Present appeal by the defendant aggrieved by the

judgment

and

order

dated

15.07.2015

passed

in

R.A.No.68/2013 on the file of the Principal District and

Session Judge, Haveri (hereinafter referred to as the ‘First

Appellate Court’), in and by which the First Appellate Court

while allowing the appeal of the defendant in part

confirmed the judgment and decree dated 26.09.2013

passed in O.S.No.116/2001 on the file of the Senior Civil

Judge, Haveri (hereinafter referred to as the ‘Trial Court’).

The Trial Court decreed the suit of the plaintiff for recovery

of sum of Rs.5,66,671/- with interest at the rate of 16.5%

per annum compounding ½ yearly rests on the principal

amount of Rs.98,000/- from the date of suit till realization.

BRIEF FACTS OF THE CASE:-

2.

Respondent/Corporation

herein

being

the

plaintiff filed the above suit in O.S.No.116/2001 against

the appellant herein who is the defendant in the said suit

seeking recovery of a sum of Rs.5,66,671/- with interest

- 3 -

at

14%

per

annum

with

compounding

quarterly

contending inter alia that defendant had approached the

plaintiff/Corporation for sanction of loan for the purpose of

construction of house building in a sum of Rs.1,25,000/-

but the plaintiff advanced Rs.98,000/- on 23.04.1988 on a

condition that defendant has to repay within a period of 15

years in 30 equal half yearly installments commencing

from the date of disbursement of the first installment of

the loan. That in case any installment of principal was not

be paid within a month from the due date thereof, the

entire loan shall become due and payable forthwith at the

option of plaintiff/Corporation and the plaintiff/Corporation

shall be entitled to call in the entire loan. That in terms of

the agreement, defendant executed promissory note and

also deposited title deeds of the property in favour of the

plaintiff/Corporation. Defendant failed to adhere to the

repayment schedule of the loan transaction giving rise to

cause of action. That the defendant defaulted installments

since

24.11.1989.

Repeated

demands

by

the

plaintiff/Corporation to defendant to pay the money due

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did not yield any result, consequently, the above suit was

filed for recovery of money and also for sale of schedule

property and to adjust the said proceeds towards the due.

3.

Defendant in the written statement contented

the suit is barred by law of limitation. It is specifically

contended that as per the terms of the agreement, the

whole amount will become due when there is any single

default, as such, the suit ought to have been filed within

12 years from the date of alleged default. Thus, the suit is

barred by law of limitation and sought for its dismissal. It

is also contended that the loan was not sanctioned to the

extent required by the defendant as a result of which

defendant could not complete the construction of the

house. That the interest being charged by the plaintiff is

contrary to the provisions of Interest Act, 1978. The

amount claimed by the plaintiff against the sum of

Rs.98,000/- is highly illegal and untenable. That the

mortgage deed is an unregistered, as such, inadmissible.

Hence, sought for dismissal of the suit.

- 5 -

4.

Based on the pleading, the Trial Court framed

the following issues:

“1. Whether plaintiff proves that, defendant borrowed

loan of Rs.98,000/- on 23.04.1988 for the purpose of

construction of house?

2. Whether plaintiff proves that, defendant agreed to

pay interest at 14% p.a., compounding with half

yearly rests and further agreed to pay additional

interest at 2 ½ % p.a., in case of default in payment

of installments?

3. Whether plaintiff proves that the defendant has

created mortgage over the suit schedule property by

deposit of title deeds, as security for the said loan?

4. Whether defendant proves that the suit is not

maintainable in the present form?

5. Whether suit is barred by limitation?

6. Whether plaintiff is entitled to the suit claim?

7. What decree or decree?”

5.

Plaintiff/Corporati