1. This appeal arises out of a suit for arrears of rent, based upon a kabuliyat which provided for the payment of interest at the rate of 75 per cent, on arrears of rent besides 'full damages'. The Court of Appeal below held in appeal that the stipulation was in the nature of a penalty and awarded damages only at 25 per cent.
2. The plaintiff has appealed to this Court, and it is contended on his behalf that as the lease is a permanent mokarari lease, he is entitled to the interest at 75 per cent, as well as the damages stipulated for.
3. It is true Section 67 of the Bengal Tenancy Act does not control the provisions of Section 179, and it has been held with reference to the provisions of Section 179 that a contract for the payment of interest on arrears of rent, at a vale higher than that provided for by Section 67, entered into by a landlord and a permanent tenure-holder under him is enforceable by law see Matangini Debi v. Mokrura Bibi 29 C. 671 : 5 C.W.N. 433 (F.B.). But all that Section 179 lays down is that nothing in the Bengal Tenancy Act shall be deemed to prevent a proprietor or permanent tenure-holder from granting a permanent mokarari lease on any terms agreed on between him and his tenant. That section dons not exclude the consideration of the question whether the contract is affected by the provisions of law other than the Bengal Tenancy Act.
4. The contract in the present case was to pay interest at 75 per cent, besides full damages. I think the stipulation was by way of penalty and the Court should not allow it to be enforced. It is true we do not know whether the rent was high or low or whether any premium was paid at the creation of the tenancy. But interest represents compensation for the detention of the rent, and the stipulation to pay 75 percent, interest plus full damages appears rather to have boon intended as an effective means of securing punctual performance of the contract than represents the damages which the landlord was to suffer by reason of non-payment of the rent.
5. Although there may be no question of payment of higher interest on default of payment on the due date, the contract, if it contains any stipulation by way of penalty, may come under Section 74 of the Contract Act as amended, and in any case the Court can grant relief in the exercise of its equitable jurisdiction, if the contract is unconscionable. No hard and fast rule can be laid down as to what is unconscionable and exorbitant, which must be determined with regard to the facts of each case.
6. There are observations in some cases to the effect that the rule of law relating to hard and unconscionable bargains applies to contracts relating to payment of interest between landlord and tenant. See Kali Nuth Sen v. Trailokhya Nath Roy 26 C. 315 : 3 C.W.N. 194 and Narendra Kumar Ghose v. Gora Chand Poddar 33 C. 683 : 3 C.L.J. 301. It is true the observations are obiter, as the cases related to ordinary raiyats to whom the provisions of Section 07 of the Bengal Tenancy Act are applicable, and not cases of permanent mokarari lessees who are apparently not considered as requiring any special protection in the matter of contracts with their landlords. In the first case the rate of interest was 225 per cent, but in the second it was 75 per cent. and the learned Judges observed that even if it was open to the parties to contract themselves out of the provisions of Section 67, a contract to pay interest at the rate of 75 per cent, for arrears of rent payable for the land, for which arrears the landlord had good security in the holding on which arrears are a first charge, and which he can recover in other way, was an unconscionable one, and one which should not be allowed to be enforced. I agree in the above observations, and although the Courts should not lightly interfere with contracts between landlords and tenants in cases of permanent mokarari leases, I think that a stipulation to pay interest at lb per cent, besides full damages is an unconscionable one and should not be allowed to be enforced. It may be mentioned that although the lease in the present case is a permanent mokarari one, it is a lease of only 3 kanis and one ganda of land at a rent of Rs. 20 and the terms indicate that it was taken for the purposes of cultivation. The Court of Appeal below has awarded 25 per cent, damages which is a reasonable compensation. The appeal is accordingly dismissed. No order as to costs.
7. This second appeal arises out of a suit for arrears of rent payable in respect of a permanent mokarari tenure. The appellants are the plaintiffs, the landlords. The respondent, the defendant No. 6 in the suit, purchased the tenure at a sale held in execution of a previous decree for arrears of rent obtained by the landlords against his predecessors, the defendants Nos. 1--5. The sale was confirmed on the 20th July 1910. The tenure is held under a kabuliat executed in the plaintiffs' favour.