defendants Nos. 1 and 2. The said finding is based on the documentary and oral evidence adduced by the plaintiff himself. The trial court has further correctly held that the rate of interest claimed by the plaintiff is excessive and usurious. Therefore, the trial court has very correctly allowed the interest at 10 per cent. per annum. Thus, the judgment and decree delivered and passed by the trial court is fully justified and it does not call for any interference by the appellate court.
9. The point for determination in the present appeal is as to whether the trial court was justified in holding that only Rs, 53,525 were advanced to defendants Nos. 1 and 2 and as to whether it was further justified in not allowing the interest at the contractual rate.
10. As regards the finding given by the trial court, to the effect that only Rs. 53,525 were advanced by the plaintiff-bank to defendants Nos. 1 and 2, it has to be seen that the said finding is totally perverse. The defendants themselves produced the statement of account (exhibit D-3) which goes to show that Rs. 53,525 (incorrectly mentioned as Rs. 52,525) were advanced by the plaintiff-bank as per receipt (exhibit P-21) dated November 7, 1974, which bears the signature of Mathura Prasad. There is no dispute about this aspect that Rs. 53,525 were advanced by the plaintiff-bank for the purchase of the tractor. Likewise in the said account (exhibit D-3) it is specifically mentioned that on the same date, i.e., November 6, 1974, Rs. 8,475 were advanced for purchase of the seed drill, plough and trolley and thus a total amount of Rs. 62,000 was advanced to defendants Nos. 1 and 2 for purchase of the tractor and its accessories.
11. It has to be seen that the said document, exhibit D-3, was produced and relied upon by defendants Nos. 1 and 2 themselves. Therefore, there is absolutely no reason to disbelieve the contents of the said document. It has also to be seen that it was not even the pleaded case of the defendants that only Rs. 53,525 were advanced by the bank to them and Rs. 8,475 were not advanced by the plaintiff-bank. On the other hand, there was categorical admission contained in the letters admittedly written by Mathura Prasad, which have been exhibited as exhibit P-32 and exhibit P-33.
12. It is strange to see that when the said fact was not even contended by defendants Nos. 1 and 2, the learned Additional Judge in the Court of District Judge, Sehore, gave a finding to the said effect beyond the pleadings of the defendants, ignoring the overwhelming documentary evidence contained in the receipt (exhibit P-21), letters (exhibits P-32 and P-33) coupled with the execution of the promissory note (exhibit P-16). Therefore, as the trial court has completely ignored the said overwhelming documentary evidence available on record, it has been observed that the said finding given by the learned judge is perverse. It is held that the plaintiff-bank had advanced Rs. 62,000 to defendants Nos. 1 and 2 for which defendants Nos. 3 and 4 stood surety.
13. In the present case, the provisions of the Usurious Loans Act of 1918 would not be applicable due to the following reasons :
14. As per Notification No. F-45-VII-N-I-80, dated February 12, 1981, published in the M. P. Gazette on February 27, 1981, the provisions of the Usurious Loans Act, 1918 (“Act” in short), would not be applicable to the loans advanced by the State Bank of India (please see clause 3 of the said notification published in the M. P. Gazette on February 27, 1981).
15. It has to be seen that Section 3 of the Act of 1918 reads as below :
“Reopening of transactions.–(1) Notwithstanding anything in the Usury 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 ; or
(b) that the transaction was, as between the parties thereto, substantially unfair, (the court shall exercise all or any of the following powers, namely, shall),
(i) reopen the transaction, take an account between the parties, and relieve the debtor of all liabilities in respect of any excessive interest. . .”
16. Now, in this regard, it has to be seen that the court is supposed to have reason to believe only at the time of delivering judgment or passing an order. Therefore, the court could reopen any transaction of advancement of loans only on giving the finding that the interest was excessive or the transaction was, as between the parties thereto, substantially unfair, Therefore, the provisions of Section 3 of the Usurious Loans Act could have been applicable only on the date of the judgment or order and not before it. In the present suit, the judgment was delivered on October 16, 1982. The said notification dated February 12, 1981, was published in the M. P. Gazette on February 27, 1981, and, therefore, in view of the said notification, the provisions of the Usurious Loans Act were not applicable to the transaction in the present suit on October 16, 1982, that is the date on which the judgment was delivered in the suit and hence the account could not have been reopened.
17. It has to be seen that it was fully established from the evidence available on record that the account between the plaintiff-bank and defendant No. 1 was settled on March 13, 1981, on which date defendant No, 1 executed the acknowledgment dated March 13, 1981 (exhibit P-l) in writing. Therefore, also on the said date, viz., March 13, 1981, the provisions of the Usurious Loans Act were not applicable to the transaction in the present suit, as per the said notification dated February 12, 1981, published in the M. P. Gazette on February 27, 1981.
18. It appears that the said notification dated February 12, 1981, was not brought to the notice of the trial court and, therefore, the aspect as to whether the provisions of the Usurious Loans Act would or would not be applicable on the transaction in the present suit, was not at all considered from this angle.
19. In the result, the appeal is allowed and the decree passed by the trial court is set aside. In its place it is decreed that the defendants shall pay jointly and severally Rs. 1,41,041.70 to the plaintiff-bank. The defendants shall further pay interest on the said amount of Rs. 1,41,041.70 at the agreed rate of interest from the date of suit till the said amount is repaid jointly or severally by the defendants or the said amount is recovered from them (jointly or severally). The defendants/respondents shall bear their own costs of the suit and shall also pay the costs of the plaintiff-bank of both the courts, Pleader’s fee as per rule if certified. Decree be drawn accordingly.