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Bajrangi Misir Vs. Padarath Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1930All504
AppellantBajrangi Misir
RespondentPadarath Singh and ors.
Excerpt:
- - if, having regard to what is customary in the society to which the family belongs, a certain expenditure is reasonable, such that a prudent man similarly situated would incur or such that other members if adult are likely to sanction, it may well be regarded as money spent on 'legal necessity,'a phrase which is not capable of an exhaustive definition. on failure to pay interest at the end of six months, enhanced rate of rs......the court that the borrower could not have raised money at a lesser rate of interest or that the rate agreed on was otherwise justified. in the case before us, it is conceded that interest at 12 per cent per mensem is itself reasonable. it is the stipulation for compounding the interest at the end of each year which is objected to. we do not think that such stipulation is, under the circumstances of this case, at all unreasonable. the creditor has a right to expect that the interest would be punctually paid at the end of the year as agreed and that if it is not paid when it falls due, he would be compensated by interest being paid on the unpaid interest. for these reasons we are of opinion that no case has been made out for interference with the rate of interest payable under the.....
Judgment:

Niamatullah, J.

1. This is a defendants' appeal arising out of a suit brought by the plaintiffs-respondents for enforcement of a hypothecation bond dated 24th November 1914 executed by Udit Misra, defendant 1, and Lachhman Misra, defendant 2. Defendant 3 is the son of Udit Misra and defendant 4 is the son of Lachhmnan Misra. They were both infants when the mortgage deed was executed. The sum advanced under the deed in suit is Rs. 300. The rate of interest agreed on is 1 per cent per month. The mortgage money is payable in two years time. It is agreed that if interest is not paid at the end of a year it shall be added to the principal, and interest at the contractual rate is to run on the aggregate amount of principal and interest. No payment was made and the sum claimed by the plaintiffs-respondents came to Rs. 1,180-9-0 at the date of the suit, namely, the 30th June 1926.

2. The only defences to which it is necessary to refer are: (1) that there was no legal necessity for the loan contracted by defendants 1 and 2; and (2) that, at any rate, the high rate of interest which the executants agreed to pay was not justified by any family necessity.

3. Both the lower Courts have found that a aura of Rs. 230 out of the consideration of Rs. 300 represented an antecedent debt payable by defendants 1 and 2. The question of legal necessity can thus be raised only with regard to the sum of Rs. 70. Both the Courts are again agreed that this sum was borrowed by defendants 1 and 2 for expanses of the Gauna ceremony of the daughter of one of the executants. It should be mentioned that the first two defendants are brothers and members of a joint Hindu family between themselves together with their sons, defendants 3 and 4. The Court of first instance held that the expenditure of money on the Gauna ceremony of a daughter is not warranted by legal necessity. The lower appellate Court has taken a different view and held that a loan for meeting the expenses of Gauna ceremony is justified and should be considered to be for legal necessity and binding on other members of the joint Hindu family. As regards the rate of interest, the two lower Courts have likewise differed, the Court of first instance holding that the stipulation as to compound interest has not been shown to be justified; the lower appellate Court, on the other hand, is of opinion that the rate of interest stipulated for in the bond in suit is reasonable and should be considered to be justified by the necessities of the case.

4. It has been argued before us on behalf of the defendant-appellants that the Gauna ceremony is not essential according to the rules of Hindu Law. The learned advocate for the appellants has not been able to support his contention by any authority. On the other hand, the view taken by the lower appellate Court is based on Churaman Sahu v. Gopi Sahu [1910] 37 Cal. 1 in which it was held that a Hindu widow governed by the Mitakshara Law was competent to make a gift of a reasonable portion of her husband's immovable property to her daughter on the occasion of her Gauna ceremony and that such a gift is binding upon the reversionary heirs of her husband. The principle underlying this view takes account not only of what is strictly enjoined by rules of religion but also of social considerations which cannot be altogether ignored. If, having regard to what is customary in the society to which the family belongs, a certain expenditure is reasonable, such that a prudent man similarly situated would incur or such that other members if adult are likely to sanction, it may well be regarded as money spent on 'legal necessity,' a phrase which is not capable of an exhaustive definition. The circumstances of the particular family, such as its means, social customs and sentiments, the purpose on which the sum in question is to be spent, its adequacy or otherwise, are some of the considerations which will determine the propriety of the expenditure in a given case. The defendants are Brahmans occupying a respectable position in the village and in their own society. It was not at all unreasonable that a sum of Rs. 70 should have been spent on the Gauna ceremony of a daughter of their family. We are therefore of opinion that the expenditure was one which a prudent man would incur and which defendants 3 and 4 would have incurred if they had managed the affairs of the family.

5. As regards the rate of interest agreed to by the executants of the deed in suit, it has been argued before us that in the absence of evidence establishing the necessity of borrowing at compound rate of interest no more than simple interest should be allowed as was done by the Court of first instance. Reference has been made to the dictum of their Lordships of the Privy Council in Nazir Begam v. Raghunath Singh A.I.R. 1919 P.C. 12 that

it is incumbent on those who support a mortgage made by the manager of a Hindu family to show not only that there was necessity to borrow, but that it was not unreasonable to borrow at some such high rate and upon some such terms, and if it is not shown that there was necessity to borrow at the rate and upon the terms contained in the mortgage that rate and those terms cannot stand.

6. The rate of interest agreed on in that case was Rs. 2-8-0 per cent per mensem. On failure to pay interest at the end of six months, enhanced rate of Rs. 3-2-0 per cent per mensem was payable besides the interest being added to the principal. We do not think that their Lordships intended to lay down that the creditor must invariably establish by evidence that the particular rate of interest which a member of a joint Hindu family agreed to pay, however reasonable it may appear to be on the face of it, is the lowest rate at which the borrower could have raised the money needed for the purposes of the family. We think if the rate of interest is prima facie reasonable it may be considered to be justified. If, on the other hand, the borrower agrees to pay an abnormally high rate of interest, it is the duty of the creditor to satisfy the Court that the borrower could not have raised money at a lesser rate of interest or that the rate agreed on was otherwise justified. In the case before us, it is conceded that interest at 12 per cent per mensem is itself reasonable. It is the stipulation for compounding the interest at the end of each year which is objected to. We do not think that such stipulation is, under the circumstances of this case, at all unreasonable. The creditor has a right to expect that the interest would be punctually paid at the end of the year as agreed and that if it is not paid when it falls due, he would be compensated by interest being paid on the unpaid interest. For these reasons we are of opinion that no case has been made out for interference with the rate of interest payable under the deed.

7. It is true that a sum of Rs. 300 originally borrowed has now swelled to over Rs. 1,100, but apart from any question of undue influence which has not been raised, it is not suggested that the Court has any power to relieve the appellants of what is largely attributable to their own default in paying interest regularly as it accrued due. In the view of the case that we have taken, we sustain the decree of the lower appellate Court and dismiss this appeal with costs including in this Court fees on the higher scale.


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