1. These two Letters Patent Appeals arise out of two original suits, O. S. No. 24 of 1920 & O. S. No. 823 of 1918 on the file of the Court of the District Munsif of Kovur. Both suits were tried together. The plaintiffs sued to recover principal and interest on two mortgage bonds executed in their favour. The mortgage bonds are couched more or less in the same language. The principal amounts are made payable in various installments with interest at 18 per cent per annum. Then the documents contain further a stipulation that If payments are not made for 1-2 installments according to the prescribed time, and if any default is made, we shall pay the same with compound interest at the said rate on the whole amount of principal and interest due on the date of default (see Ex. B in O. S. No. 823 of 18).

2. Default having been made in the payment at the end of the first installment, the plaintiffs claimed to enforce the stipulation for the payment of the compound interest contained in the bonds. The only question argued before us is whether the stipulation for payment of compound interest in these circumstances is penal under Section 74, Indian Contract Act. The learned Judge, Phill