LAWS(MAD)-1995-9-106

INDIAN OVERSEAS BANK Vs. V VAIJAYANTHIMALA

Decided On September 13, 1995
INDIAN OVERSEAS BANK Appellant
V/S
V VAIJAYANTHIMALA Respondents

JUDGEMENT

(1.) THIS suit is filed by a Nationalised Bank for recovery of a sum of Rs. 74,81,271. 40p. together with interest at 25% per annum with quarterly rests by sale of the mortgage properties and also personally from the defendants.

(2.) THE facts which are not disputed are, that the first defendant availed financial assistance from the Bank of Tamil Nadu which is now merged with the plaintiff-Bank. It is said that as per three financial facilities of Rs. 5,50,000 Rs. 7,50,000 and Rs. 1,77,000 amountswere due from the defendants. It is also said that an equitable mortgage has been created by deposit of title deeds by defendants 2 and 3. THE facilities were availed for construction of a cinema theatre and for purchase of machineries for the same. It is also averred that the contract rate of interest was 19 1/2% per annum with quarterly rests. Since the Bank is supervised and controlled by the reserve Bank of India, they are bound to implement the rates of interest as revised from time to time. It is said that from 12. 4. 1982 till 3. 7. 1991 the defendants are liable to pay interest at 91/2% per annum with quarterly rests and from 3. 7. 1991 they are (plaintiff) entitled to calculate interest at 25% per annum with quarterly rests. On the basis of calculation, it is said that the defendants are liable to pay an amount of Rs. 74,81,271. 40p. It is said that various demands were made for settling the transaction. But in spite of the same, the defendants have not cared to do so, which necessitated the filing of the suit. It is also averred that the defendants had been renewing the documents from time to time.

(3.) SINCE the suit is for recovery of money by sale of mortgage properties, the provisions of Section 34 of the Code of Civil procedure may not apply. We are governed by Order 34, Rule 11, C. P. C. and also section 21-A of the Banking Regulation Act. SINCE Order 34, Rule 11, C. P. C. governs the matter, it is better we consider that provision before going to the case-law on the point. It reads thus:- Payment of interest- In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the court, may order payment of interest to the mortgagee as follows namely:- (a) interest upto the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage. (i) on the principal amount found or declared due on the mortgage, at the rate payable on the principal, or, where no such rate is fixed, at such rate as the court deems reasonable. (ii) xxxxx (iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage-security up to the date of the preliminary decree and added to the mortgage-money at the rate agreed between the parties, or, failing such rate, at such rate not exceeding six per cent, per annum as the Court deems reasonable; (b) subsequent interest upto the date of realisation or actual payment on the aggregate of the principal sums specified in clause (a)as calculated in accordance with that clause at such rate as the court deems reasonable.