- (1.) THIS is a plaintiffs' second appeal in a suit for money which has been decreed by both courts below, though for varying amounts as to interest, and wherein the plaintiffs have been deprived of their costs.
(2.) THE plaintiffs founded their suit on five documents in all alleged to have been executed by the defendant in their favour, on the basis of which they claimed 2781/8/- as principal and Rs. 1232/8/- as interest the total of these amounts comes to Rs. 4014/- but they brought their suit for the recovery Rs. 4000/- only relinquishing their claim for the rest of the amount. THE defendant denied the execution of the documents in suit and contended that he had never borrowed any money from the plaintiffs. THE defendant further contended that the plaintiffs had agreed to purchase and the former to sell a certain shop to the plaintiffs for Rs. 4000/-suggesting thereby that he had received the same as sale-consideration thereof and that the latter could only claim this money back if they proved that the defendant had refused to fulfil the contract. Both courts below have found that the execution of the documents Exs. 1 to 5 by the defendant has been satisfactorily proved. They also found that the proposed sale of the shop by the defendant to the plaintiffs had fallen through owing to no fault of the latter. In these circumstances, the trial court decreed the plaintiffs' suit in toto. The defendant then went up in appeal to the learned District Judge, Kotah, and prayed for the dismissal of the suit. The plaintiffs filed a cross-objection where they prayed that they should have been allowed costs of the suit by the trial court. The learned District Judge partly allowed the defendant's appeal inasmuch as he reduced the amount of interest viz. , Rs. 1232/8/-allowed by the trial court, to Rs. 615/8/ -. In doing so, the learned Judge held that the trial court was wrong in allowing interest on Ex. 2 which did not contain any stipulation as to the rate of interest, and he further reduced the rates of interest, on the various loans, in so far as they were stipulated to be more than one per cent, per mensem, to one percent, per mensem, holding that the stipulated rate of interest in some of the documents being over one per cent, per mensem was penal. So far as the plaintiffs' cross-objection as to costs was concerned, the learned District Judge held that as they had not given a notice to the defendant before filing their suit, the trial court was justified in depriving them of their costs of the suit. The learned District Judge further ordered that the parties would bear their own costs of the appeal and the cross objection. The plaintiffs have now come up in second appeal to this Court. The only questions which are pressed before me in this appeal relate to interest and costs. As to the first point, it is contended by learned counsel that the learned District Judge had acted arbitrarily in reducing the rate of interest which was stipulated in some of the documents at 2 or 1/8 percent to 1 per cent only. The contention is that the learned Judge in the appellate court below was wrong in holding that the rates of interest in the various documents in suit, in so far as they exceeded 1 per cent. , were excessive as there was neither any plea nor evidence which could have led the court to come to that conclusion. With respect, this contention appears to me to have force. In the first place, it may be pointed out that the defendant did not choose to resist the plaintiffs' suit on this ground at all. Consequently he did not raise any plea to that effect in his written statement. It is also true that the defendant in his memorandum of appeal filed in the court below did not raise this question either. In these circumstances, the learned Judge below was not justified in interfering with the decree of the trial court on this aspect of the case. It may be pointed out in this connection that the learned District Judge would have been justified in reducing the rate of interest if it should have fallen within the mischief of the Usurious Loans Act, 1918. Now section 3 of this Act provides, among other things, that the court may relieve the debtor of all liability in respect of interest where it has reason to believe that the interest is excessive and that the transaction as between the parties thereto was substantially unfair. There is also an explanation to this section which lays down that interest may, of itself, be sufficient evidence that the transaction was substantially unfair. It is obvious however, that before the explanation can apply, the interest must be grossly excessive or unconscionable. But leaving such cases apart, as the present case is hardly one of that type, it may be safely postulated that it is for the debtor to establish that the interest was excessive and further that the transaction between the parties was substantially unfair. Again, I should like to point out that the term "excessive" is, broadly speaking, relative, and what is excessive in one case may not be so in another. Therefore, whether interest is excessive or not in a particular case must depend upon the surrounding circumstances of each case and is therefore largely a question of fact and some of the points which must be taken into account in arriving one way or the other would be the financial condition of the debtor, the nature of the loan, that is whether the loan is secured or unsecured and the risk incurred by the creditor, the prevalent market rate of interest at the relevant time and the like. Thus it was held by the Federal Court in Girwar Prasad Vs. Ganeshlal Saraogi (1) that it was for the debtor to establish both the conditions mentioned above, namely, that interest paid on the loan was excessive and that the transaction as between the parties thereto was substantially unfair, and, therefore, where the debtor adduced no evidence as to the circumstances under which he borrowed money from the creditor, the availability of credit facilities and the possibility of borrowing on easier terms in that part of the country where the transactions took place, and that the rate of interest charged was in excess of the usual commercial rate prevailing at the time between the sort of the borrower and the lender under the circumstances of a particular case, there would be no room for interfering with the rate stipulated between the parties. Again, it was held in Sonar Bangla Bank Vs. Calcutta Engineering Col!ege (2) that the question whether the rate of interest was excessive or whether the transaction was substantially unfair was always a question of fact and that unless it was satisfactorily proved, it was impossible to hold that the provisions of the Usurious Loans Act could be attracted. It may be pointed out that in this last-mentioned case, reference was made to Narendra Nath Vs. Paban Mondal (3) among certain other cases, where even an interest of 25 percent compound was not re-opened under the Usurious Loans Act. Again, in Dawoodbhai Vs. Shaikhali (4), it was held with reference to the explanation to sec. 3 (which provides that interest may of itself be sufficient evidence that the transaction was substantially unfair) that in order that the court may exercise its discretion under this provision, the rate of interest must be so grossly excessive that the court would not require any further evidence to come to the conclusion that the transaction as between the parties was substantially unfair, and the same principle should hold good, if I may say so with all respect, where the rate of interest is assailed as being unfair. These then being the principles of law which govern the matter of the reduction of interest under the Usurious Loans Act, it is difficult to hold, in the circumstances of the case, to which I have drawn attention above that the learned District Judge was justified in reducing the stipulated rates of interest being over one per cent, to that level, on the ground that they were excessive. It is further urged in this connection that the learned District Judge was also wrong in disallowing interest on Ex. 2 (which was for the sum of Rs. 1271/- and was dated the 27th September, 1951) on the ground that there was no stipulation as to interest in this document. This is true so far as it goes; but it is contended that when the further money under Ex. 5 was paid by the plaintiffs to the defendant, the latter had agreed to pay interest on all the three previous documents which, included Ex. 2 at the rate of R. s. 1/8/- percent, per mensem with effect from Bhadwa Sudi 15 and, therefore, the plaintiffs were still entitled to claim interest on the amount of Ex. 2 with effect from the last-mentioned date, and this was what the trial court had allowed. I have perused Ex. 5 which bears out what learned counsel says, and that being so, the plaintiff clearly appears to be entitled to interest on Ex. 2 also with effect from Bhadwa Sudi 15 Smt. 2008. I hold accordingly. The next point is whether both courts below were right in disallowing costs to the plaintiffs because they had not given any notice to the defendant before instituting the present suit. My finding on this point is also in favour of the plaintiffs; the reason being that the defendant hotly contested the suit and, therefore, the circumstance that the plaintiffs did not give him any notice prior to the filing of this suit cannot make any difference to his liability to pay the costs thereof. It would have been another matter if on the filing of this suit the defendant had come to court and accepted the plaintiffs' claim and paid them the money which was due from him or he might have, having accepted his liability, prayed for time to pay the same in a lump sum or in instalments. ! Thus it was held in Allah Diya Vs. Sona Devi (5) that where a suit was contested by the defendant, the fact that the plaintiff did not issue notice to the defendant before instituting the suit was no reason for depriving the plaintiff of his costs of the suit. I am in respectful agreement with this principle and hold that the plaintiff was entitled to his costs of the trial court. The result is that I allow this appeal, set aside the judgment and decree of the learned District Judge and restore the decree of the trial court. The plaintiffs will get their costs both of the trial court and the lower appellate court. They will, however, bear their own costs of this Court as the defendant has not put in appearance here. . ;