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PSS, J.
S.A.No.1452 of 2005
HONOURABLE SMT. JUSTICE P. SREE SUDHA
SECOND APPEAL No.1452 OF 2005
JUDGMENT:
This Second Appeal is filed against the Judgment and decree passed in A.S.No.46 of 2004 dated 12.08.2005 on the file of Principal District Judge, Medak at Sangareddy.
2. The appellant herein mainly contended that the reduction of rate of interest by the first appellate Court from 12% to 6% from the date of institution of the suit till the date of realisation is contrary to law. The first appellate Court did not assign any reason for reduction of rate of interest and as per Section 61 r/w Sections 24 and 25 of the Andhra Pradesh Chit Fund Act, 1971 which authorises the "Foreman" to charge interest at the rate of 12%per annum till the date of realisation and would prevail over Section 34 of the Code of Civil Procedure. He also relied upon clause 20(B) of the Registered Statutory Bye-Laws i.e., Ex.A2 and Clause 15(a) (II) of Ex.A3 Chit agreement. He further contended that though the respondent No.1 herein remained exparte in the trial Court, the first appellate Court took lenient view without any 2 PSS, J.
S.A.No.1452 of 2005 basis and requested this Court to set aside the Judgment and decree passed by the first appellate court.
3. Heard arguments of both sides and perused the entire evidence on record.
4. The parties herein are referred as plaintiff and defendants as arrayed in the trial court for the sake of convenience.
5. The Margadarsi Chit Fund Limited, Sangareddy represented by its Branch Manager filed a suit vide O.S.No.50 of 1999 against defendant Nos.1 to 6 for recovery of Rs.3,05,175/- along with interest stating that on 06.04.1997, Defendant No.1 joined as a member of the Chit Fund scheme of their company for a chit value of Rs.5,00,000/- with monthly subscription of Rs.10,000/- for fifty months. On 26.10.1997, defendant No.1 participated in the auction and became successful bidder by forgoing Rs.2,25,000/- and received the balance amount. D2 to D6 executed an agreement of guarantee to the future liability of D1. D1 paid Rs.70,000/- upto the date of payment of prize amount and his future liability was Rs.4,30,000/-. Defendant No.1 committed default in payment of instalments from 15.01.1999 3 PSS, J.
S.A.No.1452 of 2005 onwards. In spite of repeated demands made by the plaintiff, defendants failed to pay the balance amount and thus, plaintiff company got issued legal notice to defendants and filed the suit for recovery of amount.
6. Defendant No.3 filed a written statement and other defendants remained ex-parte. Defendant No.3 in his written statement admitted all the averments of the plaint and stated that defendant No.6 is the father of defendant No.1 and a house bearing No.3-5-31, situated at Sangareddy is standing in the name of defendant No.6 and requested for attachment of the said house for recovery of the suit amount and also to decree the suit against D1 and D6 only.
7. The trial court examined PW1 on behalf of the plaintiff company and got marked Exs.A1 to A9. Defendant No.3 was examined himself as DW1 and marked Exs.B1 to B4 on behalf of the defendants.
8. DW1 in his evidence stated that during the pendency of the suit, i.e., on 31.03.2002, defendant No.1 paid Rs.2,90,000/- towards one time settlement and the balance to be paid was only 4 PSS, J.
S.A.No.1452 of 2005 Rs.15,175/-. Both the plaintiff company and defendant No.3 filed their calculation memo before the trial Court. As per the plaintiff- company defendant has to pay balance of Rs.1,23,616/-, whereas, as per defendant No.3, defendant No.1 has to pay only Rs.14,543/. The trial Court held that on 27.02.2004, the learned counsel for the plaintiff-company conceded that calculation memo filed by defendant No.3 is correct, but the trial Court decreed the suit for an amount of Rs.3,04,546/- with interest @ 12% per annum from the date of suit till the date of payment of Rs.2,90,000/- i.e., on 31.03.2002 and thereafter to recover the balance amount with interest @ 12% per annum from 31.03.2002, till the date of decree and at the rate of 6% per annum from the date of decree till realisation.
9. Aggrieved by the said Judgment and decree, defendant No.1 preferred an appeal before the first appellate court. The trial Court also observed that in the cross-examination of DW1, he admitted that there was no record to show regarding the payment of Rs.2,90,000/- towards one time settlement between the plaintiff-company and the defendants. He also admitted that 5 PSS, J.
S.A.No.1452 of 2005 receipt passed for payment of Rs.2,90,000/- shows that it was a part payment.
10. The first appellate Court held that the suit claim as on the date of filing the suit i.e., on 17.11.1999 was Rs.3,04,546/- but defendant No.1 paid Rs.2,90,000/- on 31.03.2002. The chit fund company is entitled for pendentelite interest on Rs.2,90,000/- from the date of the suit (17.11.1999) till its payment i.e., on 31.03.2002. As the appellant paid major sum of Rs.2,90,000/-, the chit fund company is only entitled to interest @ 6 % per annum and thus it was held that defendant No.1 was liable to pay only Rs.43,980/- with interest @ 6 % per annum from 12.08.2005, till the date of realisation.
11. In the present Appeal the main contention of the appellant/plaintiff is that the first appellate Court cannot reduce the rate of interest, but the first appellate Court stated that major portion of amount i.e., Rs.2,90,000/- out of Rs.3,04,546/- was paid immediately after filing of the suit, as such the interest was reduced from 12% to 6% per annum. Therefore, the argument of the appellant herein that no reasons were assigned cannot be 6 PSS, J.
S.A.No.1452 of 2005 accepted. The appellant herein also contended that as per the Chit Fund Act, 1971 they are entitled for interest @ 12% and it prevails over Section 34 of Code of Civil Procedure and the reduction of interest is also against the Bye-Laws of the company, as such requested the Court to set aside the order to the extent of reduction of interest.
12. Admittedly, the suit claim was Rs.3,04,546/- as on the date of filing of the suit, but immediately after the filing of the suit, defendant No.1 paid a substantial amount of Rs.2,90,000/- and as per the calculation memo, after deduction of the said amount appellant is entitled for Rs.43,980/- towards suit claim and as per the Chit Fund Act, plaintiff is entitled for interest @ 12% per annum from 31.03.2002 till the date of decree and 6% per annum from the date of decree, till the date of realisation and thus the order of the first appellate Court is modified as stated above.
In the result, the second appeal is partly allowed and the appellant is entitled for balance amount of Rs.43,980/- with interest @ 12% per annum from 31.03.2002 till the date of decree 7 PSS, J.
S.A.No.1452 of 2005 and @ 6% per annum from the date of decree till the date of realization. There shall be no order as to costs.
As a sequel, miscellaneous applications pending, if any, shall stand closed.
____________________________ JUSTICE P. SREE SUDHA Dt. 03-11-2023.
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S.A.No.1452 of 2005 HONOURABLE SMT. JUSTICE P. SREE SUDHA SECOND APPEAL No.1452 OF 2005 Dt. 03.11.2023 krl