ASHRAF ALI Vs. MAKBUL AHMED

JUDGEMENT

(1.) This appeal arises out of a suit to recover the sum of Rs. 1,032 to be realized from certain mortgaged property. The contract sued on between the parties was to the following effect. The plaintiffs advanced a sum of Rs; 500 and for this the defendant undertook to re-pay 172 maunds of paddy in the year 1322 and the same amount on the following year, in the month of Falgoon in each year. In default of delivering this paddy, the price was to be charged at Rs. 3 per maund. Both the lower Courts have given the plaintiffs a partial decree. The lower Appellate Court has held that the stipulation was penal under Section 74 of the Indian Contract Act and has confirmed the decree of the lower Court allowing 15 per cent. per annum interest.

(2.) In this case there is no suggestion that the defendant acted under any undue influence find the fact that the result of the breach of his contract has been that he has to pay nearly double the amount advanced is in itself no sufficient reason for holding that the contract is not binding. So far as the original contract is concerned, to deliver paddy on the due dates in lieu of the sum advanced, there is nothing which could make the provisions of Section 74 of the Contract Act applicable; nor do we think that that section can be applied to the condition that the price of paddy was to be charged tit Rs. 3 per maund. The arrangement as to the price of paddy fixed some time beforehand which is not, on the face of it, excessive cannot be held to be an agreement by way of penalty. It was to the interest of the parties that a definite rate should be fixed, and it might have been to the advantage of the defendant if the paddy fit the time of payment was selling at a higher late to be able to pay cash instead of paddy itself. We are unable to agree that this stipulation was in the nature of penalty. We can see no reason why the defendant should not be bound by the conditions of the contract into which he freely entered.

(3.) We accordingly allow this appeal and modify the decrees of both the low Courts and grant the plaintiffs the usual mortgage-decree for the full amount of their claim. The defendant shall pay the plaintiffs-appellants costs in all Courts. Interest will be, calculated at the rate of six per cent, per annum from the date of the suit until realization. The period of redemption will be six months from the date of the decree of this Court.