ANANJAPERUMAL KONAR (DEAD) Vs. PICHAMUTHU NADAR

JUDGEMENT

(1.) The main point argued in this second appeal is whether a stipulation to pay compound interest on default of payment of interest is penal.

(2.) The District Munsif decreed the plaintiff's suit. On appeal by the 1 defendant the Subordinate Judge relying upon a decision of this Court reported in Venkataramiah Pillai V/s. Subramania Pillai (1916) 37 IC 799. held that the stipulation to pay compound interest was penal and allowed the plaintiff's claim for interest at 24 per cent. per annum and the plaintiff has preferred this second appeal.

(3.) The question is whether a bare stipulation to pay compound interest on default of payment of interest is penal. The respondent's vakil concedes that if a low rate of interest is provided for in the bond the stipulation to pay compound interest on default of payment of interest would not be penal.