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2011 Supreme(Mad) 3070
2011 (4) LW 176
High Court of Judicature at Madras
S. PALANIVELU
M/s. Prabhudas Gurmukhsingh & Sons rep. By its Partner Giridharilal Prabhudas
Versus
M/s. G.V. Films rep. by its Director & Others
C.S.No.237 of 2005
Decided on : 30-06-2011
Important Points
Subject
Civil Law - Mortgage and Money Lending
Act Referred
COMPANIES ACT : S.292(1)(c)
PARTNERSHIP ACT : .
TAMIL NADU MONEY LENDERS ACT : S.17, S.21, S.10(a)(3), S.10(a)
Headnote
Mortgage - Money Lending - Indian Partnership Act, Companies Act 1956, Tamil Nadu Money Lenders Act 1957 - The judgment discusses the validity of a mortgage and loan transactions between the plaintiff and the defendants, the authority of the late G.Venkateswaran to borrow money on behalf of the defendant companies, and the applicability of the doctrine of indoor management. The court found that there was a valid contract between the plaintiff and G.Venkateswaran on behalf of the defendant companies, and that the suit was not barred by limitation. The court also held that the interest claimed was not usurious and passed a decree for recovery of the loan amount with interest against the defendants.
Fact of the Case:
The plaintiff, a partnership firm, lent money to the 1st defendant company, represented by late G.Venkateswaran, and obtained an equitable mortgage over the defendant's property. After G.Venkateswaran's death, the plaintiff sought recovery of the loan amount from the defendants.
Finding of the Court:
The court found that there was a valid contract between the plaintiff and G.Venkateswaran on behalf of the defendant companies, and that the suit was not barred by limitation. The court also held that the interest claimed was not usurious and passed a decree for recovery of the loan amount with interest against the defendants.
Issues: 1. Entitlement to preliminary decree for loan amount and interest. 2. Limitation of the suit. 3. Usurious nature of the interest claimed. 4. Relief entitled to by the plaintiff.
Ratio Decidendi: The court held that there was a valid contract between the plaintiff and G.Venkateswaran on behalf of the defendant companies, and that the suit was not barred by limitation. The court also found that the interest claimed was not usurious and passed a decree for recovery of the loan amount with interest against the defendants.
Final Decision: The court passed a decree for recovery of the loan amount with interest at 18% per annum against the defendants who were jointly and severally liable.
For the Plaintiff:G. Govindarajan, Advocate.
For the Defendants:G.A. Thiagarajan for M/s. Rugan & Arya, Advocates.
1. The Civil Suit is filed for a judgment and decree against the defendants 1 to 3 for a sum of Rs.57,99,700/- together with further interest at 18% per annum on Rs.25,00,000/- from the date of the plaint till the date of realisation and for a preliminary mortgage decree against the defendants directing them to pay the decretal amount of Rs.57,99,700/- with further interest and costs.
2. The plaint averments, in brief, are as follows:-
2.(a) The plaintiff are dealing various business activities including money lending and for this purpose they have formed a syndicate consisting various members and along with them the plaintiff used to carry on its business activities, that the 1st defendant company approached the plaintiff's firm during October 1999 with requisition for financial assistance to the tune of Rs.25,00,000/- and offered to give the property held by the 2nd defendant company situate at Door No.18/1, 5th Street, together with super structure in Second Floor, Lake Area, Nungambakkam, Chennai 34, as security and agreed to pay the interest on the amount to be advanced @ 1.5% per month, that the same was favourably considered and a sum of Rs.25 lakhs was advanced by the plaintiff and a bond was executed by the Managing Director and Chairman of the first defendant company Late Mr.G.Venkateswaran on 20.10.1999 and that the 1st defendant company had handed over the original title deeds of the said property to the plaintiff to secure the loan by creating equitable mortgage thereon.
2.(b) Subsequent to the above said transaction, Mr.G.Venkateswaran, Chairman and Managing Director of the 1st defendant company had borrowed various amounts to the tune of several lakhs from the plaintiff on various dates and kept on paying the interest therefor promptly based on the same security, that at one point of time as the amount borrowed by the 1st defendant company became huge, the Managing Director of the 1st defendant company offered to give title deeds pertaining to the ground and first floors of the above mentioned property held by the 2nd defendant as collateral security in addition to the title deed pertaining to the second floor of the said premises on which mortgage was created already, that the same was agreed by the plaintiff as additional collateral security for the amount advanced to the 1st defendant company, that Managing Director of the 1st and 2nd defendant companies have addressed various letters and bond to the plaintiff evidencing the amount borrowed by them then and there on various dates, that the 3rd defendant, wife of the Managing Director of the 1st defendant company, stood as guarantor in her personal capacity for the amount borrowed by the 1st defendant company from the plaintiff.
2.(c) During the month of January 2003, the Managing Director of the 1st defendant company had repaid the amount borrowed by the 1st defendant company from the plaintiff to some extent and requested the plaintiff to return the original title deeds pertaining to the ground and floors of the above mentioned property and further requested the plaintiff to retain the title deeds pertaining to the second floor of the above mentioned property and an endorsement to that effect was made by the then Chairman and Managing Director of the 1st defendant company in the bond dated 29.3.2001 and that though the money transactions between the plaintiff and the 1st defendant company are on various occasions then and there, the same are overlapping in nature and the same were treated as single transaction as the security offered by the 1st and 2nd defendants for these transactions are one and the same.
2.(d) As of April 2003, the 1st defendant company was due and liable to pay a sum of Rs.46,60,000/- towards principal and interest for which the 1st defendant company had issued ninety five post dated cheques in favour of the plaintiff drawn on State Bank of India, Alwarpet Branch, Chennai for various amounts totalling Rs.46,60,000/- in discharge
