Coutts Trotter, J.
1. This is a suit on a promissory note and an equitable mortgage of properties securing it. The plaintiff is a Sowcar and the defendant is the Jagirdar of Arni represented by the manager of his estate as his guardian. It is an estate under the Court of Wards and his interests are represented by Mr. V. Ramesam, the Goverment Header. The contract is this. It is a promissory-note, dated the 18th day of July 1915, in the ordinary form for Rs. 10,000,--'on demand I promise to pay Sukkulal Sowcar or order at Madras, the sum of rupees ten thousand only with interest at 24 per cent, per annum for value received in cash.' That is the promissory note and that is accompanied by two other contemporaneous documents one of which is not of very great importance, because it only shows what was done, which I am going to describe presently. The other is a letter signed by the defendant in which he says this:--'I have this day borrowed and received from you the sum of Rs. 10,000 upon the equitable mortgage of the stable No. 2/10 Madaran Paracherry, Egmore, Madras, for the re-payment of the amount of the promissory note payable on demand with interest at 24 per cent, per annum. I have this day executed for the re-payment of the amount of the said promissory note, 20 Hundis of Rs. 500 each authorising you to cash each Hundi every month on the due date and credit the sum so realised towards the said pro-note. If the amount of the said Hundis is not paid by me you are at liberty to proceed against me, for the recovery of the amount of the said Hundis and credit the same on footing of the said promissory note', and then a document is executed which shows what was done. There was paid Rs. 4 500 in cash and a balance of Rs. 1,500 outstanding on an old promissory note of 1914 was wiped out. The remaining Rs. 4,000 is described in this way, 'paid interest for 20 months in respect of the promissory note for Rs. 10,000 dated this day on condition of re-payment of the amount of the said pro-note by monthly instalments of Rs. 500 for which 20 Hundis of Rs. 500 each and executed this day in your favour,' this is the transaction on the documents. One has to see what the real transaction was. Treating the extinction of the old promissory note as cash, he did not get Rs. 10,000 at all but only Rs. 6,000 and he agreed to pay all the interest on Rs. 10,000, to treat that as paid in advance, and to re-pay Rs. 10,000 by 20 Hundis of Rs. 500 each. So that on the face of it at best he got a loan of Rs. 6,000 with an obligation to re-pay Rs. 10,000 in 20 months which worked out at something like 40 per cent, and not 24 per cent, as described in the contract. But there are two other features about this matter which make the interest, though it would require an expert mathematician to work it out, very much more oppressive than that. In the first place, but for the payment of the interest as a whole in advance the defendant would have had the advantage of having in his hands all the interest at any given time which remained unpaid. If he paid it as stipulated, he would have the use of it for the whole or the gradually diminishing period during the 20 months instead of the user passing forthwith to the plaintiff. In the second place, while he is paying--consider that the interest was paid at the end instead of at the beginning--month by month Rs. 200, in fact what he is doing is to pay a consolidated interest on the total which is in fact constantly diminishing. So that every month he is in fact paying a higher rate of interest because, whereas he pays on Rs. 10,000 for the first month, the next month he pays off Rs. 500 and still pays interest on Rs. 10,000, although the capital has been reduced by the payment of Rs. 500 and so on. That will hove the effect of spreading a little more interest over smaller sums and the rate of interest will increase until you get the astounding result in the last month that he pays Rs. 200 for the month's use of Rs. 500 which works out at very nearly 500 per cent In this state of things the question I have to consider is, whether the plaintiff is entitled to enforce this contract as it stands, or whether there is any provision of law which enables me to give relief to the defendant. It is an unconscionable bargain, but I have not got a Money Lenders Act to give relief against a bargain merely because it is oppressive and catching and no plea has been raised here of undue influence or pressure or anything of that kind. So that the sole question I have to ask myself is, is there any provision of law administered in this country that enables mo to attack or give relief against this transaction. I need hardly say that if I possibly could I would have done so.
2. The first way in which Mr. Ramesam puts his case is that put down in his pleadings. He says this case comes under Section 74 of the Contract Act, being penal. I asked him what was penal. He said what is penal is to treat a loan of Rs. 6,000 as a loan of Rs. 10,000 and make the interest payable in advance--I think that both the English and the Indian Courts have finally established the principle that the word penal or penalty has a bearing, as Mr. Justice Ayling puts it, only when there is a main contract and a subsidiary contract providing for some more drastic consequences in the event of the breach of the original and main contract. That seems to me what is meant by penalty, and I do not think anything can be brought under the operation of Section 74 which is a term and stipulation of the main contract between the parties. A common instance of such a penal stipulation is the familiar one that on failure of payment of one instalment the whole shall become due. That is the penalty for the breach of what the contracting party has undertaken to do. Against such penalties the Courts can, if they choose, give relief. But it seems to me that the word penalty is totally inapplicable to a term of the original contract or consequence of the original contract not owing to breach but, owing to fulfilment; and what Mr. Ramesam complains against is not in consequence of the breach but in consequence of the fulfilment of the contract; if I fulfil this contract according to its tenor, he says, these are the consequences and these I say are penal. They may be oppressive, bat in my opinion they are not penal within the meaning of the Contract Act and the decided cases.
3. In relation to this a decision of Sir Basil Scott and Mr. Justice Bachelor; Velchand Chhaganlal v. A. Flagg 13 Ind. Cas. 853 was referred to. It does certainly appear from the decree there that where a larger sum was recited to have been lent--Rs. 6,000--but in fact by the deduction of interest a smaller sum was lent, the Court undoubtedly seems to have treated the loan in its judgment as being a loan for the lesser amount. There is no report of the arguments and the judgment gives no reasons whatever for the result arrived at and does not discuss the matter in the least. All I can say is that the result of the case which is apparently embodied in the headnote is one that is absolutely unintelligible to me. No reasons, as I say, are given and it is not necessary for me to say that I think the case is wrongly decided. I can only say that as reported, it is absolutely unintelligible, and I see that my brother Ayling in Suryadevara Seetaramayya Suryadevara Kotayya 35 Ind. Cas. 111 made similar observations with regard to this very same case at page 114. I, therefore think shut it is impossible to give relief under this contract to the defendant under Section 74.
4. Mr. Ramesam puts forward a most ingenious argument and one which if I thought verged on soundness I should certainly give effect to. It is this. All through-neglect the fact that I paid interest at the start--I was paying interest on money which I had not got, because the moment I paid off Rs. 500 for the first Hundi there was only Rs. 9,500 to pay interest on, but I paid interest on Rs. 10,000 and so on until the capital has gone to Rs. 500 and the interest is still on Rs. 10,000, that is, quoad Rs. 9,500 as it was discharged there was total failure of consideration. I think he wants me to go so far as to say that the whole stipulation to pay interest was vitiated by that feature. It seems to me that you cannot break up this contract into bits and treat each monthly payment as a separate contract. It seems to me that the contract is indivisible. I do not think it can reasonably be described as a loan of Rs. 10,000--I think in truth it is a loan of Rs. 6,000 with an agreement to pay Rs. 500 a month which goes in reduction of principal and interest until the sum of Rs. 10,000 has been paid off. Whether you regard one particular portion of it as re-payment of interest and another as re-payment of principal does not matter. I think there is no law in this country which either forbids such a transaction or allows a Court to give relief against it. It simply is a re-payment of Rs. 10,000 spread over a certain period in return for a lean of Rs. 6,000 and I am totally unable to see that there is anything illegal or improper about such a matter according to the law of this country, and I think that the well-known observations of Lord Hatherley in Wallingford v. Mutual Society (1880) 5 App. Cas. 685 apply where in a decision before the Money Lenders Act in England and after the repeal of the Usury Acts the House of Lords held that an agreement in return for a smaller sum to re-pay a larger one on a given day representing the original principal and interest was not contrary to law. I must hold the same with regard to this agreement and I must give judgment fur the plaintiff for the amount claimed with costs and interest at the contract rate till the date of plaint and 6 per cent, thereafter. Usual mortgage decree. Time six months. Plaintiff must give credit to the defendant for the payment already made.