The main legal point established in the judgment is the interpretation and application of the terms of the loan agreement, the computation of interest, and the creation of equitable mortgage in a commercial transaction, as well as the discretion of the Court in awarding interest under Sec.34 of CPC.

R. BANUMATHI, J.

1. Being aggrieved by decreeing of the suit in part and declining the prayer of preliminary decree for mortgage in respect of B and C schedule properties and dismissal of the suit against Defendants 4 and 5, Appellant-UCO Bank has preferred this Appeal.

2. Brief facts which led to the filing of suit is as follows:-

Defendants 2 and 3 [Perumal @ Kaliaperumal and Shanmugam] are the partners of 1st Respondent-M/s.Lucky and Company. On 31.05.1972, Defendants 2 and 3 approached the Plaintiff Bank and availed loan of Rs.5000/- by hypothecating the A schedule properties. Defendants 2 and 3 have also agreed to repay the same with interest at the rate of 6% p.a. over the RBI rate subject to a minimum of 15% p.a. On 19.3.1973 at the request of Defendants 2 and 3, the said limit was enhanced to Rs.20,000/- and to that effect Defendants 2 and 3 have executed documents by way of securities. Subsequently, Defendants 2 and 3 have requested for further increase in the limit. One Sundarambal executed guarantee deed infavour of Plaintiff Bank on 16.5.1973 and also deposited her title deeds in respect of B schedule property belonging to her with an intention to create an equitable mortgage over the same for the liability of 1st Defendant not only for the existing limits, but also for the future increase in limits.

3. Case of Plaintiff is that at the request of Defendants 1 to 3, Plaintiff Bank sanctioned limit of Rs.40,000/- on 06.11.1973; Rs.50,000/- on 26.11.1975; Rs.2,00,000/- on 07.06.1978 and Rs.5,50,000/- on 01.03.1980 besides an adhoc limit of Rs.1,00,000/- on 13.1.1981 for which Defendants 1 to 3 have executed the documents. Plaintiff Bank issued lawyers notice on 15.11.1984 for which Defendants have sent reply on 11.12.1984 disputing the correctness of outstanding balance. Guarantor Sundarambal died in July, 1987 intestate leaving Defendants 2 and 3 to inherit her properties. Since, Defendants 2 and 3 are legal heirs of deceased Sundarambal, they are liable to pay the suit claim. It is averred that there are other suits in O.S.No.512/1984, 349/85, 484/84 and 348/84 filed before the Sub-Court, Pondicherry in which C schedule theatre has been subjected to a charge. Since, 5th Defendant-Central Bank of India is a puisne mortgagee, 5th Defendant is impleaded as Defendant in the suit. Hence, Plaintiff Bank filed the suit for recovery of Rs.22,94,072.29 together with future interest at 17.5% p.a.

4. Denying the correctness of description of B and C schedule properties, 3rd Defendant filed written statement contending that he never mortgaged the C schedule property in favour of Plaintiff and moreover 4th Defendant does not own the C schedule property, so as to mortgage the same. It is averred that, Plaintiff has not disclosed in their plaint as to what is the principal amount and what is the interest due. According to 3rd Defendant, he never acknowledged any sum of Rs.16,00,000/-under acknowledgement of debt. Contending that there is no indication of rate of interest in the documents, 3rd Defendant averred that Plaintiff Bank claimed interest of Rs.10,00,000/- for the principal amount of Rs.5,50,000/- and interest claimed is more than the principal amount and prayed for dismissal of the suit.

5. Contending that 5th Defendant-Central Bank of India is unnecessary party to the suit, 4th Defendant filed written statement which was adopted by 1st Defendant contending that and the suit is hit by mis-joinder of parties. Case of 4th Defendant is that there is no cause for the suit, since he had not extended the alleged mortgage of C schedule property infavour of Plaintiff Bank and extension of any mortgage is one unknown to law. According to 4th Defendant, there was no enhancement of claim to the tune of Rs.5.50 lakhs as alleged, besides the adhoc limit of Rs.1 lakh, because, at every stage, the outstanding balance would be adjusted towards the part of the quantum payable and the actual amount of advance availed would only b