Karnataka High Court
Smt H V M Nirmala W/O Siddaiah vs Karnataka State Financial Corporation on 28 November, 2012
Bench: D.V.Shylendra Kumar, B.Manohar
IN THE HIGH COURT OF KARNATAKA
AT BANGALORE
Dated this the 28th day of November, 2012
PRESENT
THE HON'BLE MR JUSTICE D V SHYLENDRA KUMAR
AND
THE HON'BLE MR JUSTICE B MANOHAR
Regular First Appeal No. 1843 of 2005 (MON-DB)
BETWEEN:
1. SMT H V M NIRMALA
W/O SIDDAIAH
AGED ABOUT 40 YEARS
NO.208, 10TH CROSS
BEML LAYOUT
BASAVESHWARNAGAR
BANGALORE - 560 079
2. SRI SIDDAIAH
S/O GANGADHARIAH
AGED ABOUT 47 YEARS
NO.208, 10TH CROSS
BEML LAYOUT
BASAVESHWARNAGAR
BANGALORE - 560 079 ... APPELLANTS
[By Sri B S Raghu Prasad, Adv.]
AND:
KARNATAKA STATE FINANCIAL CORPORATION
1/1, THIMMAIAH ROAD
BANGALORE - 560 052
REP. BY ITS DEPUTY
GENERAL MANAGER (ADMN) ... RESPONDENT
[By Sri Ramesh Upadhyaya, Adv.]
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THIS APPEAL IS FILED UNDER SECTION 96 OF CPC
AGAINST THE JUDGMENT AND DECREE DATED 31.08.2005
PASSED IN O.S.NO.214/2000 ON THE FILE OF THE ADDL. CIVIL
JUDGE (SR.DN.), HASSAN, DECREEING THE SUIT FOR RECOVERY
OF MONEY AND ETC.,
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
SHYLENDRA KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the defendants in OS No 214 of 2000, on the file of court of Additional Civil Judge (Sr Dn), Hassan, is directed against the judgment and decree dated 31-8-2005 passed in the said suit, being aggrieved by the judgment and the learned trial judge decreeing the plaintiff's suit, for recovery of money in a sum of Rs 2,01,833/- with costs and interest at 12% pa and 15% pa pendente lite and future respectively in favour of the plaintiff and the respondent in this appeal.
2. The appeal by the defendants is on the ground that the learned judge of the trial court has not taken into account the repayments in a proper manner; that the rate of interest as claimed and charged by the plaintiff - Karnataka state financial corporation - wherein the first 3 defendant was an employee earlier and as employee of the corporation had availed certain loans, has not been either on any agreed rates or on any known basis, but interest has been charged at exorbitant rate and also that it is not on any rationale basis.
3. Brief facts leading to filing of the suit by the plaintiff against the defendants are that: Second defendant is the husband of first defendant; that first defendant had, as an employee of the plaintiff-corporation, availed a house building advance of Rs 1,50,000/- as per sanction letter dated 23-9-1992; that the loan amount had been split into two components and first component to carry interest at the rate of 8% pa and the second component to carry interest at the rate of 11% pa and the loan amount was to be repaid in 182 equated monthly instalments [EMI]; that the first defendant had also availed a car loan subsequently i.e. a year later; that the first defendant ceased to be an employee of the plaintiff on and after 1995, following an order of suspension and a 4 departmental enquiry etc.; that there was default in payment of EMIs on and after 1-7-1995; that the last instalment had been deducted from the salary of the first defendant on 30-6-1995 and due to default thereafter in payment of instalments, the amount became due to the corporation, though sporadic payments were being made by the defendants in between and in this background, the plaintiff had got issued a legal notice enclosing a copy of statements of accounts along with the notice, indicating that the second defendant being the guarantor and the first defendant being the borrower were jointly liable to pay a sum of Rs 2,68,379/- as per notice dated 15-11- 1999 and within the permitted time, the defendants having not made good this amount, the suit was filed praying for a judgment and decree of this amount with interest at the rate of 18% pa pendenti lite and future.
4. The suit claim was resisted by both defendants. Second defendant filed a detailed written statement, which was adopted by the first defendant. Defendants 5 contended that the plaintiff-corporation had not given credit to all payments made by the first defendant; that adjustment of provident fund, which was due to the first defendant from the plaintiff, has also not been done in a proper manner and also contested the manner of computation of the amount, particularly the manner of computing the interest payable by the defendants and pleaded that the plaintiff has given a distorted figure of outstanding amount. While the defendants admitted that they were still outstanding certain amount, that was not as much as claimed in the plaint, but much less and in view of dire consequences in which the defendants were placed, they were not able to pay the entire amount in one lumpsum, but the amount can be paid given five annual instalments after applying necessary corrections as contended by the defendants.
5. In the wake of such pleadings, the trial court framed the following issues:
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i. Whether the plaintiff proves that the defendant is liable to pay interest @ 18% p.a.?
ii. Whether the plaintiff proves that the defendant is liable to pay the principal and interest as claimed at para No.10?
iii. Whether the plaintiff entitled to the decree as prayed for?
iv. For what order or decree? 6. Parties went on trial on such issues. On behalf of
plaintiff, Hariswamy, Manager (Personnel) at the head office of the plaintiff-corporation, has been examined as PW1 and got marked ExP1 to 26 and on behalf of the defendants, first defendant deposed as DW1 and got marked ExD1 to 29.
7. On appreciation of such evidence, learned judge of the trial court, after hearing the arguments addressed by the learned counsel for the parties, answered the issue No 1 partly in favour of plaintiff and partly in favour of defendants. Issue No 2 was also substantially answered in favour of plaintiff, in the sense, the learned 7 judge of the trial court held that the defendants are liable to pay a sum of Rs 2,01,853/- towards principal and interest, instead of Rs 2,05,526/- as claimed by the plaintiff. The third issue was also partly answered in the affirmative and accordingly decreed the suit as indicated above.
8. Appearing on behalf of defendants-appellants, Sri B S Raghuprasad, learned counsel, has very vehemently urged that that the learned judge of the trial court has committed an error in simply accepting the ipsy dixsy of the plaintiff; that the plaint averments having not been scrutinized at all vis-à-vis the defence set up by the defendants; that while the plaint averments are given importance and accepted without proper scrutiny, the defence set up by the dependents is not properly examined or at any rate not given the same treatment; that the rate of interest claimed has no basis at all; that even when it had been indicated as per the agreement or understanding between the parties that in respect of two components of 8 house building advance, the rate of interest should be at 8 and 11% pa, the plaintiff has claimed interest at the rate of 18% pa for the period on and after 5-5-2000; that this is not permissible, as it was neither the contractual rate nor the defendants made known about it; that the basis for claiming interest at 18% pa being that it is the commercial lending rate, but house building advance given to an employee at the time of grant of such loan is never a commercial transaction and at any rate housing loan being not in the nature of commercial transaction, claiming interest at 18% pa is not justified and therefore the learned judge of the trial court is not justified in allowing this rate of interest for an earlier period and even while permitting levy of interest on the principal amount as arrived at by the learned judge of the trial court and indicated to be Rs 2,01,833/-, the rate of interest is not justified, as the learned judge of the trial court has loaded penal interest of 3% on the earlier agreed rates of interest by calling in aid Regulation 127 of the KSFC Staff 9 Regulations, 1965, which governs the relationship between the plaintiff and its employees; that even according to the plaintiff-corporation, the first defendant ceased to be an employee of the corporation only after 30-
6-1998 onwards, there was no scope for mulcting the defendants with penal interest; that it is not even the case of the plaintiff that it is entitled for penal interest over and above the agreed rate of interest, loading of interest at 8% and 11% with penal interest at 4% is not justified and it has to be corrected.
9. On the other hand, Sri Ramesh Upadhyaya, learned counsel for respondent-plaintiff has pointed out that when legal notice was issued enclosing along with it the statement as per ExP1, the defendants did not raise any demour and they did not join issue on that and it is only the case of the defendants getting wise after the suit was laid before the court. With reference to letter addressed to the plaintiff as per ExD1, it is pointed out that the defendants had virtually admitted the amount as claimed 10 by the corporation and therefore they cannot play hot and cold and that too while in appeal and that being not backed by any material on record, the claim at any rate, the amount as admitted as per ExD1 cannot be disputed.
10. We have given our anxious consideration to the submissions made at the Bar and have also perused the records and the judgment under appeal. We find the basis for the suit claim being made up to Rs 2,05,526/- as principal sum, is on the following as on 10-12-2000:
Statement of House Building Advance of Smt H V Nirmala as on 10-12-2000 Principal Interest Amount Amount From release (Date 12-01-1992 1,34,149-00 34,425-00 and 13-01-1993) to till salary deduction i.e. 30-06-1995 (HBA-I @ 8% & HBA-II @ 11%) Interest:
From 01-07-1995 to 30-06-1998 37,863-00 From 01-07-1998 to 31-03-2000 22,111-00 From 01-04-2000 to 04-05-2000 1,182-00 Cheque received on 04-05-2000 27,518-00 and adjusted to principal 1,06,631-00 95,581-00 CHQ. Received on 26-06-2000 3,000-00 Interest. 2,787-00 From 05-05-2000 to 26-06-2000 @ 18% P.A. 1,03,631-00 98,368-00 11 From 27-06-2000 to 31-10-2000 6,530-00 @ 18% P.A. 1,03,631-00 1,04,898-00 Interest from 31-10-2000 to 23- 1,172-00 11-2000 @ 18% P.A. 1,03,631-00 1,06,070-00 CHQ. Received on 23-11-2000 5,000-00 and adjusted to principal Interest from 24-11-2000 to 10- 98,631-00 1,06,070-00 12-2000 @ 18% P.A. 825-00 98,631-00 1,06,895-00 Total outstanding principal 98,631-00 Interest 1,06,895-00 Total 2,05,526-00 From this statement of accounts and the basis as indicated by the plaintiff, we find that the amount towards principal and interest outstanding when the EMI payment was stopped on and after 30-6-1995 was in sum of Rs 1,34,149/- and a sum of Rs 34,425/- towards interest.
11. We also find that up to 4-5-2000, the corporation while has adjusted a sum of Rs 27,518/- received by it by way of cheque towards principal, further interest which is added is calculated at the rate of 8 or 11% pa, as the case may be, and it is only on and after 5-5-2000 and up to 26- 6-2000 on the outstanding amount, calculation of interest is at 18% pa. This rate of interest is maintained for all 12 subsequent computation of interest. We, therefore, find that the principal and the interest components of the EMI repayments as on 30-6-1995 is the sum total of Rs 1,34,149/- plus Rs 34,425/-. It is also undisputed case of parties that on and after this date, the instalments having not been maintained and payments if at all have been sporadic. If so, with the EMIs being comprised of both principal and interest put together, the outstanding balance put together can be taken as Rs 161,65,574/- as on 1-7-1995. We find that the plaintiff itself has worked out interest on whatever basis it might have been adopted at 8 or 11% pa up to 4-5-2000 and thereafter, it is the rate of interest which is adopted at 18% pa.
12. While, we allow the basis on which the plaintiff has calculated interest at 18% pa without going into further merits of this as to whether it was commercial rate or otherwise, up to the date of presentation of the suit i.e. up to 16-12-2000 when once the suit is brought before the court and the matter is seized before the court, the award 13 of interest pendente lite and future is always in the domain of the court. We find and as submitted by the learned counsel for the appellants that the amount from the date of presentation of the suit on such basis is Rs 2,34,414/-. We deem it proper to treat this amount as the principal amount, but we find the rate of interest as claimed thereafter by the plaintiff even as allowed by the learned judge of the trial court to be not very rationale or equitable.
13. Learned counsel for the appellants refers to the judgment of the Supreme Court in the case of C K SASANKAN vs DHANALAKSHMI BANK LTD [AIR 2009 SC 3171], submits that the Supreme Court found it proper to reduce the rate of interest to 9% pa from 19% which had been fixed by the high court and taking a cue from this, we would allow interest at the same rate of 9% pa on Rs 2,34,414/-. We fix the pendente lite and future interest to be at this rate. It is needless to observe that all payments which have been received by the plaintiff and 14 which have not been taken note of or given credit to in the statement ExP1 or in the computation table which we extracted above and the amount of deposit made before this court pursuant to the interim order in a sum of Rs 1.00 lakh, which has reached the plaintiff corporation, have all to be set off against the amount which the defendants are liable to pay in favour of the plaintiff. The plaintiff should also take into account provident fund in a sum of Rs 52,580/- which has been adjusted by the corporation towards the loan outstanding and due by the first defendant.
14. We find from the above, the computation of outstanding amount as on the date of filing of the suit is got reduced to Rs 1,11,101/- after giving credit to the payments that have been made by the first defendant and also the adjustment of provident fund amount.
15. Accordingly, this appeal is allowed in part and while the judgment and decree passed by the trial court is set 15 aside and the suit is, nevertheless, decreed for the principal amount of Rs 1,11,101/- with interest at 9% pa from the date of presentation of suit till realization of this amount.
16. It is also submitted by the learned counsel for the appellants that subsequent to filing of the appeal, a sum of Rs 1.00 lakh had been deposited by the defendants- appellants and this amount has been withdrawn by the plaintiff. Appellants are also entitled to claim set off of this amount.
17. Registry to draw decree in terms of this judgment.
Sd/-
JUDGE Sd/-
JUDGE *pjk