1. This is an appeal by the mortgagee against the decree of the Subordinate Judge, Second Court, Midnapur, partially rejecting his claim on a mortgage bond. The mortgage bond was executed by the father of defendants 1 to 5 for Rs. 8,000 in the year 1920. The stipulation was to pay interest at the rate of Re. 1 per month with yearly rests. The plaintiffs brought the suit for the mortgage money including interest in terms of the bond. The Subordinate Judge reduced the interest on the ground that the stipulation to pay compound interest with yearly rests is excessive and unfair. His reason for so holding was that the security was ample and the property was valuable, the plaintiff himself having offered to purchase it for Rs. 27,000. It was proved that the defendant had considerable properties, although he had other debts. The Subordinate Judge made a decree for simple interest at the rate of one per cent per month. The plaintiff has appealed against that decree and his contention is that he is entitled to enforce his mortgage according to its terms and that the Subordinate Judge was wrong in allowing only simple interest. It is well settled that unless the defendant can show any good reason why the contract entered into by him under the mortgage bond should not be enforced, the Court cannot make a new contract for him and interfere with the terms of the contract. The Court cannot reduce the rate of interest or interfere with the stipulation for compound interest merely on the ground that the interest stipulated is considered to be excessive or that the interest has amounted to a large sum owing to the defendant not paying it at the stipulated periods of the rests agreed upon in the bond.
2. The authority for this proposition will be found in the cases of Aziz Khan v. Duni Chand A.I.R. 1918 P.C. 48, Balla Mal v. Ahad Shah A.I.R. 1918 P.C. 249 and Raghunath Prosad Sahu v. Sarju Prosad Sahu A.I.R. 1924 P.C. The decisions of their Lordships of the Judicial Committee in these cases has in effect overruled the earlier cases as to the power of the Court to reduce the interest on the ground that it was excessive. The respondent, however, relies upon the provisions of the Usurious Loans Act (Act 10 of 1918) which applies to this case as the mortgage bond was executed after the Act came into operation. Under Section 3 of that Act the Court can reopen the transaction entered into between the parties if it has reason to believe that (a) the interest is excessive and (b) the transaction was as between the parties-thereto substantially unfair. In this case, no evidence has been given that the interest charged was excessive, having regard to the rate of interest prevailing in the locality. As a matter of fact, 12 per cent per annum with yearly rests cannot be considered as excessive. Besides, there is no evidence in the case that the rate of interest prevailing at the time, was lower than that provided in the mortgage bond. Moreover, there is no circumstance in the present case on which it can be held that this transaction as between the parties to it is substantially unfair. The plaintiff was not in a position to dominate the will of the mortgagor. The result, therefore, is that this appeal is decreed with costs. Plaintiff will be entitled to interest at the stipulated rate, that is to say, one per cent per month with yearly rests. Au account should be made of what is due to the plaintiff for the principal, interest and costs calculated up to 8th April 1929, and the amount so found shall carry interest at the rate of six per cent per annum from that date until realization. A preliminary decree for sale shall be drawn up in terms of Form No. 4 of Appendix D, Schedule 1, Civil P.C.
3. We are told that the added respondent in this Court who has purchased the mortgaged property deposited the sum decreed by the lower Court. It is not known whether the plaintiff-appellant has actually withdrawn the amount deposited. If he has done so, it must be taken as in part payment of the decretal amount and from that date interest on the amount withdrawn will cease. If on the other hand, the appellant has not withdrawn any amount so deposited, an account shall be made as directed above in the Court below. The decree shall be prepared by the lower Court.
4. Let the records be sent down as soon as the decree in this case is signed.