Andhra HC (Pre-Telangana)
Indian Bank, Madras vs N. Munisankar And Another on 11 October, 1999
Equivalent citations: 2000(3)ALD701, 2000(2)ALT601, AIR 2000 ANDHRA PRADESH 280, (2000) 2 BANKCAS 574, (2000) 3 ANDHLD 701, (2000) 2 ANDH LT 601
ORDER S.V. Maruthi, J.
1. This is an appeal by Indian Bank against the judgment and decree of the Additional Subordinate Judge, Tirupati in OS No.264 of 1990.
2. The suit is filed for recovery of Rs. 13,41295-20 Ps., being the principal and interest due on a pronote dated 22-11-1985 executed by the first defendant in favour of the plaintiff-Bank for a sum of Rs.3,00,000/-and for costs.
3. The averments in brief are that the 1st defendant for purpose of doing business in real estate obtained overdraft facility in the Current Account of a sum of Rs.3,00,000/- and started availing the facility after executing a pronote on 22-11-1985. He agreed to pay interest at the rate of 7.5 per cent over the official rate of Reserve Bank of India with a minimum of 17.5% per annum with quarterly rests. The second defendant was the guarantor. On 31-3-1987 the first defendant renewed the demand promissory note for a sum of Rs.7,13,402-40 Ps. The first defendant deposited the title deeds of the immovable property as security on 28-4-1988. The defendants have acknowledged the debt in a sum of Rs.8,67,239-55 Ps. The Promissory note was also renewed. Inspite of repeated demands, the defendants have not paid the amount. Hence the suit.
4. Defendants denied all the allegations in their written statements.
5. On the basis of the averments, the following issues were framed:
1. Whether the plaintiff is entitled to recover the suit amount?
2. Whether the second defendant is liable to pay the suit amount?
3. To what relief?
6. The plaintiff examined PW1 and marked Exs.A1 to A22 documents. The defendants have not adduced either oral or documentary evidence.
7. On the basis of the oral and documentary evidence, the trial Court decreed the suit.
8. However, while decreeing the suit, the trial Court awarded interest from the date of redemption till the date of realisation at 13% on the principal sum of Rs.3,00,000/-. Aggrieved by the same, the Plaintiff-Bank preferred this appeal.
9. The main argument of the learned Counsel for the appellant is that in view of the judgment of the Supreme Court in Bank of Baroda v. M/s, Jugannath Pigment and Chem and others, 1995 ISJ (Banking) 573 = 1996 (5) Scale 38, the trial Court ought to have awarded interest at 18.5% per cent from the date of redumption till the date of realisation as the interest payable is only on the amount adjudged and no on the amount borrowed. On the other hand, the learned Counsel for the respondents contended that interest is to be allowed only on the principal amount and not on the amount adjudged.
10. The question, therefore, is whether the appellant is entitled for interest on the amount adjudged or on the principal amount borrowed.
11. In view of the judgment of the Supreme Court in Bank of Baroda v. M/s. Jugannath Pigment and Chem and others (supra), holding that interest is to be granted on the principal sum adjudged from the date of redemption till the date of realisation, the learned Counsel for the appellant is right in his contention that the trial Court ought to have granted interest on the amount adjudged and not on the principal amount borrowed.
12. Therefore, we allow the appeal and direct that interest be paid at 18.5 per cent on the amount adjudged i.e., Rs.13,41,291-25 Ps.
13. The appeal is accordingly allowed. No costs.