JUDGMENT

The suit was filed by a partnership firm-borrower (the first plaintiff) and its two partners (the second and third plaintiffs) seeking to recover from the lender - the Indian Overseas Bank (the Bank): (a) the sum of Rs.1,39,93,779/- (towards amounts pre-deposited plus interest) with interest thereon at 18% per annum compounded on a monthly basis from the date of filing the plaint till the date of payment; (b) the sum of Rs.92,36,568/- (towards surplus sale proceeds plus interest) with interest thereon at 9% per annum compounded annually from the date of filing the plaint till the date of payment; and (c) the sum of Rs.87,61,521.06 (towards alleged excess interest appropriation plus interest) with interest thereon at 18% per annum compounded monthly from the date of filing the plaint till the date of payment.

2. The plaintiffs availed credit facilities from the Bank by creating a mortgage on an immovable property situated at T.S.No.138, Thiru Vi Ka Industrial Estate, Guindy, Chennai 600 032, ad-measuring an extent of 2421 sq.ft. On account of default in discharging the loan, the Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act).

3. By resorting to the procedure prescribed by the SARFAESI Act, the mortgaged property was brought to sale by the Bank and a sum of Rs.60,20,000/- was realised. According to the plaintiffs, the amount due and payable by the plaintiffs towards discharge of the loan was a sum of Rs.28,01,850/- as on the date of auction sale. Therefore, after deducting the amount due and payable by the plaintiffs from the sale proceeds, a sum of Rs.32,18,150/- was available as surplus. The plaintiffs stated that the Bank was directed to refund the surplus amount to the plaintiffs by the Hon'ble Debts Recovery Tribunal II, Chennai (the DRT-II), in S.A.No.181 of 2007, by order dated 10.03.2010, and, by the Hon'ble Debts Recovery Appellate Tribunal, Chennai (the DRAT), in RA (SA) No.153 of 2010, by order dated 16.11.2012, and subsequently by the Hon'ble Supreme Court in S.L.P.(Criminal) No.3159 of 2015 on 23.02.2017. Since the surplus sale proceeds were not refunded as directed, the plaintiffs asserted that they are entitled to interest compounded annually at 9% per annum on the principal amount. The plaintiffs stated that they have computed interest on the same terms as were applied by the Bank in respect of the facilities availed of by the plaintiffs. Thus, by way of surplus sale proceeds, the plaintiffs claimed a sum of Rs.92,32,568/-, comprising Rs.32,18,150/- as principal and Rs.60,18,418/- as interest and further interest thereon from the date of plaint until realisation.

4. By way of pre-deposit in relation to the appeal filed by the plaintiffs before the DRAT, the plaintiffs were called upon, by order dated 07.05.2010, to deposit a sum of Rs.32,13,000/- in an interest bearing “no lien account” until the disposal of the appeal. When the appeal was dismissed, a direction was issued to the Bank to take appropriate action in relation to the pre-deposit. The plaintiffs alleged that the Bank made no effort to return the pre-deposit amount of Rs.32,13,000/-. Therefore, the plaintiffs state that the Bank is liable to pay the sum of Rs.32,13,000/- with interest at 18% per annum compounded on a monthly basis from 07.05.2010. The plaintiffs stated that they have computed interest thereon on the same terms as were applied by the Bank in respect of the facilities availed of by the plaintiffs, and that this aggregates to a sum of Rs.1,39,93,779/-, comprising Rs.32,13,000/- as principal and Rs.1,07,80,779/- as interest.

5. After filing the suit, upon receipt of the statement of account in respect of the loan account, the plaintiffs further stated that they discovered that the Bank had charged interest even after the date of auction of the property. In specific, the plaintiffs stated that the Bank wrongly charged interes