PEAREY LAL Vs. SOLU GIR

JUDGEMENT

(1.) The plaintiffs filed a suit for recovery of Rs. 261-5-0 on the basis of a bond dated 30 July 1931. According to the plaintiffs, the defendant had borrowed a sum of Rs. 165 and had agreed to pay the amount in three instalments of Rs. 55 each. The first instalment was to be paid on 25 January 1932. The bond provided that in default of payment of any instalment the whole amount, then remaining due, would become payable. No instalment was paid. The defendant had paid a sum of Rs. 10 on 24 July 1934 and another sum of Rs. 10 on 3 July 1937. The first payment of Rs. 10 was entered on the back of the bond and it bore the defendant's thumb impression. The entry was as follows: "To-day the 24th July 1934, received Rs. 10 towards the bond."

(2.) The defendant did not appear but the Court below held that the plaintiffs suit was barred by limitation as the cause of action to file the suit arose on 25th January 1932, the date of the first default, and the payment dated 24 July 1934 not being payment of interest as such, it could not saw limitation. On the said finding the lower Court dismissed the suit. The plaintiffs have come up in revision to this Court and have argued that their suit was within time and have further urged that they were entitled to the benefit of the Amending Act (XVI of 1942). The defendant was unrepresented also in this Court, but at my request Mr. Ambika Prasad Pandy agreed to act as amicus curiae. Learned Counsel appearing for the plaintiffs has argued two points. He has urged that the payment of Rs. 10 on 24 July 1934 must be deemed to be a payment towards principal and therefore a fresh, period of limitation should be computed from the time when the payment was made. In the Court below plaintiffs case was that this payment was towards interest as such and one of the plaintiff's went into the witness-box and gave evidence to that effect. The Court below, however, disbelieved that evidence and held that the payment was "towards the bond" and was not payment of "interest as such." On a question of fact, I do not think it is open to the plaintiffs to change their case and urge before me that this sum of Rs. 10 was not paid towards interest but was paid towards principal. The further ground, on which they have urged this point, is that the bond dated 30 July 1931 did not provide for payment of any interest if the instalments were paid in time and the clause that in case of default of payment of any instalment interest at 2 per cent, per mensem would run on the whole amount from the date of the bond was a penal clause. Learned Counsel has argued that this clause was invalid under Section 74, Contract Act, and was not enforceable.

(3.) It may be that if the plaintiffs had claimed interest at the rate provided for in. the bond relying on the clause referred to above, the Court may have held that the clause being penal the plaintiffs were not entitled to claim interest at 2 per cent, but if the defendant believed that he was liable to pay both principal and interest and paid, the sum of Rs. 10 towards the bond it could, not be argued that it was payment towards the principal. In the endorsement of the second payment of Rs. 10 dated 3 July 1937 it was clearly stated that the payment was towards interest. It is not possible, therefore, for learned Counsel to argue that, as a matter of fact, the defendant, when he made the first payment, did not pay towards the bond but paid towards the principal.