(Manikka) S. Venkatachalam Aiyar vs Duraiswami Chetti and Others

The only question in this appeal relates to enhanced rate of interest. The mortgage is dated the 4th May 1917, and the amount is payable by

instalments of Rs. 2,500, the last instalment being due on the 5th May 1921. The penal clause in the document runs as follows:

Should in any instalment as aforesaid there be default in paying either the principal sum or the interest, we shall, whenever you may require, for the

principal sums as may be due till the last installment and the interest as may be due till then, irespective of the subsequent instalments, pay

compound interest accruing thereon at 1-1/4 per cent. (one and a quarter per cent) a month at 12 months'' rest, from the date of default, from out

of the undermentioned secured properties, holding ourselves as well personally liable.

It appears that certain instalments were paid and endorsements made on the document. On the 19th June 1918, a sum of money of Rs. 859 was

paid as compound interest, but the compound interest paid there was with monthly rests at 14 annas per cent and not as stipulated in the

document. Then nothing was paid, and, on the 21st November 1921, the plaintiff sent a notice demanding payment, but by the time the notice was

sent all the instalments had become due and there was no question of exercising any option. On the facts of the cash the Subordinate Judge, relying

upon Lachakkammal v. Sokkayya Naik [1918] M. W. N. 586 held that he was entitled to simple interest at 14 annas per cent and not enhanced

interest or compound interest. It appears that no demand was made, when the breach was committed, stating that the mortgagee would claim

enhanced interest provided for in the document. The decision in Lachakkammal v. Sokkayya Naik [1918] M. W. N. 586 covers the facts of this

case. The notice was not sent after the instalments had become due and there was no case of exercising any option. It may be, if the plaintiff had

properly framed the suit, he may be entitled to some damages for not paying the money after the due date, but such a claim is not made in the

plaint. The fact that he got compound interest in a manner not provided for by the terms of the document would not show that there was any

promise to pay compound interest for future default at the same rate as was paid on the 18th June 1918. Such would be in variance of the

registered document and could not be enforced as a contract varying the penal clause provided for in the bond. There can be no variance of the

terms of any registered document by oral arrangement and so the plaintiff cannot enforce any oral arrangement and get compound interest at 14

percent. We do not think the Subordinate Judge was wrong in not allowing compound interest or enhanced interest. ''The appeal fails .and is

dismissed with costs.