GOPESWAR SAHA Vs. JADAB CHANDRA CHANDARAY

JUDGEMENT

(1.) These appeals are directed against the decree in a suit to enforce two mortgage-bonds assigned by the original mortgagee to the plaintiff. The bonds were executed on the 25th July 1898 and were assigned to the plaintiff on the 16th July 1906. The principal sums secured by the bonds were Rs. 525 and Rs. 375 respectively, which carried interest at the rate of 15 3/4 per cent, per year-with triennial rests. The plaintiff commenced this action on the 13th September 1911 for recovery of Rs. 4,979-9, namely, Rs. 900 as principal and Rs. 4,079-9 as interest thereon. He joined as principal defendants the mortgagor as also the purchaser of the equity of redemption, in whose favour the transfer was completed on the 16th September 1911. The substantial question in controversy relates to the amount of interest justly recoverable by the plaintiff. The defendants contended, first, that the rate of interest was penal, and, secondly, that the interest was suspended from the 1st November 1908 to the 16th September 1911, as during that period the debtor was prevented by the improper act of the creditor from re-paying the loan, at he would otherwise have done, by the sale of the mortgaged properties. The Subordinate Judge overruled the first contention but gave effect to the second objection and made the usual mortgage-decree for a portion of the amount claimed. The plaintiff as also the defendants appealed to the District Judge against that decision. The District Judge has confirmed the decree of the Trial Judge and has dismissed both the appeals. Against this decree of the District Judge, the plaintiff, and the defendants have presented separate appeals to this Court. The plaintiff has contended that interest should have been allowed for the entire period from the date of the mortgage to the date fixed in the decree for redemption. The defendants have argued that the contract rate of interest was extravagantly high and unconscionable, and that interest should consequently have been decreed only at a reduced rate.

(2.) As regards the appeal by the plaintiff, there can be no doubt that where delay in the payment of the principal debt is caused by some improper act or omission of the creditor, the general rule is that the accrual of interest will be regarded as suspended during such period. In the case before us, the facts concurrently found by the Courts below may be briefly recited. The mortgagor, hard pressed by the high rate of interest on the loan, found himself in a helpless condition, and on the 6th August 1908, entered into a written agreement with the second defendant to sell the mortgaged property to him with a view to satisfy the mortgage- debt from the sale-proceeds. The plaintiff, the assignee of the mortgage-bonds, was himself anxious to purchase the property, so he forthwith intervened and urged the mortgagor to break his contract with the intending purchaser. The mortgagor was reluctant to resile from his agreement and explained to the plaintiff the obvious danger of the course proposed by him, as the contract was complete and enforceable. The plaintiff, however, successfully dissuaded the mortgagor from the contemplated sale. The result was a suit by the intending purchaser against the mortgagor for specific performance of the contract. The plaintiff did his best to defend the suit in the name of the mortgagor, but he was ultimately thwarted as the suit was decreed. The mortgagor was accordingly obliged to complete the sale in favour of the purchaser, which he did on the 16th September 1911. The plaintiff, thus foiled in his design to seize the mortgaged property, sued to enforce the securities he held. The question arises, whether, in the circumstance stated, the accrual of interest should not, in justice, be deemed to have been suspended during the period when, but for the improper intervention of the plaintiff, the mortgagor might-have completed the sale of the mortgaged property and re-paid the loan from the sale proceeds. The Courts below have concurrently answered this question against the plaintiff. The principle that if the failure to make payment of the principal debt is due to an improper act of the creditor or to such conduct on his part as prevents the debtor from repaying the loan, interest on such debt stands suspended during the time the debtor is so prevented, is of extensive application. The Courts have taken recourse in various reported decisions, both in England and in the United States, to this principle to attain the ends of justice. No useful purpose would be served by an analysis of the varying circumstances of the different cases, but reference may be made to the decisions in Edwards v. Warden (1876) 1 App. Cas. 281; 45 L.J. Ch. 713; 35 L.T. 174, Merry v. Rybes (1757) 1 Eden, 1; 28 E.R. 584, Marlborough v. Strong (1723) 4 Bro. P.C. 539; 2 E.R. 367, Cameron v. Smith (1811) 2 B. & Ald. 305; 20 R.R. 444; 106 E.R. 378, Bawer v. Dalzel (1829) Moo. & Mal. 228, Anderton v. Arrowsmith (1839) 2 Per. & Dav 408, Laing v. Stone (1829) 2 Man. & Ry. 561; Moo. & Mal. 229, London Chatham and Dorer Railway Company v. South Eastern Railway Company (1892) 1 Ch. D. 120; 61 L.J. Ch. D. 294; 65 L.T. 122; 40 W.R. 194, Webster v. British Empire Mutual Life Assurance Company (1880) 15 Ch. D. 169; 49L.J. Ch. 769; 43 L.T. 229; 28 W.R. 818, Hayes v. Elmsby (1893) 23 Can. Sap. Ct. 623, Stevenson v. Davis (. 893) 23 Can. Sup. Ct. 629, Bowman v. Wilson (1881) 2 Mac. Crary. (u.s.) 394; 12 Fed. Rep. 864, Pinkard v. Ingenoll (1847) 12 Alabama 441, Union Insurance Co. v. Chicago Railway Company (1893) 146 III. 320; 34 N.E. 948, Southern W.L. Company v. Hass (1888) 76 Lowa 432; 41 N.W. 63, Watson v. McManus (1909) 223 Pa. 583; 72 Atl. 1066, Morjord v. Ambrose (1830) 3 J.J. Marshall (K.Y.) 688, Hart v. Brand (1818) 1 A.K. Marshall 159; 10 AM. Dec. 715, Suffok Bank v. Worcester Bank (1827) 5 Pickering (Mass.) 106, Stevens v. Baringar (1835) 13 Wendell N.Y. 639, Reid v. Reusselaer (1824) 3 (Cowan) N.Y. 393; 5 Cowan 587 and Plotner v. Warehouse (1909) 22 S.W. 443. It is obviously just that if a creditor, by his own act, puts it out of the power of the debtor to make payment, no interest should be recoverable for the period during which the debtor was thus prevented from paying the creditor; the wrong was with him and he cannot charge the effect to the other. This doctrine is based on the plainest grounds of justice, equity, and good conscience, and has been rightly applied by the Courts below for the protection of the defendants.

(3.) As regards the appeal by the defendants, the decisions of this Court in Khagaram Das v. Ram Sankar Das 27 Ind. Cas. 815; 21 C.L.J. 79; 42 C. 652; 19 C.W.N. 775, Abdul Majid v. Ksherode Chandra Pal 29 Ind. Cas. 843; 42 C. 690; 19 C.W.N. 809 and Bouwang Raja Challaphroo Chowdhury v. Banga Behary Sen 31 Ind. Cas. 394; 22 C.L.J. 311; 20 C.W.N. 408 show that a Court is competent to grant relief whenever the rate of interest-appears to the Court to be of a penal character, that is, unconscionable and extravagant that no Court should allow it. We are not prepared to hold that the present case falls within that rule. The amount claimed as interest, if distributed over the entire period, works out at the rate of 35 per cent, per annum simple interest, while the amount actually decreed by the Courts below works out at the rate of 22 per cent, per annum simple interest. We cannot say that this rate is so excessive as to justify our interference.