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TMI Blog1966 (10) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... . of the Madras High Court and the Bench of two Judges in appeal were of the view that the provision for interest in the impugned mortgages should be reduced; but whereas the learned trial Judge reduced the rate of interest from 15 pet cent compoundable every quarter to 15 per cent compoundable with yearly rests, the Judges in appeal after taking all the circumstances into consideration held that 10 per cent compound interest with yearly rests would not be excessive and they reduced the rate accordingly. They also scaled down the rate of interest to 6 per cent from the date of the institution of the suit. The creditor has come up before this Court in appeal and his substantial complaint is that the rate of interest should not have been cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value thereof, the financial condition of the debtor and the result of any previous transactions of the debtor, by way of loan, so far as the same were known, or must be taken to have been known, to the creditor. Clause (d) of the said sub-section enjoins upon the court to consider also all circumstances materially affecting the relations the parties at the time of the loan or tending to show that the transaction was unfair, including the necessities or supposed necessities of the debtor at the time of the loan so far as the same were known, or must be taken to have been known, to the creditor. In effect the provisions of the section which are relevant for the purpose of this appeal are as follows:- (a)If the Court has reason to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a will executed by him on the basis that the properties were his self-acquired properties. Her brother Alavandar filed a suit in the year 1919 through a next friend claiming that the properties were not the self-acquired properties of his father and as such not capable of bequest under a will. This suit was dismissed as also the appeal therefrom to the Madras High Court preferred in 1922. By the year 1936 when the first mortgage in favour of Srinivasavaradachariar, the appellant, before us, was executed, Dhanakoti Ammal was involved in debts. The most important item of her properties was a market on the outskirts of the city of Madras which had become dilapidated and the Corporation of Madras was refusing to renew the licence unless i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench of the Madras High Court found that the amount advanced under the old mortgages came to nearly ₹ 48,000/- that there was already a prior mortgage in respect of which nearly ₹ 8,000/- was due and the value of the security though not very ample could not be said to be markedly inadequate and there was a shadow on the title of the mortgagor by reason of the threat of suit by her brother. On a consideration of the entire evidence bearing on the point revealing the circumstances in which the loan transaction came into existence the appellate bench held that 15 per cent compound interest calculated with quarterly rests was certainly excessive. Taking note of several decisions of the Madras High Court to which we shall p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting of Rajamannar C. J. and Panchapekesa Ayyar J. observed, in normal cases where the security is ample to cover the loan and there is no danger at all to the principal and interest the court will hold more than 12 per cent simple interest to be excessive, as held in A.I.R. 1952 Madras 872 and by us in A.S. 348 and 361 of 1948 . According to the learned Judges Where the security is not sound, 10 per cent compound interest can be allowed as in A.I.R. 1954 Madras 764. In the result the learned Judges only allowed simple interest at 12 per cent per annum. In the instant cases the learned Judges in appeal also referred to a judgment, of Subba Rao J. (as he then was) in C. S. 163 of 1949 as containing an observation that the dictum in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in view of the fact that his earlier suit which had been taken in appeal to the Madras High Court and subsequently lost, was never regarded seriously. This is corroborated by the fact that even after the institution of that suit in 1937 the appellant before us advanced further sums of money to Dhanakoti Ammal at the same rate of interest as before; if he had thought that his security was put in jeopardy by the institution of the suit he would have been careful not to advance any further amounts and would in any case have insisted on the rate of interest being higher than that provided for in the earlier mortgages. In our opinion the Division Bench of the Madras High Court made a correct assessment of the situation and their pronouncement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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