MT KHALLO Vs. JAWALA PRASAD

JUDGEMENT

(1.) This is an appeal solely on the ground that the lower appellate Court had no power to reduce the rate of the interest on a mortgage. The suit on the mortgage was not contested by the mortgagor presumably because he had by subsequent mortgages so burdened the property that it was of no interest to him. A subsequent mortgagee has contested the suit, but he was of course not in a position to know what passed between the mortgagor and the prior mortgagee and, therefore, he could not lead any evidence that the prior mortgagee was so situated as to be able to dominate the will of the mortgagor. We are left then with the sole fact that the interest is by ordinary canons extortionate, but we have no material on which to hold that there was any undue influence brought to bear on the mortgagor. In view of the ruling of their Lordships of the Privy Council in Raghunath Prasad Sahu V/s. Sarju Prasad Sahu A.I.R. 1924 P. C. 60 the mere fact that the interest is heavy is not sufficient to attract the consequences of Section 16 of the Contract Act. On behalf of the respondent we are asked to apply Section 74 of the Contract Act. But it has been held in Ganga Dayal V/s. Bachchu Lal [1902] 25 All. 26 and Janki Das V/s. Ahmad Husain Khan [1902] 25 All. 159 that a mere stipulation for compound interest does not amount to a penalty. While, therefore, the interest is indubitably extortionate it does not appear that the lower appellate Court had any power to reduce it.

(2.) There is a cross-objection that the mortgage-deed is not proved to have been validly executed. But in view of Act 26 of 1917 there is no force in this contention.

(3.) The result is that the cross-objection is dismissed with costs and the appeal is allowed and setting aside the decree of the lower appellate Court we restore that of the Court of first instance. The appellant will have his costs throughout.