N SAVITHRI Vs. UNITED COMMERCIAL BANK

JUDGEMENT

(1.) THESE two appeals arise out of the same suit, one filed by the plaintiff and the other by the defendant. For the sake of convenience, we refer to the parties by the rank they held in the trial court. Mr. G. N. Sam, the husband of the defendant, who was an industrialist got cash credit facilities from the United Commercial Bank Limited, which is now known as UCO bank. He had pledged 17, 000 shares of his in Cambodia Mills Limited, which were valued at Rs. 10 per share on the face of them. Mr. Sam died in 1961, without discharging the loan. He left as his heirs two daughters by his first wife, the defendant who was his second wife and a son and a daughter by the defendant. The defendant borrowed loan from the bank and discharged the amounts due under the loan account of her husband. That was in 1962. That loan account continued to subsist till November, 1963, when she got cash credit facilities for a sum of Rs. 1, 00, 000 and pledged 2, 150 shares of her in Coimbatore Spinning and weaving Company Limited. The face value of each share was Rs. 50. By obtaining the loan, she discharged her earlier loan account and continued to avail of the cash credit facility. The defendant was periodically executing promissory notes and also signing confirmatory letters accepting the balance due as on such dates. Ultimately, a notice was issued by the plaintiff in exhibit A-7 dated October 12, 1977 , calling upon the defendant to pay the balance. As the defendant did not pay it, the suit was filed on March 27, 1979 , for recovery of a sum of Rs. 4, 02, 880. 93 with interest at 17 per cent. per annum. According to the plaint, the amount due as on December 26, 1978 , was Rs. 3, 86, 672. 43 and the interest thereon was Rs. 16, 208. 50.

(2.) THE defendant raised in the main three contentions, viz. ,-- (1) THE plaintiff-bank had not returned the shares pledged by her husband after the discharge of the husband's debt. THEy had no right to keep the same with them and in spite of several demands by the defendant they did not choose to return them. Consequently, they were liable to adjust the value of those shares as in 1962 as against the amount due. (2) THE plaintiff bank failed to sell the shares of Coimbatore spinning and Weaving Company Limited which were pledged by the defendant with the plaintiff-bank when the sale price of such shares was high in the market. Even though notice was issued by the bank calling upon the defendant to pay the amount and informing her that in default the shares will be sold, the bank had failed to take action pursuant to such notice. THE shares became worthless subsequently as the mills became sick and were taken over by the National textile Corporation. Consequently, the defendant was put to heavy loss. THE plaintiff is bound to give credit to the value of such shares as against the amounts due under the loan account. If an adjustment had been made under any one of the heads, the entire debt would have been discharged and there will be no amount due to the plaintiff under the suit transaction (3) THE interest claimed by the plaintiff-bank was excessive and illegal as it was charging interest on interest. THE actual principal lent to the defendant was much less than Rs. 1, 00, 000 and she did not borrow any money, subsequent to 1966. THE plaintiff-bank was only adding interest year after year and taking statements from the defendant. THE defendant will not be liable to pay such interest claimed by the plaintiff-bank.

(3.) FAR from helping the defendant, the above judgment is only against the contention put forward by her. The provisions of section 176 of the Contract Act declare that if the pawnor makes default in payment of the debt at the stipulated time, the pawnee may bring a suit against the pawnor upon the debt and retain the goods pledged as a collateral security or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. The section does not enjoin the pawnee to sell the articles or goods pledged immediately after issuing the notice. He may not sell the same, but he can proceed by initiating a suit. It is not open to the defendant to contend that once the notice is issued by the bank the sale must follow immediately. Further, on the facts of this case, the defendant cannot raise the contention that the plaintiff ought to have sold the shares in Coimbatore Spinning and Weaving Mills Limited immediately after issue of notice. We have already seen that even as late as October 8, 1976, the defendant had been requesting the plaintiff not to take any action as threatened. Apart from that as regard the shares in Cambodia Mills Limited as well as the shares in Coimbatore Spinning and Weaving Mills Limited, the defendant is not entitled to get any relief in this proceeding as there is neither a plea for set-off nor a counter-claim. The defendant has not paid the requisite court-fee. There is no question of equitable set-off or adjustment as against the amount due to the plaintiff. A Division Bench of this court has considered this question in Sri Sambu Films v. Vijaya Pictures [1990] II MLJ 405. It is held that even in respect of equitable set-off, the court-fee has to be paid by the defendant. In the present case, apart from making an offer to pay the requisite court-fee, the defendant has not paid any court-fee nor has she set out even the amount which will have to be adjusted as against the amount claimed by the plaintiff.