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Atikulla Munshi Vs. AzimuddIn Haji - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in40Ind.Cas.415
AppellantAtikulla Munshi;azimuddIn Haji
RespondentAzimuddIn Haji;atikulla Munshi
Excerpt:
sonthal pergannas regulation (iii of 1872), section 6 - contract for evading provisions of section, whether enforceable--sonthal pergannas. - .....to repay the principal sum which was. borrowed and interest at the rate of 100 per cent, on the date of repayment, namely, magh 1335. having come to the conclusion that it was a device to evade the regulation, what is the result ?4. it was argued by the learned vakil for the appellant that the whole contract was invalid. then, i think, he rather abandoned that position and said that he could not dispute that the principal sum could be recovered but he contended that no interest was recoverable. i do not think that the contract was invalid. i think that having come to the conclusion that the real effect of the contract was an undertaking to repay the principal and interest at the rate of something like 100 per cent. within three months, what we have then to see is what the court would.....
Judgment:

Sanderson, C.J.

1. This appeal from the judgment of my learned brother Mr. Justice Newbould raises a point which is somewhat out of the ordinary.

2. I do not suppose that the decision that I am about to give will be a precedent in other cases, because I imagine that the particular form of the contract in the present case is not a usual one. The borrower of Rs. 550 entered into an agreement dated the 10th of Kartick 1315, reciting that he borrowed on that day Rs. 550 'for the purpose of purchasing hide within the month of Magh of the current year which is the period fixed for repayment.' Then instead of undertaking to repay the money, the method of repayment was as follows:

I shall pay off by 550 maunds of dried autumnal paddy by weighing them on the same day, at the rate of one maund per rupee, and T shall have it entered on the back of this deed;' so that, the method of repayment; was by delivery of certain paddy which is to be 550 maunds at the rate of one maund per rupee. Then the borrower said: 'if I fail to pay the paddy I shall be liable to make good the gain which would accrue to you by purchase and sale with the said money.

3. Now, the learned Judge in the first Appellate Court came to the conclusion that this was really a subtle device for the purpose of evading the provisions of Regulation III of 1872, a Regulation for the peace and good government of the territory known as the Sonthal Pergannas. He based this conclusion on the fact that it was proved that the price of pady in Magh 1315 was Rs. 2 per maund, i.e., the sum repayable was Rs. 1,100, the result being that the Rs. 550 was to double itself in three months. I think that is a conclusion which he was justified in coming to upon the terms of this agreement. It was in effect an agreement to repay the principal sum which was. borrowed and interest at the rate of 100 per cent, on the date of repayment, namely, Magh 1335. Having come to the conclusion that it was a device to evade the Regulation, what is the result ?

4. It was argued by the learned Vakil for the appellant that the whole contract was invalid. Then, I think, he rather abandoned that position and said that he could not dispute that the principal sum could be recovered but he contended that no interest was recoverable. I do not think that the contract was invalid. I think that having come to the conclusion that the real effect of the contract was an undertaking to repay the principal and interest at the rate of something like 100 per cent. within three months, what we have then to see is what the Court would do in such a case. We find that in the Regulation there are certain provisions varying according to the period for which interest is to be calculated, which direct the Court as to the rate at which the interest is to be allowed. I think the Court ought to enforce the contract in accordance with those provisions of the Regulation. Therefore, the period for which interest was to be calculated, having regard to the real meaning of the contract, was from the date of the loan to the month of Magh in the same year, which the learned Vakil told me was about 3 1/2 months. In may judgment inasmuch as that is less than a year, applying the Regulation Section 3, paragraph (6), the rate of interest for that period would be 25 per cent. Therefore, the plaintiff is entitled to recover the principal and 25 per cent, interest from the date of the loan down to the date of repayment mentioned in the contract.

5. In addition to that, the plaintiff is entitled to damages, inasmuch as the defendant did not pay that which he was legally bound to pay under the contract and the question then arises, what will be the rate of interest which the defendant should be charged in respect of the period after the date of repayment mentioned in the contrast. We have had certain cases mentioned to us in some of which 6 per cent, interest was allowed, in some of which 12 per cent, was allowed, and in some of which 25 per cent. was allowed. Having regard to all the circumstances of this case, I am of opinion that 12 per cent, would be a reasonable rate of interest to be allowed from the date of repayment mentioned in the contract down to the date on which the suit was instituted: and, then from the date of the institution of the suit at the rate of 6 per cent, per annum until realisation.

6. Inasmuch as the plaintiff succeeded to some extent but has not succeeded to the full extent for which he contended, I think the fairest thing as regards costs in this appeal is to make each party pay their own costs of this hearing.

7. This judgment disposes of both the appeals (Nos. 52 and 55), and we direct that each party do pay their own costs of this hearing in Appeal No. 55 also.

Chatterjea, J.

8. I agree.


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