K.P. SUBBARAMA SASTRI & ORS. ETC. vs K.S. RAGHAVAN & ORS. ETC.

The Supreme Court held that under Section 74 of the Indian Contract Act, a stipulation in a Kuri agreement that upon default, the entire amount becomes payable with 12% interest is not unconscionable or penal. The Court established that if the debt was due at the time of the bond, the stipulation is not penal, whereas if it becomes due only on the respective instalment dates, it may be considered a penalty. In this case, the Court found no unconscionability in the contract, thus allowing the appeal and upholding the enforceability of the stipulation.