The appellate court modified the interest rate from 24% to 6% p.a. based on judicial discretion, emphasizing the necessity of evidence and jurisdictional validity.

JUDGMENT:

1. This Appeal, under Section 96 of the Code of Civil Procedure [for short ‘the C.P.C.’], is filed by the Appellant/defendant challenging the Decree and Judgment, dated 13.02.2001, in O.S. No.154 of 1998 passed by the learned Additional Senior Civil Judge, Tirupati [for short ‘the trial Court’]. The Respondent herein is the plaintiff in the said Suit.

2. The respondent/plaintiff filed a Suit for recovery of Rs.3,60,000/- being interest due on principal of Rs.5,00,000/- said to have been borrowed by the defendant on 10.02.1995 from the plaintiff agreeing to repay with interest at 24% p.a.

3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.

4. The brief averments of the plaint, in O.S. No.154 of 1998, are as under:

The defendant borrowed an amount of Rs.5,00,000/- from the plaintiff on 10.02.1995 for his business purpose and executed a promissory note in favour of plaintiff agreeing to repay the same with interest at 24% per annum. On 27.01.1998, the defendant informed the plaintiff to come to Madras with all the documents and to collect the entire amount payable saying that he had ready money by sale of property. When the plaintiff actually went to Madras with the promissory note and cheques, the defendant with some of his men put the plaintiff in fear of death and forced him to surrender the cheques and promissory note by receiving a Demand Draft for Rs.5,00,000/-, plaintiff having no other go surrendered the documents and took the D.D. unwillingly and unvoluntarily under threat and then gave a report to the police at Tirupati after returning to Tirupati. The C.C.S. police, Tirupati stated that they have no jurisdiction and hence complaint was preferred by post to the Commissioner of Police, Chennai.

The plaintiff further pleaded that subsequently, the defendant borrowed another sum of Rs.7,50,000/- from the plaintiff on 10.06.1997 at Tirupati as a short term loan, promising to repay the same with interest at 36% p.a. within one month, but the defendant failed to repay the short term loan as agreed. The defendant sent through post, on 10.12.1997, four post dated cheques for a total sum of Rs.9,29,600/-.

5. The defendant filed a written statement denying all the contents of the plaint and further contended as under:

The plaintiff, who wanted to be a millionaire overnight, proposed to the defendant that he would like to be a partner in business and asked the defendant to accept a sum of Rs.5,00,000/- towards plaintiff’s contribution in the business.

The defendant, who is a good business man doing lawful business, agreed to take him into his business and also warned the plaintiff that in business, things could go wrong, in that circumstances, the investment could be returned without any interest or compensation. The defendant further alleged that the plaintiff has no capacity to lend money much less another sum of Rs.7,50,000/- on 10.06.1997.

The defendant further pleaded that he paid Rs.5,00,000/- by means of D.D.No.077894 on 27.01.1998 drawn by the defendant on Syndicate Bank along another sum of Rs.5,441/- in cash under a receipt duly passed by him towards Maruthi car transaction. The defendant further pleaded that in the promissory dated 10.02.1995, the rate of interest is mentioned as 6% p.a., while the plaintiff is now claiming at 24% p.a. Infact, it was intended that no interest shall be payable by the defendant to the plaintiff as both of them have share in the business.

6. Based on the above pleadings, the trial Court framed the following issues:

(i) Whether the suit claim is true, valid and binding on the defendant?

(ii) Whether the payment of Rs.5,00,000/- through D.D. by the defendant is towards full and final settlement as pleaded in the written statement?

(iii) Whether the Court has no jurisdiction to try the suit?

(iv) To what relief?

7. During the course of trial in the trial Court, on behalf of the Plaintiff, PW1 was examined and Ex.A1 to Ex.A10 were marked. No oral or do