New Bank of India Vs. Suba Singh and anr. - Court Judgment

Excerpt:
- hindu law -- custom: [vijender jain, c.j., m.m. kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of ancestral property - punjab and haryana - held, in respect of state of punjab by virtue of punjab amendment act, 1973 there is a complete bar to contest any alienation of ancestral or non-ancestral immovable property or appointment of an heir to such property on ground that such alienation or appointment was contrary to custom. in punjab the property in hands of a successor has to be treated as coparcenary property and its alienation has to be governed by hindu law except to the extent it is regulated by sections 6 and 30 of the hindu succession act. in haryana, property in hands of successor has to be treated as coparcenary property as well as ancestral property. parties can fall back upon hindu law in case they fail to establish that rule of decision is custom. therefore, in haryana both under hindu law and the customary law, the alienation would be open to challenge. custom was given precedent over uncodified hindu law presumably for reason that custom has been consistently replacing the hindu law. however, it was soon realized that ancestral immovable property, which ordinarily held to be inalienable amongst jats of punjab by virtue of custom except for necessity, no limitation was placed on degrees of collateral, eligible to contest such alienation. it was, therefore, felt necessary to engraft certain restriction on degrees of collateral, eligible to contest an alienation, which under the custom itself was not limited. accordingly, the punjab custom (power to contest) act, 1920 (act no.2 of 1920) was enacted. the hindu succession act was extended to the state of punjab. act 2 of punjab act defined expression alienation to include any testamentary disposition of property and appointment of an heir was to include any adoption made or purporting to be made according to custom. a further provision was made by section 3 that hindu succession act was to apply only in respect of alienation of immovable property or appointment of heirs made by persons who in regard to such alienation or appointment were governed by custom. whereas section 4 declared that hindu succession act was not to affect any right to contest any alienation or appointment of an heir made before the date on which the succession act was to come into force. in other words, act, no.2 of 1920 was not to affect alienation or appointments of heir made before date on which it came into force. it also preserved the rights of any alienation or appointment of an heir made by a family. after section 7 was inserted in act of 1920 by the punjab amendment act of 1973 right of contest being contrary to custom had been totally effaced and taken away. therefore, no person has any right to contest any alienation of immovable property whether ancestral or non-ancestral on ground of being contrary to custom after january 23, 1973. in haryana, the situation as enunciated by act no.2 of 1920 continued to prevail in respect of alienation because no reforms parallel to punjab as brought by amendment act of 1973, had been enacted although right to pre-emption has been substantially abolished in haryana also. no steps even have been taken in that regard. therefore, situation in haryana have to be regarded as it existed under act no. 2 of 1920. hindu succession act,1956[c.a.no.30/1956] -- sections 6 & 30: [vijender jain, c.j., m.m.kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of coparcenary property - law laid down by full bench in joginder singh kundha singh v kehar singh dasaundha singh [air 1965 punjab 407] and pritam singh v assistant controller of estate duty, patiala [1976 punj lr 342] -whether there is any conflict? - held, the basic controversy in the full bench decision of joginder singhs case was regarding constitutional validity of section 14 of hindu succession act and as to whether it infringes article 14 of constitution. it was held that the estate held by male and limitation on his power of alienation were in no way removed and the reversioners were not debarred from challenging such alienations. the full bench held that section 14 of hindu succession act postulates that estate held by a hindu female before enforcement of succession act either by inheritance or otherwise, was enlarged and on date of enforcement of succession act, she became a full owner. likewise, if she has inherited any estate after the commencement of the act, she was to be regarded as absolute owner rather than a limited owner. consequently, the limitations on power of alienation automatically vanished. this was the necessary result of the provisions made in section 14 of the act. the full bench further held that in respect of male proprietors, no corresponding provision was made either enlarging their estate in ancestral property or enlarging their power of alienation over property inherited by them. however, it noticed section 30 and observed that it only deals with power of his share in coparcenary property by will, which prior to enforcement of the act, he had no right to do. the only provision made in respect of male proprietor regarding alienation of property was his power of alienation by will. in so far as persons governed by custom are concerned, they continued to be governed by the restriction on the power of alienation of a male holder as existed before enforcement of the act. likewise, other restriction on alienation other than disposal by will also continued. the full bench, thus, recognized the superior right of hindu females by virtue of section 14 and upheld the provision as intra vires. the argument that reversioners have ceased to exist after enactment of provisions of section 14 of succession act, was rejected as there was no provision pointed out to that effect. the proposition laid down by the full bench in pritam singhs case was that the hindu succession act has not abolished joint hindu family with respect to rights of those who were members of mitakshara coparcenary, except in the manner and to the extent mentioned in sections 6 and 30 of the act, this statement should also imply, though it does not say so expressly, the succession act to this extent does not affect the rights of the members governed by dayabhaga coparcenary. the full bench in pritam singh;s case expressly noticed the judgment of earlier full bench in joginder singhs case but construed the same as irrelevant by observing that it dealt with the power of alienation of a person governed by customary law and constitutional validity of section 14 of hindu succession act. thus there is no real conflict between the two full bench judgments. both the full bench judgments have been delivered on the assumption that joginder singhs case dealt with question of alienation whereas pritam singhs case had decided the question concerning succession. even on fact in joginder singhs case the issue was validity of alienation by consent decree by a father to his two sons, which was challenged by third son, whereas in pritam singhs case the question of nature of property in hands of sons on death of their father had arisen for purposes of assessment of estate duty. in pritam singhs case the property in the hands of the sons was held to be coparcenary property and only 1/3rd of property belonging to deceased father was considered eligible for estate duty. therefore, there was no question of alienation in pritam singhs case. - such a course can be justified by stipulation in a contract voluntarily entered into between the parties or by a practice or usage well established in the world to which the parties belong.ajay kumar mittal, j.1. the petitioner-bank feeling aggrieved against order dated 23.12.1994 passed by the executing court whereby it was held that it was entitled to further interest on the original loan amount of rs. 5,000/- only has challenged the same by way of the present: revision petition.2. the sole point for consideration in the present revision petition is whether the petitioner-bank is entitled to interest on the suit amount which included the principal amount and interest or on the original loan amount.3. the respondent-judgment debtor filed an objection in the execution proceedings stating that he had already deposited rs. 7,000/- on 2.11.1993 and about rs. 5,000/- was adjusted under debt relief scheme by the bank and as per the law' of damdupat no amount more than twice the original loan amount can be recovered. it was further averred that the judgment debtor had borrowed only rs. 5,000/- and the decree holder had filed execution wrongly calculating the interest. the interest can only be charged on rs. 5,000/- but the bank has charged compound interest on all costs and other expenses which is not permissible. the other objection taken by the objector was that no final decree has yet been passed and the decree holder has not submitted the statement of account regrading the disputed amount from the date of decree till filing of the execution.4. the executing court held that the decree-holder is entitled to interest on the original loan amount advanced, to the judgment debtor amounting to rs. 5,000/- and the decree holder-bank is entitled to recover further interest at the agreed rate i.e. 14% p.a. to be calculated in simple manner under section 34 of the code of civil procedure.5. mr. r.s. bhatia, learned counsel for the petitioner while placing reliance upon the apex court decisions in corporation bank v. d.s. gowda and bank of india v. karnam ranga rao : (1994)5scc213 and bank of baroda v. jagannath pigment & chem and ors. (1996-1)112 p.l.r. 193 (s.c.) contended that the executing court has erroneously directed that the judgment debtor is liable to pay interest on the original amount of loan and not on the suit amount i.e. the amount of loan advanced to the judgment debtor along with interest thereon.6. i have heard learned counsel for the petitioner and with his assistance have gone through the record carefully.7. the respondents have not put in appearance to contest the petition.8. three judges bench of hon'ble supreme court in jagannath pigment & chem's case approved the view of two judges bench decision in corporation bank's case (supra). in jagannath pigment & chem's case (supra), the sum borrowed by the debtor was rs.l,20,675.59p and the bank after adding the compound interest had filed a suit to recover a sum of rs. 1,66,759.29p with interest as it was claimed that the interest accrued and added to the sum borrowed would be the principal sum adjudged on which future interest could be granted under section 34 of the code of civil procedure. the trial court decreed the suit. however, on appeal the high court modified the decree and directed that future interest should be calculated on the sum borrowed i.e. rs. 1,20,675.59p and not the principal sum adjusted i.e. rs. 1,66,759.29p. the apex court set aside the high court order and restored the decree passed by the trial court.9. the matter relating to interpretation of the liability of the borrower to pay interest on the principal sum to include interest that became merged with the principal sum advanced or principal sum as lent was referred by a three-judges bench on 7.5.1996 to the constitution bench and the hon'ble apex court while affirming the decisions in corporation bank and jagannath pigment and chem's cases (supra) in central bank of india v. ravindra and ors. (2001-3) 129 p.l.r. 837 (s.c.). held in para 49 that a creditor can charge interest from his debtor on periodical rests and also capitalise the same so as to make it a part of the principal. such a course can be justified by stipulation in a contract voluntarily entered into between the parties or by a practice or usage well established in the world to which the parties belong. such practice is to be found already in vogue in the field of banking business.10. further, the constitution bench answered the reference in the following terms:-(1) subject to a binding stipulation contained in a voluntary contract between the parties and/or an established practice or usage interest on loans and advances may be charged on periodical rests and also capitalised on remaining unpaid. the principal sum actually advanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum on the date of the suit.(2) the principal sum so adjudged is 'such principal sum' within the meaning of section 34 of the code of civil procedure, 1908 on which interest pendente lite and future interest i,e. post-decree interest, at such rate and for such period which the court may deem fit, may be awarded by the court.(3) corporation bank v. h.s. gowda and anr. : (1994)5scc213 and bank of baroda v. jagannath pigment & chem. have been correctly decided.11. in view of the above, the impugned order passed by the executing court cannot be legally sustained. accordingly, this revision petition is allowed and the order dated 23.12.1994 is set aside.12. as the proceedings, were stayed by this court, the trial court shall now proceed in accordance with law and dispose of the matter expeditiously.