RAMESWAR PROSAD SINGH Vs. RAI SHAM KISHEN

JUDGEMENT

(1.) The suit out of which this appeal arises is to recover a sum of Rs. 11,23,147, being the principal, interest and compound interim due upon two mortgage bonds executed by the defendant and dated the 19 June 1888 and the 15 June 1891 respectively. The first bond is for Rs. 4,35,000, and the second for Rs. 1,65,000. The conditions of the 1 bond are: (1) that the defendant is to pay interest at as 14 per cent. per month (that is 10 1/2 per cent. per annum) with six-monthly rests; (2) that on the failure to pay interest at the end of 6 months, then compound interest at the rate of 1-8 per cent. per month (or 18 per cent. per annum) is to be paid; (3) that interest is to be calculated according to the Hindi calendar, according to which there are 13 months in each year; and (4) that if interest is not paid for one year, then interest to run on the principal at 1 per cent. per mensem from the date of the bond. The stipulations of the second bond are similar, except that the rate of simple interest is as, 12 per cent. per month instead of as, 14 per cent. per month.

(2.) The plaintiff sues to enforce all these stipulations. But he does not claim simple or compound interest on the 1 bond from 1888 up to 15 June 1891, because he alleges there was a settlement of accounts and the simple interest due on the first bond was entered as part of the principal of the 2nd bond, while compound interest up to that date was waived by him.

(3.) The defendant, Raja Rameshwar Narain Singh, admits execution of both bonds. He, however, does his best to minimize his liabilities under them. His pleas, so far as it is necessary for the purposes of this appeal to state them, are: (1) that he did not receive Rs. 85,000 out of the alleged consideration of the first bond, or Rs. 20,000 out of the alleged consideration of the 2nd bond; (2) that the stipulation for the payment of interest at a higher rate from the dates of the bonds in default of payment of interest and the stipulations for the payment of compound interest at a higher rate than the rate at which simple interest was to run are penalties, which cannot be enforced.