S RAJAGOPALASWAMI NAIDU Vs. BANK OF KARAIKUDI LIMITED

JUDGEMENT

(1.) This is an appeal by certificate from a decree of the Madras High Court.

(2.) The appellant mortgaged his property bearing No. 162-A. West Masi Street, Madurai town for a sum of Rs. 45,000/- with the respondent Bank on October 14. 1950. He agreed to repay Rs. 5,000/- within a specified date and the balance was payable within two years from the date of the deed together with interest at 10 1/2 %. It was further agreed that if the mortgagor failed to pay the interest periodically and regularly he would be liable to pay interest at the rate of 12% per annum from the date of such default and further if he failed to pay the entire amount stipulated within two years he would have to pay the whole amount together with interest at 3 1/2 % per annum. The sum of Rs. 5,000 was paid within the time specified but the balance remained unpaid. In January 1952, the appellant and his wife borrowed Rs. 25,000/- and jointly executed a pronote. The wife deposited her title deeds relating to premises No. 162 West Masi Street. On June, 25, 1952 the appellant and his wife created a mortgage of their respective properties Nos. 162-A and 162 West; Masi Street to secure repayment of a sum of Rs. 8850/-. All the three mortgages were in favour of the respondent Bank.

(3.) In 1953 the Bank instituted a suit on the foot of the last two mortgages and obtained a decree against the appellant and his wife. This decree appears to have been satisfied. In April, 1958 the suit out of which the present appeal has arisen was filed by the Bank on the foot of the mortgage dated October 14, 1950. The main defence of the appellant, who was the sole mortgagor was that the suit was not maintainable in view of the provisions of Section 67-A of the Transfer of Property Act and that the stipulation of interest was Penal and in contravention of the provisions of the Usurious Loans Act. 1918. A number of other issues were framed but it is altogether unnecessary to mention them. The trial Court granted a preliminary decree for the recovery of principal amount of Rs. 40,000/- which remained unpaid with interest at 12 % per annum from August 1, 1952 till the date of the decree and thereafter at 6 % per annum till realisation. An appeal was taken to the High Court where two points were agitated. The first was based on the provisions of Sec. 67-A of the Transfer of Property Act and the second related to the rate of interest. The High Court did not accede to any of the contentions and dismissed the appeal.