1. This is a plaintiffs' appeal and arises out of a suit brought by them against the defendants-respondents to recover Rs. 1,54,333-1-3 on account of the balance of principal and interest on the basis of a mortgage-deed dated 22nd May 1915. The mortgage-deed was executed by Messrs. Beni Prasad, Raghunath Das and Raja Joti Prasad, who were own brothers. They had purchased the Roorkee Canal Foundry and Engineering Workshop from the Government for Rs. 3,00,000. Out of it they paid to the Government Rs. 1,80,000. The balance was to he paid by three annual instalments without interest. This balance was secured by a mortgage-deed dated 13th day of January 1916 in favour of the Secretary of State. The execution of the sale-deed by the Secretary of State was deferred till the payment of the balance in order to carry on the business; and also to pay the remaining price of the workshop purchased, the mortgagors executed the mortgage in suit in favour of the plaintiffs for a sum of Rs. 2,00,000 out of which Rs. 1,50,000 were paid to the executants before the Sub-Registrar at the time of the registration of the deed. The balance was never taken by the mortgagors. Raghunath Das had died before the suit. Raja Joti Prasad died during the pendency of the suit and Beni Prasad died during the pendency of this appeal. Brij Raj Saran, son of Beni Prasad, Raghubir Saran, Brij Bhushan Saran and Sumer Singh, sons of Raghunath Das, and Madhuri Saran, son of Raghubir Saran, and Rameshwar Saran, Janardhan Sararn and Radhay Shyam, sons of Raja Joti Prasad, were also impleaded as defendants as members of the joint family. The following pedigree will show the relationship of the mortgagors with the defendants aforesaid:

BANSI LAL |

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"3. After the institution of the suit the Courts of Wards of the United Provinces and Punjab took over the whole estate of the family under their superintendence and management. Thereafter a written statement was filed by the Courts of Wards in which it was contended that the bond in suit was not executed according to law nor did its consideration pass to the defendants. The executants had no right to borrow the money and the defendants or the joint family were not liable for the payment of any portion of the debt which was not contracted for legal or family necessity. It was also contended that the executants could not have mortgaged the property as they were not its owners at the time of the execution of the mortgage and that the rate of interest was very high and there was no necessity for borrowing at that rate of interest. The learned Subordinate Judge found that the mortgage was not made for any family necessity and was not binding on it or the family property. As the property mortgaged was subsequently acquired by the mortgagors, the learned Subordinate Judge found that the mortgage was valid and binding on the property mortgaged. He also found that the due execution of the mortgage-deed in suit for consideration was proved."

4. He found that the rate of interest was very high and there was no necessity for borrowing the money at that rate of interest. He therefore reduced the rate of interest from eleven annas per cent per mensem compoundable quarterly to Rs. 6 per cent per annum simple. He also credited four items of Rs. 5,000, Rs. 12,000 Rs. 9,993-12 and Rs. 5,000 towards the. payment of the initial principal. It may be mentioned here that out of the principal Rs. 50,000 had been paid by the mortgagors. The learned Subordinate Judge therefore gave a decree to the plaintiffs for Rs. 84,764-7-9 against the mortgaged property. The defendants took no objection to the decree and submitted to it. The plaintiffs have come here in this appeal against the part of the claim which has been disallowed by the lower Court. The first point that arise for consideration is: Whether the plaintiffs are entitled to the contractual rate of interest. The rate of interest, as already stated, was eleven annas per cent per mensem compoundable quarterly. This has been reduced to Rs. 6 per cent per annum simple on the ground that the plaintiffs have failed to show that there was necessity for the mortgagors to borrow at the contractual rate. He has observed:

It is an established principle of Hindu Law, supported by numerous rulings, that the question of legal necessity involves the question of the rate of interest. And it is incumbent upon those who support the mortgage of a manager or managers of a joint Hindu family to show not only that there was necessity to borrow, but that it was not unreasonable to borrow at some high rate and upon some hard terms...As such it was his duty to establish that there was legal necessity for the mortgagors in this case to incur debt at the onerous rate mentioned in the deed. The rate of interest mentioned in the deed is eleven annas per cent per mensem with quarterly rests compound interest and it was to be paid according to the computation of Indian months every three months, i.e. Rupees 1,375 a month.

5. The ground on which the learned Subordinate Judge has reduced the interest does not apply to this case because the learned Subordinate Judge himself found that the mortgage was not binding on the joint family or on the joint family property as the debt had not been incurred for any family necessity. The learned Subordinate Judge has given a decree to the appellants against the mortgaged property and not against the defendants as members of the joint family or against the joint family property. When once a mortgage is held not to be binding on the joint family, the principle governing the joint family would not apply to the mortgage. The validity of the terms of the mortgage will have to be determined under the provisions of the contract act and not under the provisions of the Hindu Law relating to a joint Hindu family. A valid contract is binding on the parties. Unless the mortgagors or their representatives show that the contract was not valid, they would be bound by the terms of the contract. The respondents have not pleaded that the contract was invalid under the Contract Act. The only ground taken by the respondents is that the rate of interest was excessive. As we shall show later on, the interest in this case is not excessive. But the mere ground that the interest is excessive, is no ground to make the contract invalid. In Balla Mal v. Ahad Shah 1918 16 ALJ 905 their Lordships of the Privy Council observed:

In money lending transactions the mere fact that the sum ultimately claimed exceeds enormously the amount originally advanced is no ground for holding the transaction unconscionable. It must also appear that there is something unconscionable, either in the original dealings, or in the subsequent stages of the transaction. By making short term loans and insisting on capitalising the interest immediately it falls due, a money-lender may pile up compound interest at an oppressive and unconscionable rate. But there is nothing inherently wrong or oppressive in his securing interest upon interest after the interest has been due and unpaid for a considerable time.

6. In Raghunath Prasad v. Sarju Prasad 1924 3 Pat 279 their Lordships of the Privy Council held:

Although a mortgage for ample security provides for excessive and usurious interest no presumption arises that it was induced by undue influence in the absence of proof by the mortgagor that the mortgagee was in a position to dominate his will.

7. In this case the compound interest was paid from time to time and consequently the compound interest has not been piled up. The rate of 12 per cent per annum simple interest has been regarded as a reasonable rate, and even where a debtor) has been relieved of interest under the Usurious Loans Act, interest at the rate of 12 percent per annum has been allowed. In Gajraj Singh v. Muhammad Musthaq Ali 1934 ALJ 170, which was a case under the Usurious Loans Act, it was held:

Prima facie and in the absence of special circumstances to the contrary, the rate of 12 per cent per annum simple may be taken as a fair, proper and reasonable rate in a mortgage transaction.

8. No plea has been taken in this case of any undue influence. As held in Bharat Singh v. Jeobodh Lal 1934 32 ALJ 593, in the absence of any plea of the contract having been brought about by the exercise of undue influence, the Court has no jurisdiction to interfere with the contract and substitute a new one in lieu thereof. In Raja Hurronath Roy Bahadoor v. Randhir Singh (1891) 18 IA 1 their Lordships of the Privy Council accepted the view of the High Court that the stipulation for the payment of interest at the rate of 18 per cent per annum was high and had been properly reduced to 12 per cent per annum simple by the High Court. In Narain Das v. Abinash Chandra 1922 21 ALJ 201 their Lordships of the Privy Council held that the rate of 12 per cent per annum simple should be allowed. They observed:

It appears, according to our notions in this country, a high rate of interest but that has nothing to do with the matter. It may very well be that, having regard to the local conditions in India, it is very proper and reasonable to impose, and there is no reason why any alteration should be made as to amount.

9. In Sunder Mull v, Satya Kinker Sahana 1928 26 ALJ 364 at page 371 the reduction of interest from 15 per cent per annum to 12 per cent per annum was upheld by their Lordships. They pointed out that as compound interest is common and may often be necessary and proper in India under the circumstances of this country there should be no presumption one way or the other. In another case Ram Bhujawan Prasad Singh v. Nathu Ram 1923 50 IA 14, their Lordships of the Privy Council upheld the finding of the Subordinate Judge that simple interest at 12 per cent per annum was a fair and commercial rate of interest. On examining the interest, it would be found that the interest at the contractual rate is less than the interest at 12 per cent per annum simple. Rs. 1,12,309-15-3 interest has been paid. Rs. 54,333 are claimed for further interest under the deed. The total comes to Rs. 1,66,642.15-3, while the interest at 12 per cent per annum simple would come to Rs. 2,07,750. As regards the rate of interest, it may also be mentioned here that the security offered for the sum advanced under the mortgage was not substantial. The same property had been mortgaged as security which had been purchased by the mortgagors for which the sale deed had not been executed at the time of the mortgage. It was quite uncertain as to whether the mortgagors would get the sale deed executed in their favour or not. If the mortgagors had failed to get the sale deed executed in their favour, no security would have been available to the mortgagees. Taking into consideration all these circumstances, we find that the interest agreed to in the deed and which is claimed is not excessive.

10. The next point for consideration is whether the learned Subordinate Judge was right in crediting the four items referred to above from the initial principal of Rs. 1,50,000. The distinction that is between principal and simple interest does not exist in the case of compound interest. In the case of simple interest the interest remains always separate and apart from the principal. In the case of compound interest, as soon as the interest falls due, it becomes a part of the principal and does not remain separate from the principal. What has been done in this case is that as soon as any interest fell due, it was added to the principal and became a part thereof. From it whatever was paid by the mortgagors on account of interest was deducted. In our opinion, this was the only proper coarse which was open to the mortgagees. It may be mentioned here that on no occasion any sum was paid in excess of the interest that had fallen due with the exception of the amount of Rs. 50,000 which has been credited towards the initial principal. It is a well-established rule in ordinary cases that the money is first applied in payment of interest and then, when that is; satisfied, in payment of the capital. The rule is referred to by Lord Justice Rigby in Parr's Banking Co. v. Yates (1898) 2 QB 460 at p. 466 in these words:

The defendant's counsel relied on the old rule that does no doubt apply to many cases, namely, that, where both principal and interest are due, the sums paid on account must be applied first to interest. That rule, where it is applicable, is only common justice. To apply the sums paid to principal where interest has accrued upon the debt and is not paid, would be depriving the creditor of the benefit to which he is entitled under his contract.

11. This principle was approved of by their Lordships of the Privy Council in Venkatadri Appa Rao v. Parthasarathi Appa Rao 1922 44 Mad 570. We are therefore of opinion that the learned Subordinate Judge was not justified in crediting the four items of Rs. 5,000, Rs. 12,000, Rs. 9,993-12.0 and Rs. 5,000 towards the payment of the initial principal. These items should have been appropriated in the manner in which the plaintiffs have done.

12. It has been urged by the learned Counsel for the respondents that the appellants are not entitled to a mortgage decree because the execution of the mortgage in accordance with law has not been proved. The learned Subordinate Judge did not fully appreciate the evidence that was produced in the case. He relied on the signatures of the Registration Officer and the witnesses who identified the executants at the time of registration for the due execution. He observed:

The question is whether this evidence proves the execution of the bond according to law. Now so far as the deposition of the attesting witnesses, Sultan Singh, Raghubir Singh and Madho Saran, goes, it positively disproves the execution of the deed as required by law, but the deposition of the plaintiff Banarsi Das proves the due registration of the deed in his presence. Under the new Transfer of Property Act the definition of 'attestation' given in Section 3 is very wide and in view of the principle laid down in the ruling, Ram Charan v. Bhairon 1931 28 ALJ 1561, proof of duo registration of a mortgage deed is proof of its due attestation, hence due registration of the deed having been proved, its execution according to law should be held to be proved in view of that ruling. Though there is no direct ruling of our Hon'ble High Court on the point, it has been so held by other High Courts in India. Were it not for proof of registration, it would have been difficult in this case to hold that the execution is proved, but in view of the principle enunciated above, it must be held that the execution of the bond has been proved.

13. This view of the learned Subordinate Judge was not correct. In Lachman Singh v. Surendra Bahadur Singh 1932 ALJ 653, it has been observed:

Neither the Registering Officer nor the witnesses identifying the executant at registration sign as attesting witnesses, and they cannot therefore be treated as such for the purpose of the validity of the mortgage. Where a mortgagee sues to enforce his mortgage and, on the one hand, the execution and attestation of the deed are not admitted and, on the other, there is no plea that the deed for want of proper attestation does not operate as a mortgage deed, the mortgagee need prove only this much, that the mortgagor signed the document in the presence of the attesting witnesses called (or the attesting witness received from the executant a personal acknowledgment of his signature) and the attesting witness signed in the presence of the executant, provided the document on the face of it bears the attestation of more than one person. But if the validity of the mortgage be specifically denied, in the sense that the document did not effect a mortgage in law, then it must be proved by the mortgagee that the mortgage deed was attested by at least two witnesses.

14. As already stated, the defence of the respondents was that the bond in suit had not been executed according to law. The validity of the mortgage was never specifically denied in the sense that the document did not effect a mortgage in law. Execution and attestation of a mortgage deed are two separate things and they may take place on two separate occasions. Therefore one has to be considered separately from the other. If the execution or attestation is denied, under Section 68, Evidence Act, a document required by law to be attested shall not be used as evidence until one attesting witness at least has been called for the purpose of proving, its execution, if there be an attesting witness left and subject to the process of Court and capable of giving evidence. In this case the deed was attested by five witnesses out of whom one had died before the suit and three had been summoned. Out of these three, one Sultan Singh was examined. The other two witnesses, Kishori Saran and K.E. Sorabji, did not appear. Both of them had been summoned. Kishori Saran had been served with summons but did not appear, Summons could not be served on K.E. Sorabji. The document on the face of it bears the attestations of more than one person. Sultan Singh deposed:

Rai Bahadur Lala Joti Prasad, Lala Raghunath Singh and Lala Beni Prasad had executed a hypothecation bond. The document dated 22nd May 1915, exhibit, bears my signature as a witness.... Lala Joti Prasad, Lala Raghunath Singh and Lala Beni Prasad had signed in my presence...When I signed at that time, perhaps Raja Saheb and the same three persons (executants) may have been present.

15. Sultan Singh was not sure one way or the other as to whether the executants were present at the time he signed the deed. This point was made clear by the evidence of Makhan Lal, the scribe of the deed. He has deposed:

The mortgagors signed beneath them at R. B. Sultan Singh's kothi. They all signed it in my presence; they signed in the presence of R. B. Sultan Singh, Ram Chandra and Ram Jiwan. I do not recollect the names of others who may be present. E.B. Sultan Singh is dead. Ram Jiwan is dead. Witness identified Ram Jiwan's signature on the deed. He signed the deed in my presence. R. B. Sultan Singh and Ram Jiwan attested the deed in the presence of the mortgagors.

16. It may be mentioned here that R. B. Sultan Singh died after his evidence had been recorded. The evidence of the scribe left no room for doubt that E.B. Sultan Singh had attested the deed in the presence of the mortgagors. In case of denial of execution or attestation, all that Section 68, Evidence Act, requires is that one attesting witness at least is called for the purpose of proving its execution. Section 71, Evidence Act, lays down:

If the attesting witness denies or does not recollect the execution of the document, its execution may be proved by other evidence.

17. In this case E.B. Sultan Singh did not recollect as to whether he had attested the deed in the presence of the executants and consequently under Section 71, Evidence Act, it was open to the plaintiffs to have proved the execution of the deed by other evidence as they did by the evidence of the scribe and Benarsi Das, plaintiff. As already stated, the evidence of Makhan Lal, scribe, proves that R. B. Sultan Singh was an attesting witness and attested the deed in accordance with the provisions of the law relating to attestation. Section 3, Transfer of Property Act, lays down:

'Attested' in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time and no particular form of attestation shall be necessary.

18. The necessary conditions for a witness attesting the deed are: (1) that he has seen the executant sign or affix his mark to the instrument or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark and (2) that he has signed the instrument in the presence of the executant. If these two conditions are fulfilled by a witness, there can be no doubt about his being an attesting witness. In this case, as already stated, it is proved by the evidence of R.B. Sultan Singh that all the executants signed the deed in his presence, and the fact that he witnessed the deed in the presence of the executants is proved by the evidence of Makhan Lal, scribe. Consequently the plaintiffs have thoroughly complied with the provisions of Section 68, Evidence Act, as required under the decision of the Full Bench case referred to above on the plea of the respondents. The point that the mortgage was invalid on account of the mortgagors not being owners of the property at the time of the mortgage has not been pressed. As already stated, the sale deed was executed by the Government in favour of the mortgagors, some time after the mortgage deed, and at the time of the suit the mortgagors had become the owners of the mortgaged property. Section 43, Transfer of Property Act lays down:

Where a person fraudulently or erroneously represents that he is authorized to transfer certain immoveable property and professes to transfer such property, for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.

19. Under this section the plaintiffs are entitled to enforce their security against the mortgaged property. On these findings the appellants are entitled to a decree for the whole claim. It is therefore ordered that the appeal be allowed with costs and the decree of the lower Court be amended to this extent only: that the plaintiff's claim for the full amount shall stand decreed with costs.