Norman Macleod, C.J.
1. The plaintiffs sued to redeem their ornaments by paying the loan amount and interest thereon at eighteen per cent. per annum. They admitted that they borrowed the amount of Rs. 2,000 for their business from the defendant and passed to him a promissory note dated September 17, 1922, for that amount on the pledge of ornaments and Cash Certificates, of the Post Office, agreeing to pay interest at 6 per cent. per mensem, but they alleged that they were orally told by the defendant that they would be charged interest at 2 per cent. per mensem on the promissory note amount when it was returned. The defendant denied ever having promised to charge interest at 1 per cent. per mensem.
2. The chief contention of the plaintiffs was that the Court could give relief against the transaction as being harsh and oppressive under Sections 16, 19-A and 74 of the Indian Contract Act and the Usurious Loans Act X of 1918. It is quite clear that the provisions of the Indian Contract Act would be of no assistance whatever to the plaintiffs. They wanted money for their business and expected to make a good profit out of the business when assisted by the loan from the defendant. The first plaintiff had to admit that she consented freely and willingly to pay a high rate of interest in anticipation of realising a bumper profit out of her own business, The defendant demanded one anna interest and she consented. There cannot, therefore, be any question of undue influence or misrepresentation, and the Trial Judge was right in his decision on this point.
3. The Judge then referred to the Usurious Loans Act X of 1918 and held that the Act could not apply where the suit is brought by a debtor. Under Section 2(3) a suit to which the Act applies means any suit, (a) for the recovery of a loan made after the commencement of the Act, (b) for the enforcement of any security taken or any agreement whether by way of settlement of account or otherwise made after the commencement of the Act, in respect of any loan made either before or after the commencement of the Act. I should say that it is possible that a suit for the enforcement of an agreement whether by way of settlement of account or otherwise made in respect of any loan might include a suit brought by a debtor.
3. The chief argument urged in appeal was that this was a suit to enforce such an agreement, namely, the agreement to charge interest at the rate of 18 per cent. and not 75.
4. The Trial Judge finding the issues against the plaintiffs directed them to pay the balance due according to the promissory note and the costs of the suit to the defendant, and on their doing so they were at liberty to take back their ornaments lying with the Nazir as produced by the defendant.
5. The Acting District Judge said:
It seems to me that the nature of the suit should be regarded not from the point as to by whom it was filed but from the point as to upon what matter judicial inquiry became necessary and judicial pronouncement made. Plaintiff deposited an amount in Court and asked for release of security pledged and adjudication of the amount due on the promissory note. If the defendant had applied for recovery of the loan made by him the course of the suit would have been exactly the same. In the absence of clear direction to the contrary, I do not consider that the application of the Act can be refused, merely because it is the debtor who came to Court to end the relation between herself and the moneylender.
The security in the present case was ample. The interest was exorbitant. It was excessive within the meaning of the term as explained in Section 3(2)(a) of the Usurious Loans Act. I think it proper in the circumstances to reduce it to one-third of that specified in the promissory note, that is to say 25 per cent. per annum.
6. The order of the Trial Court was varied accordingly.
7. We cannot agree. We do not think this is a suit to which the Act applied. It cannot be said that the plaintiffs' suit is for the enforcement of any security taken. It would only be a creditor who, could file a suit for the enforcement of his security. While the fact that the plaintiffs set up an agreement, which, being contrary to the written terms of the promissory note, they were unable to prove, could not be said to change the suit which was really a suit to redeem the ornaments pledged, into a suit to enforce an agreement in respect of the loan. If that were the case, it would always be possible for a debtor to set up an agreement in his favour contrary to the terms of the contract to support a contention that the Court was then entitled to re-open the transaction and exercise the powers given to it under Section 3.
8. We must, therefore, allow the appeal and restore the order of the Trial Court with costs throughout.
9. I concur.