GAJRAJ SINGH Vs. MUHAMMAD MUSHTAQ ALI

JUDGEMENT

(1.) This is a plaintiffs appeal arising out of a suit for sale on the basis of a mortgage-deed dated 18 June 1918 executed by ho defendant, Mohammad Mushtaq Ali, in favour of Lakhpat Singh, father of plaintiff-appellant 1 and grandfather of plaintiff-appellant 2. The property consisted of large shares in no less than seven villages. The amount was Rupees 14,500 carrying interest at the rate of 1 per cent per mensem compoundable annually. The mortgage money was taken in order to set off the amount due on a pronote dated 18 January 1918, another sum due on another pronote dated 17 April 1918, money required for deposit of pre-emption money and some money received at the time of the registration for the purpose for redeeming zamindari property in other two villages.

(2.) The claim was contested by the defendant on many grounds which have already been decided against him except the plea that the rate of interest was unfair to him. The learned Subordinate Judge in dealing with issue No. 3 which related to this question found that the value of the property, if taken at the rate of 20 times the annual profits, would be over Rupees 56,000.

(3.) The patwari of the village had however stated that the zamindari property in the village used to be sold at 57 times the profit. The Court below has distinctly found that the mortgagee had ample security for his money because there was no incumbrance on the property and there were no other claimants to the mortgaged property. He considered that the rate of interest at Re. 1 percent per mensem compoundable every year is so excessive on the sum of Rs. 14,500 where the security is ample that it leads one to infer that the transaction between the parties was substantially unfair. He considered that the plea of the defendant that the rate was excessive and unenforceable was substantially a plea that the rate should be reduced under the Usurious Loans Act. The learned Judge pointed out that on four different occasions the defendant from 1916 to 1923 had borrowed sums ranging from Rs. 300 to over Rs. 1,400 at rates from Annas 4 to Annas 8 per cent per mensem simple but in one place at Annas 6 per cent per mensem with yearly rests that the plaintiffs evidence, which consisted of a statement of one witness that the defendant could not get money at a smaller rate of interest than Re. 1 per cent per mensem compoundable every year, was worthless and could not be believed. He discussed the documents produced by the plaintiffs to show that high rate of interest had been charged on the documents executed by the defendant. Two of them were executed in 1909 and 1910 before the passing of the Usurious Loans Act and they carried interest at the rate of Re. 1 per cent per mensem compoundable every six months and Annas 13 per cent per mensem compoundable every 6 months, respectively, The third was of the same date as the mortgage in question, i. e., 18 June 1918. It was for a sum of Rs. 6,000 only and carried interest at Re. 1 per cent per mensem compoundable every year. There was no evidence before the Court as to the value of the properties which were mortgaged in the first two deeds, but there was a statement in the written statement filed by the defendant in a previous suit suggesting that the property covered by the third deed was worth Rs. 35,000 but the judgment of that suit was not before the Court. So the Court has remarked that it did not appear to what grounds the other Court had refused to reduce the rate of interest. The learned Judge concluded that this one instance of interest at Re 1 per cent per mensem compound-able ever year could not be regarded as the prevailing rate.