NAFEESUMMA Vs. INDIAN OVERSEAS BANK
HIGH COURT OF KERALA
INDIAN OVERSEAS BANK
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(1.) The 3rd defendant in a suit for realisation of money secured by an equitable mortgage filed by a Bank (which now is a nationalised one) is the appellant. The court below has passed a preliminary decree for sale of the mortgaged properties plaint. A schedule properties for realisation of a sum of Rs. 1,46,643.24 with interest on the principal amount of Rs. 1,25,000/- at the rate of 6% per annum from the date of suit till realisation and also for costs of the suit The only relief which the 3rd defendant prays for is payment of the decree amount in instalments as she is entitled to being an agriculturist under S.4(3) read with the proviso to clause (1) of S.2(4) of the Kerala Agriculturists Debt Relief Act (shortly stated the Act). However the time fixed as per the Act for payment of these instalments are already over. The appeal as such have become infructuous. Hence it is dismissed, but in the circumstances of the case without costs.
(2.) However, we have to deal with the Cross Objections filed by the Bank in the matter. The contentions raised by the Bank are:
(i) the principal amount sued on is Rs. 1,39,130-03 and not on R. 1,25,000/- as erroneously assumed by the court below;
(ii) even assuming that the 3rd defendant is entitled to take advantage of S.5(2) of the Act the lower court ought to have allowed interest at 9 1/2% per annum, the contract rate till 14-7-70 and thereafter at 1% per annum till date of preliminary decree namely 5-4-72;
(iii) the court below erred in not allowing interest on the insurance premia paid pending suit;
(iv) The court below should have allowed future interest at 6% per annum on the whole of the principal amount namely Rs. 1,39,130-03 plus R.6, 081-31 (insurance premia paid pending suit).
(3.) In regard to the first question what is the principal amount sued on Mr. T. L. Viswanatha Iyer, learned counsel for the respondent bank pointed out that as per the agreement between the parties the interest that has accrued due at the end of the quarter is added on to the principal and becomes the principal and never thereafter ceases to be the principal. It is on this basis that the principal was shown as Rs. 1,39,130-03 at the time of filing the suit. It Was contended that this method of calculating the principal is perfectly legal and we were referred to a Full Bench decision of this Court in Thandamma v. Puthencol Iype ( AIR 1962 Ker. 235 ) wherein the following passage from the English case in Inland Revenue Commissioner v. Holder (1931 (2) KB 81) was quoted with approval:
"I am therefore of opinion that having regard to the method in which, with the concurrence of the company the account was kept by the Bank, the company must be deemed to have paid each half year the accruing interest by means of an advance made for that purpose by the Bank to the company".;
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