The court has the power to reopen a transaction under Section 3 of the Usurious Loans Act if the interest rate is excessive and the transaction is substantially unfair.

JUDGMENT

M Venkata Ramana, J. - This second appeal is presented against the decree and judgment in A.S.No.113 of 2018 on the file of the Court of the learned Principal District Judge, West Godavari at Eluru dated 19.02.2021. By this decree and judgment, the decree and judgment in O.S.No.251 of 2016 dated 03.01.2018 on the file of the Court of the learned Additional Senior Civil Judge, Eluru were confirmed.

2. Having regard to the nature of this matter, upon hearing Sri Ch.Venkaiah, learned counsel for the appellant, it is felt desirable to dispose of at the stage of admission itself, finding that it is lacking substantial questions of law in terms of Section 100 CPC, to determine.

3. The question involved in this matter is in respect of granting or rather permitting interest during currency of the transaction covered by the suit promissory note dated 29.07.1987.

4. The case of the appellant is that the respondent and his father borrowed Rs.25,000/- on 29.07.1987 for the purpose of their business agreeing to repay the same with interest at 12% p.a. compounded annually and made part payments, time to time. Further case of the appellant is that in spite of repeated demands and issuance of a legal notice dated 07.06.2016, since the respondent did not repay the amount due, he was constrained to lay the suit for recovery of Rs.5,21,531/- with interest at 12% p.a. from the date of the suit till realisation.

5. The defence set up by the respondent at the trial was that the appellant is a benami of one Sri Vegunta Radha Krishna Murthty and his son Sri Vegunta Prasad and that there were money transactions between these parties since the year 1988 including during the lifetime of his father Sri China Kannayya. Further defence of the respondent was that at the instance of the creditors, he was made to make payment endorsements upon paying interest from time to time without any default, though these payments were not to the extent stated by the appellant.

6. Basing on the pleadings, the learned trial Judge settled the following issues for trial:

1. Whether the plaintiff is entitled to suit claim as prayed for or not?

2. Whether the suit pronote and part payment endorsements are true and valid and binding on the defendant or not?

3. Whether the suit pronote is supported by consideration or not?

4. To what relief?

7. The parties went to trial, where the appellant examined himself as P.W.1 and an attestor to the suit promissory note-Ex.A1 as P.W.2, while relying on Ex.A1 to Ex.A14. The respondent examined himself as D.W.1 and no documents were marked on his behalf.

8. The learned trial Judge, on the material and evidence, held that the suit promissory note and the payment endorsements-Ex.A1 to Ex.A11 being true and correct. However, in respect of rate of interest claimed, the learned trial Judge held that the same is usurious and calculating the rate of interest with yearly rests on the principal sum adjudged since the year 1987 is unconscionable. Thus, reopening the transaction relating to this contract covered by Ex.A1, the learned trial Judge reduced the same to 12% p.a. being simple interest on Rs.25,000/- from the date the suit promissory note viz., 29.07.1987 till the date of decree and thereafter at 6% p.a. on Rs.25,000/- from the date of the decree till realization. In the appeal, the appellate Court confirmed the decree and judgment of the trial Court for the same reasons, rejecting the contention of the appellant.

9. In these circumstances, the appellant choose to present this second appeal. The entire question is confined only in respect of reopening the transaction covered by Ex.A1 suit promissory note and scalling down the rate of interest. Both the Courts below concurrently held in this respect recording consistent findings against the appellant.

10. Sri Ch.Venkaiah, learned counsel for the appellant, strenuously contended that the circumstances relating to the transaction covered by Ex.A1 should be taken into consideration and when the bo