VELUSWAMY GOUNDER Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) A.S. Nos.561 and 630 of 1992 are filed against the preliminary decree, while A.S. No.637 of 1994 is filed against the final decree. A.S. Nos.561 of 1992 and 637 of 1994 are filed by the defendants, while A.S. No.630 of 1992 is filed by the plaintiff. The suit, O.S. No.410 of 1990 on the file of the Sub-Court, Palakkad was filed by the plaintiff-State Bank of India. According to the plaintiff, the first defendant applied for a term loan of Rs. 1,50,000/- for constructing a Cinema Theatre at Valayar and a loan of Rs. 88,500/- to equip the same with machinery. The 2nd defendant is the daughter of the first respondent. In anticipation of the loan, the defendants created equitable mortgage on the properties detailed in the schedule to the plaint, but deposited the title deeds thereto with the predecessor Bank, viz., Bank of Cochin. The defendants executed and delivered a memorandum of deposit of title deeds.

(2.) On 21-7-1981, the Bank of Cochin granted a term loan of Rs. 1,50,000 to the first respondent on his agreeing to repay the same with interest at the rate of 15% per annum or such other rates fixed by the Bank from time to time with quarterly rests. The Bank also granted a guarantee to the tune of Rs. 38,500/- to M/s. Photofone Limited, Emakulam for the supply of a brand new 35 mm Projector. The first defendant executed various documents for securing the amount. On 8-12-1984, the first defendant executed a demand pronote for Rs. 2,44,482.01, which was the amount outstanding till then with interest at 18% per annum. The Bank of Cochin was taken over by the State Bank of India. It is further stated that on 14-10-1987, the defendants had signed and delivered a revival letter including the liability for the amount then due as on that date amounting to Rs. 2,44,482.01. Even though the first defendant promised to pay the amount, the amount has not been paid. The balance as on 30-6-1990 was Rs. 3,86,260.80 being the loan granted for agricultural activities. The plaintiff is entitled to recover the amount with future interest at 16.5% with quarterly rests. The suit is filed for Rs. 3,86,260.80 with interest thereon at 16.5% per annum from 30-6-1990. Thus, the total amount as on the date of suit is Rs. 4,03,547/- with future interest at 16.5%.

(3.) The defendants filed a written statement. Various contentions were raised. One of the contentions was with regard to interest payable pending suit. The defendants raised the contention that the plaintiff cannot demand interest at 16.5%. The Court below, after considering the entire matter, rejected the contentions of the defendants regarding his liability to repay the amount. Regarding the rate of interest, it took the view on the basis of the decision in Divl. Manager, LIC of India v. Bhagavathy Amma, 1991 (2) KLT 522 : (AIR 1992 Kerala 329) that the future interest is restricted to 6%. per annum. Then a decree was given for Rs. 4,03,547/-. The defendants were directed to pay within six months the said amount with interest at 16.5% per annum from the date of suit till date of decree and at the rate of 6% per annum thereafter till deposit. It was also said that if the defendants fail to deposit the above amount, the plaintiff can apply for final decree. It is against the above judgment and decree that the two appeals, A.S Nos.561 and 630 of 1992 have been filed.