Pratibha Upasani, -
(1.) THIS substantive appeal is filed by the appellants/original defendants being aggrieved by the judgment and Order dated 11.6.2004, passed by the learned PO of DRT, Ernakulam, in OA-105/2001. By the impugned judgment and order, the learned Presiding Officer allowed the OA filed by the Bank and ordered the defendants to pay to the applicant Bank sum of Rs. 15 lakhs with the interest thereon at the rate of 18% per annum from 16.8.1998 (from the date of transaction of loan) to 24.4.2001 (date of filing of the OA) and, therefore, at the rate of 14% p.a. to the date of decree and 12% p.a. as future interest (post-decree) till realisation and also proportionate costs, etc. He also gave certain consequential declarations and ordered issuance of Recovery Certificate in the above stated terms. Being aggrieved, the appellants have approached this Appellate Tribunal by filing this appeal but their grievance is limited only with respect to the interest portion. Hence, the scope of the appeal is now very limited.
(2.) I have heard Mr. Siby J. Monippally, the learned Advocate for the appellants and Mr. A.P.S. Kasturi Rangan, the learned Advocate for the respondent Bank I have also gone through the proceedings, which have been called from DRT, Ernakulam, including the impugned Order and the relevant documents.
It is the contention of Mr. Monippally, the learned Advocate appearing for the appellants, that the learned Presiding Officer erred in awarding interest @ 18% p.a. from the date of transaction till the date of filing of the OA. He contended that the rate of interest only should be 6% p.a., that it is a banking transaction and, therefore, provisions of Banking Regulation Act and Reserve Bank of India circulars apply. He further argued that no rate of interest is mentioned any where including the Agreement of Loan and Promissory Note, which was given as a collateral security. He argued that when no rate of interest was indicated anywhere, taking recourse to Section 80 of the Negotiable Instruments Act was not proper and the interest should have been awarded only @ 6% p.a. from the date of transaction till filing of the OA.
As far as the pendente lite and the post-decree interest is concerned, it was the contention of the learned Advocate for the appellants Mr. Monippally, that the learned PO did not exercise the discretion judiciously when he granted interest @ 14% p.a. from the date of filing of the OA till date of decree and @ 12% p.a. from the date of decree till realisation. It was pointed out that no reasoning, whatsoever, has been given by the learned PO in arriving at the conclusion as to why the above mentioned rate of interest was being awarded by him. He, therefore, prayed that the entire interest should be reduced and it be awarded at the rate of 6% p.a. only.
(3.) MR. Kasturi Rangan, the learned Advocate appearing for the Bank, on the other hand, argued that the transaction was simple money suit and equitable mortgage was created by way of collateral security and even a Promissory Note was executed by the appellants by way of collateral security only. He admitted that no rate of interest was mentioned either in the Loan Agreement or in the Promissory Note. He further pointed out the provisions of Section 80 of the Negotiable Instruments Act, and highlighted that when no rate of interest was mentioned, then in that eventuality, interest has to be calculated at the rate of 18% p.a. from the date at which the loan amount ought to have been paid by the party charged, until tender or realisation of the amount due thereon. He pointed out that this was the position after the amendment of Section 80 of the Negotiable Instruments Act, 1881. He admitted that earlier the rate of interest under these circumstances was 6% p.a., which was now enhanced to 18% p.a. As far as the awarding of pendente lite and post-decree interest was concerned, MR. Kasturi Ragan, admitted that the learned PO has not give any reason as to why he was not granting interest at that particular rate. He, however, pointed out that the amount of Rs. 15 lakhs was given by way of loan to the appellants and it, was to be repaid in ten instalments of Rs. 1,50,000/- each. He pointed out that the due date for payment of the entire loan was 16.1.1999 and the due date for the first instalment was 16.4.1998. He further highlighted that, however, the defendants committed default at the time of the very first instalment and further argued that though, thereafter, they made some payments, they were irregular in paying the same.;