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Umesh Chandra Khasna Vis Vs. Golap Lal Mustafi - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Judge
Reported in(1904)ILR31Cal233
AppellantUmesh Chandra Khasna Vis
RespondentGolap Lal Mustafi
Cases ReferredBeynon v. Cook
Excerpt:
interest - compound interest--unconscionable bargain--unfair dealing--delay in suit--urgent necessity--pardanashin lady. - .....as to be unusual in this country, and. we are unable to hold that the bargain in itself was hard pr unconscionable. further, we find it impossible to hold that a bargain not in itself hard and unconscionable can be held to have become so by reason of delay on the part of the creditor in suing to recover the debt, and with all due respect to the judges of the allahabad high court who decided the case of madho singh v. kaskiram (1887) i.l.r. 9 all. 228, we are unable to agree with their decision in that case. in our opinion that decision goes far beyond the principle laid down by the privy council in the case of kamini sundari chaodhrani v. kali prosunno ghose (1885) i.l.r. calc. 225 : l.r. 12 i.a. 215. that was the case of a loan to a pardanashin lady by her own mukhtear at (sic).....
Judgment:

Brett and Mitra, JJ.

1. The plaintiff in this case brought a suit on a mortgage bond dated 9th Chaitro 1294 B.S. to recover from the defendants the sum of Rs. 19,749. The original mortgage debt was Rs. 1,999, but by means of compound interest and interest it had swelled up to the sum claimed by the 23rd Sravan 1307, the date on which the suit was instituted. The due date under the bond was the month of Aswin 1295 B.S.

2. The defendants pleaded that the claim of the plaintiff for interest was unjust, excessive and illegal; that they had never agreed to pay compound interest, and that the plaintiff could only recover the principal due under the bond with simple interest thereon up to date.

3. By the bond the defendant stipulated to pay interest at Re. 1-12 per cent. per mensem and as security for the repayment of the loan they mortgaged lot Balahai, towji No. 199, in the Dinajpur Collectorate. The bond further contained the following clause--'and so long as the said amount is not wholly repaid we shall pay interest at the said rate, and if we do not pay the amount of interest within the year, then from 1st Bysack of the next year that amount of interest shall be considered as principal, upon that interest shall run at that rate.'

4. The Subordinate Judge held that the plaintiff was right in contending that this clause amounted to a stipulation to pay compound interest, but at the same time he came to the conclusion that the bargain was hard and unconscionable for the following reasons: The money was borrowed to pay the Government revenue which was due two days after the loan was taken, and he held that the plaintiff took advantage of the defendant's necessity to demand not only interest at 21 percent, on the loan, although the estate was mortgaged as security, but also compound interest; and judging from the fact that no suit was brought by the plaintiff till yearly 21 years after the due date, viz., Aswin 1295, he further concluded that it was the intention of the plaintiff that compound interest should accumulate to an exorbitant amount. The suit was brought for a sum nearly ten times the amount of the original debt. He was further of opinion that those of the defendants who were females did not understand the nature of the contract as to interest, and that it was not proved that the terms of the deed had been read and fully explained to them.

5. On the authority then of the decision in the case of Madho Singh v. Kashiram (1887) I.L.R. 9 All. 228, in which the Allahabad High Court allowed the principle laid down by the Privy Council in the case of Kamini Sundari Chaodhrani v. Kali Proaunno Ghose (1885) I.L.R. Calc. 225 : L.R. 12 I.A. 215, he held that the bargain was hard and unconscionable, and disallowed, the claim for compound interest. He accordingly gave the plaintiff a decree for the principal due on the bond with simple interest at 21 per cent, per annum up to the date of suit and thereafter up to the date of payment. Plaintiff has appealed.

6. The only question for determination is whether the bargain between the parties was in this case a hard and unconscionable one, or was otherwise such that a Court of Equity would give Relief. If the bargain was of that description, there can be no doubt that the Courts of Law in this country have ample power to live relief; In support of the appeal it has been argued generally that the Subordinate Judge has misapplied the principles to be followed in cases of this nature, while for the respondents it has been contended that the decision is correct and is supported by the authorities; After hearing the learned pleaders oil both sides we are of opinion that the judgment and decree of the Sub-ordinate Judge cannot be maintained.

7. The mortgage bond was executed by nine persons, five of whom were men and four were ladies. They all appear to have been of full age, and not to have been under any disability to enter into the agreement. The mortgaged was one Saroda Sundari Dassi and the negotiations were carried on through her husband who was a mukhtear. The money was borrowed on the 9th Chaitra 1294 B.S. (21st March 1888) to pay the Government revenue due on mehal lot Balahar, towji No. 199; in the Dinajpur Collectorate, oil account of which the estate was advertised for sale by auction oil the 23rd March The mortgagors were undoubtedly in urgent need of the money. They seem to have applied to the plaintiff for the loan and to have taken it on the terms stated in the bond. There is no evidence to prove that they were overreached, tricked, or deceived, or that the plaintiff took unfair advantage of their necessity. The terms its to interest on which the money was lent appear to be high, judged by the standard of Western Nations; but the monthly rate of interest is not higher than is often paid in this country, and the provision as to yearly rests and compound, interest is not unusual. It would seem as though the Subordinate Judge In coming to his conclusion that the bargain was hard and unconscionable was to, some extent influenced by the fact that there had been a delay of nearly 12 years in bringing the suit; and he seems to have thought that the object of the delay was that the interest should accumulate to an extravagant amount No doubt the decision of the Allahabad High Court in the case of Madho Singh v. Kashiram (1887) I.L.R. 9 All. 228 goes to support the view which he has taken. There is, however, so far as we are aware, no authority for the principle that a bargain which in itself is not open to objection as hard and unconscionable can be held to have assumed that character in consequence of the delay on the part of the creditor in suing on the bond. There is, moreover, nothing beyond surmise, so far as we can find from the record, to support the conclusion that the delay was wilful on the part of the mortgagees, or that there was any intention that the interest should accumulate. It is not unusual for a mortgagee to delay suing on the bond in consequence of the solicitation of the mortgagors themselves. There was also nothing to prevent the mortgagors from mating arrangements to pay off the debt before the interest had accumulated.

8. It is true that four out of the nine mortgagors were ladies, but we are unable to hold that there is anything on the record to support the view taken by the Subordinate Judge that they did not understand the nature of the contract as to interest, or that the terms of the deed were not read over and fully explained to them. The clause as to interest is perfectly clear, and we think that the conclusion to which the Subordinate Judge came that it stipulated for the payment of compound interest was only one possible. The ladies went to execute the bond with their male relatives who were interested in the transaction in the same way as they were: sow far as we can judge, the ladies had full opportunity of taking the best advice available, and it is impossible to believe that the terms of the deed were not read over and explained to them by their relations. This appears to us to be the only natural conclusion, and we can see no reason for adopting the view taken by the Subordinate Judge. The eases relied on by the respondents, viz., Kanai Lal Jowhari v. Kamini Devi (1867) 1 B.L.R. (O.C.) 31, Nistarini Dassi v. Nundo Lall Bose (1899) I.L.R. Calc. 891, 918, Sudisht Lal v. Seobarat Koer (1881) I.L.R. 7 Calc. 245 : L.R. 8 I.A. 39 and Khas Mehal v. The Administration-General of Bengal [1901] 2 K.B. 110, can hardly therefore be held to apply, as there (sic) rounds for supposing that the ladies were (sic) from the mortgagee, or that they had not (sic) or that the deed was not read and (sic) his ground for impugning (sic).

9. (sic) consider the sufficiency of the grounds on which (sic) judge has held that the bargain was hard and (sic) that the stipulation as to compound interest cannot be allowed to have effect. The authority both in India and England are dear that it not in every case in which the interest charged is very high that the Court will interfere when, as in the present case, the debtors who contracted the loan were sui juris, and there is no proof of unfair dealing. In the case of Zebonnissa v. Brojendro Coomar Roy Chowdhry (1874) 21 W.R. 352, Couch C.J. refused to disallow a stipulation for interest at 75 per cent. Per annum in the absence of any confidential relation between the parties, or of any imposition, misrepresentation, or want of capacity. In the case of Mackintosh v. Wingrove (1878) I.L.R. 4 Calc. 137, it was laid down that the Court will afford no protection to persons who wilfully and knowingly enter into extorionate and unreasonable bargains. It is only when a person has entered into an extortionate bargains and it is shown that it was in ignorance of the unfair nature of the transaction that the Court is justified in interfering; and in the case of Mangniram Marwari v. Rajapati Koeri (1890) I.L.R. 20 Calc. 366, which was followed in the case of Surya Narain Singh v. Jogendra Narain Roy Chawdhry (1892) I.L.R. 20 Calc. 360, it was held where there is no question of fraud or oppression, improper dealing, exorbitant amount, dealing with an ignorant person, or any such consideration, the stipulation as to interest must be enforced.

10. The equitable doctrine applicable in England to cases like the present has been clearly laid down Ridley J. in the case of Wilton & Co. v. Osborn [1901] 2 K.B. 110, follows: If Appears to be established by a series of decisions that that a Court of Equity will not grant relief in such cases merely because the charges or interest are excessive. Every case has, indeed, to be judged by its own circumstances; (sic) known as expectant heirs (which require (sic) rule is that, assuming him to be of (sic) not be granted unless, it can be shown that he (sic) tricked, or deceived, and that the money-land (sic) fair and undue advantage of his weakness and (sic) on in the judgment he says: 'The general (sic) excess of interest nor exorbitance of charge (sic) the element of unfair dealing is found to have existed;' and fee states that the principle to be followed is not to save persons from the consequences of their own folly, but that it is right and expedient to save them from being victimised by other people.

11. Now applying those principles to the present case, we can find, no proof of unfair dealing or undue pressure exercised on behalf of the creditor. The mere fact that a person is in urgent need of money is not sufficient in itself to raise the presumption that the persons to whom he applies for the loan will take unfair advantage of his necessity. In this case there appears to have been no reason why if the defendants objected to the terms demanded by the plaintiffs they should not have borrowed the money elsewhere, and there is no proof that the plaintiff used any pressure whatever to induce them to take the loan from her. Undue influence or unfair dealing must, we think, be proved before such a presumption can arise. The terms on which the loan has given, though high, were not so excessive as to be unusual in this country, and. We are unable to hold that the bargain in itself was hard pr unconscionable. Further, we find it impossible to hold that a bargain not in itself hard and unconscionable can be held to have become so by reason of delay on the part of the creditor in suing to recover the debt, and with all due respect to the Judges of the Allahabad High Court who decided the case of Madho Singh v. Kaskiram (1887) I.L.R. 9 All. 228, we are unable to agree with their decision in that case. In our opinion that decision goes far beyond the principle laid down by the Privy Council in the case of Kamini Sundari Chaodhrani v. Kali Prosunno Ghose (1885) I.L.R. Calc. 225 : L.R. 12 I.A. 215. That was the case of a loan to a pardanashin lady by her own mukhtear at (sic) the security being ample, and the (sic) be a hard and unconscionable bar- (sic) for such interest should not be enforced, (sic) Cook (1875) L.R. 10 Ch. 389, which they followed, was the (sic) emainderman, that is to say, one of the (sic) to which Mr. Justice Ridley refers in his (sic).

12. (sic) in which advantage had been taken by the (sic) of the fiduciary relations which existed between him and the lady, and in the second of the youth and ignorance of the debtor. These were special classes of cases, and are case of a person of full age and subject to no disability who knowingly enters into a contract without being subjected to any undue pressure or influence. We are unable to hold that their Lordships of the Privy-Council intended to apply the broad principle, which was laid down in the case of Beynon v. Cook (1875) L.R. 10 Ch. 389 as applicable to expectant heirs, to cases of the class to which the case before us belongs.

13. We are unable therefore to agree with the Subordinate Judge that in this case the bargain was a hard and unconscionable one, and that on that account the stipulation as to compound interest should not be enforced. We accordingly allow the appeal and order that the decree of the Subordinate Judge be modified by directing that an account be taken of what will be due to the plaintiff for principal and interest at compound interest as provided in the mortgage bond up to the end of the six months running from the 12th April 1901, the date of the disposal of the case in the Court of the Subordinate Judge, and for his costs of the suit in the lower Court and in this Court of Appeal, and that interest shall run on the amount so found to be due at 6 per cent, per annum from those dates up to realization.


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