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Shridhar Vaman Joshi Vs. Ramchandra Narayan Tipse - Court Judgment

LegalCrystal Citation
SubjectContract;Service
CourtMumbai
Decided On
Case NumberSecond Appeal No. 643 of 1927
Judge
Reported inAIR1933Bom297; (1933)35BOMLR573; 145Ind.Cas.581
AppellantShridhar Vaman Joshi
RespondentRamchandra Narayan Tipse
Excerpt:
.....act (xvii of 1879), sections 12, 13, 71a-agriculturists-contract rate of interest-court cannot award higher rate of interest.;sections 12 and 13 read with section 71a of the dekkhan agriculturists' relief act, 1879, contemplate that in oases where the court finds that the interest charged is unreasonable, extortionate or oppressive, it should substitute a reasonable and a lower rate of interest, that is, the rate which is generally known as the mercantile rate of interest. they do not enable the court to award to the creditor anything more than ho bargains for. - maharashtra scheduled castes, scheduled tribes, de-notified tribes (vimukta jatis), nomadic tribes, other backward classes and special backward category (regulation of issuance and verification of) caste certificate act (23..........is to be exercised for the benefit of the agriculturist debtor and cannot be used to enhance the rate agreed upon between the agriculturist and his creditor. this is clear from sections 12 and 13 of the act read with section 71a and the preamble of the act. section 13, clause (e), runs as follows:-in the account of interest there shall be debited to the debtor, monthly, simple interest on the balance of principal for the time being outstanding, at the rate allowed by the court as hereinafter provided :...section 71 a, runs as follows :-in taking an account under section 13 or any suit under this act where interest is chargeable, such interest shall be awarded at the following rates :...(a) the rate, if any, agreed upon between the parties or the persons (if any) through whom they.....
Judgment:

Rangnekar, J.

1. This appeal arises in a suit for redemption filed by several persons, most of whom were agriculturists within the meaning of the Dekkhan Agriculturists' Relief Act, against the representatives of their mortgagee. It is common ground that the suit is governed by the provisions of the Dekkhan Agriculturists' Relief Act, and both the lower Courts have proceeded on that footing. Accounts were taken by the trial Court, and in appeal the judgment of that Court was substantially confirmed.

2. In second appeal the only point taken by Mr. Joshi on behalf of the appellants-plaintiffs is that the lower Courts were wrong in allowing interest at twelve per cent, on the mortgage amount to the mortgagees. By the mortgage bond the ancestors of the plaintiffs mortgaged certain property for Rs. 201, and it was agreed that the amount should be repaid after twenty-live years. Half of this amount, i. e., Rs. 101, was not to bear any interest, but the mortgagee was to be in possession of the mortgaged property and take the profits in lieu of interest on this part of the mortgage amount. The other half of the mortgage amount was to bear interest, but it appears that actually only Rs. 76 were paid, and not the full amount of Rs. 101. The interest agreed upon was six per cent. This suit was filed in 1922. Both the Courts after setting aside the agreement of the parties in accordance with Sections 12 and 13 of the Dekkhan Agriculturists' Relief Act have allowed twelve per cent interest on Rs. 176 to the mortgagee, on the ground that under the provisions of the Act the Court, after setting aside the agreement, has a discretion to award such rate of interest as the Court may consider to be reasonable. They have referred to certain circumstances which are peculiar to the case as supporting their opinion that in this case the rate of six per cent, should be increased to twelve per cent. Now undoubtedly under the provisions of Sections 12 and 13 of the Act the Court has, after setting aside the agreement between the parties, a discretion to award a reasonable rate of interest. But that does not mean that where parties have agreed upon the rate of interest, viz., six per cent, the Courts can increase the rate. The power to award reasonable interest in spite of the agreement between the parties is to be exercised for the benefit of the agriculturist debtor and cannot be used to enhance the rate agreed upon between the agriculturist and his creditor. This is clear from Sections 12 and 13 of the Act read with Section 71A and the preamble of the Act. Section 13, Clause (e), runs as follows:-

in the account of interest there shall be debited to the debtor, monthly, simple interest on the balance of principal for the time being outstanding, at the rate allowed by the Court as hereinafter provided :...

Section 71 A, runs as follows :-

In taking an account under Section 13 or any suit under this Act where interest is chargeable, such interest shall be awarded at the following rates :...

(a) the rate, if any, agreed upon between the parties or the persons (if any) through whom they claim, unless such rate is deemed by the Court to be unreasonable; or...

The latter section shows that in the first place the Court has to award interest at the rate agreed upon, unless the Court considers it to be unreasonable. If the Court finds that the rate agreed upon is unreasonable, then it should award interest at a reasonable rate. It is difficult to see how this provision can authorise the Court to enhance the rate agreed upon. The Act was passed, as the preamble shows, to 'relieve' the agriculturist and in his interest. What these provisions contemplate is that in cases where the Court finds that the interest charged is unreasonable or extortionate or oppressive, it should substitute a reasonable rate of interest, that is the rate which is generally known as the mercantile rate of interest. It is difficult to see how a Court can award to the creditor anything more than he bargains for.

3. In this view the decree made by the lower appellate Court must be set aside and the case remanded to that Court with a direction to have the accounts taken either by itself or by a Court subordinate to it after calculating the interest at six per cent on Rs. 176 which the Courts have found as the amount advanced under the mortgage deed. Costs will be costs in the cause.


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