NAME – YASHI TANSUKH JAIN

ROLL NO. – 136

DIVISION – C

SUBJECT – FAMILY LAW

Rule of Damdupat : A detail study
Origin of Damdupat

• In India, the corpus of Hindu law contains a rule typically known as

Damdupat or Dvaigunya.

• Damdupat caps a lender's loan recovery at twice the amount of a

principal, irrespective of the rate of interest or the time elapse.

• The law is described in numerous ancient texts, and sources

document its use in pre-colonial India. During India's colonial
period it was explicitly included in British Indian law in some
regions and remains in the law books to the present day.
• Similar rules have been documented in China for over a thousand
years.

• There was also a Roman equivalent of Damdupat, known as alterum

tantrum (as much more) which was described in authoritative
compendia of Roman law.

• The origins of Damdupat in India can be traced back to the Smriti, texts
composed in the first few centuries of the common era.

• In a rule in Manusmriti, 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)’.
Rule of Damdupat: Under Hindu law

The rule of Damdupat is a branch of Hindu law of debts. According to this

rule, the amount of interest which can be recovered at any one time
cannot exceed the principal amount. In other words, this rule prohibits the
recovery, at any one time, of interest in excess of the principal amount of
the loan.

Eg: Thus, A, a Hindu lends Rs 1000 to B (another Hindu) at 24 % interest

per annum. A, allows the interest to run into arrears until it amounts to Rs
1500. If A sues B to recover Rs 2500 (presuming that the suit is not time
barred under the Limitation Act), A will not be entitled to recover more
than Rs 2,000 that is Rs 1000 for the principal amount and Rs 1000 by way
of interest. It will be seen that, in this case, the interest exceeds the
principal amount, and hence, the rule of Damdupat comes into play.
Part payment of principal amount
If part of the loan is repaid, whether under an agreement to pay by
installment or otherwise, the principal amount, for the purpose of the rule
of Damdupat, is the balance of the principal amount due when the interest
is sought to be recovered.

PLACES WHERE RULE OF DAMDUPAT APPLIES:

• former State of Bombay (i.e State of Maharashtra and Gujarat now)

• City of Calcutta, but not elsewhere in West Bengal

• In the States of Rajasthan, Uttar Pradesh and Tamil Nadu, the rule has
not been given effect to

• In U.P it has been adopted as U.P Encumbered Estates Act, 1934

Person who can claim benefit of the rule

• According to Calcutta High Court (Nobin Chunder v. Ramesh Chunder, 14

Cal. 781), the rule applies only if both the original contracting parties
viz.,the debtor and creditor, are Hindus. However, according to the
Bombay High Court (Harilal v. Nagar, 21 Bom.), it is only necessary that
the original debtor should be a Hindu, and the rule does not apply if the
original debtor is some Mahomedan, though the debt is subsequently
transferred to a Hindu.

• In cases where there are two debtors, one of whom is a Hindu, the rule
will apply only to the Hindu debtor. However, this will not prevent the
non Hindu debtor from claiming contribution from the Hindu debtor on
the basis of direct payment made by him to the creditor.

• In cases where the original debtor, is a Hindu, and the debt is later
transferred to the Mahomedan, the rule applies as long as the debtor is
a Hindu, and ceases to operate from the date when the debt is
transferred to the Mahomedan.
Exceptions to the rule
• The rule does not apply where the original debtor is not a Hindu, even if
the debt is subsequently transferred to a Hindu.

• The rule does not apply to money due otherwise than under a contract,
as for instance, money due from an executor to a legatee.

• The rule applies only up to the date of the suit, and the interest awarded
by a Court from the date of institution of the suit till the date of decree
(or payment) is not affected by the rule of Damdupat.

• Likewise, the rule is not applicable where interest is recoverable in

execution of a decree. The reason for this is that the rule ceases to
operate after the suit.

• In the case of a mortgage with possession, the rule does not apply,
unless there is an agreement between the parties to the effect that the
mortgagee is to appropriate the fixed amount of annual rents and profits
in lieu of interest.