Manoo Bepari vs Durga Churn Saha

Ghose, J.—This appeal arises out of a suit for recovery of money upon a mortgage bond executed by the Defendant in favor of the Plaintiff; and the only question that arises in this appeal is whether the Plaintiff is entitled to interest at the rate of Rs. 6-4 per cent, per month, that is to say, 75 per cent, pet annum, as mentioned in the said bond. The terms of the bond are as follows :-- "I, Manoo Bepari, do hereby execute this duni kistbundi bond on mortgage of property to the following effect : that I borrow from your tehbil (till) Company''s Rs 100, one hundred only in cash, on mortgage of the undermentioned property owned and held by me; that the profit of the said money for the term extending from 1290 to 1295, B. S. being Rs. 100 in all, the total sum of Company''s Rs. 200 shall be paid by me according to the kistbundi mentioned below; that if I do not pay the same according to the kist then I shall pay interest at the rate of Rs. 6-4 per cent, per month on the amount for which breach of instalment shall be made 5 that if there be any loss in your profits owing to any laches in payment of the sudder rent of the said property, you shall be able to realize the same by sale at auction of my other immovable and movable properties," and so on. Upon the construction of the terms which we have just noticed, it seems to be very doubtful whether the stipulation as to interest at the rate of Rs. 6-4 per cent, per month was intended to operate from the date of each breach in the payment of the instalments, or from the date of the bond itself. In the latter case, it would clearly be a penalty. In the former case it may not be so. We think it however safer, in the circumstances of the case, to construe the stipulation in question in favour of the Defendant rather than in favour of the Plaintiff. But, even if we were to put the construction which the Plaintiff has contended for, we should not be prepared to say that he is entitled to insist upon payment of the interest claimed. We think we are not precluded from relieving the Defendant from the penalty of paying that interest, if we are convinced that the stipulation was intended to be really a penalty for ensuring the payment of the instalments on the dates agreed upon, and not for the payment of a higher interest.

In a very recent case See 2 C. W. N. 284.--J. C, decided by Mr. Justice Wilkins and myself, a case which is on all fours with the present case, we held, following the decision of the Bombay High Court in the case of Umarkhan Mohamad Khan Deshmukh v. Sale Khan I. L. R. 17 Born. 106, that there is nothing in Act XXVIII of 1855, which takes away the equitable jurisdiction of a Court to relieve against penalties. And we adhere to the same view in the present case. We think we are not bound to give the Plaintiff a decree for interest at the rate of Rs. 6-4 per cent, per month or the amount of the instalments, because, in the view we take of the conditions, it was not really interest, but a penalty.

We accordingly modify the decree of the Court below so as to allow the Plaintiff interest at 12 per cent, per annum upon the instalments as they fall due.

We make no order as to costs.

Ameer Ali, J.

The case, to my mind, shows the necessity of some provision authorizing Courts to go behind contracts when the bargain appears to be of a character which is unsustainable either on equitable grounds or upon grounds of conscience. The sum borrowed by the Defendant was only Rs. 100, and he mortgaged his holding for a sum of Rs. 200, that is, the Plaintiff obtained interest for the money which he advanced equal to cent per cent. But, not satisfied with that, the borrower was made to enter into an agreement, to pay Rs. 75 per cent, upon the instalments by which the Rs. 200 was to be paid. The lender has already received Rs. 170, and, in the suit which he brings on his mortgage, he puts the principal as Rs. 83 and interest as Rs. 453-15 annas. My learned brother has already referred to the circumstances under which, in the present state of the law, we should feel ourselves justified in reducing a claim such as that put forward by the Plaintiff. But it seems to me that there ought to be larger powers vested in our Courts to go behind contracts, for the payment of such exorbitant rates of interest, independently of questions of penalty or otherwise, I agree in the judgment which has just been delivered for the reasons given by my learned brother.