A V EXHIBITORS Vs. CORPORATION BANK

JUDGEMENT

(1.) THE respondent Bank as applicant filed the suit against the appellants for recovery of Rs. 13,79,623.94 p. THE appellants also deposited the title deeds and created equitable mortgage and the appellants also hypothecated the goods and movables specified in Schedule C. THE appellants as defendants filed the written statement contending that there is no agreement for payment of any interest and the Bank has claimed unauthorized charges by way of penal interest, service charges, etc, and the Bank took the signatures of the appellants in several documents without explaining the nature of the documents. THE Original Application (OA) was heard by the Presiding Officer, DRT, Bangalore, and it was allowed holding the defendants jointly and severally liable to pay the amount decreed and also for sale of the mortgaged property in case of non-setting the claim of the Bank within three months. Aggrieved against the order the appellants have preferred this appeal.

(2.) In this appeal (AT-31/2000) the appellants contend that there was no agreement to pay interest and the appellants never agreed to pay compound interest at quarterly rests. The appellants have paid a sum of Rs. 14,55,849.38 p. upto 19.10.1981. The appellants paid a sum of Rs.34,99,865.60p. before and after filing of the suit i.e. upto 14.8.1997 and on 24.11.1997 another sum of Rs. 3 lakhs was paid by the appellants and again on 22.11.1997 the appellants paid another sum of Rs. 3 lakhs and so in all the appellants paid a sum of Rs. 40,99,865.60 p. as on 22.1.1998. So the decree passed for Rs. 11,50,000 is wrong. So the appellants have sought relief in this appeal against the decree for the principal amount of Rs. 11,50,000 and for award of interest at 12% pendente lite and future interest without compound interest.

(3.) COUNSEL for the appellants during the course of his arguments submitted that the appellants are aggrieved against the order passed by the Presiding Officer, DRT, on the award of rate of interest, on the payment of insurance premium amount by the Bank to the Insurance Company which amount was already paid by the appellants to the Insurance Company, and also the inclusion of Court-fee amount with the principal amount and charging interest on that amount also. With regard to the award of interest, COUNSEL for the appellants submits that the Bank is entitled for interest only at 12% simple interest and the order passed by the Presiding Officer, DRT, awarding interest at 12% compounded quarterly from the date of lending till the date of realization, is not proper and it warrants interference. He lays stress on the wordings contained in the Pro-note and contends that the Bank is not entitled to charge any more interest than the interest as per the contract as mentioned in the Pronote. In Ex. P3, the interest is mentioned at 5% per annum over and above the Bank rate subject to a minimum of 12% p.a. with quarterly rests for value received. He further pointed out that at the relevant point of time when the amount was borrowed, the Bank rate of interest was 7% and if 5% is added over and above that Bank rate the rate of interest comes to only 12% and the Bank is entitled to charge only 12% and not above that rate as claimed by the Bank.