INDIAN BANK Vs. KAMALALAYA CLOTH STORE

JUDGEMENT

(1.) The present appellant filed T.M.S. No. 105/79 for a mortgage decree for recovery of Rs. 24,905/- with future interest.

(2.) The undisputed facts leading to the case are that the plaintiff-Bank sanctioned a sum of Rs. 15,000/- as a loan to M/s. Kamlalaya Cloth Store, Khallikot. M/s. Kamlalaya Cloth Store was represented by defendant No. 1, the sole proprietor in the suit. Defendant No. 2 was the surety for the loan granted. It was a commercial loan sanctioned to the loanee for improvement of his business. The defendants did not appear and case was set ex parte. In the ex parte judgment dated 2-5-1980, learned Subordinate Judge, Berhampur passed a preliminary decree for Rs. 24,905/- against the defendants with costs. The defendants under the decree were required to pay to the plaintiff pendente lite and future interest at the rate of 16 1/2 % per annum on the principal amount of Rs. 15,000/-.

(3.) The appellant-plaintiff has urged in this appeal the sole point that though the principal amount of loan was Rs.15,000/- with interest, the amount outstanding against the defendant, on the date of the suit was Rs. 24,905/- which was the suit amount, the trial Court was not therefore justified in law in awarding pendente lite and future interest on Rs. 15,000/- instead of Rs. 24,905.00. The respondents in spite of notice have not chosen to appear in Court and have not contested in the first appeal. It is not disputed that the principal amount of loan was Rs. 15,000/- but according to the agreement with the Bank, the plaintiffs, the rate of interest was to be calculated at the rate of 16 1/2 % and at periodical rest the interest that was accrued was added to the principal which ultimately came to Rs. 24,905.00 on the date of the suit. Mr. Sharma, learned counsel appearing for the Bank urged that the principal amount found in S.34 of the Code of Civil Procedure refers to this amount of the suit and not the principal amount of loan as has been wrongly held by the trial Court. In support of his contention Mr. Sharma refers to a case reported in 1989 Bank J 330. In this case the Hon'ble single Judge of the Delhi High Court after discussing a number of cases on the point came to hold that "the principal sum" appearing in S.34 of the Code of Civil Procedure is the amount initially advanced including the interest added from the date of advance, on the date of the suit. I am in complete agreement with the view expressed by the Delhi High Court in the case.