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2002 DIGILAW 354 (JHR)

Bank Of India v. Kisan Chemical Industries

2002-03-14

VIKRAMADITYA PRASAD

body2002
JUDGMENT Vikramaditya Prasad, J. 1. This appeal has been preferred to set aside the decree passed by Sri P. Topno, 2nd Addl. Subordinate Judge, Giridih, in Title Mortgage Suit No. 13/78/32/79. 2. By the impugned judgment and decree, Title Suit No. 13/77 and Mortgage Suit No._ 13/78 were heard and decided and the appellant Bank of India was decreed on contest with cost and it was declared that the appellant Bank of India was entitled to recover a sum of Rs. 3,12.432.12 only from the defendant Nos. 1,2,3,4 And 5, who were the defendants in Mortgage Suit and that no further interest would be paid to the Bank of India on any of the aforesaid sum as the interest already claimed by it (Bank) had come upto the tune of Rs. 1,47,425.12. It was further directed that the defendant K.C. Industries might pay off the aforesaid dues (Rs. 3,12,432.12) soon and it might resume business and dealings with the Bank of India. The aforesaid decretal amount was directed to be paid within nine months from the date of the judgment failing which the decretal amount was to be recovered by the sale of the properties under security and hypothecation and if the sale proceeds did riot cover the dues the remaining dues would be recovered from the persons of the defendant Nos. 2, 3 4 and 5. It was also declared that there was a valid and" subsisting charge in favour of the Bank of India on the hypothecated goods and there was a valid and subsisting mortgage on the immovable properties of the defendants. The other reliefs like injunction against the defendants restraining them from dealing with or encumbering the properties which had been hypothecated prayed for by the appellant was disallowed. 3. M/s. Kisan Chemical Industries is a partnership firm having its place of business at Isri Bazar. Dumri. Giridih, and the other defendants-respondents are the partners of that firm. The partnership firm was a registered small scale unit with the Government of Bihar. The said firm applied for a credit facility of Rs. 3 lacs to the plaintiff-appellant for purchase of new machinery, construction of buildings-sheds and godown. The plaintiff-appellant agreed to advance money to the extent of Rs. 3 lacs on interest and on the terms and conditions conveyed to them, vide annexure-1 to the plaint. The Bank advanced altogether Rs. The said firm applied for a credit facility of Rs. 3 lacs to the plaintiff-appellant for purchase of new machinery, construction of buildings-sheds and godown. The plaintiff-appellant agreed to advance money to the extent of Rs. 3 lacs on interest and on the terms and conditions conveyed to them, vide annexure-1 to the plaint. The Bank advanced altogether Rs. 1,65.0007- out of the sanctioned amount (on 20.10.1973 Rs. 81,000/- & on 14.12.1973 Rs. 23.0007- for purchasing machineries and on 11.12.1073 for construction of the factory shed) and certain documents were executed in favour of the appellant-Bank tn connection with the loan and those documents were renewed subsequently on 31.3.1975. The loan agreement, vide its Clause 3 of the deed of hypothecation, provides that the defendant respondents will have to repay the loan meant for construction of factory-shed and purchase of machineries in half-yearly installments of Rs, 25,000/-each being due in August, 1974. February 1975. August. 1975, February 1976, August, 1976. February 1977, August. 1977 and February 1978 and the rate of interest on the loans so long as it remains unpaid or any balance thereof remains unpaid shall be paid @ 4% above the Reserve Bank of India rate minimum 11% effective 11 1 /2% per annum or at such rate or rates as applicable from time to time with quarterly rests March, June, September and December each year. So liability to pay interest arose right from December, 1973, following the disbursement of loan during the quarter ended December, 1973. Then it transpires that the defendants did not pay interest and also the sum advanced which they had taken and subsequently the defendants stopped dealings with the Bank. 4. All the aforesaid circumstances compelled the appellant-Bank to file a Mortgage Suit No. 13/1978. 5. It also transpires that a Title Suit No. 13/1977 was filed by the M/s. Kishan Chemical Industries against the appellant Bank for a declaration that as the defendant (Bank) had not disbursed the entire amount of loan sanctioned to the plaintiff (respondent) and the defendant (Bank) had not performed their part of contract the Bank was not entitled to recover any instalment of loan, dues and interest on any loan amount. A further relief was prayed to restrain the defendant (Bank) by a temporary injunction from taking steps by instituting or otherwise for recovery of the principal sum advanced in instalments by contract and interest thereon till the disposal of the Title Suit and prayer of cost etc. In paragraph 6 of the Title Suit filed By the defendant it has been explained by the plaintiff of the. Title Suit (respondent in this appeal) that Rs. 1,65,000/- was advanced to the defendant-respondent by the Bank and this is also the statement of the plaintiff (Bank) in the Mortgage Suit as stated above. 6. The Mortgage Suit was filed by the Bank for the following reliefs : (i) A decree be passed against the defendant-respondent to pay Jointly and severally to the Bank a sum of Rs. 3,12,432.12 with interest pendente life and future till realisation @ 14 174% plus 2% penal rate or at such rate or rates as will be applicable and cost of the suit and also other reliefs and that the hypothecated goods and immovable properties may be appropriated towards the satisfaction of the amount of the loan advanced. 7. The defendants-respondents contested the suit. As stated earlier both the Mortgage Suit brought by the Bank and the Title Suit brought by the respondents were merged together and disposed of by the common judgment and decree, the substance of which has already been stated above. 8. It transpires that being aggrieved by the impugned judgment and decree, the appellant Bank filed this appeal and the respondents did file a cross- objection pleading, inter alia, that the Court below should have held that the rate of interest was highly excessive and compound interest was charged on compounding the principal and interest every quarterly which was against the terms of the contract and the practice prevalent in the trade and the Court below should have, if at all, granted a decree for the principal amount of loan and not for any interest either till the institution of the suit or for any time. But that cross-objection was rejected, vide order dated 2.4.1984, because of the non-compliance of the Courts order to deposit the requisite Court fees. Thus, the cross-objection docs not exist and the plea taken by the respondents in the cross- objection cannot be entertained. 9. But that cross-objection was rejected, vide order dated 2.4.1984, because of the non-compliance of the Courts order to deposit the requisite Court fees. Thus, the cross-objection docs not exist and the plea taken by the respondents in the cross- objection cannot be entertained. 9. The only point for determination in this first appeal is whether the Court below has erred in exercising its jurisdiction by not allowing the interest pendente Lite and future till the payment to the appellant-Bank. 10. The main grievance of the appel-lant-Bank is that the Court has not passed any order with regard to the interest pendente lite and future which should have been awarded and in support of this, it has relied upon a number of decisions. 11. Learned counsel appearing for the respondents argued that the interest has already gone beyond the original principal sum advanced and even the interest that has been granted to the appellant should not be allowed as it violates the rule of Damdupat. This rule of Damdupat is between the parties who are Hindus, where the interest exceeding the principal is not allowable, and the rule of Damdupat is exhausted when the matter passes into Judgment. In this case, the judgment has already been passed and so exhausted. Moreover, it is not a suit between the two Hindus, but between the two parties, out of whom one is Hindu and the other is a Nationalised Commercial Bank. Thus, they do not fall within the definition of the Hindus, 12. As the matter relating to the cross-objection cannot be dealt with in this appeal for the reasons that the same has been rejected, the only question to which I will confine is to the point which is in hand for determination. 13. It is worthwhile to reproduce (he operative portion of the impugned judgment, which reads as follows : "...the Bank of India is entitled to recover a sum of Rs. 3,12,432.12 (Rupees three laks twelve thousand four hundred thirty two and paise twelve) only from defendant Nos. 1, 2, 3, 4 and 5 (in T. Mort. 13/78) only, no further interest is allowed to the Bank of India on any of the aforesaid sum as the interest already claimed by them has come up to the tund of Rs. 3,12,432.12 (Rupees three laks twelve thousand four hundred thirty two and paise twelve) only from defendant Nos. 1, 2, 3, 4 and 5 (in T. Mort. 13/78) only, no further interest is allowed to the Bank of India on any of the aforesaid sum as the interest already claimed by them has come up to the tund of Rs. 1,47,425.12P..." Thus, it is clear from the aforesaid judgment that the Court has given reason for not awarding any interest pendente lite and future. 14. Section 34(1) CPC empowers the Court to allow further interest at such rate riot exceeding six per cent per annum as the Court deems reasonable on such principal sum from the date of decree to the date of payment or to such earlier date as the Court thinks fit, provided that where (he liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relalion to commercial transactions. In this sub- section "Nationalised Bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. For the purpose of this section, a transaction is a commercial transaction if it is connected with the industry, trade or business of the party incurring the liability. 15. Thus, this provision leaves discretion on the Court to grant interest pendente lite and future and this discretion has to be used by the Court on the basis of the facts and circumstances of each of the cases. 16. If there is no order passed by the learned trial Court with regard to the payment, of interest pendente lite and future, as per Section 34(2) CPC, it will be deemed that the Court has refused such interest. But. in my opinion, it is not that the decree is silent on this point. From the order of the learned trial. Court it will appear that the trial Court has, for the reasons, not granted the interest pendente life and future, because the interest has already, gone to a particular limit of Rs. 1,47,425.12P. But. in my opinion, it is not that the decree is silent on this point. From the order of the learned trial. Court it will appear that the trial Court has, for the reasons, not granted the interest pendente life and future, because the interest has already, gone to a particular limit of Rs. 1,47,425.12P. Thus, it appears that the learned trial Court, after applying its mind on this fact, has, for the reasons recorded by it, not granted interest pendente lite and future to the Bank. 17. The question now is whether the Court below has exercised its discretion vested in it by law reasonably or whether this Court in the first appeal will interfere with that and will pass order contrary to it. 18. From the facts of this case, it appears that Rs. 1,65,000/- had been advanced by the Bank to the respondents and the impugned judgment says that by the time, the suit was filed for recovery of the loan, the amount has come to Rs. 3,12,432.12P including the interest payable on that date. Definitely, therefore, the interest has gone to the extent of Rs. 1,47,424.12P, i.e. roughly it became equal to that of the principal amount that was paid to the respondents by the Bank. The suit was disposed of by the trial Court in the year 1980 and therefore, about 22 years have passed and if at this stage, it is ordered that interest as per the commercial practice or as per the stipulated rate be granted from the date of decree then in that circumstances, the interest amount will become so enormous, which will be difficult to be realised from the assets of the respondents which had been hypothecated will besides that also be unconscionable. Therefore, this Court does not consider it proper to interfere with the discretion exercised by the Court below in this first appeal. Consequently, no interest is allowed pendente life and future even though it could have been admissible under the contract. 19. Before I part with this judgment, I think it proper to observe that the Title Suit was disposed of in the year 1980 and there was no stay granted against the execution of the decree passed in the impugned Title Suit. 19. Before I part with this judgment, I think it proper to observe that the Title Suit was disposed of in the year 1980 and there was no stay granted against the execution of the decree passed in the impugned Title Suit. But it is not known as to whether the Bank authorities have taken up execution proceedings or not and if they have not taken up the execution proceeding and realised the amount which was already decreed in their favour, they have done it at their own peril and the disadvantage that has accrued to them is because of their own lapses. 20. In the result, this appeal is dismissed and the decree of the Court below passed in the Title Appeal is confirmed. 21. Let the lower Court records the sent back to the Court concerned forthwith.