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2003 DIGILAW 637 (KER)

The Catholic Syrian Bank Ltd. v. M. C. Stephen

2003-10-08

A.LEKSHMIKUTTY

body2003
Judgment :- The plaintiff in O.S. No.610 of 1990 on the file of the principal Sub Court, Ernakulam is the appellant herein. The plaintiff filed the suit for recovery of money. The case of the plaintiff is that the plaintiff bank gave an overdraft facility of Rs.50,000/- to the defendant for the purpose of his business. He executed hypothecation agreement of goods to secure the over draft. The plaintiff is entitled to charge interest at 17.5% per annum. As per the agreement the interest at the end of every three months should be added to the principal. The defendant also executed a demand promissory note agreeing to repay the amount with interest. As per the terms of the agreement, the plaintiff bank is entitled to charge interest according to their discretion. The plaint a Schedule property belonging to the defendant was mortgaged to the plaintiff by deposit of title deed. The plaint B schedule are the goods hypothecated to the bank. The plaintiff bank insured the goods since the defendant refused to insure it. As on 12.11.1990. Rs.43,039/- is due to the plaintiff bank. The plaintiff bank also entitled to get 18.5% interest since it is a commercial transaction. The suit is filed for recovery of the said amount with interest. 2. In the written statement, the defendant admitted the plaint transaction. There was also a contention that all the amounts paid by the defendant were not credited. The interest claimed is excessive. The defendant is ready to pay the amount in instalments. 3. Subsequently, the defendant has withdrawn the contention in the written statement and admitted the plaint claim. The court below passed a decree directing the defendant to pay an amount of Rs.43,039/- within 6 months with future interest at 6% per annum together with cost at a concessional rate failing which the plaintiff is allowed to recover the amount by sale of the plaint schedule property and the balance, if any, from the defendant and his other assets. Challenging the interest portion of the judgment and decree, the plaintiff filed this appeal. 4. It is submitted by the learned counsel for the appellant/plaintiff that as per the agreement, the plaintiff is entitled to recover interest at the rate of 18.5% per annum. The loan transaction was admitted by the defendant in the written statement. Challenging the interest portion of the judgment and decree, the plaintiff filed this appeal. 4. It is submitted by the learned counsel for the appellant/plaintiff that as per the agreement, the plaintiff is entitled to recover interest at the rate of 18.5% per annum. The loan transaction was admitted by the defendant in the written statement. Even though he has raised a contention that all the amounts paid were not credited and interest claimed is excessive, the said contentions were withdrawn and the suit was decreed Admittedly the plaint amount includes 18.5% interest. Learned counsel for the appellant submitted that since it is a commercial transaction, the plaintiff is entitled to get interest at the agreed rate, the plaint amount includes 18.5% interest. Calculation of future interest is at the disoretion of the court, the judgment itself would show that the plaint transaction was admitted by the defendant. 5. In so far as the decree is for payment of money, the court may order interest at such rate as the court deems reasonable and in normal course it shall net exceed 6% per annum. But it may exceed 6% per annum if the liability had arisen out of a commercial transaction but shall not exceed the contractual rate of interest. Once the Court has exercised its discretion, there is no scope for any interference. But it may exceed 6% per annum if the liability had arisen out of a commercial transaction but shall not exceed the contractual rate of interest. Once the Court has exercised its discretion, there is no scope for any interference. As per Section 34 of the code of Civil procedure, where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principle sum judged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum from the date of the decree to the date of payment or to such earlier date as the Court thinks fit; provided that where the 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 nationalized banks in relation to commercial transactions So. It can be seen that the court is having the discretion with regard to future interest. The court below has exercised its discretion and granted only 6% interest from the date of decree till recovery. In such circumstances. I find no reason to interfere with the discretion exercised by the court below. There is no merit in the appeal and it is dismissed.