Point of Law: While considering a similar issue relating to a loan given by a bank had held that the Court has discretion to modulate interest pendente lite and post decree.

JUDGMENT :

R. RAGHUNANDAN RAO, J.

1. The parties in the present appeal are referred as they are arrayed in the suit. The plaintiff filed a suit for recovery of Rs. 2,63,832/- with subsequent interest at 30% p.a. compounded on a yearly basis.

2. The case of the plaintiff is:

(A) The 1st defendant and her husband had borrowed a sum of Rs. 90,000/- from the plaintiff on 08.09.1992. This money was to be repaid with interest @ 30% p.a. compounded on a yearly basis. As security for repayment of the said money, the defendants created a mortgage, in favour of the plaintiff, on the plaint schedule property. Thereafter, the 1st defendant and her husband repaid a sum of Rs. 24,000/- on 05.01.1993 towards part payment of principal and interest and had thereafter, defaulted in repayment of the debt.

(B) The husband of the 1st defendant, after some time, passed away. The 1st defendant sold the mortgaged suit schedule property to the 2nd defendant. After purchasing the property, the 2nd defendant called on the plaintiff to bring the title deeds of the plaint schedule property and receive the remaining debt amount from the 2nd defendant. However, the 2nd defendant did not make any payment despite the plaintiff having approached the 2nd defendant, for receiving the said payment, promised by the 2nd defendant.

(C) As the defendants had not paid the amount due to the Plaintiff, he filed O.S. No. 55 of 1997, in the court of Senior Civil Judge, Pithapuram against the 1st and 2nd defendants for recovery of Rs. 2,63,832/- with subsequent interest @ 30% p.a. compounded on a yearly basis, against the defendants. The 2nd defendant passed away during the pendency of the suit and his legal heirs, defendants 3 to 6 were impleaded as defendants in the suit.

3. The defendants contested the suit by filing a written statement. In the written statement, the defendants do not appear to have disputed the loan transaction or the mortgage of the property. However, the defendants claimed that the 3rd defendant had obtained two demand drafts for Rs. 45,000/- and sought to deliver these two demand drafts along with cash of Rs. 75,000/- for a full and final settlement of the deed. As the plaintiff insisted for payment of interest calculated at 30% p.a. compounded interest from the date of mortgage, the debt could not be cleared. The defendants also took the stand that interest @ 30% compounded annually is usurious as per A.P. Act 26 of 1961 and the plaintiff cannot claim more than 18% p.a. as defendants are agriculturists and further, the receipt issued by the plaintiff in the monies paid by the 1st defendant on 05.01.1993 demonstrates that the rate of interest was only 24% p.a. and not 30% p.a.

4. On the basis of these pleadings, the trial Court framed the following issues:

1. Whether the interest claimed is usurious?

2. Whether the plaintiff demanded 30% compound interest when D.3 approached him with Rs. 75,000/- on 03.07.1997?

3. Whether the defendants 3 to 6 are entitled to the benefits of Act 4/38?

4. To what relief?

5. After a trial in the matter, the trial Court decided all the three issues in favour of the plaintiff and passed a preliminary decree, dated 11.10.1999 in the suit as prayed for.

6. Aggrieved by the said judgment and preliminary decree dated 11.10.1999, the 3rd defendant filed the present appeal.

7. Heard Sri. N.Vijay, learned counsel for the appellant and Sri. E.V.V.S. Ravi Kumar, learned counsel for the defendants.

8. A perusal of the case papers including the judgment and preliminary decree would show that there is no real dispute as to the fact that the 1st defendant and her late husband had borrowed Rs. 90,000/- and had executed a deed of mortgage giving the suit schedule property as security for repayment of the debt along with interest @ 30% compounding annually.

9. The only issue that remains before this Court is whether the plaintiff is entitled to recovery of the unpaid principal amount along with interest @ 30% p.a. compounded annually. There is no dispu