MEGHRAJ & ORS. versus MST. BAYABAI & ORS.

Citation: [1970] 1 S.C.R. 523 · Decided: 30-04-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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523 
MEGHRAJ & ORS. 
v. 
MST. BAYABAI & ORS. 
April 30, 1969 
[J. C. SHAH AND G. K. MITTER, JJ.J 
MortgGge-Money deposited in Court towards principal, effect of-, 
Interest-Some mortgagee Firm's Partners migrated to Pakistan-Custodian 
of Evacuee Property impleaded-Ef/ect of. 
Madhya F1adesh Money Lenders Act (Madli. Pra. 13 of 1934), s. 9-
lnterest lvhether can exued principal. 
A preliminary decree was obtained by the mortgagee-firm for recovery 
of the principal, interest at 3 % and costs by sale of the mortgaged pro-
perty. The High Court in affirming the decree, directed payment of the 
decretal amount by November 10, 1946, and awarded interest at 3% 
from the date of suit to Auf1St 11, 1941 and thereafter at 4% till the date 
of satisfaction. 
In an apphcation for clarification of the order the Hiah 
Court directed that interest 'be paid at 3 % from October 5, 1936 till 
A11gust 11, 1941 on the amount decreed by the trial court and at 4% 
thereafter till November 10, 1946. 
During the pendency of an appeal 
by the mortgagor against the preliminary decree some of the partners of 
the mortgagee-firm migrated to Pakistan, and were declared evacwees. 
The court ordered that the Custodian of Evacuee Property be impleaded 
as a party respondent in the appeal. 
The appeal filed in this Court was 
dismissed. 
Thereafter the only partner of the mortgagee,.firm who had not migrated, 
for himself and as agent of the evacuees applied for a decree absolute 
for sale. 
The Custodian of Evacuee Property resisted the 
application. 
Ultimately the High Court ordered that the Custodian of Evacuee Property 
be joined as a party to the application for decree absolute for sale, ob&erving 
that the respective rights of the Custodian of Evacuee Property and the 
partners of the mortgagee firm were not decided in that proceeding: Tile 
mortgagors contested the application, contending that (i) 
on proper 
accounting nothinJ WaH due against them since they had made deposits 
towards the principal in the Court 0. 21 r. 1 C.P.C. as and in making 
some deposits they bad informed the court that the payments were made 
towards the principal due; (ii) the High Court by its order clarifying the 
decree restored the rate of interest awarded 
by the trial court after 
November IO, 1946; (iii) the mortgagee could not be awarded as interest 
an amount exceeding the principal, because of s. 9 of the Madhya Pradesh 
Money Lenders Act, 1934; and (iv) the Custodian of the Evacuee Pro-
perty was not entitled to the decree absolute for sale, and drat the only 
partner. who had not migrated, could get a decree absolute in respect 
only of bis share. Rejecting these contentions, this Court :-
HELD : (i) Unless the mortgagees were informed that the mortgagors 
had deposited the amount only towards the principal and not towards 
interest, and the mortgagees agreed to withdraw the· money from the court 
accepting tho condltiollal deposit, th,. normal rule that the amounts de· 
posited in court should first be applied towards satisfaction of the interost 
aT1d 
co~ts and thereafter towards the principal applied. 
There was no 
524 
SUPREME COURT REPORTS 
[ 1' 70] 1 S.C.R. 
c:vidr.nce in this C'.risc, tha-. the mortgagees were informed that the money 
wa1 dcpoaited towards principal or that the mortgaiccs accepted the pa}-
meot made tov,ranb the principal. f52b C-DJ 
Venkatadri A.ppa RoH- and Ors. v. I'arthasarathi Appa Row, L.R. 47 
I."<. 150, referred to. 
(ii) By directing that interest at 4% from Auaust 12, 1941 to Novem-
ber 10, 1946, it was not, and could not be, inttnded by the High Court 
that interest after November 10, 1946 was to be awarded only at 1he 
rate of 3 % . No such application was made by the debtors. 
The High 
Ceurt did not reduce the rate of interest after November 10, 
19~6. 
(iii) Section 9 of the Madhy" Pradesh Money Lenders Act prohibited 
tile courts from awarding interest exceeding the principal of the Joan. But 
tke prohibition of the statute was against the making of a decree t'or 
arrears of intcr~t exceeding the amount of loan. 
In the present CJse 
tbe decree awarded interest much leo;s tba11 the principal. [529 BJ 
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(iv) The court was concerned in the 
pres~nt proccc<ling to pass a 
4ccree absolute tor !lale ir. a mortgage suit. 
It was not concerned to 
determine the respective rights of the mortgagees inttr -~t". The mortgagees· 
iatcrest was fully represented 
l-~fore the- _Court. 
Whether or 

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