M.M. Ismail, J.
1. The defendants in O.S. No. 69 of 1970 on the file of the Court of the Subordinate Judge of the Nilgiris at Ootacamund arc the appellants herein aid the appeal itself lies within a very narrow compass. The respondent instituted the suit on the foot of an. equitable mortgage, for recovery of a sum of Rs. 2,00,000 with interest which amounted to Rs. 62,466.10 p. On 24th May, 1967, admittedly, the appellants executed a promissory note in favour of the respondent hereira for the said sum of Rs. 2,00,000 undertaking to pay interest 'at 5 per cent over the Reserve Bank of India rate rising and falling with a minimum of 11 per cent per annum with quarterly rests' One of the points that appears to have been urged on behalf of the appellants before the trial Court was that the rate of interest was excessive. The trial Court considered this question and held thac 11 per cent interest per annum with quarterly rests was excessive and 11 per cent interest per annum with half-yearly rests from 24th May, 1967, to the o ate of plaint would be reasonable and thereafter it provided for interest at (5 per cent per annum till realisation. The defendants in the suit have preferred this appeal questioning the award of this interest at 11 per cent with half-yearly rests. The appellants have claimed that they would be liable to pay only simple interest at 11 per cent per annum from 24th May, 1967, to 4th March, 1970. Consequsntly the only question that arises for consideration in this appeal is whetr er the award of interest at 11 per cent per annum with half-yearly rests ty the trial Court can be said to be illegal from any poirt of view.
2. Mr. Varadarajanjthe learned Counsel for the appellants, first contended that vrder the proviso to Section 3(2)(b) of the Usurious Loans Act, 1918 (Central Act X of 1918) as amended by Madras Act VIII of 1937, in the case of loans to agriculturists, if compound interest is charged, the Courts} all presume that the interest is excessive.
3. Admittedly, the appellants herein did not put forward any case in their written statement that they were agriculturists ard consequently, under the Proviso to Section 3(2)(b) of the Central Act as amended by the Madras Act, the compound interest provided for in the promissory note, Exhibit A-1 , should be presumed to be excessive. As a matter of fact, in the entirety of the written statement filed on behalf of the appellants, which consists of seventeen paragraphs, there is not a single paragraph in which the appellants have put forward the contention that the rate of interest provided for in Exhibit A-1 , for which by way of collateral security an equitable mortgage was created, will attract the provisions of the Usurious Loans Act and therefore no issue was framed by the trial Court on this question. The only paragraph in the written statemert, to which my attention was drawn in this behalf is paragraph 15, which states:
In my view of the case this defendant is not liable to pay interest at 11 per cent per annum. The rate, method and manner of calculation of interest are not correct. The interest claimed is also-excessive. The plaintiff is not entitled to claim compound interest.
Even in the other paragraphs of the written statement, there has not been a. single statement to the effect that the appellants were agriculturists. The learned Counsel merely relied on two sentences in the evidence of the fifth defendant as D.W. 1 who was the aole witness on behalf of the appellants herein, wherein he stated 'The first defendant is a firm registered under Partnership Act. It is an agricultural firm.' From this alone it cannot be concluded that the appellants are agriculturists and fall within the scope of the proviso to Section 3(2)(b) of the Act. It is1 in view this alone, the learned trial, Judge has stated in paragraph 14 of his judgment that the learned Counsel for the appellants (defendants before him; hadr not satisfied the Court that the appellants were agriculturists coming within the Proviso to the Explanation under Section 3(2)(b) of the Usurious Loars Act. Therefore, the appellants are not entitled to any relief with reference to the said Proviso on the ground that they are agriculturists and consequently, the provision for payment of compound interest per se shall not be presumed to be excessive.
4. Independent of this contention the learned Counsel also contended that the provision forll per cent interest with half-yearly rests must be held to be usurious under the provisions of the Usurious Loans Act, 1918,1 am afraid that no such argument is available to the appellants herein, having regard to the circumstances of this case. Nowhere in the whole of the written statement was any case put forward by the appellants herein that the transaction between the parties was substantially unfair or the transaction was unconscionable. However, the learned Counsel for the appellants sought to invite my attention to several decisions of this Gomt holding that a particular rate of interest would be the proper rate having regard to the circumstances of the case. The provisions contained in the Usurious Loans Act, 1918, themselves indicate certain circumstances and factors which are to be taken into account for the purpose of coming to a conclusion whether the ra te of interest in a particular case is excessive or not. The learned Counsel for the appellants took me through the entire evidence of D.W. 1 and, in the whole of the evidence, there is not a single statement which has any bearing on the consideration of this question of the rate of interest with reference to the provisions of the Usurious Loans Act. This Court, in Sri Nageswaraswami Bhakta Veluguri Sarayohayya Gupta v. Gupta Lazarus (1954) M.W.N. 684 after referring to several decisions cited before it, pointed out:
I am afraid that the learned Counsel on both sides are relying on rulings for a decision which must depend only on the facts of each case and cannot be covered by rulings. It might have been a Very good thing if Parliament had enacted a law that 9 per cent simple interest per annvm is the maximum rate which can be allowed on any loan, whether to an agriculturist or to a non-agriculturist as both the classes contain extremely poor and needy persons who will be hard hit by excessive interest. But as Parliament has not enacted such a law, the Court has to find in each case, on its facts, whether the interest contracted for its usurious or unconscionable or excessive and has to be reduced. There is no conflict between the two Bench rulings relied on by either side. It all depends on the facts. A Court has not, in my opinion, the same powers as the Legislature in this matter of fixing the reasonable interest. Nor has it got the powers of even a lender or creditor to fix a low rate of interest for a poor man out of pity. It has only the limited power of considering whether the interest contracted for between the parties is, in the circumstances cf each case, usurious or unconscionable or excessive and, therefore, liable to be reduced. The rate allowed to stand by Courts will vary enermously in particular cases according to the particular facts. Thus if a pennyless man borrows Rs. 100 to make purchases in the neighbouring weekly shandy hoping to sell the articles so purchased at 50 per cent profit within 2 or 3 days, he cannot be said to pay an excessive rate of interest even if he agrees to pay simple interest at 15 per cent per annum as the sum borrowed is small and he will be paying that rate only for a few days, and no other person in the world would give him a loan at a lower rate of interest and the loan would be necessary for him to earn the 50 per cent profit he reasonably hopes to get. On the other hand, when there is good property given as security as in this case, any rate mere than 12 per cent simple interest per annum must be held to be excessive. If the security afforded is worthless, such as a land which has got submerged or a land situated in enemy territory, interest higher than 12 per cent simple interest per annum may be justifiable when the borrower has no other property. It all depends upon the circumstances proved in each case.
5. This decision is in tune with several' other decisions holding that no hard and fast rule can be laid down with reference to the rate of interest or with reference to the nature of interest, whether simple or compound, for the purpose of determining whether the rate of interest in a particular case is excessive or not. As far as the present case is concerned. D.W. 1 has not stated one word about the value of the property given as security for the loan. There is absolutely no evidence as to what was the ruling rate of interest in the market at the time when the loan was contracted in this case. Information about i such factors will have a considerable bearing on the question whether the actual rate of interest contracted for by the; parties is excessive or not. Further, the respondent herein was a Bank which is subject to certain regulations and control by the Reserve Bank of India and the reference to 'interest at five per cent over Reserve Bank of India rate rising and falling' in Exhibit A-1 itself is a clear indication in this behalf. On the face of it, the rate of interest at 11 per cent per annum with half-yearly rests, provided for by the lower Court cannot be prima Jacie said to 'be excessive. As against this, the appellants had not placed any materials before the Court to show that such a provision for payment of interest was anyway excessive, requiring to be reduced by this Court.
6. Under these circumstances, there are no merits in the appeal and the same fails and is dismissed with costs.