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Baijuntha Nath Chowdhury and on His Death His Heirs and Legal Representatives, Kulada Prosad Chowdhury and ors. Vs. Ramanand Patnaik - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in61Ind.Cas.923
AppellantBaijuntha Nath Chowdhury and on His Death His Heirs and Legal Representatives, Kulada Prosad Chowdhu
RespondentRamanand Patnaik
Cases ReferredSundar Koer v. Bai Sham Krishen
Excerpt:
mortgage suit - preliminary decree, appeal against after passing of final decree, whether maintainable appeal filed in ignorance of final decree--amendment whether can be allowed--contract act (ix of 1872), section 74--interest-covenant to accept reduced rate--original rate, whether penal. - .....us was lodged in this court on the 21st april 1920. it appears that, though in the interval, the final decree had been made on the 16th march 1920, the appeal is directed only against the preliminary decree and dot against the final decree. in these circumstances, an objection has been taken by the respondent that the appeal is incompetent, on the authority of the decision in mackenzie v. lala narsing sahai 1 ind. cas. 510 : 18 c.l.j. 223; this preliminary objection is manifestly well founded on principle, for if we were now to reverse the preliminary decree at the instance of the appellant, the final decree would still remain unaffected, as no attempt has been made to challenge the propriety of that decree. but our attention has been drawn by the appellants to the ease of khirodatraye.....
Judgment:

Asutosh Mookerjee, J.

1. This is an appeal by the defendant in a mortgage suit. The preliminary decree was made on the 15th January 1920 and the appeal now before us was lodged in this Court on the 21st April 1920. It appears that, though in the interval, the final decree had been made on the 16th March 1920, the appeal is directed only against the preliminary decree and Dot against the final decree. In these circumstances, an objection has been taken by the respondent that the appeal is incompetent, on the authority of the decision in Mackenzie v. Lala Narsing Sahai 1 Ind. Cas. 510 : 18 C.L.J. 223; This preliminary objection is manifestly well founded on principle, for if we were now to reverse the preliminary decree at the instance of the appellant, the final decree would still remain unaffected, as no attempt has been made to challenge the propriety of that decree. But our attention has been drawn by the appellants to the ease of Khirodatraye Dasi v. Adhar Chandra Ghose 21 Ind. Cas. 516 : 18 C.L.J. 321, which is clearly distinguishable. There the final decree was made after the appeal had been preferred against the preliminary decree. In these circumstances, it was ruled that the final decree must be deemed to have been made on the assumption that if the preliminary decree should be modified or set aside in the appeal, the final decree also would be similarly modified or set aside. The present case, however, is not of that description and is covered by the decision in Mackenzie v. Lala Narting Sahai 1 Ind. Cas. 510 : 18 C.L.J. 223; which was followed in Abdul Jalil v. Amar chand Paul 21 Ind. Cas. 510 : 18 C.L.J. 223,

2. When we intimated this opinion to the Counsel for the appellant, he made an application for leave to amend the memorandum of appeal so as to turn it into an appeal not merely against the preliminary decree, dated the 15th|January 1920, but also against the final decree, dated the 16th March 1920. It was stated in the petition that the appellants were ignorant villagers and apparently, at the time when the appeal against the preliminary decree was lodged in this Court, neither the appellants themselves nor their legal advisers were aware that the final decree had already been passed. In these circumstances we have thought it right to grant the application made by the Counsel for the appellant.

3. He has undertaken to attach to the memorandum of appeal a certified copy of the final decree and to amend it suitably. This order is made on the condition that the respondent would be entitled in any event to Rs. 50 as extra costs thrown away.

4. As regards the merits of the appeal, the contention is that the agreement for payment of interest is a penalty and should not have been enforced. The mortgage, executed on the 11th February 1915, provides that interest would run at the rate of Rs. 2 per cent. per mouth and Would be paid off every year. It further provides that the amount of interest which will remain unpaid at the end of the year would be treated as principal and interest, that is, compound interest would run at the rate of Rs. 2 per cent. per month The agreement Consequently was that the loan would carry interest at the rate of Rs. 2 per cent. per month with annual rests. There is a further provision to the following effect: although the rate of interest per cent per month is fixed at Rs. 2 in the bond and the same is agreed by us, yet at our request and supplication you also agree that in case we pay off in one lump the entire sum due as interest in proper time, that is, just at the end of the year from the date of this document, then we shall pay interest at the rate of Rs. 1 per sent per month instead of Rs. 2 per cent. per month and you and your heirs shall take interest at the said rate of Re. 1 per cent. per month without any objection. But if we or our heirs do not pay the whole interest in one lump sum at the rate of Rs. 1 per cent. per month within the year, then we and our heirs shall remain bound to pay interest and compound interest at the rate of Rs. 2 per cent. per month as stated in the bond, and this rule will apply all along.' We are of opinion that this covenant to accept interest at a reduced rate, if interest is paid punctually, does not make the original rate of interest a penalty within the meaning of Section 74 of the Indian Contract Act. It has not been disputed that this principle was applied in the cases of Hardy v. Martin (1788) 1 Bro. C. C. 419n : 28 E.R. 1214, Union Bank of London v. Ingram (1881) 16 Ch. D. 53 50 L.J. Ch. 74 : 43 L.T. 659 : 29 W.R. 209, Wallis v. Smith (1882) 21 Ch. D. 243 at p. 261 : 52 L.J. Ch. 145 : 47 L.T. 389 : 31 W.R. 214 and Walling-ford v. Mutual Society (1880) 5 App. Cas. 685 : 50 L.J.Q.B. 49 : 43 L.T. 258 : 29 W.R. 81.

5. But it has been contended that the rule is not based on reason and should not be applied to this country. We find, however, that the rule was applied by this Court in the ease of Kirti Chunder Chatterjee v. J.J, Atkinson 10 C.W.N. 640, by the Allahabad High Court in the ease of Kutub-ud-din Ahmad v. Bashir-ud-din 5 Ind. Cas. 665 : 32 A. 448 : 7 A.L.J. 394 and by the Madras High Court in the case of Abdul Rahiman v. Rangiah Gounden 22 Ind. Cas. 597 : 1 L.W. 181. We are of opinion that the rule is reasonable; for, as was pointed out by Stanley, C.J. in Kutub-ud-din Ahmad v. Bashiruddin 5 Ind. Cas. 665 : 32 A. 448 : 7 A.L.J. 394 and by White, C.J., in Abdul Rahiman v. Rangiah Gounden 22 Ind. Cas. 597 : 1 L.W. 181, the effect of a clause of this description is to encourage punctuality on the part of the debtor, and there is no reason why the Courts in such circumstances should be astute to nullify the contract between the parties. We do not overlook that in the case of Syam Peary Dassya v. Eastern Mortgage by Agency Co, Limited 40 Ind. Cas. 865 : 22 C.W.N. 226 at pp. 241, 245 the rule, though recognised and approved, was not applied; but the decision, in that case has, upon this point, been reversed by the Judicial Committee, Mati Lal Has v. Eastern Mortgage & Agency Co. Ltd. 61 Ind. Cas. 486 : 25 C.W.N. 265 : (1920) M.W.N. 631 : 28 M.L.T. 351 : 47 I.A. 265 : 2 U.P.L.R. (P.C.) 166 (P.C.). The position then is that the rule as enunciated in Wallingford v. Mutual Society (1880) 5 App. Cas. 685 : 50 L.J.Q.B. 49 : 43 L.T. 258 : 29 W.R. 81 has now been adopted by the Judicial Committee. We hold accordingly that the agreement to accept interest at a reduced rate, on punctual payment, does not make the original rate of interest a penalty. We may add that reference was made to the decision of the Judicial Committee in the case of Sundar Koer v. Bai Sham Krishen 34 C. 150 : 9 Bom. L.R. 304 : 11 C.W.N. 249 : 17 M.L.J. 43 : 2 M.L.T. 75 : 4 A.L.J. 109 : 5 C.L.J. 106 : 34 I.A. 9 (P.C.), but that was clearly a case where there was no covenant to accept a reduced rate of interest on punctual payment.

6. It has finally been urged that the whole of the sum alleged to have been advanced was not paid on the date of the execution of the bond and that a considerable portion of the money was in fact paid much later. This point does not appear to have been discussed in the Court below and we are not in a position to deal with it here.

7. The result is that the appeal is dismissed with costs. We assess the hearing fee at Rs. 150.

Buckland, J.

8. I agree.


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