K. MANICKCHAND & ORS. versus ELIAS SALEH MOHAMED SAIT & ORS.

Citation: [1969] 2 S.C.R. 1082 · Decided: 03-12-1968 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Case Partly allowed

Judgment (excerpt)

108 2 
K. MANICKCHAND & ORS. 
v. 
ELIAS SALEH MOHAMED SAIT & ORS. 
December 3, 1968 
[J. M. SHBI.AT AND V. BHARGAVA, JJ.] 
Mysore Money Lenders Act 13 of 1939 s. 17-"Principal amouni of 
original loan", meaning of-Interest 
under-Code of <7ivil Procedure 
A 
B 
(Act 5 of 1908), 0. 34, r. 11 application of-Mysore Usurious Loans 
C 
Act (Mys. Act 19 of 1923); determination of fair rate of interest under. 
The predecessor-in-inter<~! of the appellants filed a imit under two 
mortgages claiming as principal and interest in respect of the first mort-
gage a sum of Rs. 51,200 and in respect of the second mortgage a sum 
of Rs. 60,200. The trial court applying s. 17 of the Mysore Money 
Lenders Act, 1939 held that the principal amount of the loan in the case 
of the first mortgage deed was the consideration shown therein, namely 
Rs. 20,000, and similarly the principal amount under the second mort-
gage was Rs. 24,000. Accordingly the trial court passed a decree for 
the amount of Rs. 44,000 towards principal under the two mortgages 
and an equal amount as laid down in the aforesaid s. 17, to,wards interest. 
The High Court in appeal held that the principal amount of the original 
loan was Rs. 15,017-8-0 in respect of the first mortgage and Rs. 22,954 
in respect of the second mo11gage the aggregate being Rs. 37,971.50 Np. 
The High Court therefore passed a decree for Rs. 
37,971.50 Np. 
as 
principal and the same amount as interest. The High Court further held 
that this would be the arrears of interest to which the appellants would 
be entitled up to the date fixed 'for payment of the redemption money 
by its judgment. The High Court also made a direction that the prin-
cipal amount would carry interest at 6% per annum from the · date 
fixed for redemption till realisation. The 
appellant in appeal to 
this 
Court by certificate urged : (i) that the High Court was wrong in re-
opening the accounts in respect of loans prior to the two mortgage deeds 
which formed the consideration for the two mortgage deeds in suit and 
it should have held, like the trial court, that the principal amount was 
Rs. 44,000 for the mortgages; (ii) that the arrears of interest under 
s .. 17 of the Act should he interpreted to mean arrears only up to the 
date of the institution of the suit, and the High Court should have 
granted future interest subst"!uently instead of granting it only 
with 
effect from the date fixed for redemption. The Court also had to con-
sider whether there was a conflict between 0. 34 r. 11 df the Code of 
Civil Procedme and s. 17 of the Act. 
HELD : ( i) Section 17, in prescribing the 
maximum amount 
of 
arrears of interest to be allowed, refers to "the principal of the original 
loan·" and not "the principal of the loan". If the latter expression had 
been used, it could have been argued in the present case that the sums 
of Rs. 20,000 and Rs. 24,000 which purported 
to be !he principal 
amounts of the two loans evidenced by the two mortgage-deeds in s~t, 
were the principal amounts df the loans to be taken into 
account m 
D 
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F 
G 
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( 
., 
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't 
A 
B 
c 
D 
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E 
F 
G 
II 
MANICKCHAND v. MOHD. SAIT (Bhargava, J.) 
1083 
working out the maximum amount of interest permissible under s. 17 
of the Act. 
The expression "the principal of the original loan" makes. 
it clear that, in determining the amount of arrears of interest allowable, 
the court must go behind the transaction of the loan and found out what 
was the actual cash originally advanced as principal and ignore all the 
interest that may have been added subsequently to that original advance 
in order to make up the consideration for the loans in suit. In the pre-
sent case therefore the High Court was justified in looking at the tran-
sactions prior to the two mortgage deeds to find out 
what 
were the 
actual cash amounts originally advanced which, together 
with interest 
and after adjustment of accounts formed the principal amounts for the 
two mortgage-deeds. 
(ii) Section 17 is in the form of a directive to a Court not to pass a 
decree on account of arrears of interest 
for a sum greater than 
the 
principal df the original loan. 
Obviously, the directive is to be carried 
out by the court at the time of passing the decree and, consequently, it 
would be at that time that the court will see how much it is awarding 
for arrears of interest. The maximum prescribed for 
the 
arrears of 
interest must, therefore be held to be the maximum amount 

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