The court clarified the application of Section 80 of the Negotiable Instruments Act in determining the interest rate for the loan amount.

( 1 ) AT the stage of admission respondent has been served and he is represented through a counsel. The records of the case are also received. As the appeal lies in a very narrow compass, it is admitted. Production of paper books is dispensed with and the appeal is heard for final disposal.

( 2 ) IN the light of the contentions urged by both sides, the following points arise for consideration : 1. Whether the Trial Court is justified on facts and in law in passing a decree for a sum of Rs. 1,23,535 /- on the basis of three cheques dated 12-11-1987, 12-11-1987 and on 27-07-1987 for Rs. 30,000/ - each ? 2. Whether the Trial Court is justified in law and on facts in awarding interest at the rate of 18% p. a. on the principal sum as claimed by the plaintiff from the date of issuance of the cheques up to the date of suit and also from the date of suit till realisation on a sum of Rs. 90,000 / - at the same rate ?

( 3 ) IN this judgment, respondent will be referred to as the plaintiff and the appellant as the defendant.

( 4 ) POINTS 1 and 2 :- The plaintiff filed the aforesaid suit for recovery of a sum of Rs. 1,23,535 /- on 7-10-1989, on the grounds that the defendant was a building contractor at Shimoga; that he was known to the plaintiff and was also the friend of the plaintiff; that in view of the friendship the defendant sought for a loan of Rs. 90,000/- for his contract work; that the plaintiff issued the cheque dated 27-7-1987 in favour of the defendant for a sum of Rs. 30,000/ - and endorsed the two cheques dated 12-11-1987 for Rs. 30,000/-each in favour of the defendant. Thus, according to the case of the plaintiff in all he paid a sum of Rs. 90,000/- to the defendant on an understanding that it was to be returned within a short period. But, the defendant did not return the amount. Therefore, a legal notice was issued on 05-09-1989 calling upon him to pay the amount with interest at 18% from the date of advancement of the amount; that the defendant inspite of receipt of the notice did not send any reply. Hence, the plaintiff averred that he was constrained to file a suit for recovery of a sum of Rs. 90,000/- with interest amounting to Rs. 33,435 /- and notice charges of Rs. 100/ -. Thus in all, he prayed for a decree for a sum of Rs. 1,23,535/ -.

( 5 ) THE defendant resisted the suit and inter alia contended that no doubt the plaintiff issued a cheque for Rs. 30,000/- on 20-07-1987 and also endorsed in his favour two cheques of the same date i. e. , 12-11-1987 each for a sum of Rs. 30,000/- and all the three cheques were encashed by him; but, he contended that these payments were made by the plaintiff towards the contract work done by him informing a lay out in the land belonging to the plaintiff and another person by name Sri B. R. Jagadeesh; that the plaintiff in all was to pay a sum of Rs. 2,09,000/ -; that he was not in a position to pay the entire sum in a lump sum; that after he paid a sum of Rs. 30,000/ - through the cheque dated 20-7-1987, according to the defendant, the plaintiff asked him to bring the customers for purchasing the sites made out in the lay out formed by the defendant for the plaintiff so that he could pay the amount due to the defendant, therefore, the defendant took two customers by name Smt. Jayalakshmi and Smt. Sumitra who took one site each and each issued a cheque for Rs. 30,000/- on 12-11-1987 and the same were endorsed in his favour; therefore he contended that there was no loan transaction between the plaintiff and the defendant; that the money paid through cheques by the plaintiff to the defendant was towards the part discharge of the debt due to him out of Rs. 2,09,000/- and the plaintiff went on postponing the payment of the balance amount.

( 6 ) THE trial court framed the following issues for trial :"1. Whether the plaintiff proves that the defendant had borrowed a sum of Rs. 90,000/- under the cheques referred to in para 3 of the plaint, agreeing to repay the said sum wi