The court has discretion to fix the rate of interest in mortgage suits instituted by banks, based on the provisions of Or. 34 R. 11, Banking Regulation Act, 1949, and relevant Supreme Court decisions.

1. This appeal has been preferred against the judgment and decree dated 111. 2002 made in O.S.No.8709 of 1998 on the file of the VII Additional City Civil Judge, Chennai,insofar as it relates to the grant of interest at the rate of 15.5% p.a throughout and modify the same by awarding interest at the rate of 6% p.a. from the date of plaint till the date of recovery and allow this first appeal accordingly.

2. Thefollowing are the averments in the amended plaint succinctly stated:

1. On 211. 1995, the first defendant availed a loan to the tune of Rs.5,00,000/- towards housing loan for purchasing HIA A type flat at Plot No.431B, Flat G 5, Second Floor K-116, New Lotus Colony, Anna Nager East, Chennai-600 102 from the plaintiff bank and the second defendant, namely, the Tamil Nadu Housing Board had alloted the house under G.O.Ms.No.2D No.478 dated 30.08.1995 in the name of the defendant. The first defendant accepted the offer of loan agreeing to deposit the title deeds relating to his property morefully described in the schedule as collateral security for the due repayment of the loan as per the terms and conditions prescribed in the letter of sanction dated 211. 1995.

2.(ii) The defendant has executed a promissory note in favour of the plaintiff for the loan amount and promised to repay the loan with interest at 15.5 per cent per annum with half yearly interest, besides executing a letter of acceptance on 211. 1995. The first defendant executed a loan agreement on 211. 1995 in favour of the plaintiff agreeing the principal sum 5,00,000/-of loan, interest and other charges and dues under this agreement shall be secured by mortgage of the property purchased under the housing loan. The repayment of loan is to commence from 211. 1995 and agreed to repay the loan in 144 equal monthly instalments at the rate of Rs.7,750/-per month. The allotment order and no objection certificate has been deposited with the plaintiff. In view of the deposit of title deeds of the property on 211. 1995, the defendant created a mortgage of the property described in the schedule as security for due repayment of the loan on terms and conditions thereof. Thus, the plaintiff is the mortgagee and the first defendant is the morgager of the mortgaged property.

2.(iii) While the matter stood thus, the defendant committed default since 1996 in due repayment of the instalments. Due to non-repayment of loan, the plaintiff issued a lawyer notice on 21.08.1998 calling upon him to repay the loan amount, but the effort of the plaintiff went in vain. Hence, the suit is laid for the following reliefs:-

a) directing the first defendant to pay a sum of Rs.5,87,206/-towards the principal and interest as on date of plaint together with further interest at 15.5 per cent per annum with half yearly interest with the principal till date of payment together with additional interest of 2 per cent towards delay in payment of monthly dues, failing which

b) a decree for sale of property described in the schedule hereunder and directing the sale proceeds to be applied for payment of the plaintiff on such date of sale

c) In case of the proceeds of sale are found to be insufficient to pay the amount due to the plaintiff, then the liberty be served to the plaintiff to apply for an order to recover the balance personally from the first defendant.

3. Thewritten statement filed by the first defendant contains the allegations as follows:

3. 1. Thefirst defendant has purchased the property in question by availing housing loan from the plaintiff Bank. He had paid equal monthly instalments starting from December 1995 upto March 1998. Due to the attitude of the Managing Director of the plaintiff bank, he stopped making further payments.

3. 2. Theprayer for decree for sale of property is not maintainable in law. Further, personal recovery from the first defendant by the plaintiff is also not permissible in law. As per the Supreme Court decision, the plaintiff bank is entitled to claim