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Hindu rule of Damdupat not applicable to Muslims: HC - Bangalore Mirror
Hindu rule of Damdupat not applicable to Muslims: HC
By Shyam Prasad S,
Bangalore Mirror Bureau |
Dec 17, 2015, 04.00 AM IST
The Rule of Damdupat, a Hindu law, is not applicable when the borrower of a loan is Muslim, the High Court has held. The rule says that interest payable cannot exceed the principal amount. A lower court had applied this rule and reduced the interest sought by the creditor. But the High Court modified the lower court order as the borrower was a Muslim and the Damdupat cannot be applied in this case.
The HC disposed of two similar cases involving the same parties on December 7. In one case, Prasad Financiers challenged the order of the XXVI Additional City Civil Judge order passed on March 11, 2009 on a case dating from 2001. Prasad Financiers had lent Rs 25,000 twice to one K Aboobacker in 1991. The agreement was stipulated at an interest rate of 21 per cent per annum. When Aboobacker failed to return the amount, a suit for recovery was filed against him for a sum of Rs 1,28,812 (including interest).
In the trial, Aboobacker denied executing any 'On Demand promissory note' or 'Consideration Receipt.' He also claimed that he had two transactions with the financiers and had returned the amount and interest back in 1994 itself. However, he did not step into the witness box and only made written submissions.
The trial court ordered that Aboobacker was liable to pay Rs 1 lakh to the financers that included Rs 50,000 principal and the rest as interest at 10 per cent per annum. The financiers approached the HC alleging that the trial court had applied the principles of 'Rule of Damdupat' under the Hindu Law and reduced the claim amount. It was contended that the said rule was not applicable in this case.
The HC noted that the trial court had not looked into the provisions of the Rule of Damdupat to find whom such provisions are applicable. It had only stated that "plaintiff is not entitled for more than the double amount of the principal amount including interest." The HC said that therefore, "the order of the trial court suffers from serious illegalities."
The HC quoted from the 17th edition of Mulla's Principles of Hindu Law by Satyajeet A Desai which says, "The rule of Damdupat applies only where both the original contracting parties are Hindus." The HC in its order said, "The said rule of Damdupat is only enunciated under the principles of Hindu Law and not under any other law for the time being in force. In this case, the debtor is a Mohammedan. Therefore, the trial court without looking into the above said definition of rule of Damdupat and also to whom the principle is applicable, erroneously passed the decree restricting the suit amount to Rs 1 lakh which is not proper or correct."
As for the interest rate, the HC said, "21% appears to be exorbitant but it does not mean to say that 10% is reasonable. In my opinion, at least the bank rate of interest has to be awarded." The interest was enhanced from 10% to 12%. The HC modified the lower court order and allowed the financier to recover a sum of Rs 1,28,812.
In a related case, the HC allowed KS Nagendra Prasad to recover Rs 80,187 from Aboobacker. The lower court had applied the Damdupat rule and restricted the amount payable to Rs 50,000 on a loan of Rs 25,000.
WHAT THE LAW SAYS
The Rule of Dvaigunya or Damdupat is found in several smritis and dharmasastras of Hinduism. In a rule in Manu Smriti, Chapter VII, 151, it is usually translated as "In money transactions, interest paid at one time (not by installments) shall never exceed the double (of the principal); on grain, fruit, wool or hair, (and) on beasts of burden, it must not be more than five times (the original amount)."
LAWS ONLY FOR HINDUS
* Hindu Laws Codified and applicable to only Hindus * Hindu Marriage Act (1955) * Hindu Succession Act (1956) * Hindu Minority and Guardianship Act (1956) * Hindu Adoptions and Maintenance Act (1956)
Hindu rule of Damdupat not applicable to Muslims: HC
By Shyam Prasad S,
Bangalore Mirror Bureau |
Dec 17, 2015, 04.00 AM IST
The Rule of Damdupat, a Hindu law, is not applicable when the borrower of a loan is Muslim, the High Court has held. The rule says that interest payable cannot exceed the principal amount. A lower court had applied this rule and reduced the interest sought by the creditor. But the High Court modified the lower court order as the borrower was a Muslim and the Damdupat cannot be applied in this case.
The HC disposed of two similar cases involving the same parties on December 7. In one case, Prasad Financiers challenged the order of the XXVI Additional City Civil Judge order passed on March 11, 2009 on a case dating from 2001. Prasad Financiers had lent Rs 25,000 twice to one K Aboobacker in 1991. The agreement was stipulated at an interest rate of 21 per cent per annum. When Aboobacker failed to return the amount, a suit for recovery was filed against him for a sum of Rs 1,28,812 (including interest).
In the trial, Aboobacker denied executing any 'On Demand promissory note' or 'Consideration Receipt.' He also claimed that he had two transactions with the financiers and had returned the amount and interest back in 1994 itself. However, he did not step into the witness box and only made written submissions.
The trial court ordered that Aboobacker was liable to pay Rs 1 lakh to the financers that included Rs 50,000 principal and the rest as interest at 10 per cent per annum. The financiers approached the HC alleging that the trial court had applied the principles of 'Rule of Damdupat' under the Hindu Law and reduced the claim amount. It was contended that the said rule was not applicable in this case.
The HC noted that the trial court had not looked into the provisions of the Rule of Damdupat to find whom such provisions are applicable. It had only stated that "plaintiff is not entitled for more than the double amount of the principal amount including interest." The HC said that therefore, "the order of the trial court suffers from serious illegalities."
The HC quoted from the 17th edition of Mulla's Principles of Hindu Law by Satyajeet A Desai which says, "The rule of Damdupat applies only where both the original contracting parties are Hindus." The HC in its order said, "The said rule of Damdupat is only enunciated under the principles of Hindu Law and not under any other law for the time being in force. In this case, the debtor is a Mohammedan. Therefore, the trial court without looking into the above said definition of rule of Damdupat and also to whom the principle is applicable, erroneously passed the decree restricting the suit amount to Rs 1 lakh which is not proper or correct."
As for the interest rate, the HC said, "21% appears to be exorbitant but it does not mean to say that 10% is reasonable. In my opinion, at least the bank rate of interest has to be awarded." The interest was enhanced from 10% to 12%. The HC modified the lower court order and allowed the financier to recover a sum of Rs 1,28,812.
In a related case, the HC allowed KS Nagendra Prasad to recover Rs 80,187 from Aboobacker. The lower court had applied the Damdupat rule and restricted the amount payable to Rs 50,000 on a loan of Rs 25,000.
WHAT THE LAW SAYS
The Rule of Dvaigunya or Damdupat is found in several smritis and dharmasastras of Hinduism. In a rule in Manu Smriti, Chapter VII, 151, it is usually translated as "In money transactions, interest paid at one time (not by installments) shall never exceed the double (of the principal); on grain, fruit, wool or hair, (and) on beasts of burden, it must not be more than five times (the original amount)."
LAWS ONLY FOR HINDUS
* Hindu Laws Codified and applicable to only Hindus * Hindu Marriage Act (1955) * Hindu Succession Act (1956) * Hindu Minority and Guardianship Act (1956) * Hindu Adoptions and Maintenance Act (1956)
