CAN FIN HOMES LTD Vs. A VITTAL MURTHY

JUDGEMENT

(1.) M/s. Can Fin Homes Ltd. , a company registered under the Indian Companies Act - the appellant herein is the respondent in I. C. No. 13 of 1993 filed by the first respondent herein for being declared and adjudged as an insolvent. The appellant being aggrieved by the order dated 18-2-2002 passed in I. C. No. 13 of 1993 on the file of the Court of the VI Addl. City Civil Judge, Bangalore, has preferred this appeal under S. 75 (2) of Provincial Insolvency Act, 1920, for short 'the Act'.

(2.) THE facts leading to the filing of I. C. No. 13 of 1993 be noted briefly as under : The first respondent had earlier been granted a housing loan in 1990 by the appellant company on the security of a residential property which he purchased with the loan given by the appellant. Being unable to pay all the debts he owed to all his creditors, he filed the insolvency petition in I. C. No. 13 of 1993. The appellant was a secured creditor as the residential property the first respondent purchased was the security for the housing loan. In the insolvency case, the appellant sought disbursement of its dues as a secured creditor of Rs. 5,06,832/ -. The appellant is the only secured creditor, which fact is not in dispute. In the said proceedings, the appellant relying on S. 47 (2) of Act sought for payment of the 'whole debt'. The Court below, however, has passed an order for payment of dues as on 4-8-1994 at contractual rate of interest till the date of adjudication of the first respondent as insolvent with future interest only at the rate of 6% per annum till the payment. Hence, this Appeal.

(3.) WE have heard Sri M. Kini, learned Counsel for the appellant and learned counsel for the respondents. The learned Counsel for the appellant would contend that under S. 47 of the Act, the secured creditor is entitled to the whole of the debt which includes not only the principal but also the interest at the contractual rate. Therefore, the Court below is not justified in passing the impugned order awarding interest at the rate of 6% per annum from the date of adjudication of the 1st respondent as insolvent till payment. Sri Kini would further contend that holding of the Court below that since the first respondent-petitioner was adjudged as an insolvent, the contract between him and appellant comes to an end and therefore, the first respondent is not liable to pay the agreed interest on the amount due, is untenable in law. The learned counsel for the first respondent, on the other hand, would support the judgment of the Court below and contend that the appellant is not entitled to claim interest at the contractual rate even after adjudging the first respondent as an insolvent.