VELCHAND CHHAGANLAL Vs. LIEUTAFLAGG

JUDGEMENT

(1.) The appellants are a firm of money-lenders who through the agency of a firm of commission agents in Bombay advanced to the first respondent a sum of Rs. 2440 on or about the 14th of October 1908. Prior to that payment an agreement upon a stamped paper of Rs. 30 was signed by the first respondent for whose benefit the payment was made. By that agreement he stated that he had received from the appellants Rs. 5500 which he and the second defendant, who was then intended to sign as a surety, agreed to repay in Ahmedabad or at the option of the appellants in Nasirabad or elsewhere in monthly instalments of Rs. 50 for the first twelve months and after that of Rs. 100 for another twenty-six months and the balance at the end of the thirty-ninth month, the instalments to begin from 5th November 1908. And it was stipulated in two subsequent clauses as follows:-" If we fail to pay any instalment on due date as agreed above we jointly or severally promise to pay the who,se amount of the bond at once on demand. But if the firm waits longer we agree to pay interest at 5 per cent, per month till payment in full".

(2.) The second respondent signed the agreement as surety on the 14th of October 1908, the date upon which the payment of Rs. 2440 was made.

(3.) It is noted by the learned Subordinate Judge that the balance of the Rs. 5500 is made up of interest calculated upon the sum of Rs. 6000 for 39 months at rate of in per mensem added in advance. That would make a rate of interest exceeding three per cent, per mensem upon the original advance. At the time of the suit the 39 months period had not expired, for the suit was filed upon the 13th of April 1910. But the plaintiffs alleged a cause of action by reason of the failure of the respondents to pay due instalments after demand made. That cause of action arises under the first stipulation which we have referred to. The plaintiffs base a claim for interest at 5 per cent, per month upon the second of the stipulations referred to.