At, Debt Recovery Appellate Tribunal At Chennai
By, THE HONORABLE JUSTICE: A. SUBBULAKSHMY. (CHAIRMAN)
1. This appeal is directed as against the order passed by the learned Presiding Officer, DRT, Bangalore, in OA-1279/99. The DRT, Bangalore, has passed the order allowing the application in part declaring defendants 1 to 3 liable to pay the decree amount jointly and severally to the appellant applicant-Bank with costs and interests stipulated in the order and dismissing the application as against the defendant. Aggrieved against the order of the DRT on the dismissal of the application as against the 4th defendant, the appellant-Bank has come forward with this appeal.
2. Learned Counsel appearing for the appellant-Bank submitted that even the 4th defendant has created security and in respect of this loan the 4th defendant also must be held liable along with the other defendants for payment of the decree amount and the order passed by the DRT dismissing the application as against the 4th defendant is not sustainable. He relies upon the letter written by the 4th defendant to the appellant-Bank dated 18.4.1991 wherein the 4th defendant has agreed to create a mortgage by deposit of title deeds in respect of the properties described in the schedule and has also handed over the documents of title to the Bank and also the agreement entered into between the 4th defendant and others confirming the oral partition. Relying upon these documents he submits that since the 4th defendant has created equitable mortgage by deposit of title deeds, the 4th defendant is also liable for the suit claim.
3. From the affidavit given by the 4th defendant to the appellant-Bank it is revealed that she is extending her property as security against the mortgage money and commission facilities that has been extended in favour of M/s. G.R. Enterprises, the principal borrower, and this security is extended until such time M/s. G.R. Enterprises deposits 10% of the margin and pay the commission charges and on compliance of this her security shall be redeemed. Ex. A4 Sanction Order shows that the cash margin is 10%. The 4th defendant has offered security only to the extent of 10% of margin money. So the documents reveal that the 4th defendant has created equitable mortgage over 'B' Schedule property in favour of the appellant-Bank as security for the margin money only. The Bank official AW 1 has also admitted in his evidence that the 4th defendant has created equitable mortgage in favour of the appellant-Bank to an extent of 10% of margin money as sanctioned in Ex. A4 Sanction letter. So it is crystal clear from these documents that the 4th defendant has created equitable mortgage over 'B' schedule property in favour of the Bank as security for the 10% margin money only. It is borne out by records that the margin money was also paid by the 2nd defendant. AW 1 has not denied this. The learned Presiding Officer has also clearly stated in his order that the material on record also reveals that the margin money was paid by the 2nd defendant and AW 1 is unable to deny the same.
4. Even in the affidavit of D-4, she has stated that the security is extended only at such time M/s. G.R. Enterprises deposits 10% of the margin money and also pays the commission charges and on compliance of this her security shall be redeemed. It is evident from the records that the margin money was paid by the 2nd defendant. So, on payment of such margin money the 4th defendant's security shall be redeemed. So, under the circumstances, the 4th defendant cannot be held liable as her liability was only to the extent of cash margin of 10% which was also paid by the 2nd defendant which automatically absolved the liability of the 4th defendant.
5. The learned Presiding Officer has considered these aspects and has dismissed the application as against the 4th defendant correctly. I find no error in the order passed by the learned Presiding Officer, DRT, Hyderabad in this aspect.
6. The appellant-Bank also contends that the rate of interest awarded by the Presiding Officer, DRT at 20.15% without rests from the date of claim till the date of realisation is not proper and the appellant-Bank is entitled to 20.15% interest p.a. with quarterly rests from the date of claim till the date of realisation. The Presiding Officer, DRT has allowed 20.15% interest p.a. without rests. Recent pronouncements of the Apex Court are to the effect that the Presiding Officer, DRT has got discretionary power to award interest during pendente lite and post-decree.
7. The Apex Court has held in VII (2001) SLT 400=I (2002) BC 150 (SC)= AIR 2001 SC 3095, Central Bank of India v. Ravindra and Ors., 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 stood 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 stop running either with payment or with such earlier date as the Court thinks fit."
8. In AIR 2001 SC Page 3119 Para 55(8), the Apex Court has observed that "Award of interest pendente lite and post-decree is discretionary with the Court as it is essentially governed by Section 34 of the CPC de hors the contract between the parties. In a given case if the Court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced the Court may exercise its discretion in awarding interest pendente lite and post-decree interest at a lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner."
9. The Presiding Officer, DRT, applying his discretion has allowed interest at 20.15% without rests from the date of claim till the date of realisation applying the principles laid down by the Apex Court in the decision cited supra I find that the order passed by the learned Presiding Officer, DRT, Hyderabad, does not suffer from any infirmity. I see no ground to interfere with the order passed by the Presiding Officer, DRT.
10. Appeal dismissed. No costs.