1. We think that on the facts which are not in dispute the stipulation for interest at 300 per cent. compound interest in default of payment on due date is a stipulation by way of penalty.
2. The extraordinarily high rate at which the interest is fixed, as well as the fact that the plaintiff has not ventured to sue for the whole amount due to him according to the terms of the document, are circumstances indicating that it could not have been in the contemplation of the parties to enforce the condition otherwise than as a penalty in the event of a breach.
3. The plaintiff is therefore entitled to recover reasonable compensation and the. Subordinate Judge must return a finding as to what amount is due on that footing. Further evidence may be taken.
4. The finding should be Submitted within six weeks, and seven days will be allowed for filing objections.
5. In compliance with the above order the Subordinate Judge submitted the following
6. FINDING:-In the light of the rulings reported in Chuhar Mal v. Mir I.L.R. (1879) A. 715; Khurram Singh v. Bhawani Baksh I.L.R. (1881) A. 440 and in the light of the High Court's opinion in this very case that the plaintiff's claim is, in its nature, an attempt to enforce a penalty, I consider that in the circumstances of the case nothing more would be required as reasonable compensation than an addition of a sufficiently large percentage of interest in order to meet the ends of justice. I hold that anything more would be offering a premium for such chit funds, which are fruitful of more harm than good to the public at large and that interest at 24 per cent, per annum allowed by the court of first instance, was a sufficient and reasonable compensation.
7. The Court delivered the following
8. We accept the finding and reverse the decree of the Subordinate Judge and restore that of the District Munsif.
9. Each party will bear his own costs in this and the lower appellate court. Time for redemption will' be two months from this date.