Sirdhary Lall vs Surjya Narain Singh on 9 March, 1883

Calcutta High Court
Sirdhary Lall vs Surjya Narain Singh on 9 March, 1883
Equivalent citations: (1883) ILR 9 Cal 825
Author: Prinsep
Bench: Prinsep, O’Kinealy


Prinsep, J.

1. The questions raised in this appeal are, first, whether the bond marked “A,” executed by Baboo Ram Gopal Singh to Baboo Sirdhary Lall dated the 31st March 1873, entitles Baboo Sirdhary Lall to demand compound interest; and, second, whether under Hindu law plaintiff was entitled to recover arrears of interest to an amount greater than the principal. One portion of the bond runs as follows: “I, the declarant, have borrowed from Baboo Sirdhary Lall, inhabitant and part proprietor of Maskin Masihuddinnuggur, pergunnah Bhagulpore, Rs. 19,000, bearing interest at the rate of one rupee five annas per cent. per mensem from this day up to the date of repayment. Therefore I, the declarant, do hereby declare and state in writing that I shall pay the interest on the said sum every year, and the principal in one lump sum in Magh 1286, F. S; that whatever amount will be paid for interest or principal, I, the declarant, shall have the same credited on the back of this bond, the plea of payment, under a separate receipt, or in any other way, shall be invalid; that I shall pay off the interest for each year after adjustment; that out of the amount paid in a year, at first the interest found due on adjustment of the account for the year shall be deducted, and if there remains any surplus, it shall be set off against the principal; that I, the declarant, shall not claim any interest on the amount thus paid; that 1 shall pay interest at the said rate until payment on the entire sum found to be due after adjustment of the account for a year.”

2. We think that the interpretation of this document is that the accounts are to be made up at the end of each successive year, and that whatever remains due is treated as principal, and bears interest at the stipulated rate of one rupee five annas per cent. per mensem, and that the contention of the appellant, that the plaintiff cannot claim compound interest under the bond, is untenable.

3. In regard to the second question it is necessary, in order to come to a correct conclusion, to enter into some details in respect of the law relating to usury in Lower Bengal. By Regulation XV of 1879, Section 6, it was declared that if the interest on any debt, calculating according to the rates allowed by the Regulation, should accumulate so as to exceed the principal, the Courts were not, except in certain specified cases, to decree a greater sum for interest than the amount of such principal. This was not declared to be a principle of Hindu law, applicable only to Hindus, but was a statutory provision embracing all persons contracting in the Mofussil. Nevertheless, it was the practice of the Courts to allow interest in excess of the principal where the interest had accumulated owing to reasons not ascribable in any degree to the laches of the creditor. In the case of Jankee Pershad v. Maharajah Oodwunt Narain Singh 3 Sel. Rep. 270 it was decided that interest exceeding the principal could, in the case of Hindus, be granted if the excess accrued pendente lite, and there is no fault attributable to the creditor. No custom or usage “among Hindus was asserted in that case. Subsequently, in the case of Goverdhun Dass v. Waris Ali 4 Sel. Rep. 261 interest exceeding the principal was granted. This was the state of the law and practice of the. Courts until the supersession of Regulation XV of 1793 by Act XXVIII of 1855. By Section 2 of that Act it was declared that in any suit in which interest was recoverable the amount should be adjudged or decreed by the Court at the rate, if any, agreed upon by the parties, and if no rate should be agreed upon, at such rate as the Court should deem reasonable. Subsequent to the passing of this Act, in the case of Kalica Prosad Misser v. Gobind Chunder Sein (Suth. S.C., C., 110: 2 W.R.S.C., C., 1) it was decided that the law under which the claim for accumulated interest was limited in amount to a sum not exceeding the principal had been rescinded by Act XXVIII of 1855. This was a case between Hindus. This decision was followed in the case of Huromonee Gooptia v. Gobind Coomar Chowdhry 5 W.R. 51 and in the case of Omda Khanum v. Brojendro Coomar Roy Chowdhry 12 B.L.R. 451. It would thus appear that from the earliest times up to the year 1874 no claim for a reduction of interest has ever been allowed on the ground of Hindu law or usage, but on the contrary that this contention whenever raised has always been repudiated, and in several cases the Courts granted interest beyond the principal. In this respect the Courts in the province of Lower Bengal have been in no way singular. The very same point has been decided in conformity with this view in the North-Western Provinces to which the Bengal Regulations apply, and in Madras where the Regulation is of similar import.

4. In the case of Annaji Rau v. Ragubai alias Sithabai 6 Mad. H.C. 400 the Court at Madras declared that in the matter of interest the Hindu law was not binding in the Mofussil. This decision was followed in the case of Kuar Lachman Singh v. Pirbhu Lal 6 N.W.P. H.C. 358. So that there is a complete consensus of opinion in Bengal, in the N.-W.P., and in Madras, that since the passing of Act XXVIII of 1855, a Hindu may claim from another Hindu interest in excess of the principal. We do not refer to the cases decided in the Bombay Presidency, because, as appears from the case of Khusalchand Lalchand v. Ibrahim Fakir 3 Bom. H.C.A.C. 23 the Regulations in that Presidency were different from those in Bengal and Madras. The learned Advocate-General, in support of his view that interest should not be allowed beyond the principal, has referred to the decision of Sir Barnes Peacock in the case of Ram Lal Mookerjee v. Haran Chandra Dhar 3 B.L.R. O.C. 130 in which it was decided that within the town of Calcutta, interest as between Hindus might not exceed the principal.

5. This decision, though doubted in the case of Meah Khan v. Bibi Bibijan 5 B.L.R. 500 has been followed in a case lately decided in the Original Side of this Court, but this judgment is founded upon considerations special to the town of Calcutta, and has no application to the Mofussil.

6. We are, therefore, of opinion that there is a whole series of cases from the earliest times to show that in Bengal interest beyond the principal is demandable among Hindus, and the contention now raised by the learned Advocate-General cannot be sustained.

7. In this view, we dismiss the appeal with costs.

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