JUDGMENT

The Appeal suit is filed against the Judgment and Decree dated 31.12.2014 made in O.S.No.3747 of 2012 on the file of the XV Additional Judge, City Civil Court, Chennai.

2. The appellant is the respondent and the respondent is the plaintiff. The respondent filed a suit in O.S.No.3747 of 2012 for declaration and mandatory injunction.

3. For the sake of convenience, the parties are referred to as per their ranking in the trial Court.

4. The case of the plaintiff is that the plaintiff was engaged in the manufacturer of power cables, PVC control cables and conductors. The plaintiff availed various facilities including loans for working capital from various institutions including the defendant. Since the plaintiff sustained huge loss, he was completely eroded and referred to Board of Industrial and Financial Reconstruction (herein after called BIFR) for rehabilitation. The BIFR appointed Industrial Investment Bank of India, as the operating agency and also prepared the necessary schemes for the purpose of financial reconstruction. It was approved by the BIFR on 15.06.1989. It was being one of the creditors approached the BIFR providing a draft proposal for charging interest at 18.50% per annum and the same was not approved by BIFR. The plaintiff borrowed a sum of Rs.39,77,860.15/- as on 31.03.2000. It was adjusted towards the principal outstanding and thereafter, it was adjusted towards interest, if any.

5. Whereas, contrary to that the defendant appears to have adjusted the payment first towards adhocly, levied penal interest and interest and they have not adjusted the payment towards the outstanding principal. As directed by the BIFR, the plaintiff has to clear the dues to the defendant as on 31.03.2001. After the payment, the defendant worked out the dues at Rs.20,24,724/-. The plaintiff also remitted the said amount on 31.03.2001 in full and final settlement under cover of the letter dated 30.03.2001. However, the defendant has raised false and frivolous claims and refused to issue “No Due Certificate”. In fact, the defendant also sent a demand notice on 22.04.2003 showing a due as 'Nil'. Hence, the suit.

6. Resisting the same, the defendant filed a written statement stating that the plaintiff approached the defendant Corporation for sanction of a loan to set up an industrial unit. The defendant sanctioned a term loan to the tune of Rs.15,00,000/- on 27.02.1963. The plaintiff mortgaged the property by the registered Mortgage Deed dated 20.01.1964 and also hypothecated the plaint and machinery. But due to various factors, the plaintiff could not be operated well and started incurring loss. Therefore, the defendant also sanctioned an additional term loan to the tune of Rs.35,00,000/- on 26.05.1970. Further, an additional loan of Rs.25.20 lakhs was also sanctioned on 25.03.1974 towards purchase of land and machinery. There was an arrangement of Paripassu on 30.04.1984 among the defendant, SIPCOT and Canara Bank for sharing recovery.

7. Due to loss incurred by the plaintiff, the plaintiff approached the BIFR for relief for repayment of dues to all the agencies during 1988. Accordingly, the plaintiff was liable to pay a sum of Rs.86,16,000/- as on 31.12.1988. By the proceedings dated 14.06.1988, the BIFR appointed Industrial Investment Bank of India Ltd., as the operating agency to implement the packages. According to Clause I of the Draft Package, the financial institutions to re-phase the interest dues upto 31.12.1988 with interest at the rate of 6% per annum. Accordingly, the plaintiff was liable to repay the principal of Rs.27.72 lakhs commencing from 31.12.1990 in 10 half yearly instalments ending on 01.04.1995. The funded interest was payable on 10 half yearly instalments commencing from 01.10.1995 and ending on 01.04.2000. But the plaintiff defaulted in repaying the defendant's dues and there was a liability to the tune of Rs.65,94,102.27/- as on 31.03.1999. Thereafter, the plaintiff was directed by the BIFR, remitted a su