2023 Supreme(Del) 3085

IN THE HIGH COURT OF DELHI AT NEW DELHI
Neena Bansal Krishna, J.
Sudhir Jain – Appellant
Versus
Sarla Mittal – Respondent
CS(OS) 777 of 2011 & IA 17692 of 2022
Decided On : 04-08-2023

Headnote:

LOAN AGREEMENT - MONEY LENDING - INTEREST - USURIOUS LOANS ACT - LIMITATION - ACKNOWLEDGEMENT - CONTRACT ACT - CONFIRMING PARTY - JURISDICTION - MAINTAINABILITY - PRELIMINARY OBJECTIONS: 1. The plaintiff, an NRI, filed a suit for recovery of Rs.11,50,00,000/- along with interest under Order XXXVII of CPC, 1908, alleging that the defendants (borrowers) had taken a loan of Rs.5,00,00,000/- from him at 13% interest p.a. and had agreed to mortgage their property as security for the loan. The Loan Agreement was executed on 30.10.2006. The borrowers failed to execute the Mortgage Deed and repay the loan despite several requests. The plaintiff claimed interest @ 30% p.a. from the date of disbursement of the loan till the date of repayment. 2. The defendants contested the Leave to Defend, which was allowed. They raised preliminary objections, including that the plaintiff was not a money lender and had no license, the suit was barred by limitation, the interest charged was excessive and unfair under the Usurious Loans Act, 1918, the suit was not maintainable as the plaintiff was not a necessary or proper party, and the suit was undervalued. 3. The court framed issues on the pleadings and held that: (i) The plaintiff had advanced a loan of Rs.5 crores to the borrowers as evidenced by emails and the Loan Agreement. (ii) The borrowers had acknowledged their liability to the plaintiff vide emails dated 11th August, 2007 and January, 2010, thereby extending the period of limitation. (iii) The plaintiff was entitled to recovery of the loan amount from the borrowers, but not from the other defendants (confirming party and her attorney holder). (iv) The interest claimed was excessive and unfair under the Usurious Loans Act, 1918, and the court granted simple interest @ 6% p.a. from the date of disbursement of loan till the date of institution of the suit, and pendente lite and future interest @ 6% p.a. from the date of institution of the suit till the date of payment. (v) The preliminary objections raised by the defendants were not tenable. 4. The court decreed the suit for a sum of Rs.5 crores towards the loan amount along with interest (including pendente lite and future interest) @ 6% per annum from the date of disbursement of loan till the date of payment to be paid by the borrowers. The plaintiff was also awarded the costs of the suit.

Fact of the Case:

The plaintiff, an NRI, filed a suit for recovery of Rs.11,50,00,000/- along with interest under Order XXXVII of CPC, 1908, alleging that the defendants (borrowers) had taken a loan of Rs.5,00,00,000/- from him at 13% interest p.a. and had agreed to mortgage their property as security for the loan. The Loan Agreement was executed on 30.10.2006. The borrowers failed to execute the Mortgage Deed and repay the loan despite several requests. The plaintiff claimed interest @ 30% p.a. from the date of disbursement of the loan till the date of repayment. The defendants contested the Leave to Defend, which was allowed. They raised preliminary objections, including that the plaintiff was not a money lender and had no license, the suit was barred by limitation, the interest charged was excessive and unfair under the Usurious Loans Act, 1918, the suit was not maintainable as the plaintiff was not a necessary or proper party, and the suit was undervalued.

Finding of the Court:

The court held that: (i) The plaintiff had advanced a loan of Rs.5 crores to the borrowers as evidenced by emails and the Loan Agreement. (ii) The borrowers had acknowledged their liability to the plaintiff vide emails dated 11th August, 2007 and January, 2010, thereby extending the period of limitation. (iii) The plaintiff was entitled to recovery of the loan amount from the borrowers, but not from the other defendants (confirming party and her attorney holder). (iv) The interest claimed was excessive and unfair under the Usurious Loans Act, 1918, and the court granted simple interest @ 6% p.a. from the date of disbursement of loan till the date of institution of the suit, and pendente lite and future interest @ 6% p.a. from the date of institution of the suit till the date of payment. (v) The preliminary objections raised by the defendants were not tenable.

Issues: 1. Whether the plaintiff had advanced a sum of Rs.5,00,00,000/- to the defendant no.2 by way of loan? 2. Whether the defendant no.2 had acknowledged his liability to the plaintiff vide e-mails dated 11th August, 2007 and January, 2010 and if so to what effect? 3. If the above issues are decided in favour of the plaintiff, whether the plaintiff, besides being entitled to recovery of the loan amount from the defendant no.2, is also entitled to recovery of the loan amount from the other defendants? 4. If the above issues are decided in favour of the plaintiff, whether the plaintiff is entitled to any interest on the loan amount and if so at what rate and for what period?

Ratio Decidendi: The court held that the plaintiff was entitled to recover the loan amount from the borrowers, but not from the other defendants (confirming party and her attorney holder). The interest claimed was excessive and unfair under the Usurious Loans Act, 1918, and the court granted simple interest @ 6% p.a. from the date of disbursement of loan till the date of institution of the suit, and pendente lite and future interest @ 6% p.a. from the date of institution of the suit till the date of payment.

Final Decision: The court decreed the suit for a sum of Rs.5 crores towards the loan amount along with interest (including pendente lite and future interest) @ 6% per annum from the date of disbursement of loan till the date of payment to be paid by the borrowers. The plaintiff was also awarded the costs of the suit.