Punjab National Bank vs Toy Land Of India And Anr.
1995 Latest Caselaw 740 Del

JUDGMENT

Devinder Gupta, J.

(1) This is plaintiffs' suit instituted on 8.7.1984 for recovery of Rs. 6,19,460.87.00 on account of principal and interest. Besides personal decree, the plaintiff Bank has prayed for a preliminary decree under Order 34 Civil Procedure Code . for sale of the mortgaged security.

(2) Loan facility was availed of by Defendant no.2, the sole proprietor of Defendant no. 1 on the basis of various loan documents executed by him. In order to secure the repayment of the loan amount, the immoveable property was equita.bly mortgaged. In addition the loan amount was also secured by hypothecation of finished and semifinished goods. The suit was contested by Defendants, who denied liability to pay the suit amount. It was pleaded that loan documents were not executed by Defendant no.2. His signatures were obtained on blank printed forms. Liability to pay interest was also disputed. Issues were framed on 9. 5.1989. The suit was set down for trial.

(3) Defendant no.2 expired on 28.9.1990. His legal representatives were ordered to be brought on record by an order passed on 26.11.1993 in i.A. 10584/90. It is not disputed that the estate of the deceased, including the property which was equitably mortgaged to secure the repayment of the amount, has been inherited by the legal representatives.

(4) On 23.11.1993, the legal representatives filed an application (I.A.1927/94) praying that substantial relief in respect of the interest charged by the plaintiff on principal sum from time to time prior to the institution and during the pendency of the suit be given to them so that legitimate dues of the Plaintiff be paid. It was alleged that there is no income from the unit for which loan for small scale industry was taken from the plaintiff by Defendant no.2. Unit became sick in 1986. Defendant no.2 had heart ailment since 1980 and there was real difficulty in not repaying the amount of loan. Defendant no.2 died in 1990 leaving behind widow, two sons and a daughter. As such plaintiffs should charge interest @ 6% p.a. On 19th July, 1994 the following order was passed on this applications: "I.A.1927/94This is an application under Section 151 Civil Procedure Code . filed by the defendants seeking relief for the payment of interest charged by the bank. Let the defendants file a statement showing what is due and payable to the plaintiff bank, according to their way of calculation and deposit that amount with the bank. Thereafter, the Court may consider the question of giving the relief to the defendants in the matter of interest, if permissible. List on 21.09.1994."

(5) The application was rejected on 20.10.1994 when it was noticed that defendants applicants were not present and had also failed to avail the benefit of order dated 19.7.1994, More or less for the same relief another applications (I.A. 9871/94) was filed on 15.11.1994. On 6.4.1995 a statement was made on behalf of defendants that on the suit amount a sum of Rs.2,91,000.00 had already been deposited with plaintiff bank and the defendants would be depositing balance amount of Rs. 3,28,460.87.00 within two months. A prayer was made for concession in payment of pendente lite interest. On 7.7.1995 it was noticed that defendants had deposited the balance amount with the plaintiff. The question which now remains to be decided is as regards interest pendente lite from the date of institution of the suit till payment and costs. It was slated on 8.8.1995 that no evidence is to be led by the parties.

(6) It is contended by learned counsel for the Defendants that since there is no specific denial by the plaintiff for the allegations made in para 3 of the two applications filed for scaling down of interest on the ground that loan was a small scale Industrial loan, the unit became sick, Defendant No.2 was having heart problem and there have been no profits since 1980, pendante lite interest should not exceed 6% p.a. and grant of pendente lite interest is in the sole discretion of the court. It is contended on behalf of the plaintiff bank that there arc no circumstances justifying the exercise of discretion in favor of defendants. The allegations were specifically denied in reply dated 22.1.1994, wherein it was denied that unit became sick in 1986, as alleged or defendants were not in a position to pay the amount for the alleged reasons. It was stated that property mortgaged and which had came in the hands of legal representatives was of the value of more than Rs.50 lakhs and the defendants could easily discharge their liability. Banks suit was got unnecessarily delayed due to a false defense. It is public money which was with held and there is no justification in not allowing the interest as prayed for in the suit. Moreover, in view of the the proviso to section .34 of the Code of Civil Procedure, discretion has to be exercised depending upon the facts and circumstances of the case and keeping in view the fact that the suit amount was due on a commercial transaction.

(7) As noticed above, the plaintiff has prayed for a decree in this suit under order 34 of the Code of Civil Procedure, in view of the amount of loan having been secured by equitably mortgaging the property. Order 34 Rules 2 and 4 of the Code of Civil Procedure, which applies to a mortgage suit, enjoins the court to order an account to be taken of what is due to the plaintiff at the date of such decree for principal and 'interest on the mortgage'. In view of the decision in Soli Pestonji Majoo v. Ganga Dhar Khernka , the special provisions in order 34 have therefore, to be applied in preference to the general provisions in Section 34, The decision says that till the period for redemption expires the matter is considered to remain in the domain of contract and interest has to be paid at that rate and with the rests specified in the contract of thg mortgage, but after the period of redemption has expired the matter passes from the domain of contract to that of judgment. The right of the mortgagee will hence forth depend not on the contents of his bond but on the directions of the decree. Order 34 Rule 11 CPC. gives a certain amount of discretion to the court so far as interest pendente lite is concerned and it is no longer absolutely obligatory on the courts to decree interest at the contractual rates up to the date of redemption in all eircumslanccs.

(8) In the instant case the dispute is now very narrow. There is no denial of the fact that interest has been charged in the suit at the contractual rate up to the date of institution of suit. The principal and interest stands duly paid. The pendante lite interest thus has to be allowed which is in the sole discretion of the court. In the facts and circumstances of the case and the fact that the suit, even if it was delayed by the deceased and the fact that no business has been carried on after his death, by the legal heirs and of the fact that liability is that of the deceased which has to be met out of his estate only and not against the legal representatives personally, I am of the view that award of 9% simple interest will meet the ends of justice.

(9) Accordingly it is directed that from the date of institution of the suit till the date when the suit amount was paid, the plaintiff will be entitled to simple interest @ 9% p.a. on the suit amount Along with costs of the suit. The defendants will pay the decretal amount within a period of three months, failing which the amount shall became recoverable by sale of the mortgaged properly. Decree be drawn accordingly. 1. A. 9871/94

(10) Ln view of decision in suit,no orders are required to be passed in this application. It stands disposed of.