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Jwala Ram and anr. Vs. Buchi Ram and ors. - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1917All315(1); 38Ind.Cas.533
AppellantJwala Ram and anr.
RespondentBuchi Ram and ors.
Excerpt:
contract act (ix of 1872), section 74 - mortgage--interest, rate of, penal--stipulation as to compound interest, validity of--penalty. - - the court below has held that the whole provision as to compound interest as well as the provision for the increase of the rate of interest from 14 annas 6 pies to re......arises out of a suit upon a mortgage. the mortgage provided that interest should be payable at 14 annas 6 pies per cant, per mensem. it also provided that if the interest was not paid at the end of every six months, the unpaid interest should be added to the principal and that interest would run upon it and that the interest in that event would be re. 1 per cent, per mensem instead of 14 annas 6 pies. the court below has held that the whole provision as to compound interest as well as the provision for the increase of the rate of interest from 14 annas 6 pies to re. 1 was a penalty and has disallowed it. the only matter with which we are concerned in the present appeal is the question of interest, in our opinion the provision as to compound interest was not a penalty but the provision.....
Judgment:

1. This appeal arises out of a suit upon a mortgage. The mortgage provided that interest should be payable at 14 annas 6 pies per cant, per mensem. It also provided that if the interest was not paid at the end of every six months, the unpaid interest should be added to the principal and that interest would run upon it and that the interest in that event would be Re. 1 per cent, per mensem instead of 14 annas 6 pies. The Court below has held that the whole provision as to compound interest as well as the provision for the increase of the rate of interest from 14 annas 6 pies to Re. 1 was a penalty and has disallowed it. The only matter with which we are concerned in the present appeal is the question of interest, in our opinion the provision as to compound interest was not a penalty but the provision to increase the rate of the interest from 14 annas 6 pies to Re. 1 per cent, per mensem was a penalty. We think that the decree of the Court below must be varied accordingly. We direct the office to calculate the interest at the rate of 14 annas 6 pies per cent, per mensem compound interest with six monthly rests and specify the amount in the decree. The decree of the Court below will be varied accordingly. We direct each party to pay his own costs of this appeal. We extend the time for payment for four months from this date. In other respects we confirm the decree of the Court below.


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