LAL GOPAL DUTT CHOWDHURY Vs. BISWA NATH ROY

JUDGEMENT

(1.) THIS is an appeal by the plaintiff against a judgment of the learned District Judge of Khulna, dated the 9th April 1914, affirming the decision of the Subordinate Judge of the same place. The plaintiff sued to recover the rent due to him on the basis of a kabuliyat for a four- annas share of a jalkar. The contract of tenancy provided that interest was to run on the rent in arrear at the rate of 25 per cent, per mensem, that is, 300 per cent, per annum. The plaintiff likes interest at 300 per cent, per annum and, therefore, the learned Judges in the Courts below having deprived him of that rate, he has appealed to this Court. The law, of course, on this matter is not settled with reference to the plaintiff s likes or dislikes but is contained in the Indian Contract Act, and there is nothing to prevent a man of full age find of ordinary understanding from contracting, if he is at arm s length, to pay interest at a higher rate. But there are provisions in the law such as Section 74 of the Indian Contract Act, and that section has reference to compensation when there has been a breach of the contract and a penalty has been stipulated for. The question in the present case is: Is this 300 per cent, per annum stipulated to be paid in the event of the rent not being paid in due time a penalty." Unfortunately, in an otherwise well-considered judgment, the learned District Judge has fallen into an error as to what would be a penalty. The learned Judge considered that the explanation to Section 74 of the Indian Contract Act was exhaustive and that there was no case with reference to the payment of interest which could be penal if it did not fall within the terms of the explanation. That is clearly not so. The case reported as Krishna Charan Barman v. Sanat Kumar Das 34 Ind. Cas. 609 ; 25 C.L.J. 24 ; 44 C. 162 ; 21 C.W.N. 740 was a case where the interest was held to be penal, notwithstanding that there was no increased rate as referred to in the explanation to Section 74. The learned Judge found himself in a difficulty because he considered that he could not hold the interest to be penal and attempted to support the judgment of the Court of first instance by an equitable doctrine as to a person standing in a fiduciary position and dominating the will of another. Those principles do not apply in the circumstances of the present case. The case must stand or fall on the terms of Section 74, and that is a mixed question of fast and law to be decided on a consideration of all the circumstances relating to the case. In that view, I say with regret, because the judgment of the learned District Judge is otherwise a well-considered judgment, that this case must go back to the lower Appellate Court to be re-heard. The learned Judge of the lower Appellate Court must come to a definite conclusion whether the interest of 25 per cent, per mensem stipulated to be paid by the kabuliyat in the event of the rent being in arrear was or was not by way of penalty as mentioned in Section 74 of the Indian Contract Act. The judgment of the learned Judge of the lower Appellate Court is accordingly set aside and the case is sent back to him to be re-heard as stated above without disturbing the findidgs of fact on the other points raised in the case. Costs will abide the result of the re-hearing by the lower Appellate Court. Smither, J.

(2.) I agree.