Partly allowed

M/S. Damani Dyechem and Ors. v. Dena Bank

Bombay HC13 Jul 2012CRA/830/1998

Case brief

AI extract

What is this about?

This revision application challenged the Executing Court's order directing payment of interest on a separate 'Interest Funded Account' in respect of which the consent decree specifically prohibited the bank from charging interest. The High Court quashed the order for this component and remanded the file to determine if the decree was satisfied.

What did the court decide?

The order directing payment of Rs.12,18,621/- interest on Interest Funded Account was quashed; direction for Rs.7,75,879/- confirmed; decree satisfaction issue remanded to Executing Court.

M/S. Damani Dyechem and Ors. Vs Dena Bank — Execution and Attachment | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL REVISION APPLICATION NO.830 OF 1998

¶5

1.	M/s. Damani Dyechem, a partnership firm, carrying on busienss at 4, Sumangal Apartments, 13 Ridge Road, Bombay – 6.	) ) ) )
2.	Badridas godulchand Damani,	)
3.	Govinddas Badridas Damani,	)
4.	Girdhardas Kedarnath Damani,	)
5.	Omprakash Badridas Damani, Nos.2 to 5 all of Bombay Indian Inhabitants, partners of the 1^stDefendant firm all carrying on business at 4, Sumangal Apartments, 13 Ridge Road, Bombay – 6.	) ) ) ) ) ).. (Org	Appellants .Defendants)
	Vs
Dena const (Acq V of Horn	Bank, ituted under the Banking Companies uisition & Transfer of Undertakings) Act 1970 having its Head Office at 17, iman Circle, Fort, Bombay.	) ) ) ) ).. (	Respondent Org. Plaintiff )

¶6

Shri Sarosh E. Bharucha along with Shri Mohan G. Salian, Ms V. Shete and Shri J. Khan i/by M/s. Gagrat & Co. for the Appellants. Shri K.D. Shukla i/by K.D. Shukla & Co. for the Respondent.

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CORAM : A.S. OKA, J DATE : 13TH JULY, 2012

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ORAL JUDGMENT :

. By this Revision Application, the Petitioners, who are the Original Defendants judgment Debtors, have challenged the order dated 24^th July, 1997 passed by the Executing Court in an Execution Application filed by the Respondent-Bank for executing the consent decree dated 21^st April, 1981 passed by this Court in Suit No.185 of 1980.

¶13

It appears that the decree was transferred by this Court for execution to the Court of Civil Judge, Senior Division, Thane. An Application for execution being Special Darkhast No.53 of 1995 was filed by the Respondent. The claim made by the Respondent-decree holder in the said execution application was for recovery of the sum of Rs.22,12,129/- which consisted of three components. The first component was of Rs.7,75,879/- due and payable by the Petitioners as on 7^th May, 1994. The second component was of Rs.12,18,621/- being the interest payable on account of defaults committed by the Petitioners-judgment debtors in payment of installments of “Interest Funded Account”. Interest was calculated on reducing balance method at the rate of 15.10% per annum. The third component was of Rs.2,17,629/- being the legal charges. The operative part of the impugned order reads thus:-

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“The decree holder is entitled to recover amount of Rs.7,75,879/- which is due as on 7.5.94 and also interest payable on account of defaults committed by the J.D. in payment of interest funded account as per the decree i.e. Rs.12,18,621/-.”

¶18

The learned counsel appearing for the Petitioners, at the outset, stated that the sum of Rs.7,75,879/- has been already paid by the Petitioners. He invited attention of the Court to the relevant portions of the consent decree. He pointed out that the consent decree records the agreement between the parties that the Respondent decree holder would not charge interest to the Petitioners on the amount which may be due under the separate “Interest Funded Account”. Learned counsel appearing for the Petitioners inviting attention of the Court to the statement appended to the execution application pointed out that the component of Rs.12,18,621/- specifically represents interest at the rate of 15.10% on reducing balance of the unpaid installments payable on account of “Interest Funded Account”. He, therefore, submitted that the said claim of interest was not covered by the consent decree which is sought to be executed. He submitted that the Trial Court be directed to mark the decree as satisfied and the Respondent Bank be directed to return the documents of title.

¶19

Learned counsel appearing for the Respondent Bank relied upon the last part of the consent decree and submitted that though

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installments were granted under the consent decree to pay the amounts payable under separate “Interest Funded Account”, the Petitioners committed breach in payment of installments and that is how the Petitioners have become liable to pay interest at the rate of 15.10% on reducing balance in as much as the consent decree provides for payment of interest at the said rate on the amount due and payable.

¶24

I have given careful consideration to the submissions. I have perused the consent decree. In the first part of the consent decree, it is provided that the installments were granted to the Petitioners to pay the principal amount of Rs.32,95,340.73 ps. The consent decree further provides that till the entire amount is paid to the Respondent Bank, interest will be payable by the Petitioners at the rate of 15.10% per annum from the 1^st day of January, 1981. It must be noted here that the date of the consent decree is 21^st April, 1981. Further part of the consent decree provides for opening of a separate account under the title of “Interest Funded Account”. The relevant part of the consent decree reads thus:-

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“DOTH FURTHER ORDER that the plaintiffs DO DEBIT to a separate account to be opened under the title “INTEREST FUNDED ACCOUNT” of the defendants Nos.1 to 5 herein the said sum of Rs.2,02,235 (rupees two lacs and two thousand two hundred thirty five ) and Rs.2,50,843 (rupees two lacs fifty thousand eight hundred forty three) in all aggregation to Rs.4,53,078 ( four lacs fifty three

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thousand and seventy eight) due for interest till 31^st day of Dec 80 and mentioned hereinabove and further interest which will accrue due on the said principal sum of Rs.32,95,340.73 ( rupees thirty two lacs ninety five thousand three hundred and forty and seventy three paise) or the principal sum which may remain due and payable from time to time from the 1^st day of Jan 81 till payment at 15.10% per annum AND THIS COURT by and with such consent DOTH FURTHER RECORD that the plaintiffs have agreed not to charge interest to the Defendants on the amount which may remain due under the said separate interest funded Account AND THIS COURT by and with such consent DOTH FURTHER ORDER that the defendants do pay to the plaintiffs the amount accumulated under Interest Funded Account of the Defendants Nos.1 to 5 by 30 monthly installments each of Rs.60,000 (rupees sixty thousand ) the first such monthly installments to be paid on or before 31^st Jan 87 and subsequent payments to be made on or before the 30^th of each succeeding month.”

¶30

Thus, the consent decree records that the sum of Rs.4,53,078/- will form a part of the Interest Funded Account which is the interest payable till 31^st December, 1980. Further it is provided that the interest will accrue on the principal sum of Rs.32,95,340.73 ps from 1^st January, 1981 at the rate of 15.10% per annum. The said component of interest forms part of the Interest Funded Account. The facility was granted to the original Defendant No.1 to 5 to pay amount accumulated under the Interest Funded Account by 30 monthly installments of Rs.60,000/- each. The first installment was payable on or before 31^st January, 1987. However, there is a clear stipulation that

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the Respondent Bank agreed not to charge interest to the Petitioners on the amount which may remain due under the said separate Interest Funded Account. The last part of the decree on which the learned counsel appearing for the Respondent relied upon reads thus:-

¶35

“AND THIS COURT DOTH by and with such consent FURTHER ORDER that in the event of the defendants committing any two defaults in payments of monthly installments towards the principal amount of Rs.32,95,340.73 (rupees thirty two lacs ninety five thousand three hundred forty and seventy three paise) or committing two defaults in payment of the amounts due under the Interest Funded Account as provided above the plaintiffs be and are hereby at liberty to execute the decree for the recovery of the whole or the balance of the amounts due under this decree against the defendants..”

¶36

The said part of the consent decree provides that in case there are two defaults in payment of monthly installments payable towards the amount of Rs.32,95,340.73 ps or two defaults in payment of the amounts due under the “Interest Funded Account”, the Respondent will be entitled to execute the decree and recover the entire balance amount payable as per the consent decree.

¶37

The earlier part of the consent decree does provide for the interest on the outstanding amount of the principal sum of Rs.32,95,340.73 ps at the rate of 15.10% per annum. However, there is a clear stipulation that on the outstanding amount due and payable

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under the separate “Interest Funded Account”, the Respondent Plaintiff shall not charge the interest to the Petitioners.

¶42

As pointed out earlier, the Executing Court has directed the Petitioners to pay the amount of Rs.7,75,879/- and Rs.12,18,621/-. The amount of Rs.12,18,621/- is payable, according to the Respondent, as per the Item No.9 of the annexure to the execution application. Item No.9 reads thus:-

¶43

“(9) Add: Interest payable on account of defaults	Rs.12,18,621-00
committed by the JDs in
payment of installments of
“INTEREST FUNDED
ACCOUNT” as per the
Decree (Interest calculated
on reducing Balance method
@ 15.10%.”

¶44

It is, therefore, very clear that the amount of Rs.12,18,621/- was claimed by the Respondent Bank by way of interest

¶45

on the amount remaining due and payable out of the “Interest Funded Amount”. As per the consent decree, the Respondent was not entitled to charge interest on the outstanding amount payable under the “Interest Funded Amount”. Therefore, the direction of the Trial Court to pay the sum of Rs.12,18,621/- will have to be set aside being illegal.

¶46

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¶47

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The Court below has not marked the decree as satisfied. It is for the Petitioners to satisfy the Court that the entire amount due and payable under the consent decree has been duly paid. If the Court is satisfied after giving an opportunity to the parties of being heard that the decree has been satisfied, the Executing Court shall pass an order in that behalf and thereafter, may pass necessary direction for releasing the documents of title deposited with the Respondent Bank in accordance with law. However, the issue whether the decree has been satisfied or not will have to be decided by the said Court and all contentions of the parties in that behalf are required to be kept open.

¶49

Hence, I pass the following order:-

¶50

ORDER:

¶51

(a) That part of the impugned order dated 24^th July, 1997 by which the Petitioners have been directed to pay the sum of Rs.12,18,621/- is quashed and set aside;

¶52

(b) After giving an opportunity of being heard to the parties, the Executing Court shall decide the issue as to whether the decree has been satisfied;

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(c ) That part of the impugned order by which the sum of Rs.7,75,879/- was ordered to be paid by the Petitioners is confirmed and is maintained as it is;

¶57

(d) After hearing the parties, the Executing Court shall pass appropriate directions as indicated in the judgment;

¶58

(e) Since the Execution Application is pending from the year 1995, the Executing Court shall endeavour to pass an order preferably before the end of this year;

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(g) The Rule is made absolute on above terms with no orders as to costs.

M/S. Damani Dyechem and Ors. v. Dena Bank

Case brief

What is this about?

What did the court decide?

M/S. Damani Dyechem and Ors. v. Dena Bank

Case brief

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