Thaithottathil Pokkar v. Ramchandra Shenoy

1. We think that the provision for compound interest in the document sued on relates only to the period during which the principal remains unpaid, that is, the four years from the date of the document providing for its payment. After that date there is no provision in the document for the payment of any interest. It has been held by the Privy Council in Ghajmal Das v. Brij Bhukan Lal(1) that in such cases the mortgagee will be entitled only to simple interest by way of damages not to compound interest. The principle of this decision we take to be that while a person owing money must be deemed to have borrowed it on the understanding that he would pay some compensation for its use either as simple interest or damages, there is no presumption that he agrees to pay compound interest, as that is not an ordinary incident of the borrowing. Following this decision we hold that plaintiff is not entitled to compound interest after the expiry of the four years, but only to simple interest at 8 per cent upon the amount of principal and interest due on that date as provided in Ex. A. Subject to this modification this' appeal is dismissed.

2. The plaintiff and defendant 5 will pay and receive proportionate costs. The appellant will pay respondent 7's costs. Time for payment is extended to three months from this date.

S.N/R.K

3. Appeal dismissed.