1988 Supreme(AP) 510

Andhra Pradesh High Court
Judges : B.P.JEEVAN REDDY, K.BHASKAR RAO
M.Ramachandra Reddy & Ors. - Appellant
Versus
S.Rajarathnam Naidu - Respondent
L.P.A.No.225/1987
Decided On : 11-25-88
Advocates Appeared :
Mr. C. Poornaiah,Mr. E. Manohar

Headnote:USURIOUS LOANS ACT, Sec. 3 - Mortgage bond executed in 1966 reciting incurring of debt out of necessity for purchasing land by mortgagor and charging compound interest at 18% per annum with yearly rests and in default of payment of interest as stipulated - Usurious in nature.

       Held : The award of interest at 18% per annum compound with annual rests usurious in the facts and circumstances of this Case. The loan is a secured one. The plaintiff was aware of the difficult situation the 1st defendant was in, at the time of the transaction, which is evident from the recitals in Ex. A-1 and also from the fact that he purchased two plots from the 1st defendant at the same time. The mere circumstance that another finance firm run by 1st defendants brothers family, is charging interest at 24% compound, is no answer of justification. It is also no proof that Courts have recognized or permitted such rate of interest. Therefore, the stipulated rate of interest cannot be allowed.