The judgment below

The part against the defendant shall be reversed, and that part of the case shall be remanded to the Panel Division of the District Court.

The grounds of appeal are examined.

1. In cases where an agreement is made on interest with a monetary loan agreement, if the interest rate exceeds the limit permitted by social norms in light of the economic and social circumstances at the time of the agreement between the parties to the agreement, if the difference in economic power between the parties has been significantly high, the agreement on interest exceeding the permissible limit is null and void as a juristic act whose content is in violation of good morals and other social order, since the lender gains unjust profits by taking advantage of his superior position and the borrower bears an excessive and unfair burden. As such, if the lender has agreed on the interest rate exceeding the permissible limit under social norms and received, the portion exceeding the legitimate limit of the interest rate shall be returned to the borrower as unjust gains;

(2) On February 15, 2007, the court below acknowledged the following facts: (a) the Defendant loaned KRW 150 million to the Plaintiff on December 29, 2006; and (b) the Defendant returned the principal by adding interest of KRW 150 million up to June 30, 2007; and (c) the Defendant delayed the return of the principal by the due date, the Defendant agreed to be paid damages for delay at a rate of 1% per month for the principal; (d) the Plaintiff was granted a right to collateral security on each of the instant real estate owned by the Plaintiff to secure this; and (e) the Defendant received dividends of KRW 39,076,255 on September 29, 2009 in a voluntary auction procedure based on the above collateral security.

In addition, the lower court stipulated that Article 2(1) of the former Interest Limitation Act (amended by Act No. 8322, Mar. 29, 2007; Act No. 8327, Jun. 30, 2007; hereinafter the same shall apply) provides that “The maximum interest rate under the contract for monetary lending and lending shall be prescribed by Presidential Decree within the scope not exceeding 40 percent per annum,” and the highest interest rate under Article 2(1) of the former Interest Limitation Act.