1. This is an appeal by the defendant in a suit for recovery of money. On the 16th January 1895, the defendant borrowed from the plaintiff Rs. 400 on interest at 4 per cent, per mensem, with six-monthly rests; the money was made re-payable at the end of a year. These terms were incorporated in a bond executed by the defendant, and subsequently registered and delivered to the plaintiff. On the 25th December 1901, the defendant paid the plaintiff Rs. 20 on account of interest, and on the 22nd December 1904, he made a similar payment of Rs. 30. These payments were duly endorsed on the back of the bond and the entries were signed by the defendant. On the 15th December 1910, the plaintiff instituted this suit for recovery of his dues on the bond. The schedule to the plaint set out an elaborate statement of accounts which showed that on the date of the commencement of the suit, a sum of Rs. 8,75,345-8 was payable by the defendant to the plaintiff. In the third paragraph of the plaint, however, the plaintiff stated that he could not possibly realise this large sum from the properties of the defendant and he consequently confined his claim to the modest sum of Rs. 3,000. The defendant pleaded in answer to the suit, first, that the claim was barred by limitation; and secondly, that the rate of interest was unconscionable and should not be enforced by a Court of Justice. The Courts below have overruled these contentions and have decreed the suit for the amount claimed. On the present appeal, the decree of the District Judge has been assailed on two grounds: namely first, that the claim is barred by limitation; and secondly, that interest is not recoverable to the extent claimed by the plaintiff.
2. As regards the first ground the appellant has argued that Article 116 of the Schedule to the Indian Limitation Act is of no assistance to the plaintiff. That Article provides that a suit for compensation for the breach of a contract in writing registered must be instituted within six years from the date when the period of limitation would begin to run in a suit brought on a similar contract not registered. The argument of the appellant is that there is no contract in writing registered, because the bond whereon the suit is instituted was not signed by the plaintiff as well as by the defendant. In support of this contention reliance has been placed upon the decisions in Apaji Bapuji v. Nilkantha Annaji 3 Bom L.R. 667 and Ramasami Chetti v. Sokhanada Chetti 1 M.L.J. 737. The first of these decisions, we observe, was not followed by this Court in Panchanan Das Majumdar v. Kunja Behari Malo 1 Ind. Cas. 438 : 12 C.W.N. 628 : 35 C. 683 : 9 C.L.J. 1. The second case, we observe, enunciates a rule contrary to what has been subsequently adopted by the Madras High Court in Ambalavana Pandaram v. Vaguran 19 M. 52 : 5 M.L.J. 228, Kotappa v. Vallur Zamindar 25 M. 50 : 11 M.L.J. 125 Zamindar of Vizianagram v. Behara Suryanarayana Patrulu 25 M. 587 : 12 M.L.J. 249 and Kotappa v. Vallur Zamindar 25 M. 50 : 11 M.L.J. 125. We are not pre pared to accept the contention of the appellant, for as was pointed out by Sir Francis Maclean, C.J., in Panchanan Das Majumdar v. Kunja Behari Malo 1 Ind. Cas. 438 : 12 C.W.N. 628 : 35 C. 683 : 9 C.L.J. 1 if we were to adopt this view we would have to read into Article 116 words not to be found there. There is in this case unquestionably a registered document, does, then, that document constitute a contract in writing? No doubt a contract implies two parties; but a contract in writing in this country does not necessarily imply that the document must be signed by both the parties thereto. In the case before us, the bond was executed by the defendant and delivered to the plaintiff. Acceptance by the plaintiff completed the agreement between the parties, and there was consequently, in law a contract in writing which was subsequently registered. We may add that there are expressions in the judgment in Apaji Bapuji v. Nilkantha Annaji 3 Bom. L.R. 667 which indicate that the principle adopted there would not have been applied to the case before us. Sir Lawrence Jenkins, C.J., stated with reference to the document then before him that it was important to know that the document was not signed at its foot by the defendants who were sought to be made liable on the basis thereof, nor by any one on their behalf; and he added with reference to the decision in Ambalavana Pandaram v. Vaguran 19 M. 52 : 5 M.L.J. 228 that the case was distinguishable, because there the contract was signed at the foot by the party sought to be charged in the suit. We need not, consequently, express an opinion upon the question, whether the decision in Apaji Bapuji v. Nilkantha Annaji 3 Bom. L.R. 667 may be defended on its special circumstances, because it is manifest that the principle there recognized does not govern the case before us. We hold accordingly that Article 116 is applicable to cases of the description now before us, and this view has been followed by implication in a long series of decisions of this Court, such as Nobocoomar Mookhopadhaya v. Siru Mullick 6 C.L.R. 579 : 6 C. 94 and Ethel Georgina Kerr v. Clara B. Ruxton 4 C.L.J. 510.
3. As regards the second ground the appellant has argued that the provision for interest contained in the bond is in the nature of a penalty and is not enforceable in a Court of Justice. In support of this view reliance has been placed upon the decisions in Abdul Majid v. Ksherode Chandra Pal 29 Ind. Cas. 843 : 42 C. 690 : 19 C.W.N. 809 and Khagaram Das v. Ram Sankar Das 27 Ind. Cas. 815 : 21 C.L.J. 79 : 42 C. 652 : 19 C.W.N. 775. In the ease last mentioned, it was pointed out upon a review of the earlier authorities on the subject that the more modern decisions recognised the rule that the Court is competent to grant relief whenever the rate of interest appears to the Court to be penal. It was further explained that the fact that the rate of interest was excessive, might be sufficient by itself to justify the inference that the rate was penal and unenforceable. In support of this view, reliance may be placed on Webster v. Bosanquet (1912) A.C. 394 : 106 L.T. 357 : 28 T.L.R. 271 : 81 L.J.P.C. 205 Clydebank Engineering and Shipbuilding Co. v. Yzquierdo Castaneda (1905) A.C. 6 : 74 L.J.P.C. 1 : 91 L.T. 666 : 21 T.L.R. 58. Reference may also be made to the observations of Lord Loreburn, Lord Macnaghten and Lord James in Samuel v. Newbold (1906) A.C. 461 : 75 L.J. Ch. 705 : 95 L.T. 209 : 22 T.L.R. 703. Lord Loreburn said: We are asked to say that an excessive rate of interest could not be of itself evidence, that the transaction was harsh and unconscionable. I do not accept that view. Excess of interest or charges may of itself be such evidence and particularly if it be unexplained. If no justification be established, the presumption hardens into a certainty.' Lord Macnaghten was still more emphatic: 'The rate of interest may be so monstrous as to show of itself that the transaction is harsh and unconscionable. There may be, as Lord Thurlow said in the case of Gwynne v. Heaton (1778) 1 Bro. C.C. 1 : 28 E.R. 949, an inequality so strong, gross and manifest that it must be impossible to state it to a man of common sense without producing an exclamation at the inequality of it.' Lord James added: 'Excessive interest of itself is sufficient to render a contract harsh and unconscionable. Proof of excessive interest may of itself, therefore, be sufficient to entitle the debtor to relief. What amounts to excessive interest is to be determined by the Tribunal in each case, the question of risk being a material matter for consideration. When excessive interest is apparently established, any facts that tend to show that such excess does not render the contract harsh and unconscionable, should be proved in evidence by the lender. The burden is on him.' In the case before us, the result of the contract is that the plaintiff has become entitled to interest on his loan at the rate of 5858 per cent, a year; no Court of Justice will enforce such a contract. The respondent argues, however, that the modest sum he now claims given him interest at the rate of 40 per cent, a year. But this contention entirely overlooks the fundamental fact that once the contract between the parties is deemed unenforceable, the plaintiff is entirely in the hands of the Court: he is not entitled to substitute for the original contract another contract which may appear to him to be reasonable. The Court has now to consider what sum should be decreed to the plaintiff by way of damages for the detention of his money. We are of opinion that the plaintiff should not have more than 12 per cent, per annum simple interest on the sum advanced by him.
4. The result is that this appeal is allowed, and the decree of the District Judge varied. A decree will be made in favour of the plaintiff for Rs. 400 with interest thereon at the rate of 12 per cent, per annum from the date of the loan to the date of the institution of this suit, that is, from the 16th January 1895 to the 15th December 1910. Allowance will be made in the accounts for the two sums admitted to have been paid towards interest. The sum thus determined will carry interest at 6 per cent, per annum from the date of the institution of the suit to the date of realisation. Each party will pay his own costs in all the Courts.