These two appeals arise from common judgment and decree dated 30.09.1991 in Special Civil Suit No.91 of 1985 passed by learned Civil Judge (S.D.) Rajkot. Therefore, they are being disposed of by this common judgment. First Appeal No. 2043 of 1992 is preferred by original defendants M/s. Prakash Ginning Factory and others, and First Appeal No.2200 of 1992 is by the Bank of Baroda, original plaintiff. 2. The original plaintiff had instituted Special Civil Suit against the defendant partnership firm for recovery of Rs.16,77,538.53 ps with interest, being the dues of the Bank arising out of the advance facilities granted by the Bank to the defendant firm by way of cash credit pledge, cash credit hypothecation and the term loan, upon application of the defendant for getting such advances for its business of ginning cotton and cottonsheets. It was the case of the plaintiff Bank that the defendant having neglected and failed to regularly repay the dues in respect of the loan amounts, Rs.3, 33, 283.00 ps. had become due towards the term loan, Rs.3,95,764.03 ps. towards cash credit hypothecation and Rs.9,48,491.50 ps towards cash credit, all inclusive of interest, totaling the amount of Rs.16,77,583.53 ps. remained due and payable. It was contended that the defendants were jointly and severally liable to the plaintiff Bank for the said amount with further interest at the rate of 20.5%.
2.1. The defendants contested the suit on various grounds, contending in written the statement (Exh.44), inter alia that, the suit was not legal and proper, that in the defendant factory on 2.4.1979 fire had broken out, for which claim before the insurance company was lodged, but the Bank did not cooperate and due to that the amount payable had piled up. The defendants denied the suit claim.
2.2. It was noticed from the record that for the loss of goods in a fire broke out in the defendants’ factory, they had instituted Special Civil Suit No.42 of 1980 against the Insurance Company for recovery of insurance claim. The Bank of Baroda applied to be joined as party in that suit against Insurance Company as the Bank’s interest was also involved. The Bank was impleaded and was transposed as plaintiff No.2 in Special Civil Suit No.42 of 1980. In that suit, the Insurance Company had deposited Rs.17,80,092.15ps in the court and from that amount the Bank withdrew Rs.16 lacs. Against the decree in the said suit, the Insurance Company preferred First Appeal No.633 of 1989, which is pending. In the pending appeal, the Insurance Company had deposited Rs.17,80,092.50 ps. From that amount, the Bank withdrew Rs.16 lacs on 22.09.1989.
3. This Court heard Mr.Darshan M. Parikh, learned advocate for the appellant and Mr. Viren G. Dave, learned advocate appearing for Mr.Yogesh Lakhani, learned senior counsel for the appellants/respondents in their respective appeals.
3.1. Learned counsel for the appellant in First Appeal No.2200 of 1992 submitted that the trial court was required to pass the decree for the sum of Rs.16,77,538.53 ps., instead of which the decree passed was for the amount of Rs.270.70 ps only. It was submitted that the trial court was not right in deducting the amount of Rs.16 lacs. It was next contended that the Bank was entitled to recover compound interest at the rate of 25.5%.
4. The contention that the decree of total of amount was not passed is stated to be rejected. It is apparent from the decree that the suit is decreed for Rs.16,00,270.70 ps. The first paragraph of operative order in the impugned judgment of the trial court is as under:
“The suit of the plaintiffBank is hereby decreed for Rs.16,00,270.70 ps. (Rupees Sixteen Lakhs Two Hundred Seventy and paise Seventy only) as prayed for against all the defendants. All the defendants are liable to pay the above amount with running interest at the rate of 18 per cent from the date of filing this suit till realisation.”
4.1 Out of the total suit claim, the trial Court deducted Rs.77,267.83 ps being the amount of penal interest component. The trial court did not consider it proper to award penal interest and therefore after deducting the said penal interest, decree for the sum of Rs.16,00,270.70 ps was pressed. It being an admitted position that the Bank had withdrawn Rs.16 lacs, the trial court was eminently justified in taking care of that amount by adjusting it while passing the decree in the present suit. The amount deposited by the Insurance Company was ultimately payable to the Bank being its dues recoverable from the present defendants, and in the defendant's suit against Insurance Company being Special Suit No. 43 of 1980, Bank had impleaded itself as one of the plaintiffs.
4.2. The trial court has awarded interest at the rate of 18% from the date of filing of the suit till realization, providing that Bank could recover remaining amount after adjustment of Rs.16 lacs at the rate of 18%. The contractual rent agreed between the plaintiff and the defendants in the documents of loan transactions were 18%. Therefore it was reasonable and legal to award interest contractual rate. The trial court awarded interest at the rate of 18% minus the amount to be calculated with reference to the adjusted amount. Therefore, the trial court has not committed any illegality in awarding 18% interest. There is no basis for the claim for interest at the rate of 25.5% more particularly when virtually entire amount sought to be recovered in the suit was satisfied as stated above.
4.3 Learned advocate for the Bank wanted this Court to clarify that dismissal of the Bank’s appeal in this case by upholding the decree for Rs.16 lacs passed by the trial Court may not be construed as limiting the case of the Bank to recover only that much amount and that the present judgment should not operate to the prejudice of the bank to recover more amount in Special Civil Suit No.42 of 1980 pending against the insurance company. The request of the learned advocate for any such clarification in the present proceedings cannot be accepted. As such, any clarification is not warranted as the suit against the insurance company is large open in First Appeal No.633 of 1989 pending before this High Court, wherein the bank is a party.
5. Arguing in First Appeal No.2043 of 1992, learned advocate for the appellant – original defendants assailed the impugned judgment and decree and took the Court through the various grounds raised in the memo of appeal. It was submitted that the trial court had committed grave error in holding that the defendants were liable to pay the amount of Rs.16,00,270.70 with 18% running interest.
6. The contention that 18% interest was awarded by the trial court on the entire decreed amount was misconceived inasmuch as the order and decree of the trial court, it directed to reduce the amount of Rs.16 lacs recovered by the Bank on 22.09.1989 from the suit claim after making calculation with interest and the remaining amount was made recoverable by the Bank with running interest at 18%.
6.1 No other ground was raised by the appellantsoriginal defendants against the impugned judgment and decree could sustain. The defendants had not disputed the factum of having secured various loan facilities from the plaintiff Bank for which they had executed written documents such as a demand Promissory Note, an agreement for hypothecation of movable machinery, a letter of continuing guarantee. The defendants’ suit against the Insurance Company for damage and the loss of goods suffered in fire and the case that the Bank had not cooperated in recovering the insurance claim, was in other way, indicative of their failure to repay the dues of the Bank regularly. The trial court, on evidence before it, held proved issue No.1 in affirmative that the Bank had given different kinds of facilities for loan advances and towards that the amount of Rs.16,77,538.53ps was due.
6.2 The loan transactions were duly proved on evidence. The suit claim was based on execution of written documents executed by the defendants in favour of the Bank which could not be disproved by the defendants. Also on record was the letter of acknowledgement dated 18.8.1983 (Exh.66) from the defendants. In the circumstances, the trial court passed decree against the defendants, which could not be faulted with as being not in accordance with law in any way.
7. In view of above discussion, there being no merit in either of the appeals, both the First Appeal Nos.2043 of 1992 and 2200 of 1992 are hereby dismissed.
[A. L. DAVE, J.] Amit [N. V. ANJARIA, J.]