1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 8793-8794 OF 2013
ATUL CHANDRA DAS (D) THROUGH LRS. APPELLANT(S)
VERSUS
RABINDRA NATH BHATTACHARYA (D)
THR. LRS. & ORS.ETC. RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.
1. The appellants are the legal representatives of
one Atul Chandra Das. These appeals are directed against
the common judgment of the Calcutta High court dismissing
the First Appeal No.7 of 1989 and First Appeal No.8 of
1989. The appeals were filed by Atul Chandra Das against
the dismissal of E.S. No.782 of 1979 filed by him for
ejectment of the respondents from the plaint schedule
property and decreeing of Suit no.1271 of 1980 filed by
the respondents which would be referred to as the title
suit. Thus, the appeals before us are lodged against the
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concurrent finding of the courts below and maintained by
special leave granted by this Court.
2. The case set up by Atul Chandra Das is as follows:
By a registered deed of conveyance dated 28.11.1959
(the parties shall be referred to as in the position in
the trial Court), the defendants sold for consideration
the plaint schedule property to one Bholanath Auddy
(hereinafter referred to as “Bholanath”).
Simultaneously, Bholanath created tenancy in favour of
the defendants at the monthly rent of Rs.50/-. It was
agreed that the share of corporation tax shall be paid by
the defendants. It was also agreed between Bholanath and
defendants that the defendants were to vacate and deliver
possession on the expiry of two years from 28.11.1959.
Thereafter, an agreement for sale was entered into on
15.8.1960 between Bholanath and Atul Chandra Das. He
agreed to sell plaint schedule property for Rs.9000/-.
Since Bholanath failed to perform the obligation, O.S.
No.171 of 1962 was filed by Atul Chandra Das for specific
performance. On 30.11.1977 a decree was passed in favour
of Atul Chandra Das. In terms of decree he deposited the
balance consideration and finally a sale deed was
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executed in his favour. He claimed to be the landlord of
the building and alleging that defendants have no right
to occupy the premises, he sought recovery of possession
by evicting the defendants. The defendants filed written
statement. That apart they also filed the other suit
namely Suit No.1271 of 1980. Therein the following
averments were made inter alia:
Smt. Annapurna Devi (since deceased) was the owner for
life of the property and on her death, her three sons
namely Late Ashutosh Bhattacharya, Late Dulal Krishna
Bhattacharya and Rabindra Nath Bhattacharya (hereinafter
referred to as ‘Bhattacharyas and who are the defendants
in the suit filed by Atul Chandra Das and plaintiffs in
O.S. No. 1271/1980) were given absolute rights, in terms
of the will executed by Bijoy Kr. Ghosal, the owner of
the property. They set up the case that a sum of
Rs.8000/- came to be borrowed from Bholanath on
28.9.1959. To secure Rs.8000/- Bhattacharyas mortgaged
by conditional sale, on 28.11.1959 the plaint schedule
property in favour of Bholanath. In order to give
effect to mortgage an agreement for sale was entered
into on 07.12.1959 with Aboya Devi (since deceased wife
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of Late Ashutosh Bhattacharya and deceased Late Karuna
Bhattacharya, the wife of first plaintiff in a title
suit and Late Smt. Rama Devi, daughter of Annapurna
Devi) who were the nominees of the mortgagors for the
agreement to sell of the house on payment of a sum of
Rs. 10,000/- which was settled to be the mortgage money,
no rate of interest having been stipulated. Two years
was agreed to be the period of redemption of mortgage.
The title deeds were to be kept with Bholanath by way of
further security. The agreement which is referred to by
Atul Chandra Das as an agreement for sale in his favour
dated 15.8.1960 is described as a collusive and
fraudulent agreement and it was entered into before the
expiry of period of redemption. The plaint schedule
property comprised of a three storied building standing
upon an area of 1 cottah and 8 chittackas of land and
the value at the relevant time would not have been less
than Rs.30,000/-, the annual municipal value being
Rs.1469/- declared at that point of time. Bholanath was
a mere mortgagee in a mortgage by conditional sale. The
specific performance suit was described as a collusive
suit. Bhattacharyas claimed to be the owners being
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legatees under the will. The relief sought by the
plaintiffs in O.S. No.1271 of 1980 is relevant. The
relevant portion reads as below:-
“20. For the purpose of jurisdiction the suit
is valued for declaration with consequential
relief of perpetual injunction at Rs.51/-
there being no objective standard of
valuation and objectively for Rs.8500/- and
Court fee stamp of Rs.4.15 is paid on the sum
of Rs.51/- being the value for declaration
with injunction and court fee stamp Rs.525.00
is paid on the sum of Rs.6500/- being balance
of the principal due the total court fee paid
being Rs.529.15p.
The plaintiffs therefore pray-
(a) That the suit be decreed for:-
(i) Declaration that the sale dated 28.11.59
for the consideration of Rs.8000/- of the
property described in the schedule “A” below
by Sm. Annapurna Devi since
deceased, Ashutosh Bhattacharyya, since
deceased and the plaintiff nos.1 and 2 to
Bhola Nath Duddya, since deceased followed by
the condition of re-transfer as per agreement
for sale dt. 7.12.59 by Bholanath Auddya
since deceased in favour of Sm. Abhoya Devi,
since deceased Sm. Karuna and Sm. Rama Devi
since deceased, on payment of Rs.10,000/-
within 2 years was on ostensible sale
amounting to a mortgage by conditional sale
and the sallers in the said deed of sale were
mortgagors and the buyer therein was the
mortgagee and the period of redemption was 2
years as provided in the said agreement for
sale dt. 7.12.59.
(ii) declaration that either the defendant
Nos. 2 to 7 are the present mortgagee being
the heirs and legal representatives of the
said Bholanath Auddya, deceased or in
alternative the defendant no. 1 is the
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present mortgages, by subrogation having
stepped in the shoes of the said Bholanath
Auddya by purchase.
(iii) declaration that the right of
redemption of the said mortgage by
conditional sale is still subsisting and the
plaintiffs are entitled to redeem the said
mortgage on deposit of the mortgage money
amounting to Rs.8500/- in court or such
amount as may be determined by the Court or
payment of the same to who ever may be
declared to be the mortgages or mortgagees.
(iv) Declaration that the agreement dated
15.08.60 between the said Bholanath Auddya
since deceased and the defendant No. 1 for
sale of the property described in the
schedule “A” below is a collusive and
fraudulent agreement and not enforceable in
law.
(v) Declaration that the decree dated
30.11.77 of the Hon’ble High Court at
Calcutta in Suit No. 171 of 62 for specific
performance of contract for the sale of the
property described on the schedule “A” below
was obtained by practising fraud upon the
court by the defendant No. 1 and the said
Bhola Nath Auddya since deceased collusively.
(vi) declaration that the said decree of the
Hon’ble High Court at Calcutta and the
conveyance executed thereunder on 26.3.79 by
the Registrar Original Side of the said
Hon’ble High Court for sale of the property
described in the schedule “A” below in favour
of the defendant No. 1 are not enforceable in
law and the defendant No. 1 cannot take any
advantage under the said decree and/ or the
said conveyance in enforcement of the same.
(vii) declaration that the defendant No.
1 has no right title and interest in the
property described in the schedule “A” below
either as owner or as landlord nor has any
right to file the Ej. Suit no. 782 of 1979 in
the city civil court, Calcutta now pending
before the Ld. Registrars’ Bench and/ or
proceeding with the same.
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That the suit be decreed for perpetual
injunction restraining the defendant No. 1.
i. From enforcing the said decree dt.
20.11.77 in suit no. 171 of 62 of the Hon’ble
High Court at Calcutta and/ or enforcing the
conveyance dt. 26.3.79 executed by the
Registrar Original side, High Court at
Calcutta in favour of the defendant No. 1
under the said decree and/ or taking any
advantage under the said decree and/ or
taking any and/ or the said conveyance and
interfering with the possession of the
plaintiffs in the property described in the
schedule “A” below in any way including
recording his name in Calcutta Corporation
and/ or in the Calcutta Collectorate.
ii. From preceding with the Ej. Suit No. 782
of 79 now pending before the ld. Registrar’s
Bench City Civil Court, Calcutta.
iii. For temporary Injunction to the effect
as prayed for in prayer Nos. b(i) and (ii)
above till the disposal of this suit.
iv. That the suit be decreed for Rs.8500/-
or such other sum as may be determined by the
court as the present balance of the mortgage
money payable by the plaintiffs for
redemption of the mortgage.
c. That the property described in schedule
“A” below be freed from the mortgage on
deposit in court or payment to whoever will
be declared to be the mortgagee or mortgagees
by the plaintiffs of the mortgage money to be
decreed by the court.
d. That the suit be decreed for Costs.
e. That the suit be decreed for any other
relief or reliefs to which the plaintiffs may
be entitled under law and equity. “
3. The trial Court proceeded to consider the
evidence and on the basis of same came to the conclusion
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that there is no merit in the case set up by Atul Chandra
Das. It was found to be a case of mortgage by conditional
sale and suit filed by Atul Chandra Das was dismissed and
the suit filed by the Bhattacharyas came to be decreed.
As already noticed, the High Court has confirmed the said
decree.
4. We heard the learned counsel for the appellant
and learned counsel for the Bhattacharyas.
5. The learned counsel for the appellant would
submit before us that the courts below have proceeded to
find that the sale dated 28.11.1959 executed by the
previous owners, namely the defendants in favour of
Bholanath was a mortgage without noticing that such a
finding will be in the teeth of the proviso to Section
58(c) of the Transfer of Property Act. In other words,
in order to constitute a mortgage by way of conditional
sale, the proviso to Section 58(c) of the Transfer of
Property Act mandates that the condition of agreement to
sell which is what is relied upon by the Bhattacharyas to
make Bholanath a mortgagee must have been incorporated in
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one document. In this case on the other hand, there is
no dispute that the Bhattacharyas relied upon a separate
and distinct document namely an agreement to sell
executed by Bholanath in favour of the Bhattacharyas
dated 7.12.1959. There is no condition for reconveying
the property contained in the sale deed dated 28.11.1959.
6. The second submission is that the courts have
gone wrong in relying on Section 37A of the Bengal MoneyLenders Act, 1940 (hereinafter referred to as ‘the State
Act’). It is her contention that the suit filed by the
Bhattacharhyas was not filed under the State Act. There
was no account demanded within the meaning of the Act.
Support was sought to be drawn from the judgment of the
Single Bench reported in Swarnalata Tat v. Chandni Charan
Dey and Ors. AIR 1984 Calcutta page 130.
7. The last submission is as follows:-
Section 37(A) contained under the State Act is repugnant
to Central Law namely Section 58(c) of the Transfer of
Property Act.
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8. Per contra, the learned counsel for the
respondent supported the judgment. He submitted that
Bholanath had not obtained any title under the purported
sale deed dated 27.11.1959. He could not have conveyed
any title to the Atul Chandra Das. The suit for specific
performance was a collusive suit.
9. Section 58(c) of the Transfer of Property Act
reads as follows:-
“58(c). Mortgage by conditional sale – Where,
the mortgagor ostensibly sells the mortgaged
propertyon condition that on default of payment of the
mortgage-money on a certain date the sale shall
become absolute, or
on condition that on such payment being made
the sale shall become void, or
on condition that on such payment being made
the buyer shall transfer the property to the
seller,
the transaction is called mortgage by
conditional sale and the mortgagee a mortgagee
by conditional sale,
[Provided that no such transaction shall be
deemed to be a mortgage, unless the condition
is embodied in the document which effects or
purports to effect the sale]”
It is undoubtedly true that under Section 58(c), the
proviso makes it indispensable to constitute a
transaction a mortgage that one of the conditions
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mentioned in Section 58(c) be incorporated in the
document by which the conditional sale is effected.
However, it is now time to refer to Section 37(a) of the
State Act. It reads as under:-
“37(a) Saving as to mortgage by conditional
sale. – In the case where any loan is secured
by a mortgage and the mortgagor ostensible
sells the mortgaged property on any of the
conditions specified in sub-section (c) of
section 58 of the Transfer of Property Act,
1882 (4 of 1882) then, notwithstanding anything
to the contrary contained in the proviso to the
said sub-section, the transaction shall always
be deemed to be a mortgage by a conditional
sale and the mortgagee a mortgagee by
conditional sale for the purpose of the said
sub-section.”
10. Keeping Section 58(c) side by side with Section
37(a) of the State Act, the conclusion is inevitable that
the State legislature has intended to override the effect
of proviso to Section 58(c) of the Transfer of Property
Act by enacting Section 37(a) in the State Act. Section
37(a) was incorporated by way of an amendment in the
State Act. Reading of Section 37(a) brings out the
Legislative intent with unambiguous clarity and therefore
the High court was right in relying upon Section 37(a) of
the State Act to find that though it was by agreement
dated 07.12.1959 which is a separate document that
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condition to make it a mortgage was incorporated it would
not make any difference. We may also notice that despite
the sale deed dated 27.11.1959, the Bhattacharyas
continued to be in possession of the plaint scheduled
property and it has been found that they paid the taxes.
It is further found that the market value of the property
would not have been less than Rs.30 thousand as on the
date of the alleged sale namely 27.11.1959.
11. The next contention is that suit filed by
Bhattacharya was not under the State Act. Support was
sought to be drawn from the judgment of the Single Judge
reported in Swarnalata Tat case (Supra). Para 12 of the
judgment relied upon by the appellants reads as follows:-
“12. The first question which calls for
determination is whether the present suit is
a suit under the Bengal Money Lenders Act,
1940 (hereinafter referred to as the said
Act). Section 36(1) of the said Act empowers
the Court to re-open a decree in any suit to
which the Act applies or in any suit brought
by a borrower for relief under the Section,
to re-open the transaction whether the suit
has been heard ex parte or otherwise. Nowhere
in Section 36, it is provided that a fixed
court fee of Re. 1 is to be paid for
initiating proceeding under Section 36 of the
said Act. Section 38 provides that any
borrower may make any application at any time
to a Court which would have jurisdiction to
entertain suit by the lender for the recovery
of the principal and interest of a loan
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before or after the commencement of the said
Act for taking accounts and for declaring
amount due to the lender. Such application
shall be in the prescribed form and shall be
accompanied by a fee of one rupee and on
receipt of such application the Court shall
cause a notice thereon to be served on the
lender. The Court shall thereafter take an
account of the transaction between the
parties and declare the amount, if any due
and payable but not due by the borrower to
the lender, whether as principal or interest
or both. A proceeding under Section 38 shall
be deemed to be a suit for the purpose of
Section 11 of the Civil P.C. 1908.
Admittedly, the plaintiff has not filed any
application under Section 38 of the Act far
less in the prescribed form. As such the
question of payment of a fixed court fee of
one rupee would not arise. Section 38 does
not contemplate any suit. It enables a
borrower to make an application in the
prescribed form asking the Court to take an
account and to declare the amount due to the
lender. Merely because a fixed court fee of
one rupee has been paid, the suit cannot be
corrected into an application under Section
38 of the said Act. Assuming that the Court
should have treated the suit as an
application under Section 38 of the said Act,
even then the plaintiff cannot succeed in her
contention. The requirements of Section 38
have not been complied with. There is no
prayer for taking account and for declaring
the amount due to the lender. No borrower can
call in and the procedure prescribed under
Section 38 unless he asks for account and
determination of the amount due to the
lender. Even if the loan is secured, the
borrower need not ask for redemption. He will
be at liberty to file an application for
determination only of the amount due from
him. This was not done by the plaintiff, who
claims to be the successor-in-interest of the
borrower. On the contrary, the plaintiff has
asked, inter alia, for the following reliefs
in the plaint:—
(a) For a decree declaring the aforesaid
transaction is a loan transaction and
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declaring that the aforesaid deed of sale is
an ostensible deed of sale as a security to
repayment of the said loan is repaid.
(b) For a decree of permanent injunction
restraining the defendant No. 1 from claiming
any right of ownership in the property in
suit by virtue of the aforesaid deed of sale.
Having regard to the provisions of Ss. 36 and
38 of the said Act and the averments made in
the plaint and the reliefs claimed in the
suit, I am unable to accept the contention of
Mr. Mullick that the present suit is suit
under the Bengal Money Lenders Act, 1940.”
12. It is at once necessary to notice Section 2(12)
of the State Act which defines the word “loan”.
“2(12). “loan” means an advance, whether or
money or in kind, made on condition or
repayment with interest and includes any
transaction which is in substance a loan but
does not include-
(a) * * * *
(b) * * * *
(c) A loan taken or advanced by, by the Central
Government or any State Government or by any
local authority in West Bengal;
(d) A loan advanced before or after the
commencement of this Act –
(i) by a bank; or
(ii) by a co-operative life insurance society, cooperative society, insurance company, life
assurance company, Life Insurance Corporation
of India, mutual insurance company, provident
insurance society or from a provident fund;
(e) an advance made on the basis of a negotiable
instrument as defined in the Negotiable
Instruments Act, 1881, (26 of 1881) other
than a promissory note;
(f) Omitted by W.B. Money Lender Amendment Act,
(Act IV of 1931)
(g) * * * *
(h) a loan made to or by the Administrator General
and Official Trustee of West Bengal or the
Commissioner of Wakfs or the Official
Assignee or the Official Receiver of the High
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Court in Calcutta;
(i) a loan or debenture in respect of which
dealings are listed on any Stock Exchange;”
13. Commercial loan is defined in Section 2(4) of
the State Act. Section 2(22) defines suit to which this
Act applies. It reads as follows:-
“2(22) “suit to which this Act applies” means any
suit or proceeding instituted or filed on or after
the 1st day of January, 1939 or pending on that
date and includes a proceeding in execution-
(a) for the recovery of a loan advanced before or
after the commencement of this Act;
(b) for the enforcement of any agreement entered
into before or after the commencement of this
Act, whether by way of settlement of account
or otherwise, or of any security so taken, in
respect of any loan advanced whether before or
after the commencement of this Act; or
(c) for the redemption of any security given
before or after the commencement of this Act
in respect of any loan advanced whether before
or after the commencement of this Act.”
14. Section 36 comes under the heading ‘Reopening of
transactions’. It deals with the power of the Court to
exercise all or any of the various powers which are
mentioned therein. Sub Section 4 of Section 36 reads as
follows:-
“36(4). This Section shall apply to any Suit,
whatever it forms may be, if such suit is
substantially one for the recovery of a loan or
for the enforcement of any agreement of
security in respect of a loan or for the
redemption of money such security.”
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15. It will be noticed that a Suit for redemption is
mentioned as suit to which Section 36 applies. Section 38
undoubtedly enables the borrowers to seek a direction for
taking accounts.
16. We have noticed the relief which was sought in
the suit which was considered by the learned Single Judge
in Swarnalata Tat AIR 1984 Calcutta 130. In fact, Court
in the said case could not find a mortgage proved also.
The reliefs on the other hand in the suit filed by
Bhattacharya include reliefs relating to redemption in
the form it is asked for. In fact, no issue in this
regard was taken before the Trial Court. We see no
reason to non-suit, the Bhattacharyas on this ground
which is taken for the reasons which we have given.
17. The last contention taken is that Section 37(a)
of the State Act is repugnant to Section 58(c) of the
Central Act namely, the Transfer of Property Act. The
contention runs as follows:-
Money lending falls as entry (30) in the State List.
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Transfer of Property other than agricultural land falls
in Entry 6 in the concurrent list. The State legislature
in enacting Section 37(a) of the State Act, a law
relating to money lending has made a law which is
inconsistent and therefore, repugnant to the law made by
the Parliament in Section 58(c) of the Transfer of
Property Act.
This contention is taken for the first time in this
Court. We also see no merit in the same at any rate.
Section 37(A) is traceable to the Entry ‘Transfer of
Property’ which is found in the concurrent list. Article
254 of the Constitution of India reads as follows:-
“254. Inconsistency between laws made by
Parliament and laws made by the Legislatures
of States
(1) If any provision of a law made by the
Legislature of a State is repugnant to any
provision of a law made by Parliament which
Parliament is competent to enact, or to any
provision of an existing law with respect to
one of the matters enumerated in the
Concurrent List, then, subject to the
provisions of clause ( 2 ), the law made by
Parliament, whether passed before or after
the law made by the Legislature of such
State, or, as the case may be, the existing
law, shall prevail and the law made by the
Legislature of the State shall, to the extent
of the repugnancy, be void.
(2) Where a law made by the Legislature of a
State with respect to one of the matters
enumerated in the concurrent List contains
any provision repugnant to the provisions of
an earlier law made by Parliament or an
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existing law with respect to that matter,
then, the law so made by the Legislature of
such State shall, if it has been reserved for
the consideration of the President and has
received his assent, prevail in that State:
Provided that nothing in this clause shall
prevent Parliament from enacting at any time
any law with respect to the same matter
including a law adding to, amending, varying
or repealing the law so made by the
Legislature of the State.”
18. In this case proceeding on the basis that there
is an inconsistency between Section 58(c) of the Transfer
of Property Act and Section 37(A) of the State Act, in
view of the assent given by the President, the matter
falls under Article 254(2). Therefore, despite the
inconsistency, Section 37(A) of the State Act will
prevail in the State.
19. The argument that being part of State Act which
is the Money Lending Act and Money lending is in the
state list and therefore, it is a case of legislative,
incompetence, does not appeal to us. We have found that
the provisions of 37(A) is traceable to the Entry
‘Transfer of Property’ in the Concurrent List and that
Article 254(2) saves the provision.
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20. We see no merit in the appeals and the appeals
stand dismissed.
…....................J.
[ASHOK BHUSHAN]
…....................J.
[K.M. JOSEPH]
NEW DELHI;
APRIL 04, 2019.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 8793-8794 OF 2013
ATUL CHANDRA DAS (D) THROUGH LRS. APPELLANT(S)
VERSUS
RABINDRA NATH BHATTACHARYA (D)
THR. LRS. & ORS.ETC. RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.
1. The appellants are the legal representatives of
one Atul Chandra Das. These appeals are directed against
the common judgment of the Calcutta High court dismissing
the First Appeal No.7 of 1989 and First Appeal No.8 of
1989. The appeals were filed by Atul Chandra Das against
the dismissal of E.S. No.782 of 1979 filed by him for
ejectment of the respondents from the plaint schedule
property and decreeing of Suit no.1271 of 1980 filed by
the respondents which would be referred to as the title
suit. Thus, the appeals before us are lodged against the
2
concurrent finding of the courts below and maintained by
special leave granted by this Court.
2. The case set up by Atul Chandra Das is as follows:
By a registered deed of conveyance dated 28.11.1959
(the parties shall be referred to as in the position in
the trial Court), the defendants sold for consideration
the plaint schedule property to one Bholanath Auddy
(hereinafter referred to as “Bholanath”).
Simultaneously, Bholanath created tenancy in favour of
the defendants at the monthly rent of Rs.50/-. It was
agreed that the share of corporation tax shall be paid by
the defendants. It was also agreed between Bholanath and
defendants that the defendants were to vacate and deliver
possession on the expiry of two years from 28.11.1959.
Thereafter, an agreement for sale was entered into on
15.8.1960 between Bholanath and Atul Chandra Das. He
agreed to sell plaint schedule property for Rs.9000/-.
Since Bholanath failed to perform the obligation, O.S.
No.171 of 1962 was filed by Atul Chandra Das for specific
performance. On 30.11.1977 a decree was passed in favour
of Atul Chandra Das. In terms of decree he deposited the
balance consideration and finally a sale deed was
3
executed in his favour. He claimed to be the landlord of
the building and alleging that defendants have no right
to occupy the premises, he sought recovery of possession
by evicting the defendants. The defendants filed written
statement. That apart they also filed the other suit
namely Suit No.1271 of 1980. Therein the following
averments were made inter alia:
Smt. Annapurna Devi (since deceased) was the owner for
life of the property and on her death, her three sons
namely Late Ashutosh Bhattacharya, Late Dulal Krishna
Bhattacharya and Rabindra Nath Bhattacharya (hereinafter
referred to as ‘Bhattacharyas and who are the defendants
in the suit filed by Atul Chandra Das and plaintiffs in
O.S. No. 1271/1980) were given absolute rights, in terms
of the will executed by Bijoy Kr. Ghosal, the owner of
the property. They set up the case that a sum of
Rs.8000/- came to be borrowed from Bholanath on
28.9.1959. To secure Rs.8000/- Bhattacharyas mortgaged
by conditional sale, on 28.11.1959 the plaint schedule
property in favour of Bholanath. In order to give
effect to mortgage an agreement for sale was entered
into on 07.12.1959 with Aboya Devi (since deceased wife
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of Late Ashutosh Bhattacharya and deceased Late Karuna
Bhattacharya, the wife of first plaintiff in a title
suit and Late Smt. Rama Devi, daughter of Annapurna
Devi) who were the nominees of the mortgagors for the
agreement to sell of the house on payment of a sum of
Rs. 10,000/- which was settled to be the mortgage money,
no rate of interest having been stipulated. Two years
was agreed to be the period of redemption of mortgage.
The title deeds were to be kept with Bholanath by way of
further security. The agreement which is referred to by
Atul Chandra Das as an agreement for sale in his favour
dated 15.8.1960 is described as a collusive and
fraudulent agreement and it was entered into before the
expiry of period of redemption. The plaint schedule
property comprised of a three storied building standing
upon an area of 1 cottah and 8 chittackas of land and
the value at the relevant time would not have been less
than Rs.30,000/-, the annual municipal value being
Rs.1469/- declared at that point of time. Bholanath was
a mere mortgagee in a mortgage by conditional sale. The
specific performance suit was described as a collusive
suit. Bhattacharyas claimed to be the owners being
5
legatees under the will. The relief sought by the
plaintiffs in O.S. No.1271 of 1980 is relevant. The
relevant portion reads as below:-
“20. For the purpose of jurisdiction the suit
is valued for declaration with consequential
relief of perpetual injunction at Rs.51/-
there being no objective standard of
valuation and objectively for Rs.8500/- and
Court fee stamp of Rs.4.15 is paid on the sum
of Rs.51/- being the value for declaration
with injunction and court fee stamp Rs.525.00
is paid on the sum of Rs.6500/- being balance
of the principal due the total court fee paid
being Rs.529.15p.
The plaintiffs therefore pray-
(a) That the suit be decreed for:-
(i) Declaration that the sale dated 28.11.59
for the consideration of Rs.8000/- of the
property described in the schedule “A” below
by Sm. Annapurna Devi since
deceased, Ashutosh Bhattacharyya, since
deceased and the plaintiff nos.1 and 2 to
Bhola Nath Duddya, since deceased followed by
the condition of re-transfer as per agreement
for sale dt. 7.12.59 by Bholanath Auddya
since deceased in favour of Sm. Abhoya Devi,
since deceased Sm. Karuna and Sm. Rama Devi
since deceased, on payment of Rs.10,000/-
within 2 years was on ostensible sale
amounting to a mortgage by conditional sale
and the sallers in the said deed of sale were
mortgagors and the buyer therein was the
mortgagee and the period of redemption was 2
years as provided in the said agreement for
sale dt. 7.12.59.
(ii) declaration that either the defendant
Nos. 2 to 7 are the present mortgagee being
the heirs and legal representatives of the
said Bholanath Auddya, deceased or in
alternative the defendant no. 1 is the
6
present mortgages, by subrogation having
stepped in the shoes of the said Bholanath
Auddya by purchase.
(iii) declaration that the right of
redemption of the said mortgage by
conditional sale is still subsisting and the
plaintiffs are entitled to redeem the said
mortgage on deposit of the mortgage money
amounting to Rs.8500/- in court or such
amount as may be determined by the Court or
payment of the same to who ever may be
declared to be the mortgages or mortgagees.
(iv) Declaration that the agreement dated
15.08.60 between the said Bholanath Auddya
since deceased and the defendant No. 1 for
sale of the property described in the
schedule “A” below is a collusive and
fraudulent agreement and not enforceable in
law.
(v) Declaration that the decree dated
30.11.77 of the Hon’ble High Court at
Calcutta in Suit No. 171 of 62 for specific
performance of contract for the sale of the
property described on the schedule “A” below
was obtained by practising fraud upon the
court by the defendant No. 1 and the said
Bhola Nath Auddya since deceased collusively.
(vi) declaration that the said decree of the
Hon’ble High Court at Calcutta and the
conveyance executed thereunder on 26.3.79 by
the Registrar Original Side of the said
Hon’ble High Court for sale of the property
described in the schedule “A” below in favour
of the defendant No. 1 are not enforceable in
law and the defendant No. 1 cannot take any
advantage under the said decree and/ or the
said conveyance in enforcement of the same.
(vii) declaration that the defendant No.
1 has no right title and interest in the
property described in the schedule “A” below
either as owner or as landlord nor has any
right to file the Ej. Suit no. 782 of 1979 in
the city civil court, Calcutta now pending
before the Ld. Registrars’ Bench and/ or
proceeding with the same.
7
That the suit be decreed for perpetual
injunction restraining the defendant No. 1.
i. From enforcing the said decree dt.
20.11.77 in suit no. 171 of 62 of the Hon’ble
High Court at Calcutta and/ or enforcing the
conveyance dt. 26.3.79 executed by the
Registrar Original side, High Court at
Calcutta in favour of the defendant No. 1
under the said decree and/ or taking any
advantage under the said decree and/ or
taking any and/ or the said conveyance and
interfering with the possession of the
plaintiffs in the property described in the
schedule “A” below in any way including
recording his name in Calcutta Corporation
and/ or in the Calcutta Collectorate.
ii. From preceding with the Ej. Suit No. 782
of 79 now pending before the ld. Registrar’s
Bench City Civil Court, Calcutta.
iii. For temporary Injunction to the effect
as prayed for in prayer Nos. b(i) and (ii)
above till the disposal of this suit.
iv. That the suit be decreed for Rs.8500/-
or such other sum as may be determined by the
court as the present balance of the mortgage
money payable by the plaintiffs for
redemption of the mortgage.
c. That the property described in schedule
“A” below be freed from the mortgage on
deposit in court or payment to whoever will
be declared to be the mortgagee or mortgagees
by the plaintiffs of the mortgage money to be
decreed by the court.
d. That the suit be decreed for Costs.
e. That the suit be decreed for any other
relief or reliefs to which the plaintiffs may
be entitled under law and equity. “
3. The trial Court proceeded to consider the
evidence and on the basis of same came to the conclusion
8
that there is no merit in the case set up by Atul Chandra
Das. It was found to be a case of mortgage by conditional
sale and suit filed by Atul Chandra Das was dismissed and
the suit filed by the Bhattacharyas came to be decreed.
As already noticed, the High Court has confirmed the said
decree.
4. We heard the learned counsel for the appellant
and learned counsel for the Bhattacharyas.
5. The learned counsel for the appellant would
submit before us that the courts below have proceeded to
find that the sale dated 28.11.1959 executed by the
previous owners, namely the defendants in favour of
Bholanath was a mortgage without noticing that such a
finding will be in the teeth of the proviso to Section
58(c) of the Transfer of Property Act. In other words,
in order to constitute a mortgage by way of conditional
sale, the proviso to Section 58(c) of the Transfer of
Property Act mandates that the condition of agreement to
sell which is what is relied upon by the Bhattacharyas to
make Bholanath a mortgagee must have been incorporated in
9
one document. In this case on the other hand, there is
no dispute that the Bhattacharyas relied upon a separate
and distinct document namely an agreement to sell
executed by Bholanath in favour of the Bhattacharyas
dated 7.12.1959. There is no condition for reconveying
the property contained in the sale deed dated 28.11.1959.
6. The second submission is that the courts have
gone wrong in relying on Section 37A of the Bengal MoneyLenders Act, 1940 (hereinafter referred to as ‘the State
Act’). It is her contention that the suit filed by the
Bhattacharhyas was not filed under the State Act. There
was no account demanded within the meaning of the Act.
Support was sought to be drawn from the judgment of the
Single Bench reported in Swarnalata Tat v. Chandni Charan
Dey and Ors. AIR 1984 Calcutta page 130.
7. The last submission is as follows:-
Section 37(A) contained under the State Act is repugnant
to Central Law namely Section 58(c) of the Transfer of
Property Act.
10
8. Per contra, the learned counsel for the
respondent supported the judgment. He submitted that
Bholanath had not obtained any title under the purported
sale deed dated 27.11.1959. He could not have conveyed
any title to the Atul Chandra Das. The suit for specific
performance was a collusive suit.
9. Section 58(c) of the Transfer of Property Act
reads as follows:-
“58(c). Mortgage by conditional sale – Where,
the mortgagor ostensibly sells the mortgaged
propertyon condition that on default of payment of the
mortgage-money on a certain date the sale shall
become absolute, or
on condition that on such payment being made
the sale shall become void, or
on condition that on such payment being made
the buyer shall transfer the property to the
seller,
the transaction is called mortgage by
conditional sale and the mortgagee a mortgagee
by conditional sale,
[Provided that no such transaction shall be
deemed to be a mortgage, unless the condition
is embodied in the document which effects or
purports to effect the sale]”
It is undoubtedly true that under Section 58(c), the
proviso makes it indispensable to constitute a
transaction a mortgage that one of the conditions
11
mentioned in Section 58(c) be incorporated in the
document by which the conditional sale is effected.
However, it is now time to refer to Section 37(a) of the
State Act. It reads as under:-
“37(a) Saving as to mortgage by conditional
sale. – In the case where any loan is secured
by a mortgage and the mortgagor ostensible
sells the mortgaged property on any of the
conditions specified in sub-section (c) of
section 58 of the Transfer of Property Act,
1882 (4 of 1882) then, notwithstanding anything
to the contrary contained in the proviso to the
said sub-section, the transaction shall always
be deemed to be a mortgage by a conditional
sale and the mortgagee a mortgagee by
conditional sale for the purpose of the said
sub-section.”
10. Keeping Section 58(c) side by side with Section
37(a) of the State Act, the conclusion is inevitable that
the State legislature has intended to override the effect
of proviso to Section 58(c) of the Transfer of Property
Act by enacting Section 37(a) in the State Act. Section
37(a) was incorporated by way of an amendment in the
State Act. Reading of Section 37(a) brings out the
Legislative intent with unambiguous clarity and therefore
the High court was right in relying upon Section 37(a) of
the State Act to find that though it was by agreement
dated 07.12.1959 which is a separate document that
12
condition to make it a mortgage was incorporated it would
not make any difference. We may also notice that despite
the sale deed dated 27.11.1959, the Bhattacharyas
continued to be in possession of the plaint scheduled
property and it has been found that they paid the taxes.
It is further found that the market value of the property
would not have been less than Rs.30 thousand as on the
date of the alleged sale namely 27.11.1959.
11. The next contention is that suit filed by
Bhattacharya was not under the State Act. Support was
sought to be drawn from the judgment of the Single Judge
reported in Swarnalata Tat case (Supra). Para 12 of the
judgment relied upon by the appellants reads as follows:-
“12. The first question which calls for
determination is whether the present suit is
a suit under the Bengal Money Lenders Act,
1940 (hereinafter referred to as the said
Act). Section 36(1) of the said Act empowers
the Court to re-open a decree in any suit to
which the Act applies or in any suit brought
by a borrower for relief under the Section,
to re-open the transaction whether the suit
has been heard ex parte or otherwise. Nowhere
in Section 36, it is provided that a fixed
court fee of Re. 1 is to be paid for
initiating proceeding under Section 36 of the
said Act. Section 38 provides that any
borrower may make any application at any time
to a Court which would have jurisdiction to
entertain suit by the lender for the recovery
of the principal and interest of a loan
13
before or after the commencement of the said
Act for taking accounts and for declaring
amount due to the lender. Such application
shall be in the prescribed form and shall be
accompanied by a fee of one rupee and on
receipt of such application the Court shall
cause a notice thereon to be served on the
lender. The Court shall thereafter take an
account of the transaction between the
parties and declare the amount, if any due
and payable but not due by the borrower to
the lender, whether as principal or interest
or both. A proceeding under Section 38 shall
be deemed to be a suit for the purpose of
Section 11 of the Civil P.C. 1908.
Admittedly, the plaintiff has not filed any
application under Section 38 of the Act far
less in the prescribed form. As such the
question of payment of a fixed court fee of
one rupee would not arise. Section 38 does
not contemplate any suit. It enables a
borrower to make an application in the
prescribed form asking the Court to take an
account and to declare the amount due to the
lender. Merely because a fixed court fee of
one rupee has been paid, the suit cannot be
corrected into an application under Section
38 of the said Act. Assuming that the Court
should have treated the suit as an
application under Section 38 of the said Act,
even then the plaintiff cannot succeed in her
contention. The requirements of Section 38
have not been complied with. There is no
prayer for taking account and for declaring
the amount due to the lender. No borrower can
call in and the procedure prescribed under
Section 38 unless he asks for account and
determination of the amount due to the
lender. Even if the loan is secured, the
borrower need not ask for redemption. He will
be at liberty to file an application for
determination only of the amount due from
him. This was not done by the plaintiff, who
claims to be the successor-in-interest of the
borrower. On the contrary, the plaintiff has
asked, inter alia, for the following reliefs
in the plaint:—
(a) For a decree declaring the aforesaid
transaction is a loan transaction and
14
declaring that the aforesaid deed of sale is
an ostensible deed of sale as a security to
repayment of the said loan is repaid.
(b) For a decree of permanent injunction
restraining the defendant No. 1 from claiming
any right of ownership in the property in
suit by virtue of the aforesaid deed of sale.
Having regard to the provisions of Ss. 36 and
38 of the said Act and the averments made in
the plaint and the reliefs claimed in the
suit, I am unable to accept the contention of
Mr. Mullick that the present suit is suit
under the Bengal Money Lenders Act, 1940.”
12. It is at once necessary to notice Section 2(12)
of the State Act which defines the word “loan”.
“2(12). “loan” means an advance, whether or
money or in kind, made on condition or
repayment with interest and includes any
transaction which is in substance a loan but
does not include-
(a) * * * *
(b) * * * *
(c) A loan taken or advanced by, by the Central
Government or any State Government or by any
local authority in West Bengal;
(d) A loan advanced before or after the
commencement of this Act –
(i) by a bank; or
(ii) by a co-operative life insurance society, cooperative society, insurance company, life
assurance company, Life Insurance Corporation
of India, mutual insurance company, provident
insurance society or from a provident fund;
(e) an advance made on the basis of a negotiable
instrument as defined in the Negotiable
Instruments Act, 1881, (26 of 1881) other
than a promissory note;
(f) Omitted by W.B. Money Lender Amendment Act,
(Act IV of 1931)
(g) * * * *
(h) a loan made to or by the Administrator General
and Official Trustee of West Bengal or the
Commissioner of Wakfs or the Official
Assignee or the Official Receiver of the High
15
Court in Calcutta;
(i) a loan or debenture in respect of which
dealings are listed on any Stock Exchange;”
13. Commercial loan is defined in Section 2(4) of
the State Act. Section 2(22) defines suit to which this
Act applies. It reads as follows:-
“2(22) “suit to which this Act applies” means any
suit or proceeding instituted or filed on or after
the 1st day of January, 1939 or pending on that
date and includes a proceeding in execution-
(a) for the recovery of a loan advanced before or
after the commencement of this Act;
(b) for the enforcement of any agreement entered
into before or after the commencement of this
Act, whether by way of settlement of account
or otherwise, or of any security so taken, in
respect of any loan advanced whether before or
after the commencement of this Act; or
(c) for the redemption of any security given
before or after the commencement of this Act
in respect of any loan advanced whether before
or after the commencement of this Act.”
14. Section 36 comes under the heading ‘Reopening of
transactions’. It deals with the power of the Court to
exercise all or any of the various powers which are
mentioned therein. Sub Section 4 of Section 36 reads as
follows:-
“36(4). This Section shall apply to any Suit,
whatever it forms may be, if such suit is
substantially one for the recovery of a loan or
for the enforcement of any agreement of
security in respect of a loan or for the
redemption of money such security.”
16
15. It will be noticed that a Suit for redemption is
mentioned as suit to which Section 36 applies. Section 38
undoubtedly enables the borrowers to seek a direction for
taking accounts.
16. We have noticed the relief which was sought in
the suit which was considered by the learned Single Judge
in Swarnalata Tat AIR 1984 Calcutta 130. In fact, Court
in the said case could not find a mortgage proved also.
The reliefs on the other hand in the suit filed by
Bhattacharya include reliefs relating to redemption in
the form it is asked for. In fact, no issue in this
regard was taken before the Trial Court. We see no
reason to non-suit, the Bhattacharyas on this ground
which is taken for the reasons which we have given.
17. The last contention taken is that Section 37(a)
of the State Act is repugnant to Section 58(c) of the
Central Act namely, the Transfer of Property Act. The
contention runs as follows:-
Money lending falls as entry (30) in the State List.
17
Transfer of Property other than agricultural land falls
in Entry 6 in the concurrent list. The State legislature
in enacting Section 37(a) of the State Act, a law
relating to money lending has made a law which is
inconsistent and therefore, repugnant to the law made by
the Parliament in Section 58(c) of the Transfer of
Property Act.
This contention is taken for the first time in this
Court. We also see no merit in the same at any rate.
Section 37(A) is traceable to the Entry ‘Transfer of
Property’ which is found in the concurrent list. Article
254 of the Constitution of India reads as follows:-
“254. Inconsistency between laws made by
Parliament and laws made by the Legislatures
of States
(1) If any provision of a law made by the
Legislature of a State is repugnant to any
provision of a law made by Parliament which
Parliament is competent to enact, or to any
provision of an existing law with respect to
one of the matters enumerated in the
Concurrent List, then, subject to the
provisions of clause ( 2 ), the law made by
Parliament, whether passed before or after
the law made by the Legislature of such
State, or, as the case may be, the existing
law, shall prevail and the law made by the
Legislature of the State shall, to the extent
of the repugnancy, be void.
(2) Where a law made by the Legislature of a
State with respect to one of the matters
enumerated in the concurrent List contains
any provision repugnant to the provisions of
an earlier law made by Parliament or an
18
existing law with respect to that matter,
then, the law so made by the Legislature of
such State shall, if it has been reserved for
the consideration of the President and has
received his assent, prevail in that State:
Provided that nothing in this clause shall
prevent Parliament from enacting at any time
any law with respect to the same matter
including a law adding to, amending, varying
or repealing the law so made by the
Legislature of the State.”
18. In this case proceeding on the basis that there
is an inconsistency between Section 58(c) of the Transfer
of Property Act and Section 37(A) of the State Act, in
view of the assent given by the President, the matter
falls under Article 254(2). Therefore, despite the
inconsistency, Section 37(A) of the State Act will
prevail in the State.
19. The argument that being part of State Act which
is the Money Lending Act and Money lending is in the
state list and therefore, it is a case of legislative,
incompetence, does not appeal to us. We have found that
the provisions of 37(A) is traceable to the Entry
‘Transfer of Property’ in the Concurrent List and that
Article 254(2) saves the provision.
19
20. We see no merit in the appeals and the appeals
stand dismissed.
…....................J.
[ASHOK BHUSHAN]
…....................J.
[K.M. JOSEPH]
NEW DELHI;
APRIL 04, 2019.
