S RAJAGOPALASWAMY NAIDU Vs. BANK OF KARAIKUDI LTD

JUDGEMENT

(1.) THIS is a defendant's appeal form a mortgage decree. He had executed the mortgage on 14-10-1950, charging premises No. 162-A West Masi St. , Madurai, with the repayment of Rs. 45000 with interest at 14 annas per hundred rupees per mensem. It was further stipulated that Rs. 5000 should be paid within a period of 6 months form the date of the mortgage towards the principal and the balance of the principal should be paid within a period of two years form the inception, and that on default, interest should be calculated at the rate of 12 per cent; but if there was continued default, interest should be raised to 131/2 per cent. Admittedly, the sum of Rs. 5000 was paid within the time specified, but the balance remained totally unpaid. On 4-1-1952, the appellant and his wife borrowed Rs. 25000 and jointly executed a promissory note. On 16-1-1952, the appellant's wife deposited her title deeds relating to premises No. 162 West Masi st. This borrowing was therefore on a mortgage by deposit of title deeds. On 256-1952 again, both the appellant and his wife mortgaged their respective properties securing repayment of a sum of Rs. 8850. All the three mortgages were sum of Rs. 8850. All the three mortgages were in favour of the plaintiff bank. It instituted O. S. 112 of 1953 on the title of the Court of the Subordinate Judge, madurai, to enforce the last two mortgages and obtained a decree against the appellant and his wife. It appears that this decree has been practically paid. The respondent then instituted on 16-4-11958 the suit out of which this appeal arises on the foot of the mortgage dated 14-10-1950. The suit seems to have been resisted by the appellant who was the sole mortgagor, on the ground that it was barred under the provisions of S. 67-A Transfer of Property Act, and that, in any case, the stipulation of interest was penal and contravened the provisions of the usurious Loans Act, 1918. The court below negatives both grounds and decreed the suit, but allowing interest only at 12 per cent till the date of the decree.

(2.) THE above two grounds have been reiterated before us by Mr. Ramaprasada rao, learned counsel for the appellant. He argues that S. 67-A of the Transfer of property Act applies to he suit, because premises No. 162-A were the subject matter of the suit mortgage as well as the mortgage of June 1952. He says that the fact that the appellant's wife also had joined in the last mortgage and charged her property too for the whole debt did not make any different to the fact that so far as premises No. 162-A were concerned, the mortgagor was the same. He further contends that the whole object of S. 67-A is to avoid harassment to the same mortgagor against whom the same mortgagee holds more mortgages than one and can get the same kind of decree for foreclosure under S. 67. Though the argument is somewhat attractive, we are clear tit is not sound and cannot be accepted in view of the clear terms of S. 67-A. The section reads:

(3.) THE other contention of Mr. Ramaprasada Rao, for the appellant, is that the penalty clauses providing for double enhancement of interests in cases of defaults are illegal, as the appellant is an agriculturist. We are unable to accept this contention. Let us assume without deciding that the appellant is an agriculturist for the purposes of the Usurious Loans Act. Even so, we do not think that the rate of interest actually allowed by the court below at 12 per cent up to the date of the decree can be regarded as usurious or penal. In Sevugan Chettiar v. Chinnasami reddiar, in which there was a provision for interest at 24 per cent, the rate was held to be penal, but the Division Bench considered that 12 per cent could properly be allowed. That is what the court below has done in this case. We can see no reason to differ from it.