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Debi Sahai and anr. Vs. Ganga Sahai and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Judge
Reported in6Ind.Cas.572
AppellantDebi Sahai and anr.
RespondentGanga Sahai and ors.
Excerpt:
contract act (ix of 1872), sections 16, 19 - undue influence--unconscionable bargain--interest at contractual rate not to be interfered with unless undue influence shown--presumption--pleading. - - it is quite clear that it is only under section 19 in the cases like the present that the court has power to interfere with a contract entered into by the parties......laid down that in the case of at unconscionable bargain, a court can interfere in the absence of undue influence or penal clauses to reduce interest. there can be no doubt that the learned subordinate judge had discretion to reduce interest.' it will be seen that it was neither pleaded nor proved that there was any undue influence or any penalty. in the judgment of this bench delivered on the 16th of may 1910 in second appeal no. 891 of 1909, we pointed out that the power of a court to interfere with contracts is limited to the provisions of the contract act. there are dicta to be found in the cases of balkishen das v. madan lal a.w.n. (1907) 55 : 29 a. 303 : 4 a.l.j. 222, kirpa ram v. sami-ud-din khan 25 a. 284, which seem to us liable to misconstruction. those dicta might be read in.....
Judgment:

1. This appeal arises out of a suit on foot of two mortgages. The rate of interest was Rs. 1-14 per. cent per mensem with yearly rests. The first bond was dated the 5th of August 1897, for Rs. 215 and the second was dated 5th December 1899 for Rs. 99 The total amount claimed was Rs. 1,270-9 after allowing payment of Rs. 150. The only question is whether or not the Court below was justified in reducing interest from the contractual rate of' Rs. 1-14 per cent. per mensem compound interest with yearly rests to Rs. 24 per cent. per annum simple interest. The learned Judge says: The defendants pleaded that the rate of interest was hard and unconscionable,' and he then goes on to cite cases upon which he relies as authorities for the proposition that the Court can of its own motion reduce in-interest as unconscionable. He says: 'It has been laid down that in the case of at unconscionable bargain, a Court can interfere in the absence of undue influence or penal clauses to reduce interest. There can be no doubt that the learned Subordinate Judge had discretion to reduce interest.' It will be seen that it was neither pleaded nor proved that there was any undue influence or any penalty. In the judgment of this Bench delivered on the 16th of May 1910 in Second Appeal No. 891 of 1909, we pointed out that the power of a Court to interfere with contracts is limited to the provisions of the Contract Act. There are dicta to be found in the cases of Balkishen Das v. Madan Lal A.W.N. (1907) 55 : 29 A. 303 : 4 A.L.J. 222, Kirpa Ram v. Sami-ud-din Khan 25 A. 284, which seem to us liable to misconstruction. Those dicta might be read in conjunction with the facts of the cases. We, therefore, think it right to refer to the decision of their Lordships of the Privy Council in the case of Dhanipal Das v. Maheshar Bukhsh Singh 28 A. 570 : 4 C.L.J. 1 : 1 M.L.T. 205 : 3 A.L.J. 495 : 9 0.C 188 : 8 Bom. L.R. 491 : 10 C.W.N. 849 : 16 M.L.J. 292. At page 583 of the report, their Lordships, referring to the decision of the Subordinate Judge, which had been confirmed by the Judicial Commissioner of Oudh, said as follows: 'The Subordinate Judge was wrong in deciding the case in accordance with what he supposed to be English equitable doctrine. He ought to have considered the terms of the amended Section 16 only.' The Contract Act is referred to. It is quite clear that it is only under Section 19 in the cases like the present that the Court has power to interfere with a contract entered into by the parties. The section is limited to contracts induced by undue influence. A contract induced by undue influence is defined by Section 15, Clause (1) of the Contract Act. Clause (3) is the only clause which refers to unconscionable bargains, and in applying the provisions of the section, it will be seen that it is only where the lender is in a position to dominate the Will of the borrower that a presumption arises that a transaction which on the face of it appears to be unconscionable was induced by undue influence. In the present case, as already pointed out, undue influence was neither pleaded nor proved, nor is there anything whatever to show that the plaintiffs were in a position to dominate the will of the borrowers. Under these circumstances, we allow the appeal and modify the decrees of the Courts below by decreeing the plaintiffs' claim in full. As the rate of interest was, in our opinion, very high, we allow no interest from the date of suit. The appellants must have their costs.


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