S.R. Abdul Khadar v. Syndicate Bank

HON’BLE SRI JUSTICE G. BHAVANI PRASAD APPEAL SUIT No.300 of 1993 JUDGMENT: This appeal is directed against the judgment and decree in O.S.No.22 of 1988, on the file of the Subordinate Judge’s Court, Kavali, dated 02.03.1990.

#2. The plaintiff sued for recovery of Rs.2,05,310.75 Ps. towards principal and interest due from the sole defendant on the defendant’s accounts with the plaintiff bank, with subsequent interest and costs. A loan of Rs.32,000/- was stated to have been sanctioned to the defendant under an agreement, dated 28.02.1975, and a stamped receipt was given in favour of the plaintiff bank under which, he agreed to repay the amount with compound interest at 8 ½% per annum above the Reserve Bank of India rate subject to a minimum of 17 ½% per annum. The defendant agreed to pay over due interest, if he defaulted in payment and by 16.02.1980, a sum of Rs.68,259.40 Ps. was due, which was acknowledged by the defendant. Similarly, the defendant acknowledged Rs.1,15,649.80 Ps. being due by 14.02.1983, which acknowledgements constitute a fresh promise to pay making the suit within time. Hence, the suit.

#3. While the defendant admitted in his written statement availing the loan of Rs.32,000/- and executing the necessary documents, he claimed that the interest claimed is excessive and usurious. While the defendant is entitled to the benefits of the Debt Relief Act for his loan being the owner of agricultural land, he claims to be entitled for scaling down of interest and to have been deprived of any counter interest on the payments made by him. Questioning the statement of account and the suit being within time, the defendant desired the suit to fail.

#4. On such pleadings, the trial Court framed the following issues for trial:

#1. Whether the interest claimed by the plaintiff is excessive and usurious?

#2. Whether the defendant is an agriculturist entitled to the benefits of the Act IV of 1938?

#3. Whether the statement of account filed is true, valid and correct?

#4. To what relief?

#5. During trial, P.W.1 and D.W.1 were examined and Exs.A-1 to A-28 were marked.

#6. The trial Court rendered the impugned judgment firstly noting that in view of the judgment of the Apex Court in AIR 1988 Supreme Court 151, the provisions of the Act IV of 1938 are not available to the defendant. The trial Court further held that the rate of interest charged by the plaintiff bank is not usurious under the Usurious Loans Act, as the defendant was shown to be owning buses from 1951 to 1981 and a cinema hall since 1978, though he claims to be owning less than Ac.4.00 of agricultural land. On his own claims, the means of livelihood of the defendant was not from agriculture and, hence, he will not be entitled to any scaling down of interest or to claim that the interest claimed is usurious. In any view, Section 21-A of the Banking Companies Regulation Act, which came into force on

15.02.1984, took away the power of the Court to reopen any such transaction and the trial Court referred to the precedents from this Court in this regard. The trial Court further went into the correctness of the account copy in which any incorrectness was not shown by the evidence on record and the claim that 25% of margin money was paid by the defendant was not corroborated by any material to deduct the same from the suit liability. The trial Court further held that in view of the execution of Exs.A-1, A-3 and A-4 being admitted, the limitation for the suit should be considered to have been saved under Section 18 (1) of the Limitation Act, 1963, and even otherwise, Ex.A-3 should be considered as a fresh promise made in writing and signed by the defendant to pay the whole debt within the meaning of Section 25 (3) of the Indian Contract Act. The trial Court, therefore, repelled the contention of the suit being barred by time and decreed the suit with costs, while limiting the future interest from the date of the suit till the date of the decree to 12% and further interest till the date of realization to 6% per annum.

#7. The defendant challenged the said judgment and decree in this appeal contending that the acknowledgements said to have been made more than three years after the expiry of Ex.A-1 cannot amount to acknowledgements in the eye of law for construing the same either as fresh promises or extension of the existing promises. The document Ex.A-5 cannot be considered to be supported by any consideration and, hence, becomes inadmissible in evidence. The non-exclusion of the margin money of 25% is illegal and the interest charged by the bank is excessive and unenforceable, as the principal source of livelihood of the defendant is agriculture. The usurious interest should have been disallowed and Section 21-A of the Banking Companies Regulation Act is prospective. Hence, the appellant desired the impugned judgment and decree to be reversed.

#8. Heard the learned counsel for both sides.

#9. The point for consideration is whether the suit claim is within time and whether the rate of interest claimed is permissible.

#10. The evidence on record is that of the Bank Manager as P.W.1 and of the defendant as D.W.1 and as opposed to the interestedness, which taints the evidence of D.W.1, P.W.1 is interested in the suit claim only in his discharge of his official duties. His statements on oath about the execution of Exs.A-1 to A-5 - Agreement, Receipt, Acknowledgements, and Agreement by the defendant is not open to any suspicion, more so, when not shaken in any manner in the cross-examination. The statement of account reflects the manner in which the suit amount was arrived at by the bank and the various copies of the Income Tax Assessment Orders relating to the defendant may suggest the primary source of livelihood of the defendant at the relevant time to be not from agriculture. The trial Court had gone into the questions of fact raised by the defendant in extenso and if it followed the dictum of the Apex Court in making the A.P. Act IV of 1938 inapplicable to the defendant, the same could not have been the source of any criticism. If the defendant was running buses for 30 years from 1951 and was running a cinema hall since 1978, his income from less than Ac. 4.00 of agricultural land cannot be in the ordinary and natural course of events be construed as indicating the primary source of livelihood of the defendant to be agriculture. The non- applicability of the Usurious Loans Act with or without reference to the Banking Companies Regulation Act, as amended in 1984, is not a matter of doubt with such facts and circumstances. The rate of interest charged by the bank is not shown to be in any way deviant from the rate of interest charged by the nationalized banks during the relevant period nor is it shown to be not reflecting the then prevailing market rate of interest. The acknowledgments executed by the defendant under Exs.A-3 to A-5 saving the limitation for the suit under Section 18 of the Limitation Act, 1963, and Section 25 of the Indian Contract Act cannot be doubted on the admitted facts and the reasoning adopted by the trial Court for the purpose needs no repetition herein. In the absence of any valid, legal or factual ground for interfering with the conclusions of the trial Court in any manner including even in respect of the future interest granted, which is not shown to be in any manner opposed to the permissible limits under Section 34 of the Code of Civil Procedure, 1908, the appeal has to fail.

#11. In the result, the Appeal is dismissed without costs. ___________________ G. BHAVANI PRASAD, J Date: 19th July, 2012 KL HON’BLE SRI JUSTICE G. BHAVANI PRASAD APPEAL SUIT No.300 of 1993 Date: 19th July, 2012 KL