SETH KISANLAL Vs. KISAN SINGH

JUDGEMENT

(1.) THE plaintiff-appellant, Seth Kisanlal, has filed this appeal against the judgment and decree of the District Judge, Chhindwara, in civil suit No, 24 of 1924. In the said judgment and decree, the learned District Judge held that the stipulations as regards interest in case of default of two instalments under the mortgage deeds in suit were penal and he accordingly disallowed compound interest at 1 per cent . per mensem, and only allowed simple interest at the same rate. If compound interest, according do the terms of the mortgage deeds (P. 1, P. 2 and P. 3), be allowed, admittedly a sum of Rs. 1,565-14-8, in addition to the amount decreed by the lower Court, is exigible, and it is this amount which is claimed in the present appeal.

(2.) IT will be convenient, first of all, to state the terms of the three mortgage deeds in suit. All three were executed on the same date and in each the principal was Rs. 1,000. In P. 1, Rule 330 were added as prospective interest, making a total principal of Rs. 1,330; this was repayable in five instalments of Rs. 266 each. The first instalment was due on Mageshir Sudi 1, Fasli 1321, corresponding to the English date 21-11-1911. The fourth and fifth instalments under P. 1. were, therefore, due on 18-11-14 and 7-12-15, respectively. In the case of P. 1, all the first four instalments were paid and only the fifth instalment was defaulted. In case of default of any one instalment, the condition laid down in P. 1, was that interest should accrue thereon at 1 per cent. per mensem till satisfaction from the date of default. In case of default of two instalments, the whole amount should be payable at once with interest at 1 per cent. per mensem with annual rests.

(3.) IN the first place I may point out that it is erroneous to suppose that the original rate of interest, under which Rs. 330 was included in the principal of P. 1, and Rs. 335 in the principal of P. 2 and P. 3 respectively, works out at only a rate of 6 annas per cent. per mensem. If, in the case of any one of these bonds instalments had been paid punctually year by year for the five years, during which the principal was to be repaid, the original rate of interest, in reality works out at something over 12 annas per cent. per mensem. I may also at this stage say that, in my opinion, there is no basis whatever for the contention which has been urged by the pleader for the fourth respondent, who alone appeared to contest the present appeal, that the condition contained in the bonds does not provide for compound interest. The terms of the bonds, so far as default of two instalments is concerned, clearly imply that there were to be yearly rests and this can only mean compound interest in the circumstance of the case.