Partly allowed

Ms Sree Vishnu Khadsari Sugar Mill v. The Tamil Mercantiles Bank Ltd.

DRAT13 Sept 2023REGULAR APPEAL/316/2018

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal, Kolkata, allowed the appeal partly, reducing the rate of interest from 16% to 9% per annum. The court held that awarding 16% interest without reasons was unsupported under settled legal propositions regarding Section 34 of the CPC.

What did the court decide?

Appellants liable to pay Rs.34,68,705.00 with pendent lite interest at 9% per annum simple from filing date till payment.

Ms Sree Vishnu Khadsari Sugar Mill versus The Tamil… — Company and Corporate | DRAT (2023)

¶1

IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

¶2

Appeal No. 316 of 2018 (Arising out of O.A. 88 of 2004 in DRT-I, Hyderabad)

¶3

THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

¶4

13.09.2023 M/s. Sree Vishnu Khandsari Sugar Mill & 3 Others

¶5

… Appellants -VsThe Tamil Mercantiles Bank Limited ... Respondents Mr. Nemani Srinivas with Mr. Gaurav Singh, Learned Counsel for the Appellants

¶6

Ms. Sweta Gandhi Learned Counsel for Respondent

¶7

THE APPELLATE TRIBUNAL :

¶8

The impugned order dated 7^th September, 2018 is passed by Learned DRT-I, Hyderabad allowing O.A. 88 of 2004 for recovery of Rs.34,68,705.00 against Defendants No. 1 to 4 with pendent lite and future interest at the rate of 16% simple interest.

¶9

Respondents challenged the impugned judgment and order on several grounds.

¶10

Pleadings of the parties would reveal that an O.A. was filed by the Respondent Bank on 5^th April, 2004 for recovery of Rs.34,68,705.00 with pendent lite and future interest. As per the Bank, Defendant No. 2, for self and on behalf of Defendant No. 1, had taken a Cash Credit Limit Facility on 30^th March, 2002 hypothecating raw materials, etc., wherein Defendants No. 2 and 4 stood guarantors. An amount of Rs.30.00 lac was sanctioned on 30^th March, 2002. Initially, Appellant No. 1 was a partnership firm wherein Appellant No. 2 and 3 were the partners which was dissolved on 31^st March, 2002 and the Appellant became the proprietor which was communicated to the Respondent Bank. Loan documents were executed in favour of the

¶11

¶12

Bank to secure loan of Rs.30.00 lac. Equitable mortgage was also created in favour of the Bank by depositing Title Deeds. Payment became irregular and the account was classified as N.P.A. and the O.A. was filed for recovery of Rs.34,68,705.00.

¶13

Appellants herein submitted before the Learned DRT that loan transaction was not availed by them and the loan documents were not executed by them. It is further denied that working capital was not sanctioned by the Bank. All the documents are concocted.

¶14

On the basis of the pleadings of the parties, following issues were framed by the Learned DRT :

¶15

(i) Whether the claim of the applicant bank is within time? (ii) Whether the defendants had utilized the loan facilities granted by the bank?

¶16

(iii) Whether all the defendants are liable to the amount due to the applicant bank or not?

¶17

Learned DRT recorded a finding that the Respondent Bank is entitled to recover by sale of the properties a sum of Rs.34,68,705.00 from the Appellants No. 1 to 4 jointly and severally with interest at the rate of 16% per annum simple. Future interest was also granted.

¶18

Feeling aggrieved, Appellants preferred the appeal.

¶19

I have heard the Learned Counsel for the parties and perused the record.

¶20

At the very outset Learned Counsel for Appellants submits that Appellants are not pressing all the grounds taken in the appeal. It is further submitted that he is only pressing for reducing the rate of interest from 16% to 6%, as taken in the ground (z) in the Memo of Appeal. Learned Counsel relies upon Section 34 CPC.

¶21

Counsel for Respondent submits that the Appellants are not entitled for reduction of interest rate as the matter is pending since 2004 and the Appellants have not paid any amount. Recovery Certificate and Sale Notice have been issued on 10^th July, 2023.

¶22

¶23

Learned DRT has recorded a specific finding regarding liability of Appellants to the extent of Rs.34,68,705.00. Interest at the rate of 16% simple was also allowed. Rate of interest was granted without assigning any reason for the same. Simply it is recorded that interest at the rate of 16% is granted. There is settled legal proposition that a finding should always be supported with reasoning.

¶24

Having considered the submission and going through Section 34 CPC, I find that there is no reasoning for awarding 16% interest simple. Section 34 of the CPC reads as under :

¶25

“34. Interest. (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:”

¶26

Appellants would be liable to pay interest at the rate of 9% per annum simple pendent lite and future. It is a reasonable rate of interest. Accordingly, the impugned order is liable to be modified.

¶27

O R D E R

¶28

Appeal is partly allowed. Appellants are liable to make payment of Rs.34,68,705.00 with pendent lite interest at the rate of 9% per annum simple from the date of filing of O.A. till the actual date of payment within a period of two months; failing which, Respondent Bank would be entitled to recover the amount by sale of the secured assets.

¶29

File be consigned to Record room.

¶30

Copy of the order be supplied to Appellant and the Respondents

¶31

and a copy be also forwarded to the concerned DRT.

¶32

Order dictated and pronounced in open Court.

¶33

¶34

(Anil Kumar Srivastava,J) Chairperson

¶35

Dated 13^th September, 2023 04/ac

Ms Sree Vishnu Khadsari Sugar Mill v. The Tamil Mercantiles Bank Ltd.

Case brief

What is this about?

What did the court decide?

Ms Sree Vishnu Khadsari Sugar Mill v. The Tamil Mercantiles Bank Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Sol Backbay Aqua Limited versus Industrial Investment Bank Of India Ltd.

Resonance Merchants (Opco)(P) (Ltd) versus Authorised Officer, Bank of Baroda

Sri Prasanta halder versus State Bank Of India

Hinduja Leyland Finance Ltd. and Ors. versus Manoj Kumar

Chaluvadi Srinivasa Rao versus Edel Weiss Asset Reconstruction Company Ltd.

State Bank Of India versus Sankar Charan Pradhan