AIR 2000 DELHI 42 :: 1999 (5) ADDEL 860
Delhi High Court
HON'BLE JUDGE(S): DEVINDER GUPTA, S. K. AGARWAL , JJ
YOGESH KANT BHAGERIA V. DEEPAK JAIN
R.F.A. No. 444 of 1998,, decided on 16/09/1999
(A) Civil P.C. (5 of 1908) , O.7 R.2— Suit for loan recovery - Loan amount allegedly
borrowed by defendant through different cheques on different dates - Bank account of
defendant and receipts issued by him establishing that amounts detailed in plaint were
received by him - Defendant failed to lead any evidence that said amounts were not taken by
him or the same were returned - Suit decreed with interest.
(Para 8)
(B) Interest Act (14 of 1978) , S.3, S.2(6)— Interest - Suit for recovery of loan amount - No
contract regarding payment of interest - Plaintiff would be entitled to interest 'at the current
rate' as defined under S. 2(6) of Act.
Civil P.C. (5 of 1908) , S.34—
In order to attract S. 3(1) of the Interest Act it is sufficient that either Cl. (a) or Cl. (b) of the Act
is satisfied. Both the classes are not required to be satisfied. If Cl. (a) of the Interest Act is
applicable in that eventuality interest will be payable from the date the debt became due.
However, if Cl. (b) is applicable, then the interest becomes payable from the date on which
written notice is served claiming or demanding interest. Where the suit for recovery of loan
amount was filed alleging that loan was borrowed through different cheques and the receipts
issued by defendant showing that said amounts were received by him, and there was no recital
in the receipts about the interest or as to when the amount has to be paid back, the plaintiff
would be entitled to interest 'at the current rate' which is defined in S. 2 of the Interest Act, to
mean highest maximum rate at which the interest may be paid on different classes of deposits
by the Schedule Banks in accordance with the directions issued to the banking companies
generally, by the Reserve Bank of India under the Banking Regulation Act, 1949. Therefore,
taking into consideration the definition of the expression 'current rate' of interest as contained in
Cl. (b) of S. 2 of the Interest Act, the plaintiff is entitled to get interest on the principal sum
adjudged at the rate of 12% per annum would be just and proper from the date of demand till
the filing of the suit and additional interest at the same rate till the suit was decreed; thereafter
at the rate of 6% per annum from the date of decree till realisation under S. 34 of C.P.C. as the
liability has not arisen out of any commercial transaction. (Para 10)
Name of Advocates
S. S. Jain, for Appellant; A. P. Aggarwal, for Respondent.
1. S. K. AGARWAL, J. :-This appeal is directed against the judgment and decree dated 7th
August, 1998 passed by the Court of Shri J. M. Malik, Additional District Judge, Delhi granting a
decree in favour of the respondent-plaintiff for Rs. 71,500/- (interest calculated at the rate of 1-1/2
% per month) with proportionate costs and pendente lite and future interest at the same rate from
the date of institution of the suit till realisation of the decretal amount.
2.Brief facts are that the respondent filed a suit against the appellant alleging that he had borrowed
a total sum of Rs. 48,000/- through four different cheques; that he had agreed to pay interest at the
rate of 3% per month; that neither principal amount nor interest thereon was paid, despite notice
dated 1st May, 1988 to the appellant and a decree of Rs. 95,000/- with costs and pendente lite
interest and future interest at the rate of 3% per month till realisation was sought. Appellant in the
written statement denied the allegations, inter alia, pleading therein that the respondent was doing
the business of money lending without any licence; loan acknowledgment receipts being
unstamped were not admissible in law; that on 13th January, 1986 he had returned an amount of
Rs. 15,000/-, taken on 24th October, 1985 by him from the respondent. It was claimed that the
signatures on the four receipts in respect of the said four cheques were forged by the respondent
and that the father of the respondent and the appellant used to make financial adjustments and no
consideration was received by the appellant in respect of the cheques pleaded in the suit.
3.On the basis of the pleadings of the parties, following issues were framed :-
"1. Whether the plaintiff is running the business of money-lending and the suit of the plaintiff is
not maintainable, as alleged in para 2 of the preliminary objection of the written statement? OPD
2. Whether the plaintiff has no cause of action for filing the present suit? OPD
3. Whether the acknowledgment receipts are unstamped and inadmissible in evidence? OPD
4. Whether proper Court-fees has not been paid on the plaint, as alleged in the written statement?
OPD
5. Whether this Court has no jurisdiction to try the present suit? OPD
6. Whether the defendant has paid the loan amount, as claimed by the plaintiff in para 1 of the
plaint through cheque dated 12th June, 1986? OPD.
7. Whether the plaintiff has advanced the loans to the defendants on the various dates
as alleged in the plaint? OPP
8. Whether the plaintiff is entitled to recover interest? If so, at what rate? OPP
9. Relief."
4.Learned trial Court decided all the issues against the appellant and decree the suit in favour of
the respondent. With regard to the interest, the trial Court held that the respondent-appellant was
entitled to interest at the rate of 1-1/2% per month.
5.At the admission stage we have heard Mr. S. S. Jain, learned counsel for the appellant and Mr. A.
P. Aggarwal, learned counsel for the respondent and have been taken through the record.
6.Learned counsel for the appellant argued that Ex. P1, Power of Attorney, did not authorise P.W.
2, S. K. Jain to give statement on behalf of the respondent therefore his statement should not be
considered; admittedly all the receipts were in the handwriting of the father of the appellant. It was
further argued that respondent deliberately made a false statement by denying his writing on bank
pay-in-slips Ex. D.W. 2/1 to D.W. 2/6 on the basis of which suit amounts were deposited in the
account of the appellant, he was however completely belied by the evidence of the handwriting
expert in this regard, therefore his evidence cannot be relied. It was argued that receipts Ex. P.W.
2/3 to P.W. 2/5 did not bear signatures of the appellant, on the revenue stamps, therefore the
documents were not admissible; that there was no agreement between the appellant and the
respondent regarding rate of interest payable; in the alternative it was argued that a very high rate
of interest was allowed by the trial Court particularly when P.W. 2 in his evidence has admitted
that different loans were advanced by the family members of the respondent, and suits are pending
for recovery of loans and in respect of some of the loans no interest was payable; and father of the
respondent had been depositing the cheques in the account of the appellant in UCO Bank Branch,
Kamla Nagar, Delhi. Learned counsel for the respondent argued to the contrary.
7.The appellant in support of his case had examined himself as D.W. 1; while denying having
taken any loan from the respondent he admitted that receipts Ex. P.W. 2/3 to P.W. 2/5 bear his
signatures, he tried to explain that his father used to obtain his signatures on blank documents from
him and that the contents of the receipts might have been written by his father. He also deposed
that cheque Ex. P.W. 1/8 bear his signatures and contended that he had signed blank cheques and
handed over the same to respondent's-father. He also admitted that receipt Ex. P.W. 2/2 was in his
hand writing and bear his signatures.
8.The bank account of the appellant and the receipts issued by him establish that the amounts
detailed in the plaint were received by him. The appellant has failed to lead any concrete evidence
that the said amounts were not taken by him or the same were returned. The learned trial Court
rightly recorded finding against the appellant. General Power of Attorney, Ex. P.W. 2/1 executed
by the respondent, in favour of Mr. S. K. Jain, P.W. 2, authorises him to appear and act, on his
behalf in all Courts, Civil, Revenue, Criminal to sign, verify the plaint and written statements etc.
and to do all acts in relation to said matters. We do not find any merit in the submission of the
appellant that P.W. 2 S. K. Jain could not appear for and on behalf of the respondent or could not
give evidence.
9.With regard to the interest, it was contended by the learned counsel for the appellant that the
receipts merely show that the money was paid to the appellant and they do not contain any recital
about the interest or as to when the amount has to be paid back and, therefore, the requirements of
sub-section (1) of S. 3 of the Interest Act, 1978 are not satisfied. Section 3(1) of the Interest Act,
1978 reads as under :-
"In any proceedings for the recovery of any debt or damages or in any proceedings in which a
claim for interest in respect of any debt or damages already paid as made, the Court may, if it
thinks fit, allow interest to the person entitled to the debt or damages or to the person making such
claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part
of the following period, that is to say-
(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time,
then, from the date when the debt is payable to the date of institution of the proceedings;
(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in
a written notice given by the person entitled or the person making the
claim to the person liable that interest will be claimed, to the date of institution of the proceedings :
Provided that where the amount of the debt or damages has been repaid before the institution of
the proceedings interest shall not be allowed under this section for the period after such
repayment."
10.In order to attract S. 3(1) of the Interest Act it is sufficient that either Cl. (a) or Cl. (b) of the Act
is satisfied. Both the classes are not required to be satisfied. If Cl. (a) of the Interest Act is
applicable in that eventuality interest will be payable from the date the debt became due. However,
if Cl. (b) is applicable, then the interest becomes payable from the date on which written notice is
served claiming or demanding interest. In the present case the respondent on 1st May, 1988 sent
notice Ex. P.W. 2/2 to the appellant demanding principal amount along with interest. The suit was
filed on 2nd August, 1988. In the absence of a contract the respondent would be entitled to interest
'at the current rate' which is defined in S. 2 of the Interest Act, to mean highest maximum rate at
which the interest may be paid on different classes of deposits by the Schedule Banks in
accordance with the directions issued to the banking companies generally, by the Reserve Bank of
India under the Banking Regulation Act, 1949. Therefore, taking into consideration the definition
of the expression current rate of interest as contained in Cl. (b) of S. 2 of the Interest Act, we are of
the view that the respondent is entitled to get interest on the principal sum adjudged at the rate of
12% per annum would be just and proper from the date of demand till the filing of the suit and
additional interest at the same rate till the suit was decreed; thereafter at the rate of 6% per annum
from the date of decree till realisation under S. 34, Code of Civil Procedure, 1908 as the liability
has not arisen out of any commercial transaction.
11.The appeal is thus partly allowed. The judgment and decree of the trial Court is modified. The
respondent is held entitled to (i) Rs. 48,000/- as principal amount; and (ii) Interest @ 12% per
annum from the date of demand i.e. 1-5-1988 till the suit was decreed and @ 6% per annum from
the date of decree till realisation on the principal amount along with proportionate costs
throughout.
Appeal Partly Allowed
