1. The only point taken in this appeal is that the rate of interest allowed by the Courts below is excessive. The mortgage deed provided for the payment of simple interest at 1 per cent, per mensem with a clause that in case of default the interest already accumulated should be added to the principal and thereafter compound interest paid on the whole at Rs. 1-8 per cent, per mensem.
2. It is contended in appeal that this clause is a stipulation by way of penalty under Section 74 of the Contract Act and this is not denied by the opposite party. It is, however, claimed by the latter that the penalty is not excessive. The principal money secured by the bond was Rs. 250, the amount now claimed is Rs. 638. Both the Courts below have held that the interest claimed is not excessive.
3. The appellant's learned pleader refers to Sundar Koer v. Rai Sham Krishen (1907) 34 Cal. 150, but in view of the explanation now added to Section 74, it is quite clear that any such stipulation as that contained in this deed is a penalty. I am unable to agree with the Courts below that the interest charged for breach of the covenant to pay upon a certain date is not unreasonably high. Some 'compensation is no doubt due. I consider that compound interest at 1 per cent, per mensem would amply meet the case.
4. The appeal is allowed to this extent that the interest allowed by the Courts below up to the date of suit is reduced to 1 per cent, per mensem compound interest with annual rests. The appellant will get proportionate costs including in this Court fees on the higher scale.