PRAYAG LAL Vs. PALAKDEO NARAIN SINGH

JUDGEMENT

(1.) This is an appeal by the defendants from a decree of the learned District Judge of Gaya passed in a mortgage suit. A suit was instituted in the Court of first instance on the basis of two mortgage bonds. The rate of interest stipulated in the bonds was Rs. 1-8-0 per cent per mensem compoundable annually. The plaintiffs, however, waived their claim to compound interest and claimed simple interest at the rate stipulated for. The principal sum was Rs. 2200 and the interest due up to the date of the institution of the suit was Rupees 1829-6-6. It should be observed that the first of the mortgages was dated 3 June 1933, and the seoond 1st August 1935.

(2.) The present appellants were puisne mortgagees and were impleaded in the suit. The trial Court passed a mortgage decree as prayed for in the suit, and an appeal was preferred to the Court of the learned District Judge. In that Court a number of points were taken under the Bihar Money-Lenders (Regulation of Transactions) Act, 1939, which had just come into force.

(3.) In the first place, the learned Judge was asked to hold that interest under these mortgages should not be allowed at a higher rate than 9 per cent, per annum simple. It was contended that the Bihar Money-Lenders act had provided that for mortgages executed after the Act came into force 9 per cent simple was the maximum rate of interest allowed. That being so, it was said that the Court should reopen the transaction under Section 8 of the Act and reduce the interest to 9 per cent, per annum simple. The learned District Judge pointed out that the rate of interest in future mortgages had been controlled by statute, though that was no reason for holding that 18 per cent, per annum simple was an excessive rate having regard to the fact that such a rate was the usual rate in the district when this mortgage was executed.