Hanuman Bux and Others vs Lal Nilmoni Nath Sahi Deo

Coutts, J.—This is an appeal against the decision of the Judicial Commissioner of Chota Nagpur in an appeal arising out of a suit on a registered mortgage bond. The bond, which is dated the 21st June 1909 was for Rs. 300 and in the bond it was stipulated that interest should be paid at 3 per cent. per month and that the mortgage-money should be repaid in Sraban 1966 Sambat In default of payment the interest was to run at the rate of 6 per cent. per month. The total amount claimed in the suit was Rs. 1,479, which the plaintiffs sought to recover by sale of the mortgaged property.

Two issues were raised in the Court of first instance:

Did the defendant receive the entire consideration money mentioned in the bond?

Whether the rate of interest stipulated for in the mortgage-bond is in the nature of penalty? Can the plaintiffs recover the interest claimed in this suit?

On the first of these issues it was found in the Court of first instance that the whole amount of the consideration money mentioned in the bond had been received, but on the second issue it was held that both the interest at 3 percent. per month and the interest at 6 per cent. per month on default were in the nature of penalties and the suit was decreed for interest at only Rs. 12 per cent. per annum. On appeal by the plaintiffs to the Judicial Commissioner it was held that interest at the rate of Rs. 3 per cent. per month was not in the nature of penalty but that the interest at Rs. 6 per cent. per month was in the nature of penalty. The learned Judicial Commissioner found, however, that there had been undue influence and in consideration of this he upheld the decision of the Munsif and dismissed the appeal with costs. The plaintiff has again appealed to this Court.

The first point urged before us is that the learned Judicial Commissioner''s decision in the matter of undue influence is wrong. No issue was framed in regard to this and the only reference to it in the pleadings is in paragraphs 2 and 3 of the written statement. In paragraph 2 defendant states that in order to meet the expenses of a criminal case he was badly in need of money so he negotiated with the plaintiff''s father for the loan, and in paragraph 3 he says that the plaintiff''s father, seeing the necessitous condition of this defendant and putting undue pressure on him, gave him Rs. 240 only and got the bond executed for Rs. 303 i.e., with an increase of Rs. 25 per cent. and made him promise, to pay a high rate of interest of Rs. 3 per cent. per month. This is the only reference to undue influence and it cannot be said that by this vague reference to undue influence was in fact pleaded by the defendant; that this was not pleaded is also clear from the fact that not issue was raised on the point. The learned Judicial Commissioner, therefore, should not have allowed the issue to be raised. In any case there is no ground for the finding that there was undue influence. The learned Judicial Commissioner has presumed that, because the security was good and that the interest was high there was undue influence and he has relied on the case of Abdul Majid v. Ksherode Chandra Pal 29 Ind. Cas. 843 : 42 C. 690 : 19 C.W.N. 809. The facts of that case, however, were entirely different from the facts of the present case and it was on these facts that that case was decided In Lala Balla Mal v. Ahad Shah 48 Ind. Cas. 1 : 23 C.W.N. 233 : M.L.T. 25 : 21 Bom. L.R. 558 (P.C.), their Lord ships of the Privy Council quoted with approval the law as stated by the District Judge that in order to come to the conclusion that there has been undue influence it must appear that there was something unconscionable either in the original dealings or the subsequent stages of the transaction. It does not appear that in this case there was anything unconscionable at either of these stages and the learned Judicial Commissioner has wrongly applied Abdul Majid v. Kshewde Chandra Pal 29 Ind. Cas. 843 : 42 C. 690 : 19 C.W.N. 809 to this case. There is then no reason for supposing that undue influence has been exercised

The only other point for consideration is whether interest at Rs. 6 per cent. per month is in the nature of penalty. On the face us why we should disagree with this view which has been adopted by both the lower Courts, and I am of opinion that their decision on this point is correct

I would accordingly modify the decree of the learned Judicial Commissioner and would decree this suit with interest at Rs. 3 per cent. per month from the date of the bond until repayment with proportionate costs.

Das, J.

I agree.