PARAMESWARAN PILLAI VASUDEVAN PILLAI Vs. JACOB PERUMAL

JUDGEMENT

(1.) THIS appeal arises out of a suit for recovery of money due under a simple mortgage. The deed of mortgage is Ext. A dated 7. 12. 1107 and it was executed by defendants 1 to 5 for a consideration of Rs. 2,850/- and charging the plaint schedule items. The executees under this document assigned their rights under it in favour of the 1st plaintiff, the deed of assignment being Ext. B dated 6. 5. 1118. The mortgage deed Ext. A provided for payment of interest at the rate of 9 per cent per annum and it was stipulated that such interest should be paid in paddy in the month of Medom of every year, the basis of commutation being 2 paras of paddy for one rupee. Provision was also made for payment of interest on the arrears of interest. According to the plaintiff the whole of the interest subsequent to the month of Medom 1109, is in arrears, and out of the interest due up to Medom 1109, a balance of 146 paras of paddy is also due. The suit is for the recovery of the principal amount together with the interest that has accumulated up to the date of the suit from the defendants and the suit properties. The 1st plaintiff has agreed that the decree granting the reliefs claimed in the plaint may be passed in favour of the 2nd plaintiff who is stated to be a near relation of the 1st plaintiff. The suit was resisted by defendants 1 to 3. Their main contention was that nothing more than the principal amount of Rs. 2,850 plus a moiety of the same, could be claimed by the plaintiffs and decreed in their favour as the total amount due under Ext. A up to the date of the suit. It was also contended that the interest payable in paddy has to be valued at the rate fixed in Ext. A itself as agreed to by the parties to the document. The 3rd defendant had special plea that Ext. A is not supported by consideration and necessity binding on his tarwad, but he does not appear to have been serious about that contention, for it is seen that no issue was raised on this particular plea. It may also be stated the 2nd plaintiff, who gave evidence as Pw. 1 in proof of the consideration for Ext. A and who produced the receipts Exts. C and D to substantiate his own testimony, was not cross-examined at all by the defendants. It may also be pointed out that on the question of consideration and necessity for Ext. A no ground is raised in this appeal memorandum. The several grounds raised in this appeal are directed against the lower court's decree upholding the plaint claim in toto after repelling the objections raised by the defendants to the claim made in the plaint on account of interest.

(2.) IT is clear from Ext. A that the transaction between the parties was a loan of money on the secuirty of the suit properties. Interest was stipulated to be paid at 9 per cent per annum. The provision for the payment of such interest in the shape of paddy does not affect the essential nature of the transaction. The accounts given in the plaint also show that the transaction was treated as a loan of money. Accordingly, interest for each year has been calculated at 9 per cent on the principal amount, and it is the amount of such interest that has been commuted into paddy. In this manner interest on the principal amount has been calculated up to 23. 5. 1112. Interest thereafter has been calculated only at 6 per cent, obviously under the provisions of the Travancore Agriculturists' Relief Act (Act III of 1112) which had fixed the upper limit of interest on money loans repayable by agriculturists at 6 per cent. The limitation of interest by the Travancore Debt relief Act of the year 1116 has also been given effect to in the calculation made in the plaint, for it is seen that interest from 1. 2. 1116 onwards has been calculated only at 4 per cent per annum. These facts also go to confirm the view that the transaction in question was only a loan of money.

(3.) ON behalf of the plaintiffs-respondents an attempt is made to take Ext. A outside the ambit of S. 31 of the Travancore Civil Procedure code. It is argued that the agreement in Ext. A is to treat the amount of interest for each year as independent of the original principal sum so that the amounts of interest may be treated as fresh loans carrying further interest. No doubt, there is a provision in Ext. A that the paddy equivalent of the amount of interest will be paid in the month of Medom every year and in default the same will carry further interest. But this provision by itself does not mean that the interest for each year has to be treated as fresh loan. Further it is seen from the concluding portion of the agreement in Ext. A that the defaulted interest was to be added to the principal sum with liberty to the creditors to recover the interest separately or the principal together with interest. This provision clearly indicates that the amount to be claimed by way of interest was the interest due on the principal sum advanced under Ext. A. The mode of calculation made in the plaint is also in conformity with this position. If the agreement was to treat the interest for each year as fresh loans, the amounts under these categories would not have been treated as debts coming within the ambit of the Debt Relief Act. But, as a matter of fact, it is seen that interest on such amounts for the period subsequent to the date of the Debt relief Act has been calculated only at 4 per cent per annum, thereby indicating that the amount is treated only as part of the original loan. In this view of the matter no significance can be attached to the calculation of interest on interest in the plaint account or to the stipulation to that effect in Ext. A. Under these circumstances the claim in the suit has to be deemed to be a claim for recovery of the principal sum of Rs. 2,850 together with interest on the same as stipulated in Ext. A. It follows therefore that the limitation imposed by S. 31 of the Travancore Civil Procedure Code must come into play in fixing the maximum amount awardable by way of such interest up to the date of the suit. This position is unaffected by the provision in Ext. A to pay interest in the shape of paddy because the commutation rate has been fixed in Ext. A itself as per the agreement of the parties, the rate being 2 paras of paddy per rupee.