1. In the suit out of which this appeal has arisen the plaintiff sued the defendants for rent for a certain area of land and he further asked for interest at the rate of 2 per cent per mensem and damages at the rate of 25 per cent in accordance with the terms of a contract entered into between the parties. The trial Court decreed the plaintiff's suit and allowed him interest at the rate of 2 per cent per mensem and damages at the rate of 12-1/2 per cent in addition to the interest. Both the parties appealed to the District Court. The learned District Judge allowed the interest and allowed damages at the rate of 25 per cent per annum. It will be seen that the learned Judge's judgment proceeded on a misapprehension as to what are really the terms of the kabuliyat. The learned Judge says that the terms of the kabuliyat are as follows:
If we make default in paying any kist, we shall pay interest at the rate of 2 per cent per month; if we make default in paying rent, you will be entitled to compensation at the rate of 25 per cent per annum etc.
2. The learned Judge then says:
I think this is a case therefore which contains as it were a stipulation in case of default and also a penalty, and under Section 74, Contract Act, either would be enforceable.
3. A reference to the kabuliyat itself will show what is provided for in the kabuliyat is damages at the rate of 25 per cent and not at the rate of 25 per cent per annum. The learned Judge made the inference without understanding what the terms of the kabuliyat were. The plaintiff has appealed to this Court.
4. The first contention of the appellant is that on a proper interpretation of the kabuliyat he should be held entitled to both interest and damages. On an examination of the kabuliyat itself, I think what the contract is entered into is that in case of default the plaintiff should get both interest and damages and I can see no reason in this particular case why the Court should not give effect to the terms of the agreement. I am not satisfied that 25 per cent damages is a stipulation by way of penalty. Even if it were so I see no reason why the Courts should not give effect to the terms of the contract.
5. The result is that this appeal is allowed and the plaintiff's suit decreed with interest at the kabuliyat rate and damages also at the kabuliyat rate. The plaintiff is entitled to his costs throughout.
6. The prayer for leave to appeal under Section 15, Letters Patent is refused.