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Present: Fisher C.J. and Drieberg A.J.
MUTHU PATHAM u. ALIAB LEBBE.
90—D. C. Batticaloa, 6,043.
No. 2 of 1918, s. 2 (1) (a).
The plaintiff lent the defendant a sum of Rs. 16,000 and it wasagreed that the defendant should discharge his obligation by thedelivery of 1,600 amonama of paddy by instalments. In defaultof delivery of any instalment the plaintiff was to be entitled losue tor the value of the balance of paddy remaining undelivered atthe ruling market price.
Held, that this was a money lending transaction within themeaning of section 2 of the Money Lending Ordinance and that itwas open to the Court to grant relief under the section.
PPEAL from a judgment of the District Judge of Batticaloa.
Balasingham (with Spencer Rajaratnam), for defendant, appellant.
No appearance for respondent.
September 9, 1927. Fisher C.J.—
In this case the respondent-plaintiff lent the appellant-defendantthe sum of Bs. 16,000 on December 21, 1920, and the parties agreedthat the defendant should discharge his obligation by delivery of1,600 amunams of paddy by four annual instalments of 375 amunamseach and a final instalment of 100 amunams. In default of deliveryof any instalment the plaintiff was to be at liberty to sue thedefendant for the value of the whole balance of paddy then un-delivered calculated at the then selling price.
When the defendant had delivered 1,125 amunams he madedefault in delivery. 475 amunams then remained to be deliveredunder the contract, and the plaintiff sued the defendant for then-value calculated at Bs. 21 per amunam, namely, Bs. 9,975. Thedefendant pleaded that he had delivered paddy to the value ofRs. 22,500 (calculated at the rate of Bs. 20 per amunam) and there-by overpaid what was due to the plaintiff by Rs. 2,635, which sumhe claimed in reconvention.
The facte were not in dispute, and the value alleged in the plaintas the selling’ price at that time (September 14, 1926), Bs. 21 peramunam, having been agreed on, the case went to trial without any
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MxiihuPatham v.Altar Lebbe.
evidence being led and the learned Judge gave judgment for theamount claimed, being of opinion that the Money LendingOrdinance, No. 2 of 1018, was not applicable.
He says, in his judgment: 44 The1 Money Lending Ordinancerefers purely to money lending and money recovering transactions, "and later on he says, 44 it is only in the case of default on the part ofthe defendant that the plaintiff is said to be entitled to sue for thepalance of paddy yet due at the price ruling at the time." I takethat to mean that in the learned Judge’s view if a borrower asin this case, binds himself to discharge his obligation by paymentin kind and only becomes liable under the agreement to make amoney payment in the event of failure to pay in kind the case isnot within the Ordinance. He holds in effect that inasmuch as theobligation on the defendant to pay money is conditional and onlycomes into existence in the happening of a certain event it is notwhat he describes as a 44 money recovering ” transaction. If suchis the case presumably the operation of the Ordinance would belimited to cases in which on money being lent the borrower agreedto repay it and the interest on it by cash payments. I do not thinkthat that is in accordance with the true construction of theenactment.
The case before us is clearly a money lending transaction, in thatit is based on the fact that the plaintiff lent the defendant Bs. 16,000,and the action, in my opinion, falls within the words of section 2,of the Ordinance, inasmuch as it is a proceeding for the enforcementof an agreement 44 in respect of money lent. " The amount of theloan is not primarily repayable in money it is true, but it is repayablein money's worth.* It seems to me that the words of the sectionwhich I have referred to clearly indicate the intention to includetransactions such as that which we are considering, and that viewis emphasized by the words of sub-section (4) of section 2, whichprovides that 44 the foregoing provision of this section shall applyto any transaction which, whatever its form may be, is substantiallyone of money lending. "
I think, therefore, that the judgment appealed from must be setaside, and the case must be remitted to the District Court todetermine whether on the facts admitted with such further evidenceas may be called the plaintiff is entitled to have the transactionreopened, and if so, to proceed accordingly. The respondent willpay the costs of the appeal and of the hearing which took placein the District Court.
I agree with my Lord the Chief Justice that the transaction beingfound by the learned District Judge to be a loan of money the merefact that it was to be repaid in property does not take the case out
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of the Ordinance, and that it is open to the Court to give relief if thetransaction is one of the character described in section 2 (1) (a)of the Money Lending Ordinance, No. 2 of 1918, and I agree withthe order he has made.
I wish to add that in determining whether the return to be receivedby the creditor was excessive, and whether the ^transaction washarsh and unconscionable or substantially unfair, the agreementshould be considered as at the lime it was made and not in the lightof subsequent events.
In Thomas v. Ashbrook/ the report of which is not available tome, but which is quoted on page 83 of Ajit Ghose’s Lawagainst Usury in British India, Gibson J. said that the reasonablenessof the interest is to be *' ascertained with reference to the conditionswhich were or ought to have been present to the mind of the lenderat the time of the transaction, not the actual or true risk,which the event might show to have been trifling or non-existent/’
It is recorded that the market price of paddy is agreed to at Rs. 21;I take that this refers to the price of paddy for the purpose of deter-mining the amount payable for failure to deliver the 475amimams, and not to the price of paddy during the whole periodof the agreement.
Set aside and sent bach.
Pat'iam tf.Aliar Lebbe.
» V$13) Jr. J?. 2t K. B. Div. 416, 427.
MUTHU PATHAM v. ALIAR LEBBE