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Issues: Whether the excess payable over the cash advance under the mortgage contract constituted interest, so that the principal remained limited to the amount actually advanced and the balance was liable to be cancelled under the applicable debt-relief law.
Analysis: The contract advanced a sum of money and required repayment by yearly instalments aggregating to a larger amount. Even though the agreement did not expressly apportion each instalment between principal and interest, the excess over the amount advanced was the consideration for the use of the lender's money. Interest, in its legal sense, includes the return, compensation, or profit obtained for the use or retention of money. The character of the excess was therefore not altered by the absence of the word 'interest' in the contract. On that basis, the principal was only the amount actually advanced, and the amount over and above it represented interest liable to statutory relief.
Conclusion: The excess over the advance was held to be interest, the principal was confined to Rs. 2500, and the appellants succeeded in obtaining cancellation of the interest component.
Ratio Decidendi: Where a loan contract requires repayment of more than the sum actually advanced, the excess is interest if it represents compensation for the use of the lender's money, regardless of the label used in the contract.
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