1. This is an appeal on behalf of the plaintiff in a suit to enforce three mortgages executed in his favour by the first defendant. The bond, earliest in point of time, was executed on the 11th January 1904, for a sum of Rs. 3,999, which carried simple interest at the rate of 11 per cent, per annum. The second bond was executed on the 6th April 1904 for Rs. 3,001, which carried compound interest at 9 per cent, per annum with annual rests. The last bond was executed on the 14th January, 1905 for Rs. 2,650 which carried compound interest at 12 per cent, per annum with annual rests. On the 1st May 1905, the first defendant deposited in Court the sum of Rs. 7,277-8 in full satisfaction of what he considered was due to the mortgagee at that time on the three bonds. The plaintiff ignored the deposit as insufficient in amount, and on the 30th June 1909, commenced the present action to enforce the three securities. Upon the first bond, he allowed credit in the plaint for Re. 2,944-13- 3, alleged to have been paid on the 11th January 1905. The defendant resisted the claim on various grounds which need not be set out in detail at this stage. It is sufficient to state that the defence prevailed in part and a decree was made in favour of the plaintiff. In the present appeal, the plaintiff has assailed that decree on three grounds; namely, first, that the sum of Rs. 2,944-13 3 ought to have been treated as paid on the 11th January 1905 and not deducted from the principal sum of Rs. 3,999; secondly, that the compound interest payable upon the third bond has been disallowed on grounds erroneous in law; and thirdly, that interest at the contract rate should have been allowed, during the pendency of the litigation and up to the date fixed in the decree for re-payment of the mortgage-money. In our opinion, each of these contentions is well founded and must prevail.
2. In so far as the first ground is concerned, the Subordinate Judge has held upon the evidence that the whole of the principal sum scared by the first mortgage was not paid at the date of the execution of the bond. He has in substance made a new case for the defence and has overlooked the very important fact that in the application which accompanied the deposit by the defendant on the 1st May 1905, he admitted receipt of the sum of Rs. 3,999 secured by the mortgage of the 11th January 1904. The view taken by the Subordinate Judge cannot be supported and the sum of Rs. 2,944-13-3 must be treated as paid on the 11th January 1905. The effect will be that interest will be allowed upon the principal sum secured by the first mortgage up to the 11th January 1905, and for the period subsequent to that date, interest will be calculated only upon the balance due. The first ground, therefore, prevails.
3. In so far as the second ground is concerned, the Subordinate Judge has held that as the plaintiff took an unfair advantage of his position as creditor and dominated the will of the first defendant, he is not entitled to claim compound interest as provided in the third mortgage. This view clearly cannot be supported. As was pointed out by their Lordships of the Judicial Committee in the case of Dhanipal Das v. Maneshar Bakhsh Singh 28 A. 570; 4 C.L.J. 1; 1 M.L.T. 205; 33 I.A. 118; 3 A.L.J. 495; 9 O.C. 188; 8 Bom.; L.R. 491; 10 C.W.N. 849; 16 M.L.J. 292 the Court must, in a case of this description, first consider the terms of the amended Section 16 of the Indian Contract Act only. Now Section 16, as amended in 1899, provides in the first sub-section that a contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of another and use that position to obtain an unfair advantage over the other. Sub-section (3) of Section 16 provides that where a person, who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon; the person in a position to dominate the will of the other. It is clear, therefore, that to bring the case within the first clause of Section 16, it is necessary for the defence to show that an unfair advantage has been obtained over him while to bring the case within Sub-section (3), he must prove that the transaction is unconscionable; unless these elements are established, the mere fact that one of the parties is in a position to dominate the will of the other, does not entitle the latter to free himself from his obligations under the contract. Now in the case before us, the loan secured by the third mortgage bond carried compound interest at 12 per cent, per annum with annual rests. We are unable to say that this provision was unconscionable on that the plaintiff took an unfair advantage over his debtor. No doubt, the first mortgage bond carried simple interest at. 11 per cent, per annum, while the second bond carried compound interest at 9 per cent, per annum. But it must be remembered that the same property was repeatedly given as security for the successive loans; and as the debtor evidently failed to pay the interest punctually, it was only reasonable that the creditor should insist on interest upon the interest money withheld. It has not been suggested, and common experience shows that it cannot be reasonably suggested, that 12 per cent, per annum is a high rate of interest. Reference was, however, made by the respondent to the decisions of the Judicial Committee in Dhanipal Das v. Maneshar Bakhsh Singh 28 A. 570; 4 C.L.J. 1; 1 M.L.T. 205; 33 I.A. 118; 3 A.L.J. 495; 9 O.C. 188; 8 Bom.; L.R. 491; 10 C.W.N. 849; 16 M.L.J. 292 and Maneshar Buksh Singh v. Shadi Lal 13 C.W.N. 1069; 31 A. 386 (P.C.) 6 A.L.J. 707; 11 Bom. L.R. 804; 10 C.L.J. 76; 36 I.A. 114; 6 M.L.T. 71; 12 O.C. 300; 3 Ind. Cas. 385; 19 M.L.J. 438 in support of the contention that the transaction was unconscionable and should not be enforced in a Court of equity. But neither of these cases is of any real assistance to the respondent. In the first case, the interest provided in the mortgage instrument was compound interest at 24 per cent, per annum with half yearly rests. In the second case, the interest provided was compound interest at 18 per cent, per annum with half yearly rests. In both the cases, as was pointed out by their Lordships of the Judicial Committee, the debtor was in a position of considerable embarrassment; his estate was in charge of the Court of Wards; as a disqualified proprietor, he was incompetent to deal with his property, and, at the same time, he was in urgent need of money. Under these circumstances, the Judicial Committee held that the provision for payment, of interest at a high rate could not be enforced. But, as their Lordships of the Judicial Committee have also held, urgent need of money on the part of the borrower does not of itself place the lender in a position to dominate his will within the meaning of Section 16: Sunder Koer v. Rai Sham Krishen 34 I.A. 9; 34 0. 150 (P.C.); 9 Bom. L.R. 304; 17 M.L.J. 43; 11 C.W.N. 249; 4 A.L.J. 109; 2 M.L.T. 75; 5 C.L.J. 106: to the same effect are the decisions of Umesh Chandra v. Golap Lal 31 C. 233; Ganesh Narayan v. Vishnu Ramchandra 32 B. 37; 9 Bom. L.R. 1164; Chairing. Mool Chand and Co. v. Whitchurch 32 B. 208; 9 Bom. L.R. 1296 and the earlier decisions in Madho Singh v. Kashi Ram 9 A. 228; A.W.N. (1887) 19; Poma v. Gillespie 31 B. 348; 9 Bom. L.R. 341 cannot be regarded as good law. Reliance was placed by the respondent also upon the case of Samuel v. Newbold (1906) A. 0. 461; 75 L.J. Ch. 705; 95 L.T.209; 22 T.L.R. 703 where the House of Lords affirmed the decision in Saunders v. Newbold (1905) 1 Ch. D. 260; 74 L.J. Ch. 120; 92 L. 67; 53 W.R. 162; 21 T.L.R. 104. The facts of that litigation were of an exceptional character and bear no analogy to the circumstances of the present case. It is clear however, that the observations of Lord Loreburn do not assist the respondent, and may possibly be claimed in support of the contention of the appellant. A transaction may fall within the description of harsh and unconscionable in many ways. It may do so because of the borrower's extreme necessity and helplessness or because of the relation in which he stands to the lender or because of his situation in other ways. These are only illustrations; and, as in the case of fraud, it is neither practicable nor expedient to attempt any exhaustive definition; what the Court has to do in such circumstances is, if satisfied that the interest or charges are excessive, to see whether in truth and fact and according to its sense of justice, the transaction was harsh and unconscionable. What we are asked to say is that an excessive rate of interest cannot of itself be evidence that it was so. We do not accept that view. Excess of interest or charges may of itself be such evidence and particularly if it be unexplained. In re A Debtor (1903) 1 K.B. 795;72 L.J.K.B. 382; 88 L.T. 401; 51 W.R. 370; 10 Manson 130, which, as pointed out in Abhiram v. Mukunda 5 C.L.J. 542; overrules Wilton v. Osborne (1901) 2 K.B. 110; 10 L.J.K.B. 507; 84 L. T 684; 17 T.L.R. 431; Carringtons Ld. v. Smith (1906) I.K.B. 79; 75 L.J.K.B. 49; 93 L.T. 779; 54 W.R. 424;22 T.L.R. 109. In the case before us, the difficulty of the respondent is that we are not satisfied that the interest was excessive; he is consequently not entitled to call upon the Court to afford him relief against the provision for payment of compound interest upon the third mortgage-bond. The second contention, therefore, must be allowed.
4. In so far as the third ground is concerned, the Subordinate Judge has not allowed interest pendente lite. It has been contended on behalf of the appellant that under Rule 4 of Order XXXIV of the Code of Civil Procedure of 1908, he is entitled to interest at the contract rate up to the date fixed for re-payment in the decree. On behalf of the respondent, it has been argued that Rules 2 and 4 of Order XXXIV are controlled by Section 34. Now Section 34 provides that where and in so far as the decree is for the payment of money, the Court may, in the decree, order interest, at such rate as the Court deems reasonable, to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged, from the date of the decree to the date of payment or to such earlier date as the Court thinks fit. In our opinion, Sub-section (I) of Section 34 does not control and negative the effect of Rules 2 and 4 of Order XXXIV. The respondent has argued that as the provisions now embodied in Order XXXIV formerly found a place in the Transfer of Property Act, their incorporation into the Code of Civil Procedure has effected a material alteration in the law. We are of opinion that there is no foundation for this contention. Under the law as it now stands, when a decree is made in a mortgage suit, the Court is bound to award to the mortgagee, interest on the principal sum prior to the date of the suit at the rate provided by the mortgage, unless the rate is penal, in which case the Court may award such interest as it thinks proper. The Court is also bound to award interest on the principal, from the date of the suit up to the date fixed by the Court for redemption of the mortgage, at the rate provided by the mortgage, unless the rate is penal, in which case the Court may award interest at such rate as it deems proper. Further, where the decree is for the sale of immoveable property, the Court may, in its discretion, award interest at such rate as the Court deems proper, on the aggregate amount of the principal, interest and costs, from the date fixed for payment of the mortgage-debt up to the date of realization or actual payment. This interest may be allowed at the Court rate, that is, six per cent, per annum or at any other, rate; but it is plain that, for this last period, the Court is not bound to award interest at the contract rate. This is the law as laid down by their Lordships of the Judicial Committee in Sunder Koer v. Rai Sham Krishen 34 I.A. 9; 34 0. 150 (P.C.); 9 Bom. L.R. 304; 17 M.L.J. 43; 11 C.W.N. 249; 4 A.L.J. 109; 2 M.L.T. 75; 5 C.L.J. 106 and, we are clearly, of opinion that the effect of that decision has not been in any way affected by the incorporation of the provisions of the Transfer of Property Act into the Code of Civil Procedure of 1908. The third ground, therefore, must succeed.
5. The result is that this appeal is allowed, the decree of the Subordinate Judge discharged, and the suit decreed on the lines just indicated. An account will be taken in this Court of the sum due on the three securities, on the first of which credit will be allowed for Rs. 2,944-13-3, deemed to have been paid on the 11th January 1905. Three months from this date will be allowed for redemption; and interest at the contract rate upon each bond will be calculated up to that date; thereafter interest will be calculated upon the aggregate sum, at the rate of 6 per cent, per annum. The plaintiff is entitled to his costs in the Court of first instance as also in this Court. We assess the hearing fee in this Court at five gold mohurs.