1. This is an appeal in a suit brought by the plaintiff-appellant, who is a professional money-lender, to recover Rs. 3,553-3, principal and interest, on a bond dated the 31st December 1902. The principal was Rs. 500. The bond was executed by the defendants Nos. 1 and 2, and they covenanted to pay compound interest at the rate of 6 per cent, per mensem.
2. The suit was decreed in full, in the first Court, against the defendants Nos. 1 and 2 and the estate of the defendant No. 1 under the management of the Court of Wards.
3. On appeal, the District Judge of Backergunge has reduced the rate of interest to 12 per cent, per annum up to the date of the decree of the first Court and further interest at the rate of 6 per cent, per annum.
4. In second appeal, the contentions raised are, first, that, in any event, a decree should be passed at the contract rate against the defendant No. 2, who did not contest the suit at all; and, secondly, that upon a right construction of Section 16 of the Contract Act, as amended by Act VI of 1899, the defendant No. 1 is not entitled to be placed in the favourable position of a person whose will has been dominated by another and who has, consequently, been placed in an unfair position towards that other.
5. With regard to the first contention, we think it must prevail because there was no defence on behalf of the defendant No. 2 and he does not appear in this Court. The decree of the first Court will stand as against the defendant No. 2, Jitendra Lal Bandopadhya, and this appeal is allowed to that extent.
6. On the second contention, the facts found are that the defendant No. 1 is a spendthrift, a young man of weak intellect, whose imbecility was so great that, in order to prevent him from squandering his estate, his relatives caused him to execute a deed of trust in favour of Nistarini, his mother, that the plaintiff was fully aware of these facts, and of the history of defendant No. 1 who is his landlord, and further, that the rate of interest, 6 per cent, per mensem, charged was never charged against any other debtor of the plaintiff.
7. Now, on these facts, there can be no doubt that the money-lender was in a position to dominate the will of this unfortunate young man, who having conveyed his entire estate to his mother, had thereby reduced himself to a state of utter helplessness. It is further evident that he used that position to obtain an unfair advantage over the latter. In our opinion, the case comes within Section 16, which provides 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 the other and uses that position to obtain an unfair advantage over the other. That is the general rule: Clauses (a) and (b) of Sub-section (2) are statutory illustrations of 'the relation subsisting between the parties being such that one of them is in a position to dominate the will of the other' as required by Sub-section (1). We also think that the case comes within the principle underlying the ruling in Dhanipal Das v. Raja Maneshar Bakhsh Singh 33 I.A. 118 : 4 C.L.J. 1 M.L.T. 205 : 3 A.L.J. 495 : 9 O.C. 188 : 8 Bom. L.R. 461 : 10 C.W.N. 849 : 16 M.L.J. 292 : 28 A. 570, which has been recently followed in another decision of their Lordships of the Judicial Committee in Raja Muneshar Bakhsh Singh v. Shadi Lal 13 C.W.N. 1069 : 10 C.L.J. 76 : 6 A.L.J. 707 : 11 Bom. L.R. 864 : 6 M.L.T. 71 : 31 A. 386 : 19 M.L.J. 438 : 3 Ind. Cas. 385. These cases show that a money-lender is in a position to dominate the will of a person,--(within the meaning of the amended Section 16 of the Contract Act)--who conveys his properties to the Court of Wards and is, consequently, in a state of helplessness.
8. In these circumstances, the only question remaining is whether we should uphold the reduced rate of interest allowed by the lower appellate Court, or whether we should vary that rate. The matter has been left in our hands by the learned Vakils engaged, and we think, upon consideration, that a fair and equitable rate of interest to allow will be 2 1/2 per cent., per mensem. In arriving at this rate, we have had regard to the circumstances of the District and to the fact that this is not a mortgage bond where the risk run by the money-lender is not so great.
9. The decree of the lower appellate Court is varied to the extent mentioned. The decree of the first Court will stand in its entirety against the defendant No. 2. Let a decree be prepared for the principal sum Rs. 500 (Rupees five hundred) with simple interest at 2 1/2 per cent, per mensem from the date of the bond up to the date of the institution of the suit and thereafter at 6 per cent, per annum. Costs will be in proportion to the success of the respective parties.