LALA BIHARI LAL Vs. ABDUL AZIZ

JUDGEMENT

(1.) This appeal arises out of a suit for the recovery of the mortgage-money due upon a mortgage-deed executed on the 20 July, 1914, as security for the sum of Rs. 2,000 advanced by the plaintiff to one Wahabuddin. In the mortgage-deed itself the interest agreed upon between the parties was stated to be 1 per cent. per mensem, compoundable yearly.

(2.) The only question for decision in this appeal is whether the Court below was right in decreeing only simple interest at the rate of 1 per cent. per mensem, in contravention of the terms of the mortgage deed.

(3.) In our opinion the Court below was clearly wrong in admitting evidence of an oral agreement modifying the terms of the written contract between the parties. The defendants case was that, as a matter of fact, the contract between the parties relating to interest was that only simple interest should be paid at the rate of 1 per cent, per mensem, but in the bond it was entered that the interest should be compoundable annually, and this stipulation "was caused to be entered merely by way of precaution for the sake of further satisfaction of the creditor. In reality it was agreed that merely simple interest would be paid". The plaintiff denied the alleged oral agreement about simple interest, and maintained that compound interest was agreed upon, as stated in the bond. The parties produced witnesses in support of their respective allegations. The Court below has disbelieved the oral evidence, finding that neither side has been able to produce reliable evidence on this point. The Court has, however, been much impressed by the fact that 17 months and three days after the execution of the deed the mortgagor made a payment of Rs. 490 and this payment was credited, Rs. 340 on account of interest and Rs. 150 on account of principal. This is shown by an endorsement on the mortgage-deed itself. The Court finds that as 17 months interest was due, and as the interest if calculated as simple interest would amount to exactly Rs. 340, and as this very sum was credited towards interest on that date, it may be inferred that the defendant is correct in stating that, as a matter of fact, the agreement between the parties was for simple interest only and not for compound interest as set forth in the mortgage deed. On this ground the learned Subordinate Judge has decreed only simple interest instead of compound interest.