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Goswami Sri Ghanshiam Lalji Vs. Ram Narain - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtMumbai
Decided On
Judge
Reported in(1907)9BOMLR1
AppellantGoswami Sri Ghanshiam Lalji
RespondentRam Narain
Excerpt:
.....act (i of 1872), section 92-usury laws repeal act (xxviii of 1885).;the plaintiff brought a suit upon six hundis drawn by defendant upon himself in favour of the plaintiff. the hundis were silent as to interest; but there was, in accordance with the custom prevailing in the district, a collateral agreement, embodied in written documents, that the hundis should bear inter, est at a rate equivalent to 30 per cent per annum. the defendant contended that notwithstanding the agreement of the parties the plaintiff's right to interest was restricted to 6 per cent by section 80 of the negotiable instruments act, 1881.;that section 80 of the negotiable instruments act 1881, presented no bar to the recovery of the stipulated amount of interest.;section 80 of the negotiable instruments act..........the class, affected by this suit.2. the contention of the appellant was that, notwithstanding the agreement of the parties, the respondent's right to interest was restricted to six per cent by section 89 of the negotiable instruments act; xxvi of 1881. both the courts in india rejected this contention, and their lordships think rightly.3. the section says:-when no rate of interest is specified in the instrument, interest on the amount due thereon shall, except in cases provided for by the code of civil procedure, section 532, be calculated at the rale of six per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as.....
Judgment:

Arthur Wilson, J.

1. The suit out of which this appeal arises was brought upon six hundis drawn, by the defendant (appellant) upon himself in favour of the plaintiff (respondent). The hundis were silent as to interest; but there was a collateral agreement, embodied in written documents, that the hundis should bear interest at a rate equivalent to 30 per cent per annum. And it has been held that the dealing with interest by a collateral agreement, and not on the face of the hundis, was in accordance with the custom prevailing in the district, and amongst the class, affected by this suit.

2. The contention of the appellant was that, notwithstanding the agreement of the parties, the respondent's right to interest was restricted to six per cent by Section 89 of the Negotiable Instruments Act; XXVI of 1881. Both the Courts in India rejected this contention, and their Lordships think rightly.

3. The section says:-

When no rate of interest is specified in the instrument, interest on the amount due thereon shall, except in cases provided for by the Code of Civil Procedure, Section 532, be calculated at the rale of six per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs.

Explanation:-When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable is pay interest only from the time that ho receives notice of the dishonour.

4. In 1855, by Act XXVIII of that year, the usury laws previously in force were repealed, and the general rule was laid down that ' In any suit in which interest is recoverable, the amount shall be adjudged or decreed by the Court at the rate (if any) agreed upon by the parties.' Section 80 of the Negotiable Instruments Act does not purport to deprive those dealing with such instruments of the freedom of contract possessed by other contracting parties. It purports to confer a right to inter est, not to take away such a right otherwise existing. When a plaintiff has to rely upon the section as the ground of his claim to interest, no doubt the terms of the section must be followed. But to read the section as depriving him of a contractual right of interest would be to read into it something which it does not say, and which cannot reasonably be implied from its language.

5. Their Lordships will humbly advise His Majesty that the appeal should be dismissed. The respondent not having appeared, then will be no order as to cost.


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