Niroda Prasad Ghosh vs Durlabh Chandra Ghorui

Roxburgh, J.—Language of Section 32 is clear and has been strictly followed by the court below. The Act sets a limitation to the interest payable and provides as to how calculations for the same are to be made. The loan or repayment in kind is to be valued according to the market price at every stage and calculations made on that basis. This is what the court has done.

This is a Rule against a decree of the Additional Subordinate Judge, Hooghly, reversing a decree of the Munsif, Arambagh, and dismissing the Plaintiff''s suit in a case which raises the question of interpretation of Section 32 of the Bengal Money-lenders Act.

The suit was for recovery of the price of paddy borrowed in instalments from Baishakh 1349, to Agrahayan 1349, the total amounting to 7 Italians odd or approximately 64 maunds. The amount was repayable in kind in Phalgun, 1350. The hatchita relating to the transaction shows that, on Phalgun 13 and 21, 1350 B.S., paddy to the total of 3 Kahans odd were delivered by the Defendants and then again the following year on Phalgun 24 and 28, one kahan odd was. repaid. The learned Subordinate Judge has applied the provisions of Section 32 of the Act by calculating the principal of the loan on the basis of the total value of 7 kahans odd or 64 maunds at Rs. 2-8 per maund, the market-rate at the time of the loan. In the year of repayment, which was after, the floods of 1942, the price of paddy had risen to the extraordinary figure of Rs. 20 per maund. He, therefore, calculates in cash that, at that date, the amount repaid was some Rs. 670. The following year the value per maund was Rs. 9 and hence the total amount calculated in cash repaid by the borrower was Rs. 787. He has, therefore, naturally dismissed the Plaintiff''s suit.

Before me it is argued that the learned Subordinate Judge has misinterpreted the provisions of Section 32. To my mind he has interpreted them quite correctly, nor is there any possible ambiguity in the matter. The Bengal Money-lenders Act lays down, particularly in Section 30, certain limits as to the amount of interest that can be charged on a loan--10 per cent, simple for unsecured loans, 8 per cent, simple for secured loans. The question then naturally arises as to how to deal with loans in kind repayable either in cash or kind. The effect of the provisions of Section 32 seems to me to be abundantly clear, and is that "for the purposes of this Act" the calculations are all to be made in cash. First, for calculating the principal of the loan, the principal is to be ascertained by the market-value of the produce delivered at the time of the loan. Where the loan is repayable in kind, the calculation again is to be made on the basis of the value of the paddy at the time of repayment.

It is to be noted that, although we are here dealing with the case of an extraordinary rise in price, the section would also cover a case of a fall in price. The section naturally gives advantage to the borrower, where repayment is made after a rise in the price of the commodity, but if repayment is made after a fall in the price of the commodity, the borrower would not obtain the same protection. For example, he might quite conceivably, in terms of the commodity, be paying interest at the rate of 50 per cent. or 100 per cent., but if, by the drop in price, when the calculations were made in accordance with Section 32, the money value showed that interest less than 10 per cent, or 8 per cent., as the case might be, was being paid, then nevertheless the borrower would have to pay the equivalent of 50 per cent, or 100 per cent, interest as calculated in terms of quantity of the commodity.

The extraordinary argument put forward here is in fact that, after 4 kahans had been repaid in this case, 3 Italians remained to be paid, and the effect of the second part of Section 32 is that those 3 kahans were to be calculated in terms of their money value at the. date of repayment and a decree for that amount must be passed. As I have said, this entirely overlooks the clear purpose of Section 32. The second part of the section is in these terms.

...in determining the amount which may, subject to the provisions of this Chapter, be decreed in respect of any loan repayable in kind, the Court shall take into consideration the market-value of the commodity in the said locality at the date or dates of repayment.

Manifestly, the purpose of this provision is to indicate how the limitations imposed in the provisions of Ch. VI Interest and "other Charges" are to be given effect to in the case of loans repayable in kind. The quantity repaid or repayable in kind in terms of the bargain is to be converted into money and if, compared with the money value of the loan, it far exceeds the limits allowable under Ch. VI, the amount repayable has to be cut down according to those limitations.

The Rule is accordingly discharged with costs.