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Andhra Pradesh High Court
Judges : D.S.R.VERMA, S.V.MARUTHI
Indian Bank, Madras - Appellant
Versus
N.Munisankar - Respondent
Decided On : 10-11-99
Suit is filed for recovery of Rs. 13,41,295-20 Ps. being principal and interest due on a pronote executed by first defendant in favour of Plaintiff-Bank for a sum of Rupees 3,00,000/- and for costs - Averments in brief are that 1st defendant for purpose of doing business in real estate obtained overdraft facility in Current Account of a sum of Rupees 3,00,000/- and started availing facility after executing a pronote - He agreed to pay interest at rate of 7. 5 per cent over official rate of Reserve Bank of India with a minimum of 17. 5% per annum with quarterly rests - Second defendant was guarantor first defendant renewed demand promissory note for a sum of Rs. 7,13,402-40 Ps - First defendant deposited title deeds of immovable property as security - Defendants have acknowledged debt in a sum of Rs. 8,67,239. 55 Ps - Promissory note was also renewed - In spite of reaped demand, defendant have not paid amount - Hence suit – Held , Main argument of learned counsel for appellant is that in view of Judgment of Supreme Court in Bank of Baroda trial Court ought to have awarded interest at 18 per cent from date of redemption till date of realisation as interest payable is only on amount adjudged and not on amount borrowed - On other hand, learned counsel for respondents contended that interest is to be allowed only on principal amount and not on amount adjudged - In view of Judgment of Supreme Court in Bank of Baroda v. holding that interest is to be granted on principal sum adjudged from date of redemption till date of realisation, learned counsel for appellant is right in his contention that trial Court ought to have granted interest on amount adjudged and not on principal amount borrowed - Accordingly allowed
( 2 ) THE suit is filed for recovery of Rs. 13,41,295-20 Ps. being the principal and interest due on a pronote dated 22-11-1985 executed by the first defendant in favour of the Plaintiff-Bank for a sum of Rupees 3,00,000/- and for costs.
( 3 ) THE averments in brief are that the 1st defendant for purpose of doing business in real estate obtained overdraft facility in the Current Account of a sum of Rupees 3,00,000/- and started availing the facility after executing a pronote on 22-11-1985. He agreed to pay interest at the rate of 7. 5 per cent over the official rate of Reserve Bank of India with a minimum of 17. 5% per annum with quarterly rests. The second defendant was the guarantor. On 31-3-1987 the first defendant renewed the demand promissory note for a sum of Rs. 7,13,402-40 Ps. The first defendant deposited the title deeds of the immovable property as security on 28-4-1988. The defendants have acknowledged the debt in a sum of Rs. 8,67,239. 55 Ps. The Promissory note was also renewed. In spite of reaped demand, the defendant have not paid the amount. Hence the suit.
( 4 ) DEFENDANTS denied all the allegations in their written statements.
( 5 ) ON the basis of the averments, the following issues were framed. 1. Whether the Plaintiff is entitled to recover the suit amount?2. WHETHER the second defendant is liable to pay the suit amount?3. TO what relief?
( 6 ) THE plaintiff examined P. W. 1 and marked Exs. A-1 to A-22 documents. The defendants have not adduced either oral or documentary evidence.
( 7 ) ON the basis of the oral and documentary evidence, the trial Court decreed the suit.
( 8 ) HOWEVER, while decreeing the suit, the trial Court awarded interest from the date of redemption till the date of realisation at 13% on the principal sum of Rs. 3,00,000. 00. Aggrieved by the same, the Plaintiff-Bank preferred this appeal.
( 9 ) THE main argument of the learned counsel for the appellant is that in view of the Judgment of the Supreme Court in Bank of Baroda v. M/s. Jugannath Pigment and Chem, 1995 ISJ (Banking) 573; the trial Court ought to have awarded interest at 18 per cent from the date of redemption till the date of realisation as the interest payable is only on the amount adjudged and not on the amount borrowed. On the other hand, the learned counsel for the respondents contended that interest is to be allowed only on the principal amount and not on the amount adjudged.
( 10 ) THE question, therefore, is whether the appellant is entitled for interest on the amount adjudged or on the principal amount borrowed.
( 11 ) IN view of the Judgment of the Supreme Court in Bank of Baroda v. M/s. Jugannath Pigment and Chem. (supra), holding that interest is to be granted on the principal sum adjudged from the date of redemption till the date of realisation, the learned counsel for the appellant is right in his contention that the trial Court ought to have granted interest on the amount adjudged and not on the principal amount borrowed.
( 12 ) THEREFORE, we allow the appeal and direct that interest be paid at 18. 5 per cent on the amount adjudged i. e. , Rs. 13,41,291-25 Ps.
( 13 ) THE appeal is accordingly allowed. No costs. Appeal allowed.
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