Court discretion under S.34 CPC to reduce pendente lite interest when disproportionate to principal, considering substantial deposits.

JUDGMENT : 19tr December, 2025

THE APPELLATE TRIBUNAL :

Instant Appeal has arisen against a judgment and order dated 27% September, 2023 passed by Learned DRT-2 Hyderabad in O.A. No. 121 of 2017 (Canara Bank versus M/s Eversure Aqua Solutions Pvt. Ltd. and others)

2. As per pleadings facts of the case are that the O.A. No. 121 of 2017 under Section 19 of the Recovery of Debts and Bankruptcy Act 1993 (hereinafter referred to as the Act) was filed by the Bank against the defendants for issuance of a Recovery Certificate to a tune of Rs.1,25,71,653/- with pendentelite future interest @15.20% per annum with monthly rests.

3. Learned DRT proceeded exparte against the defendant No. 1 to 5. Defendant No. 6 namely Smt. Gajjala Jayamma Appellant herein, contested the O.A.

4. As per the Respondent Bank, M/s Eversure Aqua Solutions Pvt. Ltd. is a Private Limited Company wherein defendant No. 2 and 3 in the O.A. namely Sri Chada Padmakar Reddy and Sri Chada Malla Reddy are the Managing Director and Director of the Company. An amount of Rs.100 lacs was availed by the Company under O.C.C. and Rs. 35 lacs under term loan wherein plant and machinery, stocks etc. were hypothecated. Properties belonging to defendant No. 5, Sri M. Amarender Reddy and defendant No. 6, Smt. Gajjala Jayamma were mortgaged as a collateral security for the loan. Guarantee agreement and necessary documents were executed by the defendants. There were defaults in the repayment. Legal notice was issued by the Bank. Thereafter, O.A. was filed. Written Statement was filed by the Appellant herein in the O.A. stating that she was a guarantor/ mortgagor for a term loan of Rs.35 lacs availed by the Company. Guarantee Agreement dated 02.05.2012 and its covering letter dated 02.05.2012 were signed on blank form. These documents were subsequently fabricated by the Bank. Liability of the Appellant is restricted to the outstanding dues pertaining to the term loan account only. Before initiating the recovery proceedings, Bank in collusion with the Company diverted the hypothecated goods worth more than Rs.50 lacs. Accordingly, Appellant is entitled for set-off to that amount. An amount of Rs. 79.80 lacs was realised by the Bank by way of sale of the property under SARFAESI proceedings. Appellant also deposited Rs. 35 lacs as per the order in S.A. No. 1398 of 2017. Liability of defendant No. 5 is settled by the Bank for an amount of Rs. 90 lacs.

5. Learned DRT framed the following two issues:

(i) Whether the Applicant Bank has proved its claim against the 6 Defendant and O.A. schedule property of defendant No. 6?

(ii) To what relief.

6. Learned DRT recorded a finding that the liability of the defendant No. 6 is to the extent of Rs. 1,35,00,000/- subject to appropriation of Rs. 79.80 lacs, Rs. 35,00,000/- and Rs.80,00,000/- only.

7. Learned Counsel for the Appellant would submit that Appellant has already deposited Rs.35 lacs and Rs. 80 lacs. Rs. 80 lacs was deposited in part satisfaction vide memo dated 12.10.2018. Liability of the Appellant is restricted to an extent of Rs.1,35,00,000/-. Accordingly, Appellant is only required to make a payment of remaining amount. It is further submitted that as far as rate of interest is concerned, Learned DRT granted an interest of Rs.15.20% per annum simple. Learned Counsel for the Appellant placed reliance upon the judgment of Central Bank versus Ravindra (2002) 1 SCC 367.

8. Learned Counsel for the Respondent Bank supported the judgment of the DRT and submits that the Appeal is devoid of merits and is liable to be dismissed.

9. As far as impugned judgment is concerned, Learn