Partly allowed

Star metal Company and Anr. v. Bank Of Baroda

DRAT20 Jun 2025REGULAR APPEAL/91/2017

Case brief

AI extract

What is this about?

Appellants appealed an order allowing an Original Application for a recovery certificate, contesting limitation and excessive interest. The Tribunal dismissed the limitation claim and modified the award of interest from 20% to 6% p.a. invoking Section 19(2) of the RDDB Act and Section 34 of the CPC

What did the court decide?

Appeal allowed in part; pendent lite and future interest rate modified from 20% p.a. to 6% p.a. simple.

Star metal Company and Anr. versus Bank Of Baroda — Banking and Recovery | DRAT (2025)

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RA 91/2017

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 20^th day of June, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN CHAIRPERSON

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RA 91/2017

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(arising out of OA 19/2015 on the file of DRT-II, Chennai) (old No.196/2010 on the file of DRT-I, Chennai)

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Between

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1. Star Metal Company, Rep. by its Partner, Mr. A.S.M. Junaid, No.23, Vengu Chetty Street, Chennai 600 003.

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2. A.S.M. Junaid, S/o A.S.A. Syed Abbas, M/s Star Metal Co. No.23, Vengu Chetty Street, Chennai 600 003.

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…..Appellants

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And

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1. Bank of Baroda, Rep. by its Senior Manager, Alwarpet Branch, No.76, T.T.K. Road, Chennai 600 018.

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2. M/s Buhari Trading Corporation, Rep. by its Sole Proprietrix, Mrs. Hirarunnissa.

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3. Mrs. Hirarunnissa, W/o M.N. Yousuf, Sole Proprietrix, M/s Buhari Trading Corporation

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R2 and R3 carrying on business at:

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No.6, Chakkarai Chetty Street, Chennai 600 001.

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RA 91/2017

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4. A.S.M. Elyas (deceased) 5. B.R. Sood, Director of India Forge and Drops Stamping Ltd., Ambattur, Chennai 600 058. No.6, Chakkarai Chetty Street, Chennai 600 001.

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6. M.N. Yousuf, Director of Indian Forge and Drops Stamping Ltd., Ambattur, Chennai 600 058. …..Respondents Counsel for Appellants : Mr. G. Sanjeevi Counsel for 1^st Respondent : Shri C. Hanumatha Rao Counsel for R2, R3, R5 and R6 : None

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ORDER

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This appeal is filed under Section 20 RDB Act against the order against the order dated 8.7.2015 passed by Learned Presiding Officer, DRT-II, Chennai in OA No.19/2015 (old OA No.196/2010 on the file of DRT-I, Chennai).

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The aforesaid OA was filed under Section 31(A) of RDDB and FI Act, 1993, on the basis of a preliminary decree dated 30.3.1998 and a final decree dated 23.3.2024 passed by Learned VI Additional Judge, City Civil Court, Chennai in OS No.5062/1997. After contest, this OA was allowed. Aggrieved by the said order, this appeal is filed.

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RA 91/2017

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It is the submission of Learned Counsel for appellants that preliminary decree was passed on 30.3.1998 but OA was filed only in the year 2010, after a period of 12 years, therefore, OA is barred by limitation. The next submission of Learned Counsel for appellants is that interest rate charged is excessive. Thus, he prayed for setting aside the order of Learned Presiding Officer and allow this appeal.

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Learned Counsel for first respondent bank opposed this appeal on the ground that OA was allowed after considering that it was filed in time and interest was awarded only on the basis of contractual rate. There is no valid ground raised for allowing this appeal. Thus, he seeks for dismissal of the appeal.

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I have considered the rival submissions and perused the records.

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It is seen from the records produced especially the impugned order that preliminary decree was passed in OS No.5062/1997 on 30.3.1998. Thereafter, final decree was passed on 23.3.2024. In pursuance of the final decree, this OA was filed for issuance of a recovery certificate. OA was filed in time. Therefore, contention of the Learned Counsel for appellants that OA was filed beyond the period of limitation cannot be accepted and it is a false ground. So far as the interest rate is considered, rate of interest is ordered on the basis of contractual terms between the appellants and the

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RA 91/2017

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respondent bank. However, Pendent lite and future interest can be reduced by the Court and the Tribunal is empowered to reduce the interest and award interest which is fit to meet the ends of justice. In this regard, it is relevant to refer to the judgments rendered by Hon’ble Supreme Court of India, in re, State Bank of India Vs. Sarathi Textiles and others, reported in II 2009 BC pg.696 and Central Bank of India Vs. N. Ravindra reported in

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2002 (1) SCC pg. 367. The relevant portion reads, as follows:

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a) State Bank of India Vs. Sarathi Textiles and others, reported in II 2009 BC pg.696.

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“Sub-Section 20 of Section 19 of the RDDB & FI Act confers a discretion on the Tribunal to award interest on an application being filed as it thinks fit to meet the ends of justice”

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b) Central Bank of India Vs. N. Ravindra reported in 2002 (1) SCC pg.367

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“Award of interest pendente lite and post-decree is discretionary with the Court as it is essentially governed by Section 34 of the CPC de hors the contract between the parties.”

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In this view of the matter, this Tribunal, while confirming the order dated

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8.7.2015 passed in OA 19/2015 by Learned Presiding Officer, DRT-II, Chennai, is of the view that pendent lite and future interest awarded by the Learned Presiding Officer can be modified. Accordingly, the rate of interest granted by the Tribunal below is modified from 20% p.a. with

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quarterly rests to 6% p.a. (simple), from the date of filing of the OA till the

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date of realization of the due.

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RA 91/2017

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