The rate of interest to be charged depends on the circumstances of each case and there is no general rule. A subsequent legislation can bar a creditor from claiming interest at a rate higher than the rate specified in the legislation, even if the right to claim interest at the contract rate had accrued to the creditor before the legislation came into force.

SRINIVASACHARI, J. :-

This is an appeal directed against the judgment of the Subordinate Judge, Vijayawada, decreeing the plaintiffs suit. The plaintiff-respondent filed a suit on the basis of a pronote executed by the defendant on 12-9-1949 which in turn was one in renewal of an earlier promissory note for Rs. 4,000/- executed on 25-9-1946. The plaintiff claimed Rs. 6,113-8-9 as being the amount of principal due on the pronote and claimed by way of interest a sum of Rs. 1461-0-6, calculated at Re. 1-4-6 per cent, per month with yearly rests.

The defendant admitting the execution of the suit pronote only disputed the claim as regards interest contesting that the rate of interest was excessive and the whole transaction was substantially unfair. She stated that interest at 9 per cent, per annum simple was the most reasonable rate of interest to which the plaintiff was entitled. The only issue in the case therefore was as to whether the plaintiff was entitled to the interest claimed by him. The learned Subordinate Judge was of the opinion that the defendant was not entitled to the relief claimed by her and decreed the suit awarding interest at the contract rate, and allowing future interest at 6 per cent, per annum on the principal amount from the date of the suit. Hence this appeal.

2.The only point for determination there-fore is whether the interest charged is excessive. Relief on the ground of interest being excessive could be granted to a debtor under the Usurious Loans Act, Act 10 of 1918. Section 3, sub-s. (1) of the Central Act has been amended by Madras Act, Act 8 of 1937 and an explanation has been introduced and the section as amended reads under:

"Notwithstanding anything in the Usury Laws Repeal Act 1855 where in any suit to which this Act applies whether heard ex parte or otherwise the Court has reason to believe that the transaction was, as between the parties thereto, substantially unfair, the Court shall exercise one or more of the following powers, namely........"

The explanation introduced by the Madras amendment is to the following effect :

"If the interest is excessive the Court shall presume that the transaction was substantially unfair, but such presumption may be rebutted by proof of special circumstances justifying the rate of interest."

The effect of the introduction of this explanation is that once the Court comes to the conclusion that the interest is excessive, a presumption would be drawn that the transaction is unfair and it would be for the creditor to rebut such presumption by showing that in the peculiar and special circumstances of the case, the interest was but fair and reasonable. Where the transaction is found to be unfair the Court is empowered to grant relief to the debtor under S. 3 (1) of the Usurious Loans Act.

The sole point to be determined therefore, is as to whether the interest in this case could be regarded as being excessive. There can be no general rule with regard to the rate of interest to be charged. It will depend upon the nature of the particular transaction and other circumstances appurtenant to such transaction.

Learned counsel for the appellant argued that under no circumstances could a rate of Re. 1-4-6 compound be regarded as being a fair rate of interest, and in support of his contention relied upon a decision of the Madras High Court in Venkat Rao v. Venkataratnam, 1952-2 Mad LJ 60 : (AIR 1952 Mad 872) (A). The learned Judge after reviewing the decisions of the Privy Council and the Allahabad High Court came to the conclusion that in Madras it has long been understood that 12 per cent, simple interest was a fair, proper and reasonable rate.

3. Learned counsel for the appellant would have us hold that any interest above 12 per cent, simple must be regarded as excessive in view of the decision above referred to. The case that the learned Judges were dealing with was a case of a loan advanced on the mortgage of immoveable property and in the particular circumstances of th