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Muthura Persad Singh and anr. Vs. Luggun Kooer and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Judge
Reported in(1883)ILR9Cal615
AppellantMuthura Persad Singh and anr.
RespondentLuggun Kooer and ors.
Cases ReferredMackintosh v. Wingrove I.L.R.
Excerpt:
interest - penal clause in contract--increased interest on default of payment--contract act ix of 1872 section 74. - .....given to an agreement, that if money is not paid at the due date it shall from that time bear an' increased rate of interest-boolakee lall v. radha singh 22 w.r. 223; mackintosh v. wingrove i.l.r. 4 cal. 137.3. the former of these cases probably dealt with a document executed before the contract act; but however that may be such cases differ materially from the present. in them the agreement to pay an increased rate of interest from a future day may well be regarded as a substantive part of the contract, not as penalty for its breach; but, where, as here, an increased rate of interest from the date of the bond is made payable on default, we cannot regard it in any other light than as a sum named in the contract to be paid in case of breach within the meaning of section 74* of the.....
Judgment:

Wilson, J.

1. We think that the Subordinate Judge has decided this case rightly. He says: I am of opinion that the stipulation made as to the payment of interest at the rate of Rs. 2 per cent per mensem from the time of the execution of the bond, in case of default of repayment of the loan in time, was laid down in the deed as a check upon the debtor, and it should undoubtedly be held as a penal clause.'

2. Several cases were cited to us in which full effect has been given to an agreement, that if money is not paid at the due date it shall from that time bear an' increased rate of interest-Boolakee Lall v. Radha Singh 22 W.R. 223; Mackintosh v. Wingrove I.L.R. 4 Cal. 137.

3. The former of these cases probably dealt with a document executed before the Contract Act; but however that may be such cases differ materially from the present. In them the agreement to pay an increased rate of interest from a future day may well be regarded as a substantive part of the contract, not as penalty for its breach; but, where, as here, an increased rate of interest from the date of the bond is made payable on default, we cannot regard it in any other light than as a sum named in the contract to be paid in case of breach within the meaning of Section 74* of the Contract Act.

4. The appeal will be dismissed with costs.


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