Delhi High Court
Delhi State Industrial Development ... vs Anil Kashyap on 16 November, 1994
Equivalent citations: 56(1994)DLT637, 1995 A I H C 2520, (1995) 2 CIVILCOURTC 443, (1996) 1 LJR 176, (1995) 1 BANKCAS 396, (1995) 2 ARBILR 117, (1994) 56 DLT 637
JUDGMENT P.K. Bahri, J.
(1) This is a suit for recover of Rs. 1,05,847.21 paise. On 3rd August 1989, a partial decree was passed by this Court. The said order is reproduced as below - The only dispute is with regard to the rate of interest. According to Mr. Gumani, the defendant is liable to pay interest at the agreed rate of 2-112 per cent per annum, whereas according to Mr. Sharma, the plaintiff is entitled to charge interest at 21 per cent per annum as claimed in the suit with effect from 5th September 1982. There is no dispute that sum of Rs. 43,201.00 was advanced by plaintiff to the defendant. In view of the above, I pass a decree in favor of the plaintiff against the defendant in the sum of Rs. 43,201.00 with interest at the rate of 2-112 per cent per annum from. 3rd September 1974 till payment by the defendant to the plaintiff. Whatever amount has been paid by the defendant to the plaintiff, due adjustments of it will be given and the said payment, it is agreed, will be adjusted towards the principal amount. In the facts and circumstances of the case. defendant is granted six months' time to pay the decretal amount. On the question of interest, the following issue is framed :-- "WHETHER the plaintiff is entitled to charge interest at 21 per cent per annum or any other rate higher than 21/2 per cent per annum from the defendant ?" Counsel for the parties agree that evidence on this issue be taken by way of affidavits. Plaintiff will file affidavits by way of evidence within two months. Counter-affidavits within two months thereafter. List the suit for arguments on the aforesaid issue on 5th March, 1990."
(2) So, the only issue which survives for decision is with regard to the right of the plaintiff to claim interest at the rate of 21 per cent per annum or any other rate higher than 2 112 per cent per annum from the defendant. Parties have filed their affidavits in support of this issue. Parties do not want to cross-examine the deponents who have given the affidavits and counsel for the parties have addressed the arguments on this issue.
(3) It is undisputed fact that plaintiff had advanced margin money of Rs. 43,201.00 to the defendant for running his small scale industry on the basis of defendant executing a Mortgage Deed which provided that concessional rate of interest @21/2 per cent per annum shall be chargeable but the debt was payable by the defendant to the plaintiff in two Installments falling due on September 5, 1983 and September 5, 1984.
(4) The defendant failed to pay the amount in accordance with the terms of the Mortgage Deed and thus notice was served on the defendant for claiming the amount Along with interest. The plaintiff claimed interest at the rate of 2 112 per cent per annum from 3rd September 1974 to 4th September 1982 and claimed interest @ 21 per cent per annum from 5th September, 1982 to 31st May, 1984 and after adjusting Rs. 2,000.00 received from the defendant, on 7th November, 1985, the suit was filed for recovery of the balance amount of Rs. 1,05,847.21 paise. The suit was filed on 22nd September, 1986.
(5) The learned counsel for the defendant has vehemently argued that as the Mortgage Deed executed between the parties clearly provided for payment of simple interest @ 2-112 per cent per annum, there is no question of plaintiff being entitled to any interest higher than the agreed rate of interest.
(6) There is no merit in this contention. The concessional rate of interest obviously was granted to the defendant subject to the defendant complying with the terms of the Mortgage Deed which contemplated payment of the amount by the defendant by two Installments falling due on 5th September, 1983 and 5th September, 1984. So, the concessional rate of interest, which was agreed to be paid, was to survive only up to the date of last payment contemplated in the Mortgage Deed. So, the effect of this interpretation would be that there was no agreed rate of interest payable by the defendant with effect from September 5, 1984 onward.
(7) Learned counsel for the plaintiff, however, has contended that as the concessional rate of interest of 2112 per cent per annum was valid only in case the defendant was to make the payment by the due dates mentioned in the Mortgage Deed and as defendant had failed to comply with the terms of the Mortgage Deed, even for the period up to September 1984 the defendant is not liable to have any concessional rate of interest @ 2l/2 per cent per annum.
(8) I have perused the contents of the Mortgage Deed from the copy of the Mortgage Deed filed on the record to which both the parties bad made reference, so the same avoided the necessity of obtaining the original Mortgage Deed. The same shows categorically that there is no default clause contemplated in the terms of the Mortgage Deed that in case the defendant was not to pay the amount within the stipulated period, the plaintiff was entitled to charge any rate of interest higher than 2 112 per cent per annum with effect from 3rd September, 1974 to 5th September, 1984. So the interest due from the defendant @2112 per cent from 3rd September, 1974 to 5th September. 1984 would come to Rs. 10,800.
(9) There is no agreement to pay any interest after September 4, 1984. The provisions of Section 3(1) of the Interest Act would become applicable, which lay down as follows:-
"3.Power of court to allow interest.-(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,-
(A)if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
(B)if the proceedings do not relate to any such debt, then. from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings;
PROVIDED that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment."
(10) Admittedly, the present claim is pertaining to the debt due from the defendant and there is a written contract for payment of the debt and thus, the plaintiff would be entitled to have the rate of interest not exceeding the current rate of interest from 5th September, 1984 till the date of institution of the proceedings because for this period there is no agreement made between the parties with regard to the rate of interest to be paid and that rate of interest has to be such rate which does not exceed the current rate of interest. The current rate of interest mentioned in the plaint is 21 per cent per annum, which fact is not controverter in the written statement.
(11) So, from 5th September. 1984 till the date of the institution of the suit i.e. on 2nd September, 1986, the rate of interest payable is 21 per cent per annum. So, up to the date of the institution of the suit, the total amount due from the defendant was Rs. 43,201.00 plus Rs. 10,800.00 plus Rs. 18,144.00 aggregating to Rs. 72,144. Before the filing of the suit, the defendant had paid Rs. 2,000.00. so the total amount clue up to the filing of the suit is Rs. 70,1441.
(12) A Division Bench of Karnataka High Court in case of B. S. Rajput Vs. Mis. The Cellar, has also held that in view of Section 3(1) of the Interest Act, what has to be proved is that the debt is due to the plaintiff from the defendant and there is no agreement to pay the interest although a deed of debt is executed, in such a situation, the plaintiff is entitled to have interest at the current bank rate till the date of filing of the suit.
(13) So, in view of the above discussion, the suit is decreed finally for recovery of Rs. 70,144.00 with proportionate cost and I grant interest at the rate of 21 per cent per annum from the date of the suit till realisation as it was a commercial transaction.
(14) The payment made during the pendency of the suit shall be duly adjusted in the decree in execution.