Lords Sitting of 17 June 1825

RATE OF INTEREST IN INDIA.
The Marquis of Hastingsrose, to introduce a bill to explain the clause of the act of the 13th of George 3rd, which had been supposed to limit the rate of interest on loans made in India to 12 per cent. He objected, we understood, in the first place, to the opinion given by the law officers of the Crown on the construction of the clause of this act. He paid the greatest deference to their opinion; but he must dissent from it, when he found it in contradiction with the system which had been acted on for half a century in India. It surely could never be maintained that the simple opinion of
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counsel, however respectable, should supersede so long a practice. This, it was true, was not likely to happen now; but bad times might return, and their lordships should be careful not to establish such a precedent. The opinion given purported, that the clause in question extended to the whole of India, even to powers totally independent of the East-India company—than which nothing could be more unjust, when it was considered what the practice had been. The preamble of the act showed what the meaning of the clause was. It was made penal to take a higher rate of interest than 12 per cent, because, under the plea of interest, presents had sometimes been corruptly taken; but the framers of the bill never dreamt that they were competent to restrain British subjects from taking any rate of interest in the dominions of an independent prince, over whose states they had no authority. If this could be supposed, the greatest confusion and inconsistency would appear in the subsequent practice of the government of India. How could acts done in foreign independent states be made prosecutable and recoverable only in his majesty's courts in India? This would be to suppose that a penalty was enacted which these courts had not the means of inflicting. The noble marquis then proceeded to show, that the construction put upon the act of parliament by the law-officers of the Crown was inconsistent with regulations which had been subsequently made by the supreme government of India. These regulations had the force of law. They were not issued until after they had been registered in the supreme court of justice, and they were annually laid before parliament. These regulations had sanctioned the lending of money at a much higher rate of interest than 12 per cent. A regulation was promulgated in 1793, authorizing the recovery of interest at 24 to 37 per cent. Another regulation, made in 1803, extended the rate of interest to 30 per cent. These regulations, and the practice which had been constantly followed, clearly showed, that the court of directors and the government of India had never understood the act to put any limit on the rate of interest, with respect to contracts made by British subjects domiciled in the territory of a foreign prince. On these grounds be submitted to their lordships a bill to amend and explain the act of the 13th of George 3rd. After the first reading, he

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should move that the opinion of the judges be taken, to ascertain whether the bill he now introduced clearly and effectually explained what ought to be in the meaning of the clauses of the act relating to the rate of interest.
The bill was read a first time.