THAMPAN Vs. DHANALAKSHMI BANK LIMITED

JUDGEMENT

(1.) This is an appeal by the 1st defendant in a suit for money due to the plaintiff Bank under a loan transaction.

(2.) The Dhanalakshmi Bank Limited (hereinafter referred to as the Bank) granted a loan of Rs. 50,000/- to the 1st defendant for purchase of a fishing boat. As security for the loan the three defendants jointly executed Ext.A1 demand promissory note for Rs. 50,000/- in favour of the Bank on 26-11-1976. The 1st defendant also executed a Hypothecation deed Ext.A2 on the same day, hypothecating the boat called 'Sindhu' purchased utilising the loan amount. As collateral security Exts. A3 to A5 title deeds of immovable properties of the defendants were deposited with the Bank by way of equitable mortgage as per three memoranda of deposits of title deeds marked as Exts.A6 to A8. After availing the loan, the defendants have also acknowledged their liability under the loan transaction as per Exts.A9 and A10 dated 26-7-1979 and 23-10-1981 respectively. Since the defendants failed to repay the loan in full, the plaintiff Bank instituted the present suit for realisation of a total sum of Rs. 58,921.40 with 18.5% interest per annum from the date of suit till realisation and costs of the suit by the sale of the fishing boat and the immovable properties charged for the debt.

(3.) Defendants 1 and 2 while admitting the loan transaction as detailed in the plaint, mainly disputed the correctness of the amount claimed in the plaint and the Bank's right to claim interest at a rate higher than 10% per annum simple interest. It was alleged that the amount has been claimed in the plaint after calculating interest at a rate much higher than 10% and that too with rests. It is the case of the defendants in their written statement that they have already paid a total amount of Rs. 1,50,000/- and if the account is settled afresh after recalculating the interest at 10% simple interest no amount will be found due to the plaintiff. Before the court below the defendant relied upon Ext.B1 photo copy of a letter sent by the Reserve Bank of India to the President, Kerala Federation of Mechanised Boats Owners Association, Quilon in support of their contention that the Reserve Bank of India has restricted the rate of interest chargeable in regard to agricultural loans like the one availed of by the defendants to 10% and that the plaintiff Bank is bound by the circulars fixing the rate of interest issued by the Reserve Bank and referred to in Ext.B1. It was also contended that the plaintiff is bound to recalculate the amount due as per the loan transaction and the suit can be decreed only for the balance if any found due after such recalculation and settlement of accounts.