The enforceability of interest on promissory notes is upheld when the borrower admits execution and acknowledges liability, despite claims of nominal interest.

JUDGMENT :

V. GOPALA KRISHNA RAO, J.

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 25.11.1998, in O.S. No.19 of 1997 passed by the learned Senior Civil Judge, Rajam [for short 'the trial Court']. The Respondent herein is the plaintiff in the said Suit.

2. The respondent/plaintiff filed the Suit seeking relief of the Suit claim with an interest as prayed for in the plaint.

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.19 of 1997, are as follows:

The defendant took a loan amount of Rs.70,000/- on 01.10.1990, for his contract works from the plaintiff and executed a promissory note dated 01.10.1990, for the same with his own handwriting in favour of the plaintiff in the village of Vangara and the defendant agreed to pay the said amount to the plaintiff with an interest at 24% p.a., to the plaintiff or to his order on demand. While the said debt is due to the plaintiff, the defendant again took a loan for an amount of Rs.25,000/- on 13.10.1990 for his necessity and on the same day itself he executed another promissory note and agreed to pay the said amount of Rs.25,000/- to the plaintiff or his order on demand with an interest at 24% p.a,.

The defendant had paid Rs.100/- on 20.09.1993 and Rs.70,000/- on 19.09.1994 to the plaintiff towards the principal and interest and the debt due under the pro-note dated 11.10.1990 respectively and the same was endorsed with his own handwriting on the pro-note dated 11-10-1990. The defendant also paid Rs.100/- on 20.09.1994 and Rs.10,000/- on 20.09.1994 to the plaintiff towards the principal and interest and the debt due under the pro-note dated 13.10.1990 respectively and the same was also endorsed with his own handwriting on the pro-note dated 13-10-1990 and acknowledged his liability to pay the said two pro-note debts.

The plaintiff gave a registered notice dated 03.04.1997, through his counsel demanding payment of the amount of balance due under the two suit pro-notes to the defendant and after receipt of the said registered notice, the defendant did not pay the amount of balance due under the two suit pro-notes nor gave a reply to the registered notice issued by the plaintiff. Therefore, the plaintiff filed the suit.

5. The defendant filed a written statement by denying the averments mentioned in the plaint and further contended as under: -

The plaintiff and the defendant became closely associated and acquainted with each other and the defendant had helped a lot in providing his lorries and tractors and other machines for the contracting works of the plaintiff for free of rents. So that while giving loans and other helps with each other, the question of interest on loans did not arise in their transaction at any time. Though the suit pro-notes executed in favour of plaintiff at the rate of interest of 24% p.a., is a nominal and for the purpose of mentioning as ingredient of the pro-note.

The plaintiff also assured and promised at the time of execution of the suit pro-notes that the rate of interest is a nominal and is not liable to be demanded. The defendant had paid the total amount of Rs.70,000/- to the plaintiff on the suit pro-notes dated 01.10.1990. In the same manner, the defendant had also paid Rs.10,000/- to the plaintiff on 20.09.1994 as had also made a part-payment under the suit pro-note dated 13.10.1990. The outstanding due is of only Rs.15,000/-. The plaintiff calculated the compounding interest and the defendant is not liable to pay any interest on the suit pro-notes as per their agreement at the time of execution of pro- notes. The defendant only due to the plaintiff under the suit pro-note dated 13.10.1990 is of Rs.15,000/- and the plaintiff had no right to demand the compounding interest from the defendant. Therefore, the claim is not genuine and he sought for the