Telangana High Court
Cheela Maruthi vs Mehar Filling Station, on 7 January, 2025
Author: N.Tukaramji
Bench: N. Tukaramji
HON'BLE SRI JUSTICE N. TUKARAMJI
Second Appeal No.500 of 2024
JUDGMENT:
Heard Mr. V.Ravi Kiran Rao, learned Senior Counsel,
argued on behalf of Mr. V.Rohith, learned counsel on record for
the appellant/defendant and Mr. Chetluru Sreenivas, learned
counsel for the respondent/plaintiff.
2. This appeal has been filed by the appellant/defendant
aggrieved by the decree and judgment dated 30.08.2024 in
Appeal Suit No.17 of 2019 passed by the Principal District and
Sessions Judge, Kamareddy confirming the decree and judgment
dated 30.07.2019 in O.S.No.56 of 2014 on the file of the Senior
Civil Judge, Kamareddy.
3. The respondent/plaintiff filed suit seeking recovery of
Rs.8,00,000/- with future interest at 24% per annum and costs.
The trial Court decreed the suit with costs and directed the
appellant/defendant to pay the suit claim along with interest @
24% per annum from the date of the suit to the date of decree
and @ 6% per annum from the date of decree, till realization.
4. Learned counsel for the appellant/defendant though
pointed out factual aspects for considering, precipitated pleading
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as to the interest awarded by the Courts below, at 24% per
annum. He contends that even as per the suit claim the
transaction was a hand loan but not a commercial transaction, as
such, granting interest at 24% is usurious and cannot be
maintained. Further contested that Section 34 of the Code of
Civil Procedure, 1908 (for short, 'CPC') prescribes that the Court
may grant reasonable interest on principal sum from the date of
the suit till the date of decree and thereafter not exceeding 6%
per annum in decree for money. Thus in the absence of specific
contractual interest the Courts below ought to have granted
interest as per the contemplation under Section 34 of the CPC.
5. Learned counsel cited Rajni Kumar v. Suresh Kumar
Malhotra and another - (2003) 5 SCC 315 and pleaded that in the
authority, the Hon'ble Supreme Court, by considering the aspect
that the liability to pay the amount had not arisen out of any
commercial transaction, rate of interest payable on the amount
has been reduced from 18% to 6% per annum.
6. Learned counsel for the respondent/plaintiff would submit
that though the transaction was hand loan under promissory note,
as the repayment was neglected and on demand for repayment
the defendant issued disputed cheque and taken back the
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promissory note. However on presentment, as the cheque was
returned unpaid as account closed, the suit has been filed, after
the legal notice was returned unserved as 'refused'. Thus the suit
would be for recovery of amount based on cheque, which is
negotiable instrument. Though the interest awarded in the decree
is reasonable, at any stretch it cannot be below than the
prescribed interest under Sections 78 to 80 of the Negotiable
Instruments Act, 1881 (for short, 'NI Act') and the interest rate
contemplated in Section 34 of the CPC would not be relevant.
7. Learned counsel placed reliance on T.Ramachandra Reddy
@ Ramachandrappa S/o Sannathippaiah v. Murthy Gowder S/o
Gowdra Veeranna - 2010 LawSuit(Kar) 120 and pleaded that
similar issue has been considered by the High Court of Karnataka
and by relying on Section 80 of the NI Act rate of interest was
fixed at 18% per annum.
8. In the rival contentions, the point arises for determination is:
"Whether the rate of interest granted on the principal sum
between the date of the suit and the date of decree is
usurious?
9. By the plaint pleadings, it is clear that the plaintiff sought for
recovery of amount centering on the cheque, which is negotiable
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SA_500_2024
instrument. As per the plaintiff the defendant has taken hand loan
of Rs.8,00,000/-. Though the plaintiff pleaded that the defendant
had executed promissory note and that instrument was returned
while receiving the suit cheque/Ex.A-1, there is no specific
pleading as to any agreed rate of interest with the defendant.
Further the suit claim itself is evidencing that the transaction was
a hand loan. In general, Section 34 of the CPC is relevant
provision dealing with granting of interest on a decree for
payment of money. Nonetheless as noted supra, the suit claim is
formed on the cheque/Ex.A-1 which is a negotiable instrument.
10. The decision cited by the appellant/defendant i.e. Rajni
Kumar (supra) was in a situation where the suit filed by the
landlord against the tenant for recovery of electricity and water
consumption charges, wherein it has been held that in non
commercial transaction, Section 34 of CPC is applicable.
Whereas in T.Ramachandra Reddy (supra), a circumstance
where the recovery of suit amount based on promissory note, a
negotiable instrument has been considered.
11. In regard to grating of interest where no interest rate is
specified in the negotiable instrument, the relevant Section 80 of
the NI Act reads as follows:
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"80. Interest when no rate specified.--
When no rate of interest is specified in the instrument, interest on the amount
due thereon shall, notwithstanding any agreement relating to interest
between any parties to the instrument, be calculated at the rate of eighteen
per centum per annum, from the date at which the same ought to have been
paid by the party charged, until tender or realization of the amount due
thereon, or until such date after the institution of a suit to recover such
amount as the Court directs. Explanation.-- When the party charged is the
indorser of an instrument dishonoured by non-payment, he is liable to pay
interest only from the time that he receives notice of the dishonour."
Thus in the absence of agreement between the parties to the
interest specified in the instrument, the interest has to be
calculated at 18% per annum.
12. For the aforesaid reasons, in the factual setting of the
present suit, this Court is of considered view that the related
provision in determining the interest would be Section 80 of the NI
Act. Therefore as the Courts below disregarded this aspect, the
rate of interest granted in the impugned decree requires
interference. In consequence, the rate of interest granted by the
trial and appellate Courts from the date of the suit till the date of
decree has to be modified at 18% per annum. Accordingly, the
rate of interest granted in the impugned decree stands revised.
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13. In the result, the second appeal is allowed in part. There
shall be no order as to costs.
As a sequel, pending miscellaneous petitions if any, stands
closed.
_______________
N.TUKARAMJI,J
Date:07-01-2025
ccm
