BALKISHAN DAS Vs. MADAN LAL

JUDGEMENT

(1.) This was a suit to enforce a mortgage bond. It appears that the defendant executed a bond in favour of the plaintiff to secure a sum of Rs. 500 with interest which amounted to Rs. 37-8-0 per cent per annum with six-monthly rests. Furthermore the bond contained a stipulation that the defendant borrower should not be empowered to pay the money within three years, and if he did pay within three years, he should nevertheless be obliged to pay three years interest at the rate already mentioned. The amount claimed by the plaintiff is the sum of Rs. 3,897-1-0. The defence was an allegation that at the time of the loan the defendant had fallen into dissolute habits, that his father had refused to provide him with any money and that the bargain he had entered into was a hard and unconscionable bargain, which should not be enforced against him. The Court of first instance set forth the facts that I have already mentioned, and says as follows: "It was under such circumstances that the bond in suit was executed. The terms of the bond in the face of them disclose a hard and unconscionable bargain. Only Rs. 200 were paid before the registering officer, the vest being previous debts. The rate of interest stipulated was Rs. 37-8-0 per cent, per annum with six- monthly rests. The result was that Rs. 500 in a few years had swollen to Rs. 3,897-1-0. It also stipulated that the debtor would have no power to pay off the bond within three years. On the whole I find that it was a hard and unconscionable bargain, brought about by plaintiff taking advantage of defendant's youthful folly." The Court then directed that the claim for Rs. 500 principal with simple interest at the rate of Rs. 24 per cent, per annum should be decreed. The plaintiff appealed against this decree in his favour contending that he was entitled to the full interest stipulated for in the bond. The lower appellate Court dismissed the appeal.

(2.) In the course of the judgment the learned Judge says that the defendant was no doubt a man in good position, of 28 years of age and that there was no reason to suppose that any undue influence was brought to bear on him or that any unfair advantage was taken of him. He says on the other hand that he was a profligate, addicted to drink, and his father had stopped all supplies, but he was determined to raise money at any cost. While the learned Judge makes these remarks he nevertheless finds that the bargain was a hard and unconscionable bargain, He expresses no disagreement with the finding of the Court of first instance, and as a result he gave his decision dismissing the appeal.

(3.) Taking the bargain as set forth in the bond it is impossible to say that it was anything else except a hard bargain. The stipulation that the borrower should not relieve himself from the onus of the terms of the loan by repayment before the expiration of three years, while the lender might at any moment enforce his security, throws a flood of light on the whole transaction. Taking this in conjunction with the admitted facts that at the time the defendant had given way to intemperance and profligacy, it is impossible to say that there was no evidence upon which the Court could come to a conclusion that the bargain was hard and unconscionable. The appellant takes his stand upon the alleged findings of fact of the lower appellate Court and submits that upon these findings of fact, unless the interest is by way of penalty within the meaning of the Section 74 of the Contract Act, as amended, he is entitled to his full rate of interest. In my judgment the rate of interest was not a penal rate within the meaning of that section. But I do not agree with the learned Counsel for the appellant as to the effects of the findings of fact of the Court below. In my judgment both the Courts below intended to find and did find upon evidence that the bargain which the appellant seeks to enforce is a hard and unconscionable bargain. The Courts in India have in many cases refused to enforce bargains of this nature, and in a very recent case--Kirpa Ram v. Sami-ud-din Ahmad Khan (1908) I.L.R., 25 All., 284--a Bench of this Court dismissed an appeal against a decree in exactly the same terms as the decree now appealed against. There the rate of interest was 2 per cent, per mensem with monthly rests. The bond had been entered into by a young man, aged 18, of dissolute habits. The bargain was there held to be an unconscionable bargain. In the present case the facts only differ by the rate of interest being something more while the rests were less frequent and the age of the borrower was 28 instead of 18. These are mere distinctions in the details of the evidence. The evidence may or may not have been as strong in the present case as in the case just referred to, but there were in both cases circumstances upon which the Court was entitled to arrive at the conclusion at which it did arrive, viz., that the bargain was under the circumstances such a hard and unconscionable bargain that the Court ought not to enforce it without modification. As the appellant has thought fit to prefer a second appeal, I think he ought to pay the costs. I would accordingly dismiss the appeal with costs. Knox, J.