Abeydeera V. Ramanathan Chettiar

1936 Present : Abrahams C.J. and Soertsz J.

ABEYDEERA v. RAMANATHAN CHETTIAR.

139-D. C. Galle, 33,428.

Money Lending Ordinance-Promissory note given after account stated-Money lending transaction-Compound interest-When chargeable-Ordinance No. 2 of 1918, ss. 10, 13 and 14.

The defendant gave three cheques to the plaintiff at various times to cover the value of goods sold and certain advances made to him.

Thereafter the cheques were returned and the promissory note which was the subject matter of the action was given representing the amount due upon an account stated between the parties at that date.

Held, that the note was given for a money lending transaction although no money actually passed between the parties at the time the note was given.

In Ceylon compound interest may be recovered where the party charged has agreed to pay it.

APPEAL from a judgment of the District Judge of Galle.

N. E. Weerasooria (with him J. R. Jayawardana), for defendant appellant.

H. V. Perera (with him E. B. Wikramanayake), for plaintiff, respondent.

October 30, 1936. ABRAHAMS C.J.-

This is an action for the recovery of a sum of Rs. 22,099.97 alleged to be due on a promissory note dated July 19, 1932, made out for Rs. 20,000 with interest thereon at the rate of 14 per cent, per annum. The plaint states that this sum was " the amount found to be due from defendant to plaintiff upon an account stated between them on the said date in respect of their prior dealings ". The plaintiff is a money lender, and he also appears to be a dealer in rice. On May 15, 1931, the defendant gave the plaintiff a cheque for Rs. 4,000 in payment for rice purchased from him, with interest on the amount owed. There had also been money lending transactions between the parties, and on February 6, 1932, the defendant gave the plaintiff two cheques for Rs. 14,000 and Rs. 1,000 respectively to cover certain advances made and interest charged on the amounts due. On July 19, 1932, the promissory note, which is the subject matter of the action, was given by the defendant to the plaintiff, and the three cheques previously mentioned were returned.

It was objected at the trial, on behalf of the defendant, that the capital sum actually borrowed did not appear on the face of the note as required by the provisions of section 10 of the Money Lending Ordinance, No. 2 of

1918, and therefore the note was not enforceable. It was further objected by him that the capital sum of Rs. 20,000 appearing on the note included compound interest, and that therefore the note was void, and also that it was a fictitious note within the meaning of section 14 of the Money Lending Ordinance and that it came under the provisions of section 13 of the Ordinance. At the trial it was admitted by Counsel for the plaintiff that in arriving at the sum of Rs. 20,000 compound interest was charged. The following were the issues at the trial:-

1. Does the capital sum of twenty thousand rupees, appearing on the note include interest on interest on previous transactions ?

2. If so, is the note void ?

3. Does the capital sum appearing on the note represent the actual sum due to plaintiff at the date of the note ?

4. If not, is the note enforceable.?

5. What amount if any is due on the note ?

6. Was the default if any, incorrectly setting out the capital sum borrowed due to inadvertence and not due to an intention to evade the provisions of the Money Lending Ordinance ?

In view of what I am about to find in this appeal, there will be no reason to discuss the learned Judge's finding on the 6th issue. He answered the other five as follows:-The first in the affirmative, the third in the negative, the second and fourth in favour of the plaintiff, and on the fifth he held that the plaintiff was not entitled to recover the full amount claimed on the note, as compound interest was not permissible, and that the claim must be d

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