Ghantasala Seetharamiah v. Tadepalli Pitchayya

1. Following Sundar Koer v. Rai Sham Krishen(1), we hold that a provision for compound interest on default is not by itself penal but a provision for compound interest at an appreciably higher rate than the rate mentioned as payable till default may be penal.

2. We hold that the raising of the rate for compound interest from twelve and quarter annas to one rupee per cent, per mensem (from 9.3/16 per cent, to 12 per cent par annum) is penal and we allow compound interest at nine and three-sixteenths per cent, with proportionate costs to the plaintiffs throughout in modification of the decree of the lower appellate Court. Time for redemption is extended till three months from this day.

S.N/R.K

3. Decree modified.