NEW YEAR SALAD

(T. G. John, Advocate, Tricbur)

One more year has rolled by -- a year of cataclysmic events. In which the fragile, beautiful moon has slipped from the hands of the poets into the grips of the scientists. In the political arena, rhetoric, oratory, slogan-shouting and hijacking have taken the place of law and order at local, national and international levels.

Taking a flash-back of the legal arena of the world, we find many of the editors of magazines and newspapers and broad-casters of Nixon's Land balking, when the American Bar Association recommended a tough code to limit the flow of information to reporters in criminal cases. The Code was drafted by a Committee headed by Massachusetts Justice Paul Reardon and there was a general feeling that the Committee had gone too far. But all were agreed on one point that there was a real need to keep cases from being tried in the Press.

The judicial conference of the U. S. has cleared this mine-field a bit by adopting its own recommendations which attempt to discourage publicity that might influence a jury or judge and result in an unfair trial, but unlike the American Bar Association Code do not attempt to define any standard for the news media or police working beyond the confines of the court room. Instead they rely strictly on a judge's power to discipline those actually under his judicial supervision.

Still new rules have been worked by a Committee headed by U. S. Courts of Appeals Judge Irving Kauffman of New York who has called on Judges to forbid bailiffs, clerks and other Court personnel to give out information on a case unless it is part of a public record. They also urge that each court carefully define the environs of the Court-room where photographers and T. V. Cameramen may not take pictures. Like the A. B. A.  Code the federal rules would prohibit lawyers and prosecutors from divulging a confession, or an accused man^’s past record or making other statements that might result in an unfair trial. But the Kauffman rules do not provide for the two most important recommendations of the American Bar Association: (1) Exclusion under some circumstances of newsmen from preliminary hearings and other hearings (2) Recommendation that judges bring contempt of Court citations against newsmen who publish material will fully designed to influence a trial's outcome.

The American Press objected most strenuously to the last provision and as a result the Kauffman Committee preferred not to include such a rule, since the U. S. Supreme Court has yet to decide whether or not judges have the right to use their contempt powers in this way. The Kauffman Committee's recommendations are likely to become part of the rules in every federal court in the nation.

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Tailpiece:

Sir John Popham, the Lord Chief Justice who tried Sir Walter Raleigh and Guy Fawkes, studied law with the proceeds of his earlier career as a highwayman!

DAMAGES AND GINGER BEER

(T. G. John, Advocate, Trichur)

There is nothing spreeish, crass, or scurrilous in a person stepping into a wayside cafeteria or a provision, store on a hot, stuffy evening and ordering for a bottle of ginger beer. And as he sits on the wire-legged stool watching the waiter dip the bottle and pour out for him the drink that will quench his thirst, and cheer him but not inebriate, he does not care two hoots whether, that particular bottle is opaque or otherwise. However things did not move so smoothly years ago, somewhere in England when a similar bottle of ginger beer was ordered for. For to the utter horror of the customer it was found in the bottle, couched in the lees of the drink the decomposed remains of a snail. From that moment began a controversy which consummated in the celebrated case Donoghue v. Stevenson (M'Alister v. Stevenson) or more familiarly known as the snail-in-the-bottle case, which is an important landmark in the history of English law of damages and incidentally on the question whether an action lies for nervous shock and if so under what circumstances.

Taking a cursory glance at the English authorities on this branch of law, one of the earliest cases is Victorian Railways Commissioners v. Coultas (1888). In that case the buggy of the plaintiffs, a husband and wife, was nearly but not quite run over by a passing train at a level crossing and it was held that the resulting shock and illness was damage which was too remote and hence not recoverable. The above Privy Council decision contains the following dictum: "In every case where an accident caused by negligence had given a person a serious nervous shock, there might be a claim for damages on account of mental injury. The difficulty which now often exists in case of alleged physical injuries of determining whether they were caused by the negligent act would be greatly increased and a wide field opened for imaginary claims". The reasoning seems to be that if one were to arrive at a different conclusion it will open wide the gates of imaginary claims and frivolous litigations.

The view which was not popular even in England gradually gave way by the pronouncement of Kennedy J. in Dulieu v. White & Sons (1901). The plaintiff who was in the family way was behind the bar of her husband's public house. The defendants by their servants negligently drove a horse carriage into the public house and the plaintiff prematurely gave birth to a child and became ill also. Kennedy. J. laid down two propositions, which as stated by Mr. K. Venkoba Rao in "Conundrum presented by shock cases", have become the starting point for discussions on the subject namely that unless the plaintiff is within the area of physical danger, he cannot recover damages for nervous shock and secondly .if a man is killed by the negligence of the defendants in sight of plaintiff and the plaintiff becomes ill, the damage is too remote a consequence of the negligence.

The case of Hambrook v. Siok.s Brothers (1925) is the next important step in the tumultuous march of English case law in this subject. The defendants' servant left a motor lorry at the top of a steep and narrow street u--attended with the engine running and without taking proper precautions to secure it. The lorry started off by itself and ran violently down the incline. Plaintiff's wife who had been walking up the street with her children had left them a little below a point where the street made a bond when she saw the lorry rushing down the bend towards her. She became frightened for the safety of her children whom she knew must have met the lorry in its course. A bystander informed her that a child answering to the description of one of hers had been injured. In consequence of her fright and anxiety, she suffered a nervous shock which eventually caused her death. The action was filed by her husband under the Fatal Accident Act. Bankes and Atkin L. JJ. (Sargant L. J. dissenting) held that on the assumption that shock was caused by what the woman saw with her own eyes as distinguished from what she was told by the bystanders, she was entitled to recover notwithstanding that the shock was brought by fear for her children's safety and not by fear for her own. Atkin L. J. made the following observation; "The legal effects of injury by shock have undoubtedly develop ed in the last 30 or 40 years. At one time the theory was held that damages at law could not be proved in respect of personal injuries, unless there was some injury which was variously called 'bodily' or 'physical' but which necessarily excluded an injury which was only 'mental'. There can be no doubt, at the present day, that this theory is wrong."

Chronologically, in the chain of English Shock Cases, Donoghue v. Stevensun (1932) fits in here. "In that case a manufacturer or ginger beer sold his ginger beer in opaque bottles. A snail had crept into one of the bottles which the manufacturer filled and corked up without noticing the presence of the snail which could not be seen as the bot*le was opaque. It was held that the manufacturer was liable for the injury caused to the retailer's customer who ultimately drank, the contents of the bottle". (Facts as digested in Halsbury's Laws of England, Second Edition, Volume 10). The plaintiff in this case suffered from shock and gastroenteritis. In a suit by the plaintiff to recover damages it was held that the defendants were liable.

The two important pronouncements of the post-Donoghue period are Hay v. Young (1943) and King v. Philips (1953) I All E. Reports 617. In the former case a woman who was in the family way suffered from fright and shock on account of notice produced by the collision between a motor cycle and a motor car. A month later she delivered a still born child In as much as she did not see the accident, standing about 45 feet from the point of impact and she being not within the area of potential danger and the duty of the motor cyclist being to drive with such reasonable care as would avoid risk of injury to such persons as he could reasonably foresee, the House of Lords held that she was not entitled to recover In King v. Philips (1953) a taxi driver negligently backed his cab without looking where he was going and ran into a small boy on a tricycle. His mother who was in her house seventy or eighty yards away, heard him scream and looking out of the window, saw his peril. She suffered nervous shock. It was held that the shock was too remote to be ahead of damage. "The court of appeal affirming the decision of Mc. Nair J, held that the defendant was under no liability to the mother. Singleton L. J. approved of the observations of Atkin, L. J, in Hambrook y. Stokes but he thought that the case was distinguishable because there the mother was on the highway and not up a side street as in the present case. Denning L. J thought that Hambrook v. Stokes was not overruled by Hay v- Young and that the two decisions should be reconciled. The learned Lord Justice distinguished Hambrook v. Stokes on the ground that the slow backing of the taxicab was very different from the terrifying descent of the runaway lorry. The taxi cab driver could not reasonably be expected to have foreseen that his backing would terrify a mother 70 yards away whereas the lorry driver ought to have foreseen that a runaway lorry might seriously shock the mother of children in the danger area. Denning L. J., summed up the effect of care law on the subject thus: Wife or mother who suffers shock on being told of an accident to a loved one cannot recover damages from the negligent party on that account. Nor can a bystander who suffers shock by witnessing an accident from a safe distance. But if the bystander is a mother who suffers from shock by hearing or seeing with her own unaided senses that her child is in peril that she may be able to recover from the negligent party even though she was in no personal danger herself. Hodson L. J, rested his decision on the ground that in the absence of admission of negligence in Hambrook v. Stockes, Lord Thankorten, would not have approved of it in Hay v. Young (Venkoba Rao-Coundrum presented by Shock Cases).

The Indian Case-Law on the point is very sparse and sporadic. In Governor-General in Council v. Surajmal Esarka (A. I. R. 1949Nagpur 256) there was a very minor accident on the railway; a sentinel coach in which the plaintiff was travelling callided with a stationary goods train. Ail that occurred was that the cow-catcher of the coach got entangled with the couplings of the last wagon of the goods trian and was slightly broken. The plaintiff's eye and thigh were bruised and he had a slight scratch on the right foot. Bose J. observed: "Now it may be conceded that a person of normal fortitude might suffer slightly from shock in these circumstances. Now as far as the general damages go we are not able to interfere because mental pain and so forth are not matters which can be gauged in terms of money or money’s worth. We concede that the circumstances are such that a normal man might suffer from a slight temporary shock. He would be entitled for compensation for such suffering. What that should be is a matter on which men will differ widely. Accordingly following the usual practice we do not intend to interfere". Earlier after referring to Victorian Railways Commissioners v. Coultas His Lordship observed:" even if we do not apply the restricted rule laid down by Their Lordships we decline to open wide the flood gates to special and exceptional cases, many of which rest on the border line of the imaginary . The law and particularly a law of this kind must be founded on firm commonsense where ordinary reasonable men, with normal healthy constitutions and of normal fortitude and courage deal with each other".

The next noteworthy case is Mrs. Halliguav. Mohansundaram (1951, II M. L. J. 47l). The plaintiff and her husband who is a well to do merchant and landlord at Cochin and belonging to the community of Cochin Jews came on a four day visit to Madras They engaged the first defendant's taxi and the taxi driver after driving to the Caltex petrol bunk next to Messrs Lawrence and Maye, Ltd. on the Mount Road and after filling up the petrol was crossing the road to Bosoitos when a tram car proceeding towards the Mylapore side collided with the taxi and smashed up the front portion of the car. Mrs. Halligua immediately after collision was seized by what appears to have been a very severe pain in her arms and hands. It was only after a period of five months that she was able to use her arms and ringers. Even then she was unable to bend her right little finger which according to medical evidence was likely to be a permanent deformity. In an action laid by the plaintiff against the taxi owner who in his turn impleaded the Insurance Company as second defendant, for damages for bodily injury, pain and mental shock the defendants were held liable. Mack J. after referring to the view of Atkin L.J. in Hambrook v. Stokes Brothers observes: "With great respect I have no hesitation in following the view of Atkin, L.J................I fully appreciate the difficulty in estimating^; damages claimed by reason of shock............It is not possible to lay down any hard and fast rule and each case has to be dealt with on its own merits. I think the trend of English Case law having exploded the old view that damages cannot be claimed on the basis of nervous shock attributable to negligence, Indian Case Law based on old English decisions should in this domain of law have a similar orientation".

For a judicious summing up of Indian Case Law on this point we have yet to wait and see the march-past of judicial consensus for some more time.

INTEREST ON INTEREST & COMPOUND INTEREST

(Philip K. Thayil B. A , M. L., Advocate, Ernakulam)

There is probably no matter into which more totally unnecessary complications are imported than the matter of interest for a debt which was not paid according to the promise. Is compound interest the same as interest on interest? Is compound interest essentially different from simple interest? Is realisation of interest on interest or compound interest a contravention of the provisions of the usurious Loans Act? Is the right to realize compound interest a legally protected interest? These are interesting questions of interest and are attempted to he answered briefly hereunder in the light of balance of authorities.

Is compound interest the same as interest on interest? There is a bewildering diversity of judicial opinions on this. One of these opinions is this;- "compound interest is not interest on interest; it is interest on a sum or sums which were interests but which on default or liquidation immediately become principal", see Shamsunder & others v. Harban Singh A.I R.1915 Lahore, P. 346 per John stone and Shah Din JJ. In this case their Lordships upheld the right of the plaintiff to compound.interest.

Another judicial opinion is that compound interest and simple interest are not two kinds of interests. Mr Hallifax A.C.J observed in Kishenlal v. Bapu 94 I. C. 971, that simple interest and compound interest are not two kinds of Interests. His Lordship maintains that the only difference between them is that one is paid regularly and the other is not, meaning thereby that simple interest on unpaid simple interest is compound interest But his Lordship nevertheless maintains that simple interest and compound interest are not two kinds of interests.

Still another judicial opinion is found in the Privy Council decision 8. R. M.S. 0. Chettiar v. Loo Thon Poo 1940. P. C. 60 Here their Lordships discussed and considered the question "whether the charge of compound interest, that is to say, interest on interest ought to be allowed". Compound interest is here explained as interest on interest. This Privy Council decision and a long series of English decisions like R.S. Lylee v. Chappet 1932 I K. B. 691 lay down that it ought not to make any difference to the validity of a transaction by way of a loan whether the parties go through the form of payment by the borrower of the whole amount and redelivery of the same amount by the money lender, or the transaction is carried out without any such payment by treating the amount of the principal and interest still due as a debt acknowledged by the borrower to the amount of the agreed debt. It is only just that because of the default of the debtor to pay the amount of interest at the stipulated time the creditor must not be made to lose his interest on that amount. It is again only just that the defaulting debtor must not be rewarded with the privilege of a fresh advance without interest.

The difference between interest on interest on the one hand and capitalized interest on the other is interesting to note. To say that one is compound interest and the other is not is to attach too much importance to a quibble on words, a verbal controversy devoid of legal consequences. Yet there is in essence difference between interest on interest and interest on capitalized interest. The former is interest on interest, the latter is interest on capital and the latter is legally protected right of the money lender. There is the dam up law that interest must not exceed the principal and there was a section in the Travancore Civil Procedure Code that interest must not exceed 50% of the principal. There is now in the Indebted Agriculturists Debt Relief Act (Act 111 of 1956 a provision in S. 5 to the effect that the amount of the interest payable by an agriculturist shall not exceed one half of the principal amount outstanding at the commencement of that Act. There is no statutory prohibition of the capitalization of the defaulter interest. When interest is added to the principal, according to Romer L. J in Inland Revenue Commissioners v. Holder (1931) L. K B 81 and Lord Inglis in Reddie v. Williamson 1. Macph. 228 not only becomes principal but thereafter ceases to be dealt with as principal-see also 1943 Mad. 157 which also does justify the capitalization of defaulted interest, and realizing interest on such consolidated amount If interest is added on to interest alone the interest thus accumulated may easily be hit by the damdupat law or the above mentioned Act 111 of 1956 (S. 5), or the usurious Loans Act. In Khimji v. Chunilal Ambaidas A. I. R. 1919 Bom 131, the amount sought to be recovered was for the most part made up of interest which largely exceeded the principal-a manifest contravention or flagrant violation of the damdupat law-and there was an agreement in writing in this case whereby the debtor agreed to pay interest upon interest. It was decided in this case that there was nothing to prevent the court from awarding the full sum claimed both as a matter of natural inference from the agreement and as a matter of Hindu law. The rule of damdupat it was held in this case does not prevent an agreement between the debtor and the creditor to capitalize interest at a stage when the interest does not exceed the principal. All Smrithi writers and commentators, this judgment says, are agreed that there must be an agreement between the debtor and the creditor to capitalize interest in order to justify the calculation of interest in future on the sum made up of the principal and interest thus agreed to be capitalized. If interest is added on to interest which is not capitalized the law of damdupat and S. 5 of the Act 111 of 1956 will be easily contravened or violated.

Interest on capitalized interest is legally recognized and protected by a catena of decisions even of the House of Lords and the Privy Council There is the overwhelming preponderance of judicial authorities of the Indian High Courts in its favour. In Holder V. Inland Revenue Commissioners, 1932 A. C. 264 (affirming Inland Revenue Commissioners V. Holder (1931) 2 K. B. 81) the Court of Appeal approved the statement of Lord Cowan in Reddie V. Williamson (1863) 11 Macph. 228 "that the periodical interest at the end of each year is a debt to be then paid and which must be held to have been paid when placed to the debit of the account as an additional advance by the bank for the convenience of the obligants". The case went to the House of Lords and the decision was confirmed, see 9, Halsbury's statutes 443. In Paton V Inland Revenue Commissioners 1938 A. C.341 however the point was dealt with by Lord A kin one of the most outstanding luminaries in the judicial horizon in the following terms: "The question is whether when the charges are added to the existing indebtedness at the end of one half-year and the whole sum brought down is a debit item at the beginning of the next half year, so that interest is charged on the last half-year's interest, the charges have been paid. The ordinary man would, I think, say that so far from being paid, they are added to the ordinary indebtedness because they are not paid; and I see no reason why the law should say anything different". His Lordship then quoted Russel L, in Re Jauncy B ird v Arnold (1926) Ch. 471, with approval that the contention that the interest must be deemed to have been paid would really amount to a travesty of the actual facts; because in the case of such a provision as is contained in the present deed which enables the interest to be capitalized the interest is not capitalized because it is in fact paid, but because it has not been paid.

His Lordship (Lord Atkin) further referred to the "'system adopted by the bank.........for the purpose of giving them compound interest without perhaps flaunting the fact before their customers.

Capitalization of defalted interest and realizing interest on such consolidated amount is an age old custom of bankers. This customary right of the bankers is legally recognized and protected by manifold pronouncements of very high iudicial authorities. For example see (a) 1907 2 ch. 448; (b) 1922 1 ch. 126; (c) 1B&B 420; (d) 32, L J. ch. 540-545; (e) 1898. 2. Q. B. 467; (f) Exparte Bevan. 9. Ves. 223' (g) 5. B & Aid. 34; (h) 1931. 2. K.B. 89; (i) 1932. 1. K. B 6; (T) 1938. A. C. 341; (k) 1932. A. C. 264; (1) 1940. P. C. 60; etc.

A series of Privy Council decisions have recognized and protected this right of the lender to realize interest on the defaulted interest. In Venkata Rao Garu v. Gade 1936 P. C. 283, a mortgage suit, this interest on capitalized interest was called compound interest and it was laid down here also that compound interest is in itself perfectly legal but compound interest on the principal moneys being in excess of and outside the ordinary and usual stipulation may well be regarded as in the nature of a penalty. The plaintiff in this mortgage suit was allowed compound interest (interest on the defaulted interest) at the same rate as the simple interest.

In S. R. M. S. C Chettiar v. Loo Thon Poo 1940 P. C. 60 also the Privy Council recognized and upheld the right to realize interest on the capitalized interest. The true view in the above House of Lords and the Privy Council decisions is that periodical interest when becomes due is a debt to be then paid (ie. at each rest) and which must be held to have been paid when placed to the debit of the account as an additional advance by the bank. The effect of the mode of dealing between banker and customer is, according to the long standing usage governing their relations to treat the interest accruing at each rest as discharged by borrowing an equivalent sum from the bank in precisely the same way as if the customer had given the bank a cheque upon the account for the amount in question with which the bank extinguished the interest and then placed the amount of the cheque to the debit of the account as an ordinary draft-see also P. Mudaliar v. N. Ayyar 1943. Mad. -157 & (1932) I. K. B. 691 which also upheld the right of the money lender to realize interest on capitalized interest. In this Madras case his Lordship Patanjali Sastri observes thus: "It will be seen that the mode of dealing adopted by the parties is what is u ually followed, between banker and customer; and it is well established that the effect of this system is to capitalize the interest at the end of each year and treat it as a fresh advance by the bank; in other words according to the usage prevailing between bankers and customers it is an implied term of their dealing that the banker is to be treated as having made an advance to the customer at the end of each year or half-year as the case may be of a sum equivalent in amount to the interest accruing during that period so as to enable the customer to discharge the interest increasing the principal of his debt by a corresponding amount.........This usage which has been adopted by bankers in England for over a century had its origin as a device to secure compound interest by circumventing the usury laws under which agreement for charging compound interest was usurious and illegal". This observation of his Lordship Patanjali Sastri is based on very unshakably deep-rooted catena of decisions for over hundred years in England and several decades in India.

But an observation diametrically opposed to this is found in Anthony v. Mala Catholic Union Bank Ltd., 35 Cochin 542 by Krishna Menon J. This was a suit by a bank for the balance due under an over draft account. There was an agreement between the plaintiff and the defendant for capitalization of defaulted interest and for realizing interest on such consolidated principal. The learned District Judge observed that there was an implied term, in the agreement to the effect that the bank should be considered to have made an advance to the customer at the end of each quarter of a sum equivalent in amount to the interest accrued within that quarter so as to enable the customer to discharge the interest pertaining to that period. This observation of the learned District Judge is based on a series of House of Lords, Privy Council and Indian decisions. More over it is in conformity with the opinions of the most eminent writers on Banking Law, like Paget, Tannan, Hart, Sheldon, Grant and Davar etc. But his Lordship Krishna .Menon says that the observation of the learned Districi Judge that there is such an implied term is an 'absolute fallacy'.!here is no such implied term according to Krishna Menon,J. It may interestingly be noted here that Lord Atkin, the Lord of the Privy Council, and his Lordship Patanjali Sastri and a long series of High Court judges in India have recognized and upheld this implied term.

Another almost unique feature about this Cochin decision is that counter interest is allowed to the small payments made by the debtor towards the discharge of the large debt due to the bank. The payments thus made by the debtor are treated by his Lordship as open payments. When a debtor makes payment to a creditor and when the paid amount is appropriated towards the bigger debt due by the payer to the creditor how can there be open payments? Further when a debtor who owes a large sum to a creditor makes a payment to the creditor the natural presumption is that it is to be adjusted towards the debt and not mere open payments, for the well known maxim is "Debtor non proeumitur donare'. Anyway this decision is contrary to the well known authorities of the system of account keeping See Devaynis v Noble Clayton's case (1816) 1 Mer. 529 the principles deducted from which have been enacted in Ss.59,60, and 61 of our Indian Contract Act (1872). "The appropriation is made by the very act of setting the two items (credit and debit items) against each other. Upon that principle all accounts current are settled and particularly cash accounts"-see Clayton's case. The balance is struck after appropriation and the suit in the Cochin Case was for the balance due under over draft accounts

Interest on capitalized interest is allowed in a very long series of decisions of the Indian High Courts-eg (a) A, T. R. 1915. Lahore 346; (b) 94 I C. 971; (c) 1919. Bom. 131; (d) A. I. R.1929 All. 59; (e) 1904. 31 Cal. 233;(f) 1946. Mad. 35; (g) 1935. Mad. 165; (hi 1943. Mad. 157; (i) 1919. All. 1; (j) 17.1. C. 9; (k) 119.1. C. 468; (1) 111. I. C. 694; (m) 1918. A. C. 372; (n) 1943. Mad. 158.

Capitalization of defaulted interest and realizing interest on such capitalized interest is recognized by a series of Travancore Full Bench decisions also, Among these 1948 T, L. R. 847 may be specially noted. It was held in this case that there is nothing opposed to law in enforcing the right to interest on capitalized interest. But if defaulted interest is not capitalized, interest on non-capitalized interest is not countenanced See Raman Pillai v.Neelakanta Iyer 194f. T. L. R. 716. In Philippose v. Geevarghese Kathanar 29. T. L. J, 1275 (F B.) the right to realize interest on capitalized interest was recognized and legally enforced. In Meenakshi v. Lakshmi 31. T. L. J. 528, interest on capitalized interest at every quarterly rest was allowed In Eapen v. Kochugovindan 10 T. L. J. 367, this right was recognized. See also Smkara Pillai v. Kunjulakshmi 1944. T. L. R. 324.

The right to compound interest was recognized by "Kunjulakshmi Amma v. Narayan Pattar 33. Cochin 448, Even the Agriculturists' Act (XVIII of 1114) does not affect the right to compound interest even when the debt is secured.

The right to interest on interest was considered and upheld by the Kerala High Court (D. B,) in A. S. 26 of 1955 (an unreported decision) judgment pronounced on 23-3-1956. This was a suit to recover money lent on security. Their Lordships held thus: "We do not think that there is anything in the Cochin Agriculturists' Relief Act (Act XVITI of 1114) or in any other law which prohibits parties from agreeing to treat arrears of interest as principal......Here the defendant agreed to have arrears of interest treated as principal and to pay " interest on such principal as if he paid the interest to the bank and the bank advanced it to him as a fresh loan. We therefore hold that the plaintiff is entitled to have arrears of interest treated as principal and to claim interest on such principal."

In Venkateswara Iyer Harihara Iyer v. Mathew George and others 1951 K. L T. 353 interest on capitalized interest is upheld. This is a Full Bench decision. This was also a case of secured debt. By Varghes Ouseph v. Lakshmi Amrnal Pichi Ammal and another 1951 K. L. T. 382, also the right to capitalize defaulted interest is recognised as not affecting Sn. 31 C.P.C. of Travancore. But when interest is not capitalized and interest is calculated on such non-capitalized interest the accumulation of such unqualified interest alone will be easily hit by Sn, 31 C. P. C. of Travancore. In Norayana Kochu kunju and another v. John Joseph and others 1950 K. L.T. 487 interest on capitalized interest is allowed subject to Sn. 31 of the Travancore C. P. C. This code is not in force now and there is no corresponding section in the code now in force:

Further authorities for compound interest (interest on capitalized interest) is found in:-

(I). Paget's Law of Banking 5th Edition P. 67 and 68.

(II). Sheldon Practices & Law of Banking (V. P. Sheldon) 5th Edition (1946) P. 204 and 205.The banking practice of adding interest to principal to enable the bank to realize compound interest is dealt with by Sheldon. Sheldon says:- "Money advanced on mortgage to secure a fluctuating balance may be merged in the general account and compound interest charged".

(III). Tannan's Banking Law & Practice in India 7th Edition P. 241 and 242. He recognizes quarterly rests and compound interests. He also states the grounds to justify this compound interest.

(IV). Bashyam & Adigar, Negotiable Instruments Act iy50 Edition P. 278.

(V). Pollock & Mulla, Contract Act 1957 Edition at P. 490. Sundar Koer v. Eaisham Krishnan 1906. 34. LA. 9 at P. IS. Here it is held thus"Compound interest is in itself perfectly legal but compound interest at a rate exceeding the rate of interest on the principal moneys being in excess of and outside the ordinary and usual stipulations may well be regarded as in the nature of penalty". This Privy Council decision is quoted at P. 490 of Pollock & Mulla Contract Act, 1957 Edition.

At P. 492 of the same book we find thus: "A stipulation that interest in arrear shall be capitalized and added to the principal sum and that the whole shall carry interest at the contract rate is not by way of penalty" See also Sarya Prased v. BeniMadho (1883) All. W. N. 20S.

(VI) Grant on Bank & Banking. At P. 135 of this book it is found that taking of mortgage to secure fluctuating balance does not preclude ,'the banker from continuing to charge the customer with compound interest.

(VI1) Lee on Roman Law opines that Justinian was absurd in not allowing interest on interest.

(VIII) Hart's Law of Banking (Fourth Edition) P. 234, Compound interest, says Hart may become payable although the debt is the balance of a current account secured by mortgage. "In merchants' account when an annual account is made upon accounts current and a balance struck comprising both principal and interest due up to a certain day and that balance is carried to a new account bearing interest, compound interest is given in effect". See Attwood v. Taylor (1840) 1 M & G. 27. See also Exparte champion (1792). 3. Bro. C. C. 436 at 440; Parr's Banking Co v Yates [1898] 2. Q. B. 460. Where a mortgage is made by way of collateral security for such balance as may eventually be due from a customer to his bank it is no objection to charging the land with such balance that it has been partly composed of interest turned into principal by rests and interests on that interest according to the course of dealing between the two. See Lord Chancarty v. Latouche (1810) 1. Ball tfe BA20; Bufford v. Bishop (182A) 5. Mules 346.

(IX) Davar's Law & Practice of Banking 3rd Edition P. 228. Davar says that right to compound interest is based on special agreement or is acquired by acquiescence.

Lastly this right to compound interest will be lost by death or bankruptcy of either. -See Williamson v. Williamson (1869) 7. Eq. 542.

DECISION IN 1969 K.L.T. 498

(N. K. Sreedharan, Advocate, Ernakulam)

The above decision appears to have created great confusion in the minds of judges, landlords and tenants. Normally a landlord claims market rate for paddy and other commodities when the tenant is not inclined to pay in kind and opts to pay in cash. Now according to the decision reported in 1969 KLT. On page 498 a tenant who has not got fair rent fixed by Land Tribunal for his holding is bound to pay the price notified under the Maximum Prices Order.

His Lordship V. R. Krishna Iyer J. has considered the impact of the Maximum Prices Order on the right of a landlord to demand the price of paddy and held that the tenant is not bound to pay the black-market rate, but is liable to pay the price fixed under the Maximum Prices Order.

Now the position is that a tenant while paying fair rent need pay only the price published by the District Collector under S. 43 of the Land Reforms Act whereas another tenant paying contract rent should pay a price not exceeding that fixed under the Maximum Prices Order. The price published by the District Collector may be the same as the maximum price fixed under the Maximum Prices Order. There may not be any difference at all between the two prices at a particular time. But sometimes there may be difference also.

Under S. 43 of the Land Reforms Act the District Collector causes to be published every quarter prices prevailing in each taluk of paddy, cocoanut, are canut, pepper, groundnut, tapioca, cashew nut, and any other notified crop. Price of paddy or any other commodity may not be the same throughout the State. There may be variation from place to place inside the State itself. The District Collector's publication will indicate such variations in the District. Differences in prices prevailing between Taluk and Taluk will be reflected in the publication. Further the publication will contain the prices of commodities other than paddy also. Moreover the prices will be reviewed quarterly. Whether publication of changes in the prices of commodities in this manner is advantageous to the landlord or tenant, what S. 36 (2) says, is that money value of commodities shall be computed with reference to the rates published in the Gazette under section 43. Of course Section 36 (2) restricts this facility to cases where fair rent has been determined under S. 31 or 33. But in the Miscellaneous Chapter IV it is expressly provided by S. 113 that for the purposes of the Act the price of any commodity referred to in S. 43 to be commuted into money at the market rate for any date shall be commuted at the price of that commodity published by the District Collector under S. 43 for the relevant quarter. In other words the prices published under S. 43 should be deemed to be market rates. Payment of rent cannot be said to be outside the purposes of the Land Reforms Act. Thus reading Ss. 36 and 113 together it can be seen that all tenants, whether fair rent has been fixed or not for their holdings, should pay the prices published by the District Collector under S. 43 from time to time in their respective Taluks and not any other price.

It would appear from a reading of the Order in question that His Lordship proceeded on the assumption that, when clause 2 of S. 36 is not attracted, there is no other provision in the Act specifying the money value of the rent payable in kind. There is no reference to S. 113 in the Order. Probably S. 113 was not brought to His Lordship's notice. The counsel might not have bothered to bring the Section to the notice of the Court since according to the tenant's counsel there was really no difference between the price relied upon by the learned Munsiff and the price notified as the "controlled price".

Even though the price published by the Collector and the price notified under the Maximum Prices Order may be the same I respectfully submit that a reference to the Maximum Prices Order was unnecessary in the case. Ss, 36, 43 and 113 covered all cases of money value of rent payable by tenants. When there was exhaustive and clear provision on the point it was not necessary to have relied upon the price fixed under a different Order.

Again resort to the Maximum Prices Order also will not solve the question. The aforesaid Order did not fix the price of paddy. It only prohibited sale of paddy for a higher price than that fixed therein. Paddy itself was divided into fine, medium and coarse varieties and different maximum prices fixed. The price of fine variety also varied according to the particular species of paddy. In all cases landlords may not be satisfied with the price for coarse variety, nor will the tenants be prepared to pay the maximum price for fine varieties. Therefore it becomes a matter for evidence. And each case will have to be decided on the evidence adduced therein with the anomalous result that one and the same court may be decreeing different rates for paddy for the same period according to the evidence available in each case.

The Kerala Paddy (Minimum and Maximum Prices) Order 1964 prevailed till 3 -- 9 -- 1965 until the Kerala Paddy (Maximum Prices) Order 1965 was publi­shed. Now since 1 – 4 -- 1968 the Kerala Paddy (Maximum Price) Order 1968 has fixed a uniform maximum price for all varieties of paddy of fair average quality of Kerala origin at Rs. 56.25/- per quintal. Evidently fine, medium and coarse varieties’ cannot fetch the same price in the market. But the same maximum price can be fixed for all these varieties because the Order does not fix the price at which paddy should be sold but only fixes the ceiling price and prohibits sale above that ceiling price. The 1965 Order remained in force for about 2 1/2 year. The Order did not take into consideration the local and seasonal changes which were to be taken into account in a publication of the prices by the District Collectors. Again the Kerala Paddy (Maximum Price) Order fixes the maximum price for paddy alone so that the tenant for whose holding fair rent has not been fixed will have to pay the market rate for other notified commodities until maxi­mum prices are fixed for those commodities too. A reference to Collector's publication under Section 43 will save the court and parties from an enquiry into the market value of such commodities. Section 113 provides for, warrants and directs such a reference.

The object of fixing the maximum price under the Maximum Prices Order is quite different from that of publishing the taluk price of commodities every quarter under Section 43 of the Land Reforms Act. Maximum Price Orders are made in exercise of the powers conferred under the Essential Commodities Act 1955", the provisions of which are meant to meet altogether a different situation.

The equitable consideration that the landlord will have to pay that price (that fixed under the Maximum Prices Orders) if he wants to buy rice or paddy is not every material in determining the price payable by a tenant in the face of express provisions in that behalf in the Land Reforms Act itself.

Under these circumstances it is respectfully submitted that the principle laid down in the above decision requires reconsideration. Or else the subordinate judiciary will be decreeing the maximum price fixed for paddy under the Kerala Paddy (Maximum Price) Order and will be enquiring into the market price of commodities like groundnut, cotton and sugarcane despite the clear provision in Section 113 of the Land Reforms Act.

The Kerala Land Reforms (Amendment)

Act 35 of 1969

Divesting of Jurisdiction of Civil Courts

(M. Velayudhan Nair, Advocate, Alatur—Palghat)

 The emasculation of the landholders which was begun by the Legislature about 40 years ago has been completed by the Kerala Land Reforms (Amendment) Act 35 of 1969 It is a revolutionary measure, containing drastic provisions which deprive land-owners of their rights of ownership and enjoyment and will throw them out of gear by upsetting their domestic economy. The new Amendment Act has abolished, overnight, the rights of ownership of all the landlords and intermediaries in the holdings outstanding in the possession of the cultivating tenants by vesting those rights in the Government with effect from 1st January 1970 and providing for assigning those rights to the cultivating tenants for a nominal price-payable in sixteen easy annual installments. The compensation provided “to be paid to the ultimate land-holders and intermediaries is most inadequate and illusory. On account of the vesting of the rights of ownership of the lands in the Government with effect from 1-1-1970, the landholders and the intermediaries are prevented from collecting the future rents of the properties accruing since that fateful day-1 st January 1970. This disability imposed by the Statute coupled with the absence of a provision for immediate payment of ad­equate compensation as the just equivalent of the rights of ownership and the provisions deferring the payment of compensation to a future date in sixteen annual installments will immediately create a problem for the landholders and the intermediaries they will be literally thrown into the streets. It is really a problem of existence of the large number of landholders in the State whose mainstay is the income that they have been getting from their lands. It is well to remember that there are only very few hereditary jenmies in the State. The fact is, but it is conveniently forgotten by the politicians who vie with one another ,n the matter of passing tenancy legislation, that the large majority of the landholders in the State belong to the middle class who have purchased properties with their hard earned savings and they either leased those properties to tenants or purchased the properties outstanding in the possession of tenants at a time when leases were permitted by the law and when granting leases was considered as a normal mode of enjoyment of properties. On the face of it therefore it was extremely cruel to tell these landholders and intermediaries one fine morning that from tomorrow onwards they will cease to be the owners of their properties and their rights of ownership stand transferred to the Government  and those rights are proposed to be assigned to the tenants on easy terms, whether they want it or not It is well known that the annual income from one acre of double crop land would now be about 250 paras of paddy, but "the fair rent" calculated according to the provisions of the new legislation would not come to more than 45 paras of paddy Per acre. The tenant has to deposit only the price of 45 paras of paddy for one acre of double crop land annually for 16 years towards the purchase mice and he can only enjoy the remaining income. In the meanwhile, the ultimate jenmi and the intermediary will not get any rent from the tenants and they are faced with the prospect of starvation. This, in short, is the desperate predicament to which the landlords and intermediaries .are reduced by the provisions of the Amendment Act. It is no wonder that the new Act has become a nightmare to all the landholders in the State.

2. One general observation falls to be made at this stage. And that is that all that the cultivating tenants really wanted was fixity of tenure besides a small reduction in the contract rent. These reliefs have been secured to them by the provisions of the parent Act I of 1964. There was therefore no need to thrust the jenm right on the cultivating tenants and to make provisions compelling them to purchase the jenm right from the Government-- whether they want it or not. It is a matter of common knowledge and it is significant that, although the parent Act I of 1964 contained provisions for enabling tenants to purchase the landlords' right through the Land Tribunals, very few tenants filed applications in that behalf.

3. For obvious reasons it is not possible to deal with all the drastic provisions of the new Act in this article. For the present, I am confining myself in this article to a criticism of the provisions in the new Act which seek to stultify the powers of the Civil Court in certain important matters and to transfer its jurisdiction to the Tahsildars and Land Tribunals.

4. In the guise of introducing measures of agrarian reform several provisions have been enacted in the new Act which have absolutely no relation to land reforms and which are calculated to open the door wide for trespassers and to enable unscrupulous persons to trespass on other people's lands and' to cultivate them and enjoy the rents and profits thereof without any obstruction being caused thereto by injunction orders granted and receiver appointments made by the civil courts. The so-called Amendment Act of 1969 seeks to effectually stultify the powers of the civil courts by depriving them of their jurisdiction to try and decide important questions regarding the existence of the relationship of landlord and tenant between the parties-- questions which are essentially matters to be tried and decided by the civil courts -- and investing the Tahsildars, the Revenue Divisional Officers and Land Tribunals with that jurisdiction. I am referring to new Ss 26, 29-B and 125 and to the amended S. 32 of the Act.

5. New S. 26 takes away the jurisdiction of the civil courts to entertain any claim for arrears of rent and invests the Land Tribunals with that jurisdiction. Be it noted that the Officers to be constituted Land Tribunals under the Act are judicial Officers of the rank of a Munsif or au Officer not below the rank of a Tahsildar. Even Subordinate Judge's courts, whose pecuniary jurisdiction is unlimited, cannot entertain suits for arrears of rent or michavarom after 1st January 1970. It is a matter of common knowledge that difficult questions of fact and law usually arise in suits for arrears of rent and michavarom. New Section 29-B enacts that any person claiming to be a cultivating tenant of any land is entitled to apply to the Tahsildar for an order that he is entitled to cultivate the land, complaining that he is prevented or obstructed from cultivating that land and the Tahsildar shall after making such enquiry as he deems necessary, decide whether the applicant is entitled to that land and the Tahsildar is entitled to pass an order restoring the applicant to possession of that land and allowing him to cultivate it. Sub-section 3 of new S. 29-B provides that if any suit is instituted by the opposite party relating to the said property after the date of the application to the Tahsildar, the Court shall not grant an injunction restraining the applicant from cultivating the land till the final decision in such suit. S. 32 has been amended by substituting the word "land" for the word "holding". These new-provisions are calculated to give a license to mischievous persons-- rather they amount to an invitation to them -- to take the law into their hands and to trespass on other people's properties and wrongfully enjoy the rents and profits thereof during the pendency of the proceedings before the Tahsildars and the Land Tribunals without any fear of their activities being interfered with by any injunctions granted or Receiver appointments being made by the civil courts.

6. New S. 125 which replaces old S. 125 is in the following terms:—

125. Bar of Jurisdiction of civil Courts.

(1) No civil court shall have jurisdiction to settle, decide or deal with any question or to determine any matter which is by or under this Act required to be settled, decided or dealt with or to be determined by the Land Board or Government or an Officer of the Government:

Provided that nothing contained in the sub-section shall apply to proceedings in any Court at the commencement of the Kerala Land Reforms (Amendment) Act, 1969.

(2) No order of the Land Tribunal or the appellate authority or the Land Board or the Government or an Officer of the Government made under this Act shall be questioned in any civil court, except as provided in this Act.

(3) If in any suit or other proceeding any question regarding rights of a tenant or of a kudikidappukaran (including a question as to whether a person is a tenant or a kudikidappukaran) arises, the civil court shall stay the suit or other proceeding and refer such question to the Land Tribunal having jurisdiction over the area in which the land or part thereof is situate together with the relevant records for the decision of that question only.

(4) The Land Tribunal shall decide the question referred to it under sub section (3) and return the records together with its decision to the civil court.

(5) The Civil Court shall then proceed to decide the suit or other proceeding accepting the decision of the Land Tribunal on the question referred to it.

(6) The decision of the Land Tribunal on the question referred to it shall, for the purposes of appeal, be deemed to be part of the finding of the Civil Court.

(7) No civil court shall have power to grant injunction in any suit or other proceeding referred to in sub-section (3) restraining any person from entering into or occupying or cultivating any land or kudikidappu or to appoint a receiver for any property in respect of which a question referred to in that sub-section has arisen, till such question is decided by the Land Tribunal and any such injunction granted or appointment made before the commencement of the Kerala Land Reforms (Amendment) Act, 1969 or before such question has arisen, shall stand cancelled."

7. This is one of the most mischievous and dangerous sections introduced by the Amendment Act. The effect of sub-sections 3 to 7 is that if in a suit for injunction or recovery of possession on the strength of plaintiff's title as against a trespasser, the defendant-trespasser simply puts forward a false and dishonest plea that he is a tenant of the properties, the civil court is bound to stay the suit and refer the question regarding the existence of the alleged tenancy to the Land Tribunal for decision and the civil court is bound to await the decision of the Land Tribunal and to give its imprimatur to the decision of the Land Tribunal on the question referred to it and to pass a decree accepting the decision of the Land Tribunal-- although the civil court is satisfied that the decision of the Tribunal is prima facie wrong and perverse or contrary to law. And till the Land Tribunal decides the question regarding the existence of the alleged tenancy referred to it under sub-section 3, the civil court is prohibited from exercising its jurisdiction togrant an injunction or appoint a receiver to protect the plaintiff's possession and to secure the rents and profits of the properties in the interval (Vide the first part of sub-section 7). If a person in possession' is wrongfully ousted from possession by a trespasser or if his peaceful possession is illegally threatened by another or if a person commits or threatens to commit waste on his property by cutting trees or demolishing buildings or otherwise, the person in possession should certainly be entitled under the general law to protect his possession by suing in ejectment or for an injunction on the strength of his possessory title. Such a person can always say that his possession cannot be disturbed and he is entitled to invoke the jurisdiction of the civil court to issue an interim injunction or to appoint a receiver to help him to maintain his possession or to secure the rents and profits of the properties pending suit. This is a fundamental right of the person who is in possession on the strength of his possessory title.

8. S. 125 is a dangerous provision which will lead to disastrous consequences, opening as it does, a wide door for persons to take the law into their hands and molest and disturb persons in peaceful possession of their properties. What is the remedy of the person who was in possession of the property, if the person who trespassed on his property claiming tenancy right is ultimately found to be an imposter, having absolutely no tenancy right or possession or right to possession of the property? He is obliged to submit to the trespass and to look on helplessly with folded hands when the trespasser harvests and takes away the crops raised by him and commits waste and cultivates his land and enjoys the rents and profits thereof, until such time as the Land Tribunal decides the question of the existence of the tenancy against the trespasser. And then it will be too late to grant the preventive relief of injunction, as by that time the trespass will have been completed and the plaintiff would be put to heavy and irreparable loss and difficulties.

9. Now, a dispute as to the existence of the relationship of landlord and tenant is an important matter and often raises difficult questions of fact and law. The question whether the defendant in a suit for injunction or for possession on the strength of plaintiff's title is a trespasser or is in lawful possession on tenancy right, is as his Lordship Chief Justice Mr. P. T. Raman Nayar points out in a recent case Kunchan Kumaran v. V. Ramachandra Iyer - 1969 K. L. T. 822 essentially a question for the civil court to decide. Besides rank trespas­sers, persons claiming to be in possession under leases granted in contravention of Section 74 of the Act and persons who may have obtained leases from the Urallers of a Devaswom to which the properties do not belong - just as in the case in Narayanan Nambiar v. Raman Chettiar (1969 K.L.T. 499)-- and persons claiming to be "deemed tenant" under Sections 4 to 11 of the Act may claim tenancy rights. These are difficult questions which can be satisfactorily decided only by the civil courts. What is the reason or justification for depriving the civil courts of their jurisdiction to decide questions involving such disputes and investing the Land Tribunals with that jurisdiction? Is it to be supposed that the Officers who are to be constituted Land Tribunals under the Act are more learned or more efficient and competent than the judges who preside over the civil courts?

10. Curiously enough, the jurisdiction of the civil court to entertain suits for injunction or possession on the strength of title as against a trespasser is not taken away by the Act. It is retained; but its jurisdiction to try and decide the question of the existence of the tenancy claimed by the defendant is taken away by the new Act and that jurisdiction is given to the Land Tribunal and the civil court is commanded to accept the decision of the Land Tribunal on the questions referred to it and to pass a decree accepting the decision of the Tribunal although the civil court-- it may happen to be a District Court or a Subordinate Judges' Court -- may justly feel that the decision of the Land Tribunal on the question referred to it is wrong and perverse and contrary to law. Paradoxically enough, the ultimate decree in the cause (which is based on the decision of the Land Trib­unal) will have the appearance and effect of a decree and judgment of the civil court, although the civil court has not applied its mind to the matter in dispute and is not in any way responsible for the decree and judgment! Nothing can be more absurd and ridiculous than such a situation. In ray opinion, the provisions of new S. 125 constitute an insult to the judiciary.

11. Sub-section 7 of new S. 125 enacts a contradiction in terms. The first part of sub-section 7 prohibits the granting injunction or appointment of receiver by the civil court only till the Land Tribunal decides the question of the "existence of tenancy etc., referred to it under sub-S. 3. It is obvious that the words "any such injunction or appointment" occurring in the second part of sub-S. 7 can relate only to the injunction granted or receiver appointment made by the civil court under the first part of this sub-section, viz., injunction granted or receiver appointments made by the civil court in any suit or other proceeding coming within the purview of sub-S. 3. And if, as I shall show presently, sub-section 3 applies only to suits and other proceedings initiated after the coming into force of the Amendment Act 35 of 1969, and suits and other proceedings pending at the commencement of the Act of 1969 will not fall within the purview of sub-section 3, injunctions granted and receiver appointments m3de by the Civil Court in suits and proceedings pending at the commencement of the new Act cannot be affected and cannot be treated as cancelled. The second part of sub-section 7 is inconsistent with the first part and is also in irreconcilable able conflict with the proviso to sub-section 1 which is a saving clause, saving proceedings pending in any civil court from the operation of sub-section 1 which is the provision that bars the jurisdiction of the civil Court to decide any question or matter which is required to be decided by the Land Tribunal. It is obvious that the question as to the existence of the alleged tenancy mentioned in sub-section 3 is a question which is "required to be decided" by the Land Tribunal within the meaning of sub-section 1.

12. Apart from the proviso to sub-section 1 of S. 125, the language used in sub-section 3 also shows that only suits and other proceedings which are instituted after the coming into force of the Amendment Act 1969 come within the purview of sub-section 3. Note that the expression used in sub-section 3 is "arises". Where therefore a dispute or question as to the existence of tenancy has already arisen between the parties in a suit or proceeding pending at the commencement of the new Act, in other words, where a civil court is seized of the question or dispute in a suit or proceeding instituted before the commencement of the Act, the civil court will not lose its jurisdiction to adjudicate upon that question and therefore is not bound to stay the suit and refer the question to the Land Tribunal for decision and the civil court is competent to grant injunctions and appoint receivers in such suits and proceedings. Such suits will not come within the purview of sub-section 3. In other words, the provisions in sub-sections 3 and 7 commanding stay of the suit and reference of the question mentioned in sub-section 3 to the Land Tribunal and prohibiting the granting of injunction and appointment of receiver have no retrospective operation and are inapplicable to suits and proceedings instituted before the coming into force of the Amendment Act. This principle is illustrated by the recent Full Bench decision in AIR. 1970 Andra Pradesh 1. The decision in this Full Bench case turned upon the correct interpretation of S. 56 (1) of the Andhra Pradesh Abolition and Conversion Act 26 of 1948 which provided interdict that when, after an estate is notified, a dispute arises as to (c) who is the lawful riot in any holding, the dispute shall be decided by the Settlement Officer''. The question before the Full Bench was whether S. 56 (1) applies to a case where the dispute contemplated by the section arose before the notification under sub-section 4 of S. 1 was published on 27-1- 1964 and as and from that   date the estate in suit stood transferred to the Government. The suit had been filed on 25-4-1959 and had been decided in plaintiff's favour on 24-1-1962. The appeal was filed in the High Court on 1-3-1962. The notification under sub-section 4 of S. 1 transferring the estate to the Government was published only during the pendency of the appeal on 27-8-64. The Full Bench held that the provisions of S. 56 (1) are not retrospective in operation, in divesting the jurisdiction of the civil court in matters arising before the date when the section came into operation. According to the learned Judges, a dispute will arise only when such a dispute has to be determined by some authority competent to determine it. "Where, however, a dispute in fact arises for adjudication before any of these authorities competent to determine it prior to the estate being notified, it cannot be said that the dispute arises again subsequently at any time". "The language of S. 56 (1) does not lend itself to the interpretation, whether express or implied, that the authorities already seized of a dispute in respect of matters referred to in that sub-section are prohibited from adjudicating thereon". Again Their Lordships say "It is a well established principle that a jurisdiction once vested cannot be divested unless the legislature has expressly or by necessary intendment directed otherwise". The principle had been laid down earlier in another Bench decision of the Madras High Court by Govinda Menon and Chandra Reddy JJL in an unreported case (which is referred to in the Full Bench decision) where their Lordships held that S. 56 of the Abolition Act 26 of 1948 does not affect pending proceedings nor does it take away the rights incidental to the filing of the suit.