INTRAVEN PHARMACEUTICALS PVT LIMITED HYDERABAD Vs. ANDHRA PRADESH SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED HYDERABAD

JUDGEMENT

(1.) The appellants are defendants 3 to 5 and 8. The plaintiff is A.P. Small Scale Industrial Development Corporation Ltd.. The suit is filed for a preliminary decree for the amount of Rs. 1,01,233-64 and also for a final decree for recovery of the said amount by sale of plaint B and C schedules and leasehold interest in the property covered by plaint Schedule A and for a personal decree against defendants 2 to 7, if the proceeds of the sale, of plaint, A B & C Sch. properties are not sufficient to satisfy the claim. The contesting defendants are defendents 3,4,5 & 8. The 1st defendant is a firm and it is taken over by the Ith defendant, a limited .company. Defendants 3 to 7 are partners of 1st defendant filrm. The plaintiff did not prosecute the suit against deferdants 6 and 7. The Sth defendant is the Managing Director of 8th defendant. The averments in the plaint are as follows: On 6-3-1965 the plaintiff sanctioned a loan of Rs. 95,000/- and out of the said sum the sum of Rs. 93, 770/- was paid. The rate of interest stipulated is 7% p.a. Thereafter the Ist defendant executed a simple mortgage deed dated 26-6-1965 Ex.A-1 hypothecating the plaint A,B and C schedule properties in favour of the plaintiff. Under the terms of mortgage deed the loan amount was repayable in 10 equal instalments of Rf. 9377/-each together with interest payable every half year on 2nd January and 1st July of each-year. The defendants agreed to abide by the terms and conditions of the financial assistance to be given by the plaintiff corporation according to the provisions contained in the book-let Ex.A-2 designated as "Terms and Conditions for finance assistance". The plaintiff by its resolution dated 4-9-1967 revised the rate of interest on the principal amount of the load from 7 to 8% p.a. and the rate of interest on defaulted payments either on principal or interest from 7% to 12% p.a. The revised rates of interest were brought into force from 1-4-1969. The defendants did not regularly pay the instalments on principal or interest due thereon and they paid Rs, 85,661-17 which was adjusted towards interest on Rs.92 -51 p. accrued in accordance with the revised rates of interest. The Sth defendant Limited company took over the assets and lirbilities of the 1st defendant firm. The amount claimed in the suit represented the principal sum of Rs, 93, 770/-and interest of Rs. 7160-34 p. Under the terms of the mortgage deed the plaintiff is entitled to demand repayment of the entire loan amount and interest in the event of the default committed by the loanee. Defendants 3 and 4 pleaded that they are not personally lible as they ceased to be partners long bsfore the firm was taken over by 8th defendant. The 15th defcndent also pleaded that he is not liable personally but on behalf of 8th defandant and in his capacity as managing Director pleaded in the written statement that the increased rate of interest cannot be collected as the plaintiff company cannot enhance the same without the consent of the defendants and the appropriation of the entire amount of Rs. 85,661-17 towards interest is wrong and the sum of Rs. 24, S41-S4 only has to be adjusted towards principal amount of the loan.

(2.) On the basis of these pleadings the relevant issues have been framed. The court below found that the mortgage deed Ex.A-1 expressly authorises the Plaintiff to revise the rate of interest cannot be considered as unilateral action and separate registration of the mortgage deed incorporating the revised rates of interest is not necessary and the want of registration is not fatal to the en forcement of Ex.A-1 and found other issues also against the defendant and passed preliminary decree.

(3.) In the appeal the learned counsel for the Appellants confined himself to two-fold contention viz., that the enhancement of interest at the instance of the plaintiff unilaterally is not iustified and is not binding on the defendants and further in any event the absence of registration incorporating the revised rate of interest does not enable the plaintiff to enforce the mortgage deed on the basis of the revised rate of interest. The learned counsel for the respondent contended that in view of the recitals in the mortgage deed itself enabling the plaintiff to revise the rate of interest, the question of increasing the rate of interest unilaterally does not arise and further in uiew of the fact that the power to increase the rate of interest is embodied in the mortgage deed itself separate registration is not necessary in the event of increase in the rate of interest.