B.K. Mukherjea, J.
1. This case raises a short and interesting point of law. The petitioner was a defendant in the trial Court and the suit was one for recovery of a sum of Rs. 322-10-3 alleged to be due on a bond executed by the defendant in favour of the plaintiff Bank on 14th December 1931. It is admitted that on 16th September 1928 the defendant has taken a loan of Rs. 100 from the plaintiff and executed in his favour a bond on that date stipulating to pay interest at the rate of Rs. 33 3/8 per cent. per annum. On 14th December 1931 the interest due on this debt had amounted to Rs. 108 odd annas. The defendant paid on that date a sum of Rs. 18 to the plaintiff and got a remission of Rs. 10 odd annas and for the balance of Rs. 180 he executed this bond on the basis of which the present suit has been commenced. This bond also contains a stipulation to pay interest at the rate of 33 3/8 per cent. per annum but the plaintiff has relinquished a portion of his claim and valued the suit at Rs. 322 odd annas as stated above.
2. The defence, in substance, was that the interest claimed was excessive and unconscionable. The trial Court held that the rate of interest being over 25 per cent. per annum it could be presumed that the interest was excessive and the transaction harsh and unfair as provided for in Section 3, Bengal Money-lenders Act. That being so, the Court was empowered to exercise the powers under Section 3, Usurious Loans Act and give any relief to the defendant as is contemplated by that section. The Munsiff gave the plaintiff a decree for Rs. 200, Rs. 180 being the consideration of the renewed bond and Rs. 20 being allowed as interest. Against this decision the plaintiff took an appeal to the lower appellate Court and the learned Subordinate Judge has decreed the plaintiff's suit in full, holding that the case did not come within the purview of Section 3, Bengal Moneylenders Act or Section 3, Usurious Loans Act. The lower appellate Court however has given the defendant liberty to pay the decretal debt in certain instalments.
3. Against this decision the present rule has been obtained and it is urged on be-half of the defendant-petitioner that the lower appellate Court has failed to exercise the jurisdiction duly vested in him by law in refusing to give the defendant any relief under Section 3, Usurious Loans Act read with Section 3, Bengal Money-lenders Act on the erroneous view that the present case did not come within the purview of either of these two sections. In my opinion this contention is sound and must prevail. The consideration for the bond in suit was obviously the money due as principal and interest on the old bond, leaving out the remissions allowed by the plaintiff, and there was a stipulation to pay interest at the rate of 33 3/8 per cent. per annum. Under Section 3, Usurious Loans Act when in any suit the Court has reason to believe that the interest is excessive and that the transaction is substantially unfair, it may re-open the transaction, take an account between the parties and relieve the debtor of any liability in respect of any excessive interest. The burden of proving that the interest was excessive or that the transaction was unfair is certainly upon the defendant. Section 3, Bengal Money-lenders Act however helps the debtor by raising a presumption in his favour in certain cases where the interest charged exceeds 15 per cent. per annum in case of a secured loan and 25 per cent. per annum in case of an unsecured loan.
4. The lower appellate Court is of opinion and this is supported by Mr. Bakshi who appears on behalf of the opposite party in this rule that the word 'charged' in Section 3, Bengal Money-lenders Act does not mean 'stipulated' but means actually charged or claimed by the plaintiff in the suit. In other words the argument is that whatever might be the rate of interest stipulated in the bond, if the plaintiff in bringing the suit does not claim interest at a rate exceeding 25 per cant per annum this section does not apply. Reliance is placed for this purpose upon the use of the word 'charged' as different from the word 'stipulated' in the body of the section. I am unable to accept this contention as correct. The presumption under this section arises whenever the Court finds that in respect of any money lent by a money-lender the interest exceeds a certain rate or there is a stipulation for rests at an interval of less than six months. The word 'charged' undoubtedly qualifies the words 'money lent' and it means, in my opinion 'charged' or payable under the contract of loan. It is the nature of the stipulation between the parties at the time of the contract that determines the question as to whether the transaction is one which can be called harsh and unfair within the meaning of the section and, in my opinion, both the two clauses mentioned above have reference to the actual stipulations in the contract itself regarding the amount of interest or the period of rests irrespective of the claim made by the plaintiff in the suit. If the other interpretation is accepted, the result, I think, would be anomalous. To take a concrete example, a bond might be executed for a certain amount of money stipulating to pay interest at a rate of 30 per cent. per annum. The bond may be renewed 2 or 3 times, the interest calculated as above being added to the principal and forming the consideration of each of the renewed bonds. If now the creditor sues on the last bond and claims interest upon the same at the rate of 25 per cent. per annum only, he would undoubtedly according to this interpretation, escape the provision of Section 3, Bengal Money-lenders Act. There would be no presumption in favour of the borrower and he would have to prove affirmatively that the transaction was unfair and the interest excessive which would bring it within the purview of Section 3, Usurious Loans Act, even though on each renewal the interest charged exceeded 25 per cent. This would certainly frustrate the object of Section 3, Bengal Money-lenders Act which was avowedly introduced with a view to relieve the debtor from proving these facts in order to get relief under the provisions of the Usurious Loans Act.
5. Accordingly I am of opinion that the view taken by the lower appellate Court is not correct. As there is a presumption under Section 3, Bengal Money-lenders Act in favour of the defendant in the present case, a presumption which the other side has not been able to rebut, the Court is certainly at liberty to re-open the transaction and relieve the debtor of any excessive interest. The word 'excessive' has been defined as meaning in excess of what the Court deems to be reasonable having regard to the risk incurred by the creditor at the date of the loan. Having regard to the evidence in this case and the materials on the record, I think that interest at the rate of 15 per cent. per annum would be a reasonable rate. As the transaction is re-opened the principal sum would be deemed to be Rs. 100 and interest will be calculated at the rate of 15 per cent. per annum upon the amount from the date of the original bond, that is, 16th' September 1928, up to the date of the suit. The plaintiff will get a decree for this sum and interest will run upon the decretal amount at the rate of six per cent. per annum from this date. There will be no order for costs either in this Court or in the Court of appeal below. The plaintiff will get proportionate costs in the trial Court. The defendant of course will not have the liberty of paying the decretal amount in instalments as directed by the lower appellate Court.