Question

Solve :
X lends Rs. 10,000 to Y without interest for one month, with a stipulation that in case of default, interest shall be payable. State the legal position if rate, of interest is (a) 2% p.m. (b) 3% p.m.

Answer 1

Solution: Section to which the given problem relates: Section 74. Decision and Reason: Case (a) : X is entitled to recover from X as per stipulation because the stipulation is not in the nature of a penalty.
Case (b) : X is entitled to recover from Y such compensation as the court considers reasonable because the stipulation is in the nature of a penalty.