Debt Recovery Appellate Tribunal - Madras
S. Surendran vs The Catholic Syrian Bank Ltd. on 26 April, 2002
ORDER
A. Subbulakshmy, J. (Chairperson)
1. The Catholic Syrian Bank, respondent in this appeal filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions (RDDB & FI) Act, 1993, for recovery of a sum of Rs. 16,94,648/- with interest at the rate of 23.25 per cent. The defendant filed reply statement denying the suit claim. The matter was heard by the learned Presiding Officer (PO), Debts Recovery Tribunal (DRT), Ernakulam and the application was allowed directing to pay by the appellant-defendant a sum of Rs. 17,31,398/- with future interest at the rate of 21.25 per cent per annum simple interest, less amount if any paid, from the date of Original Application till realisation and also charge over the schedule properties in the application. Aggrieved against that order passed by the learned Presiding Officer, DRT, Ernakulam, on the award of rate of interest, the appellant-defendant has come forward with this appeal.
2. In this appeal the appellant contends that the award of interest at 21.25 per cent is not proper and the simple interest at 6 per cent ought to have been awarded by the learned Presiding Officer, from the date of original application till the date of realisation. The Counsel for the appellant further contends that the original application is also barred by limitation.
3. With regard to the limitation, the Counsel for the appellant submitted that the borrowing was in the year 1992 and the original application was filed by the applicant Bank in the year 1997 and it is barred by limitation.
4. The Counsel for the respondent Bank submitted that the appellant revived the loan amount in the year 1995 and the revival letter was executed on 16.5.1995 and the appeal being filed in the year 1997, it is not barred by limitation.
5. The appellant-defendant has executed the revival letter on 16.5.1995 has evidenced by the page No. 40 of the paper book. Since the appellant has revived the loan amount by executing revival letter on 16.5.1995 and the original application being filed in the year 1997, it is not barred by limitation.
6. The Counsel for the appellant further submitted that by virtue of order pronounced by the Hon'ble Supreme Court in II (1998) SLT 361 = I (1998) CLT 88 (SC) = AIR 1998 SC 1101, N.M. Veerapa v. Canara Bank, and in IV (2000) CLT 125=VII (2000) SLT 400=AIR 2001 SC 3095, Central Bank of India v. Ravindra and Ors., the interest rate at 6 per cent can be awarded and the order passed by the learned Presiding Officer, DRT, Ernakulam has to be modified.
7. The Counsel for the respondent Bank submitted that the learned Presiding Officer, DRT, Ernakulam has exercised her discretion and has awarded at 21.25 per cent simple interest from the date of original application till the date of realisation and the order passed by the learned Presiding Officer, DRT, Ernakulam, cannot be interfered.
8. The applicant Bank claimed interest at 23.25 per cent, the learned Presiding Officer, DRT, Ernakulam, has reduced the future interest to 23.25 per cent.
9. The Counsel for the appellant submitted that even this award at 21.25 per cent simple interest is on the higher side and the interest has to be awarded at 6 per cent simple interest.
10. The Hon'ble Supreme Court in N.M. Veerapa . Canara Bank (supra), has held that in case of mortgage suits for recovery of Bank loan, the grant of interest at the rate of 6% from the date of suit is proper.
11. The Apex Court in Central Bank of India v. Ravindra and Ors. (supra), has held that while decreeing a suit if the decree be for payment of money, the Court would adjudge the principal sum on the date of the suit. The Court may also be called upon to adjudge interest due and payable by the defendant to the plaintiff for the pre-suit period which interest would obviously be other than such interest as has already stop capitalised and having shed its character as interest, has acquired the colour of the principal and having stood amalgamated in the principal sum would be adjudged so. The principal sum adjudged would be the sum actually loaned plus the amount of interest on periodical rests which according to the contract between the parties or the established banking practice has stood capitalised. Interest pendente lite and future interest (i.e. interest post-decree not exceeding 6 per cent per annum) shall be awarded on such principal sum i.e. the principal sum adjudged on the date of the suit. It is well settled that the use of the word "may" in Section 34 confers a discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit. Such interest, so far as future interest is concerned may commence from the date of the decree and may be made to slop running either with payment or with such earlier date as the Court thinks fit.
12. The Apex Court in the above said decision has observed that the use of the word "may" confers a discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit.
13. Even though, the learned Presiding Officer, DRT, Ernakulam has reduced the rate of interest from 23.25 per cent to 21.25 percent, still I feel that the interest awarded by the learned Presiding Officer, is on the higher side, and applying the principles laid down by the Hon'ble Supreme Court in supra, I feel that the interest can be reduced to 6 per cent from the date of original application till the date of realisation.
14. Appeal allowed in part. The rate of interest is reduced to 6 per cent simple interest from the date of original application till the date of realisation from 21.25 per cent awarded by the learned Presiding Officer, DRT, Ernakulam.
15. The learned PO, DRT, Ernakulam, is directed to issue modified Recovery Certificate at the rate of 6 per cent simple interest from the date of Original Application till the date of realisation.
16. No costs.