1. This is a defendant's appeal arising out of a suit for recovery of interest. Rana Raj Kumar Lal was indebted to the plaintiffs to the extent of Rs. 60,000 under a promissory note executed by him. Admittedly the whole amount of the principal plus interest due on this promissory note on 28th February 1921 came to Rs. 67,306-13-6. The correspondence which passed between the plaintiffs and the present defendant goes to suggest that the defendant either was in some way responsible for the payment of this money or at any rate agreed to see that the payment was made. The plaintiffs, however, insisted on the immediate payment of the amount due, and the defendant wrote to the plaintiffs to give the Rana more time. The plaintiffs replied saying that they could not wait, as the original rate of interest, viz: 0-8-6% per mensem, was inadequate, and that if the defendant did not reply they would presume that he was agreeable to 9% per annum being charged (p. 16). The defendant replied to this and said that he would accept 7% interest which he would willingly pay (p. 17). He also sent a telegram to the same effect on the same day (p. 18).
2. The plaintiffs, however, did not accept this rate, but wired on 17th March 1921 saying:
Can't accept below nine per cent: either, pay whole amount or accept terms. If latter pay interest up to February. Wire reply immediately.
3. This offer was accepted By the defendant in the following words:
Your telegram 17th agree pay Rs. 9 per cent from March send interest account up to February.
4. These telegrams were confirmed by letters sent on the same date. After this there can be no doubt that the defendant agreed with the plaintiffs to pay a higher rate of interest, viz. 0-10-0% per mensem instead of the original rate of about 6% per mensem if the plaintiffs gave the Rana more time. There was no contract between the Rana on the one hand and the plaintiffs on the other for payment of this extra rate of interest. On the other hand there was a direct contract between the plaintiffs and the defendant. There can be no doubt that the defendant promised personally to pay at this rate of interest. The consideration for it was the giving of more time by the plaintiffs to the Rana.
5. The plaintiffs waited up to 1925, and the Rana paid off the amount in instalments till ultimately on 14th October 1925 the whole of the principal together with interest at the rate of 0-8-6% was cleared off. There was no undertaking given by the plaintiffs at the time that the defendant would be released from all further liability to pay the balance of interest. On demand having been made and the amount not being paid the plaintiffs have instituted the suit against the defendant.
6. In the written statement the defendant admitted that he had taken upon himself the responsibility of paying the amount of the promissory note together with interest at the rate of 0-12-0% per mensem, but added that this was on the special condition that the plaintiffs would not harass the Rana by making demands, nor would they realize the amount from him. The defendant pleaded that he was relieved from his liability to pay the amount because the plaintiffs had made repeated demands from the said Rana and had also realized the entire amount due from him. The learned Subordinate Judge has overruled this contention and has decreed the claim. The defendant has appealed, and reiterates the grounds taken in the Court below.
7. There is absolutely no evidence on the record to show that there was any promise made by the plaintiffs not to make any demands from the Rana or not to realize the amount from him. On the other hand, the correspondence referred to above shows that the defendant never laid this down as a condition precedent to the fulfilment of the contract by him. There has accordingly been not breach on the part of the plaintiffs.
8. The next point urged on behalf of the defendant is that his position was that of a surety, and that inasmuch as the plaintiffs had discharged the principal debtor from all further liability the surety also was discharged. This contention cannot be accepted. So far as the amount of the principal and the interest at the rate of 0-8-6% are concerned, the Rana was in the position of a debtor and the defendant was in the position of a surety. That amount has now been paid up and the defendant's liability to that extent stands discharged. But as there was no contract by the Rana to pay interest at the excess rate, and that contract was solely between the defendant on the one hand and the plaintiffs on the other, the position of the defendant with regard to the payment of this extra interest cannot be that of a surety. Under Section 126, Contract (Act, he would have been a surety if there had been a promise or liability of the Rana to pay this extra interest. As remarked above there was no such promise on his part and no such liability. The position of the defendant therefore cannot be that of a surety. The case is one of a direct contract between the defendant on the one hand and the plaintiffs on the other for the latter to give time to the Rana, a nominee of the defendant, and for the defendant to agree personally to pay the extra amount of interest. We, therefore, see no reason why he should not pay it. There is no proof that the plaintiffs ever agreed to discharge him from this liability.
9. The next point urged in argument which is not taken in the grounds of appeal is that the interest of 0-12-0% per mensem was simple and not compound interest. The learned Subordinate Judge has noted that the original rate of interest, viz: 0-8-6% was compoundable six monthly and there can be no doubt that when the plaintiffs wanted to increase the rate they intended to maintain the compound rate.
10. There is therefore no force in this appeal and it is accordingly dismissed with costs.