Jackson, J.:— This was a suit to recover a sum of Rs. 700 lent upon an agreement to the effect that it should be repaid with interest at 8 annas per cent, per mensem, by instalments of Rs. 100 in the month of Falgoon (11th February to 12th March) each year from 1268 to 1276 (1862 to 1870); the remainder to be paid in 1277 (, 1871). There was also a clause in the agreement that, if in four years these instalments were not paid, the interest to be paid on the Rs. 700 would be at the rate of Re. 1 per cent per mensem. The plaintiff brought this suit demanding interest at the higher rate, on the allegation that for five or six years after the money had been lent, no instalment was paid as agreed upon.
Both the Courts below have dismissed the plaintiff's claim to higher interest than 8 annas per cent Both have come to the conclusion that the stipulation as to the higher percentage was a penalty, and the plaintiff had no sufficient ground to recover at that rate. It is upon this ground that this special appeal has been preferred to this Court, and it is urged that the higher percentage was clearly due under the express terms of the agreement between the parties.
On the part of the respondents, we have been referred to a decision of this Court, in Boley Dobey v. Sideswar Rao Baboo Boy Kur(a), in which it was held that where a smaller sum is secured by a larger sum, that larger sum may be looked upon as a penalty. In that case, the money had been lent at the rate of 1 per cent per mensem, and there was a stipulation that, if a certain number of instalments were not paid, the whole amount would be considered to have lapsed, and the loan would bear interest at the rate of 10 per cent pen mensem, We think that the facts of that case are very different from those of this, and the question whether the higher rate of percentage should be looked upon as a penalty or not depends upon the circumstances of the case. Ten per cent per mensem is an extraordinarily high rate of interest, and the result of that stipulation in the bond was that the recovery of the amount was considered so doubtful, that an interest in the sum of Rs. 5,500 was sold for Rs. 800. This case in no way seems to agree with that case. In this case, the terms granted to the defendants at first were below the ordinary terms on which money is usually lent in this country, and it was almost a favor shown to the defendants that such terms were granted; and the penalty was not that any excessive rate should be paid, but that the ordinary rate at 1 per cent should be paid. There was also in this case other landed security for the payment of the money, and it does seem as if the meaning of the parties solely was that, if any delay occurred in the repayment of the money, the lender should receive interest at the ordinary rate of 1 per cent per mensem. We set aside the decision of the lower Courts, and decree the plaintiff's suit with all costs with reference to the above remarks. A decree will be drawn np in accordance with the judgment above given.