Royal Commission on Labour in India: Report(1929)||
Laws against usury have been a prominent feature of various religions and national codes, and the leading religions of India affirm the principle underlying them. Unfortunately, as we think, the influence of economic thought in the nineteenth century led to the removal of all legal restrictions on usurious practices in India, and it is only within the last generation that there has been a tendency to re-impose them. This has led to a few legislative experiments but (with the possible exception of some measures relating to land) the attempts so far made have not been effective. The leading measure of general application is the Usurious Loans Act of 1918. This measure enables the court hearing a suit for the recovery of debt to re-open the transaction and relieve the debtor of excessive interest, provided that the transaction was substantially unfair in the first instance. Excessive interest is defined as meaning interest " in excess of that which the court deems to be reasonable having regard to the risk incurred as it appeared, or must be taken to have appeared, to the creditor at the date of the loan ". It is agreed that the law has not been generally successful. We doubt if the interest in the type of transaction we are considering is " excessive " within the meaning of the definition given, for the risk is usually great. But the reluctance of civil courts to deal with issues not raised by the pleadings seems to have been the main obstacle.