The Chief Justice.-The only question in this appeal preferred by the plaintiff who sued to recover the amount due for principal and balance of interest on a promissory note dated the 24th July, 1930, executed by the first defendant and others in his favour for Rs. 4,600 is whether the defendants are entitled to any relief under the Usurious Loans Act. The suit promissory note carried interest at 24 per cent, per annum. It is common ground that this promissory note represents the final transaction in a series of transactions between the parties beginning in 1922. In that year there were two promissory notes executed by the first defendant in favour of the plaintiff for Rs. 1,000 each, Exs. P-4 and P-5. Under these promissory notes the rate of interest was also 24 per cent, per annum. They were consolidated into a single promissory note on 20th September, 1924, Ex. P-6, for Rs. 2,000. On 12th April, 1927, for the amount due under the promissory note of 1924 both for principal and balance of interest, another promissory note for Rs. 3,750 was executed carrying interest at 24 per cent, per annum. It is in renewal of this promissory note that the suit promissory note was executed on 24th July, 1930, for Rs. 4,600 which included the principal and the balance of interest due under the promissory note of 1927. The defendants pleaded that they were agriculturists entitled to the benefits of Madras Act IV of 1938 and also pleaded that in any event they would be entitled to the benefits of the provisions of the Usurious Loans Act because the interest claimed was excessive. The learned Subordinate Judge rejected the former plea but accepted the latter and granted a decree for Rs. 2,000 with interest at the rate of 12 per cent, per annum from the respective dates of the two promissory notes, Exs. P-4 and P-5, after giving credit to the payments made from time to time.

The plaintiff, who is the appellant, contends that the lower Court had no power to give the defendants the benefit of the Usurious Loans Act in the way in which it has done. Firstly, he contended that the rate of 12 per cent, is too low, and at least 15 per cent, should have been allowed as a substantially reasonable rate. The rate charged by him on the different promissory notes was 24 per cent and that rate the plaintiff does not claim in appeal. He claims only 15 per cent. The lower Court has awarded 12 per cent. The question is whether there is any ground for interfering with the rate awarded by the lower Court. The learned Subordinate Judge has given, in our opinion, sound reasons for awarding a rate of 12 per cent. There was obviously not much risk incurred by the plaintiff and it must be specially mentioned that the day after the execution of the suit promissory note, the plaintiff obtained a security bond from the first defendant in respect of it. In Narasimhan v. Premayya1 only nine per cent, per annum was awarded; but as that was a case of a second debt, we do not think that it furnishes much assistance to the present case. We confirm the rate of 12 per cent, awarded by the Court below.

It was next contended by learned counsel for the plaintiff that the lower Court had no power to apply section 3(1)(ii) of the Act. In so far as it is relevant for this appeal that provision runs thus, as amended by Madras Act VIII of 1937:

“.....where, in any suit to which this Act applies, whether heard ex parte or otherwise, the Court has reason to believe,-

(a) that the interest is excessive; and

(b) that the transaction was, as between the parties thereto, substantially unfair;” the Court shall exercise one or more of the following powers, namely:

“(i) .......

(ii) notwithstanding any agreement purporting to close previous dealings and to create a new obligation, re-open any account already taken between them and relieve the debtor of all liability in respect of any excessive interest, and if anything has been paid or allowed to account in respect of such liability, order the creditor t

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