Writ Petition No. 9267 of 2009 · Madras High Court

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 30.11.2009CORAM:THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYAANDTHE HONOURABLE MR.JUSICE M.DURAISWAMYWRIT PETITION NO.9267 OF 20091. P.Hemanth Kumar2. P.Vasanthara3. P.Padmanabhan .. PetitionersVs.

The Debts Recovery Appellate Tribunal at Chennai, represented by its Registrar, 4th Floor, Indian Bank Circle Office, 55, Ethiraj Salai, Chennai-600 008.

The Debts Recovery Tribunal-III at Chennai, represented by its Registrar, 5th Floor, Spencer Tower, 770-A, Anna Salai, Chennai-600 002.

Indian Bank, rep. by its Senior Manager, A-14, Senthuran Colony, Madipakkam, Chennai-600 091. .. RespondentsWrit Petition under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorari, to call for the records of the first respondent (Debts Recovery Appellate Tribunal at Chennai) in R.A.No.66 of 2008 and quash the order dated 25.3.2009made therein. For petitioners: Mr.R.Muthukumarasamy, Senior Counsel for M/s.P.D.Audikesavalu For respondents: RR-1 & 2 Tribunal Mr.V.Ramesh for R-3 ORDER(The Order of the Court was made by S.J.Mukhopadhaya,J)The petitioners-borrower and guarantors, have jointly preferred this Writ Petition against the common order dated 25.3.2009 passed by the Debts Recovery Appellate Tribunal, Chennai in R.A.No.66 of 2008 https://hcservices.ecourts.gov.in/hcservices/ and I.N.No.603 of 2008. By the said order dated 25.3.2009, the DRATmodified the order passed by the DRT-III, Chennai so far as it relates to interest.2. We have heard the learned counsel appearing for the parties and perused the records.3. As the case can be disposed of on a short point, it is not necessary to discuss all the facts except the relevant one.

The first petitioner obtained loan from the third respondent-Indian Bank and the second and third petitioners are the guarantors. They, having failed to pay the dues, the Bank preferred application under Section 19 of the Recovery of Debts Due to Banks and FinancialInstitutions Act, 1993, before the Debts Recovery Tribunal-III,Chennai, which by the order dated 30.5.2008 in O.A.No.449 of 2007declared as follows: "8. In the result, it is declared that:-(a) The applicant bank is entitled to a Recovery Certificatefor a sum of Rs.19,75,322/- with future interest @ 10% p.a.simple on the claim amount from the date of this application till the date of realisation of the amount, along with costs, which includes the advocate fees as per rules, in the following manner: (i) For a sum of Rs.3,44,154/- from D-1 and D-3 being the amount due under MTL-I account. (ii) For a sum of Rs.14,54,608/- from D-2 to D-4 being the amount due under MTL-II account. (iii) For a sum of Rs.1,76,560/- from D-2 being the amount due under Temporary OD facility. (b) It is further ordered that in case of default of payment by the said defendants, the applicant bank is at liberty to sell the OA schedule properties and to adjust the sale proceeds thereof towards the amounts due in this claim. (c) If the sale proceeds are not found sufficient, after defraying the expenses of such sale for the payment of all such amount, the defendants 1 to 4 are personally liable for the amount of such deficiency with interest and costs mentioned above until realisation. (d) It is further ordered that any amount remitted during the course of the proceedings, shall be given due credit to the loan account of the defendants. "

The Bank was not happy with the future interest, which was allowed @ 10% p.a. simple, and hence, preferred the appeal in question, wherein the impugned order was passed by the DRAT, Chennaion 25.3.2009. https://hcservices.ecourts.gov.in/hcservices/

Learned Senior Counsel appearing on behalf of the petitioners submitted that the DRT has jurisdiction to award interest pendente-lite and post-decree interest at a reasonable rate, taking into consideration the facts of each case. The DRAT cannot alter the same on the basis of its own opinion. It is also submitted that the DRAT,by the impugned order, has awarded contractual rate of interest @18.5 p.a. with monthly rests, which is error on record, as no such agreement was reached between the parties for payment of interest with monthly rests. Learned Senior Counsel for the petitioners further submits that in terms of the DRT order, the petitioners have deposited the amount. Further, it is stated that with a view to compromise the matter, the petitioners have deposited further sum ofRs.2 lakhs with the Bank.

Learned counsel appearing on behalf of the third respondent-Indian Bank submitted that the DRAT rightly allowed the contractual rate of interest, there being a contract signed between the parties.

It will be evident from the DRAT's order that it has noticed the decision of the Supreme Court in the case of "Central Bank of India Vs. Ravindra and others" reported in AIR 2001 SC 3095 and the decision of the Supreme Court in the case of "State Bank of India Vs.M/s.Sarathi Textiles and others" in S.L.P.No.7146 of 2000, wherein, the Supreme Court held that the DRT has got jurisdiction to awardpendente-lite and post-decree interest at a reasonable rate depending on the facts and circumstances of each case.

It is accepted by the learned counsel for the parties that the DRAT has noticed the aforesaid ratio laid down by the SupremeCourt that the DRT has got jurisdiction to fix such pendente-literate of interest in a judicious manner, but no reason has been given by the DRAT to alter the decision of the DRT and the DRAT passed the following order dated 25.3.2009 in R.A.No.66 of 2008 & IN.603 of 2008:"8. Considering the impugned Order wherein 10% p.a.simple interest on the claim amount is awarded from the date of the OA filed in November, 2002, till the date of realisation, this Tribunal finds that the same appears tobe meagre in view of the contractual rate of interest at18.5% p.a. with monthly rests from the date of Applicationtill the date of realisation. Considering the rival submissions made by both sides and the facts and circumstances of the case, in the light of the ratio of the decisions cited supra, this Tribunal holds that it is reasonable to award contractual rate of interest from the date of the OA till the date of the impugned Order and thereafter at 15% p.a. simple from the date of the Order in the O.A. i.e. 30.5.2008, till the date of realisation. "

From the aforesaid facts, it would be evident that the DRAThas simply imposed its own opinion, without discussing as to what was https://hcservices.ecourts.gov.in/hcservices/ wrong with the order passed by the DRT, which allowed 10% p.a. simple interest on the claim amount of the third respondent-Bank.