Usurious Loans Act, 1977

Short title extent content.--

1. (1) This Act may be called the Usurious Loans Act, 1977.
2. (2) It extends to the whole of the Jammu and Kashmir State.

DeJnitions Definitions.--In this Act, unless there is anything repugnant in the subject or context,--

1. (1) "interest" means rate of interest and includes the return to be made over and above what was actually lent, whether the same is charged or sought to be recovered specifically by way of interest or otherwise ;
2. (2) "loan" means a loan whether of money or in kind and includes any transaction which is, in the opinion of the Court, in substance a loan ;
3. (3) "suit to which this Act applies" means any suit--
   • (a) for the recovery of a loan made after the commencement of this Act ; or
   • (b) for the enforcement of any security taken or any agreement, whether by way of settlement of account or otherwise, made, after the commencement of this Act in respect of any loan made either before or after the commencement of this Act.

Rate of interest to be decreed by Courts. is recoverable, the amount shall be adjudged or the court at the rate (if any) agreed upon by the parties; and if no or where the Court considers the stipulated rate rate as the Court shall deem reasonable.

Rate of interest upon a judgement direct that a judgement or decree shall bear interest a judgment or decree, it may order the interest allowed in the judgment or decree upon the other rate as the Court shall think fit.

Contract for usufruct of property in lieu mortgage or other contract for the loan of money, by which it is use or usufruct of any property shall be allowed in lieu of

Rate of interest on future adjustment of a an adjustment of accounts may become necessary borrower of money upon any mortgage, condition other contract whatsoever, which may have been may be entered into after the passing of this at the rate stipulated therein, or if no rate of interest and interest be payable under the terms of the shall deem reasonable.

Re-opening of fransactions. --(I) In a whether heard ex parte or otherwise if the

1. (a) that the interest is escessive ; and
2. (b) that the transaction was, as betwee unfair, The Court may exercise all or namely,--
   • (i) re-open the transaction, take an account bct the debtor of all liability in respect of a
   • (ii) notwithstanding any agreement, purporti and to create a new obligations, re-ope between them and relieve the debtor of excessive interest, and if anything has in respect of such liability, order the it considers to be repayabk in
   • (iii) set side eitber wholly or in pan or re* or agreement made in respect of any loan, with the security, ord& him to and to such extent as it may deem just : Provide that, in the exercise of these powers, the Court sl~H not--
   • (i) re-open any agreement purporting t,~ close previous dealings and to crate a new sbtigation which has been entered into by the parties or any person from whom the claim at a date more than six years from the date of the transaction ;
   • (ii) do any thing which affects any decree of a court. iExplanntion.--In the case of a suit brought an a series of transactions the expression 'the transaction' vans, for the purpxes of proviso (i), the first d such transactions. (2)
3. (a) In this &tion "excessive" means in excess of that which the Court deems to be reasonable having regard to the risk incurred as it appeared, or must be taken to have been appeared, to the creditor at the date of the loan ;
4. (b) in considering whether interest is excessive under this section, the Court shall take into account any mounts charged or paid, whether in money or in kind, for expenses, inquiries, fines, bonuses, premia, renewals or any olher charges, and if coinpound int!red is .calculated, the periods at which it is calculated, and the total advantage which may mmnably be taken to have been expected from the transaction ;
5. (c) in considering the question of risk, the Court shall take into account the presence or absence of security and the value thereof, the financial condition of the debtor, and the result of any previous transactions of the~debtor, by way of loan, so far as the same were known or must be taken to have been known to the creditor ;
6. (d) indonsrdering whether a transaction was substantially unfair, the Court , shall take into account all circumstances materially affecting the relations of the parties at the time of the loan or tending to show that the transaction was unfair, including the necessities or supposed necessities of the debtor at the time of the loan so fat as the same were known, or must be taken to have been known to the creditor. &planation.-Interest may of itself be sdEcient evidence that a transaction was substantially unfair,

1. (3) This section shav apply to any suit. whatever its form may be, if such suit it substantially one for the recovery of a loan or fbr the enforcement of any agreement or security in respect of a loan. ((4) Nothing In this section shall affect thc right of any transferee for value whu satisfies the Court that the transfer to him was bona fide, and that he had at the time of siah transfer no ngtice of sly fact which \would have entitled the