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Palai Central Bank Ltd. Vs. C. Ramaswami Nadar - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKerala High Court
Decided On
Case NumberA.S. Nos. 110 and 233 of 1957
Judge
Reported inAIR1959Ker194
ActsTravancore Code of Civil Procedure (CPC), 1100 - Sections 11, 31(1), 34, 38 and 47; Code of Civil Procedure (CPC) , 1908 - Sections 9
AppellantPalai Central Bank Ltd.
RespondentC. Ramaswami Nadar
Appellant Advocate K.K. Mathew, Adv.
Respondent Advocate Nilakanta Iyer, Adv.
Cases Referred and Mathai v. Chakko
Excerpt:
.....- when decree holder-bank applied for execution debtor raised objections that from date of decree principal amount should alone carry interest and not full plaint claim of rs. 151514 - district judge accepted contention of debtor and decree holder-bank preferred appeal against judgment - lower court went wrong in upholding judgment's objection - lower court while holding that claim for rs. 151514 was tenable at same time held in second part of its order that principal amount sued was only for rs. 75000 and that even according to section 34 interest on that amount alone was realisable until date of decree - contradictory of what court said in earlier part of its order - lower court's order on said part reversed and bank entitled to claim. - - ' the other decisions bearing on..........court's view.the decretal portion of the judgment in the case is as follows:'in the result the suit is decreed in terms of the plaint with costs against the 1st defendant subject to the following modifications: interest on the amount from the date of plaint till date of decree is 9 per cent. further interest on costs at 6 per cent. time to proceed against the hypotheca is three months'.there is an express decision allowing interest for the period of the pendency of the suit on the full claim and it is not the execution court's function to sit in judgment over that adjudication. putting the judgment-debtor's case at its highest, the decision was wrong, but the remedy as indicated earlier was by way of appeal or review. the decree shows that the plaint claim of rs. 1,51,514/8/-together.....
Judgment:

Koshi, C.J.

1. These two appeals arise from an order, dated 17-2-1957, made by the learned District Judge of Trivaudrum in the proceedings before him to execute the decree of the Nagercoil District Court in O. S. No. 66 of 1953. The Nagercoil District Court had transferred the decree to the Trivandrum District Court for execution and when the decree-holders, the Palai Central Bank Ltd., applied for execution, judgment debtor No. 1, (defendant) raised objections thereto on two grounds. The learned District Judge repelled one objection and accepted the other. Hence these two appeals, one by the decree holders Bank and the other by judgment-debtor No. 1.

2. For a proper appreciation of the objections raised to the execution it is necessary to state a few facts. The suit O. S. No. 66 of 1953, was on the basis of an overdraft security bond (Ex. A in the suit) which judgment-debtor No. 1 had executed in favour of the decree-holder Bank and that agreement provided for advances to be made to a limit of Rs. 75,000. The plaint claim, however, came to Rs. 1,51,514/8. This was because the security bond sued upon contained a provision that in case interest at the stipulated rate or any portion thereof remained unpaid for a period of six months, arrears of interest would be treated as principal and added on to the original or previous principal and that interest would be paid at the stipulated rate on the sum so arrived. Indeed some time before the institution of the suit defendant 1 had accepted the liability on this basis and sent letters to the Bank confirming the correctness of the balance they claimed. The judgment in the case, a certified copy of which was made available to us by the decree-holder's counsel, shows these details.

3. In the plaint the plaintiffs Bank claimed 12 per cent., interest on the entire claim of Rs. 1,51,5I4/8/- till the date of the decree and thereafter till realisation at 9 per cent., per annum on the aggregate sum. Defendant 1 contested the suit on various grounds, but the court passed a decree in terms of the plaint subject to the modification that from the date of the institution of the suit till the date of the decree the plaint claim would carry interest only at 9 per cent. per annum and thereafter until realisation only at 6 per cent. per annum on the aggregate amount of the decree. ThePlaintiffs- Bank were also allowed their costs of the suit.

4. The first objection judgment-debtor No. 1 raised to the execution application was that, by way ot interest in reject of the period antecedent to the institution of the suit, the Bank was not entitled to realise more than one hall of the principal amount sued for. According to the judgment-debtor No. 1 even though the plaint claimed Rs. 1,51,514/8/- Rs. 75,000 out of it, that is, the limit fixed in the overdraft agreement alone constituted 'the principal amount sued'. The other objection was that from the date of the decree the principal amount as per the judgment-debtor's contention should alone carry interest and not the full plaint claim of Rs. 1,51,514/8/-. The learned District Judge repelled the first contention and judgment-debtor No. 1 has preferred A. S. No. 233 of 1957 against that. The second contention was however accepted by the learned District Judge and the decree-holders Bank have preferred A. S. No. 110 of 1957 with respect to that part of the order.

5. In our opinion both the appeals can and have to be disposed of on the broad ground that an execution court cannot go behind the decree and question its correctness -- see Bank of Bihar Ltd. v. Sarangdhar Sing, 75 Ind App 300 at p. 304: (AIR 1949 PC 8 at p. 9). Regard, however, being had to the approach the lower court made to the questions raised before it and the arguments urged before us on behalf of judgment-debtor No. 1, we shall refer to those arguments and try to meet them independently of the consideration just mentioned. With respect to the first contention that the decree-holders cannot realise as interest for the period antecedent to the institution of the suit anything more than one-half of Rs. 75,000 is based on Section 31(1) of the Travancore Civil Procedure Code Act (Act VIII of 1100) and the said Sub-section reads;

'In suits for money, no Court shall, in respect of the period antecedent to the institution of the suit, allow in its decree a higher rate of interest than twelve per cent. per annum and the amount adjudged as interest for such period shall not exceed one half of the principal amount sued for'.

We are here concerned with the second part of the Sub-section that the amounts adjudged as interest for the period antecedent to the institution of the suit shall not exceed one half of the amount sued for. Civil Procedure Code Act VIII of 1100 was in force when the suit agreement came into being, but the Code of Civil Procedure, 1908, (Act V of 1908) had by the Code of Civil Procedure, (Amendment) Act, 1951 (Act II of 1951) been extended to the territory concerned long before the suit was brought.

Apart, however, from the question whether the corresponding provision of the Indian Civil Procedure Code, namely, Section 34, applied to the case or Section 31 (1) of the Travancore Code applied, we shall first attempt to show that Section 31 (1) of the Travancore Code as interpreted by the Travancore High Court itself did not warrant Rs. 75,000 alone being treated as 'the principal amount sued for'. A line of Full Bench decisions of the Travancore High Court had held that when the agreement between the parties to a litigation sanctioned arrears of interest remaining unpaid for any specified period being treated as principal, the principal amount sued for within the meaning of the concerned provision would be the amount claimed in the plaint as principal on that basis.

Varghese v. Ittan, 1948 Trav LR 1044 (FB), would appear to be the last case of the erstwhileTravancore High Court to decide the point. Inthat case there was difference of opinion between the two learned Judges who first heard the case and while they delivered separate judgments setting out their respective view points, both agreed that the case may be referred to a Full Bench for decision. The Full Bench that heard it affirmed the correctness of a long line of previous Full Bench rulingsbeginning with Eappen v. Kochugovindan, 10 Trav LJ 367 (FB). In 1948 Trav LR 1044 (FB), it is seen observed:

'It was expressly laid down, in these Full Bench cases, that the term 'principal' used in Section 31, C. P. C., is not restricted, in its meaning, to the original sum lent, that an agreement to treat arrears of interest, at fixed periods, as principal which is to carry interest, is valid, and does not offend Section 31, C. P. C. and that all that the section prohibits, is the allowing of interest of more than a moiety of the principal amount sued for, the words 'principal' amount, not being restricted to the original sum lent, but comprehensive to include arrears of interest, on which interest is agreed to be paid.'

The other decisions bearing on the question have all been reviewed in the leading judgment in that case and it has been clearly laid down that the dissentient notes struck in certain Division Bench rulings did not interpret the section correctly. Some Division Bench rulings had criticised the decision in Philipose v. Geevarghese Kathanar, 29 Trav LJ 1275 (FB), which followed 10 Trav LJ 367. Evidently these criticisms led to 1948 Trav LR 1044, being referred to a Full Bench,

It is unnecessary to repeat here that the security bond sued upon in this case contained a provision similar to those contained in the bonds sued upon in the Full Bench case referred to. In view of these rulings of the Travancore High Court, it is puerile to argue that the principal amount sued for in the suit was Rs. 75,000 and not Rs. 1,51,514-8-0. On this sole ground A. S. No. 233 of 1957 has to be dismissed.

6. It is however another line of approach which the lower court made to repel this contention of judgment-debtor No. 1. The question whether Section 31 (1) of the Travancore Civil Procedure Code applied to the case or Section 34 of Act V of 1908 applied is a matter which was raised and decided in the suit itself. It would be mere common place to observe here that Section 34 (1) of Act V of 1908 contained no such restriction as its counterpart in the Travancore Code had that the amount adjudged as interest for the period antecedent to the institution of the suit shall not exceed one half of the principal amount sued for.

The plaint, as stated earlier claimed Rs. 1,51,514-8-0 and interest thereon for the period of the pendency of the suit and thereafter till realisation, no doubt at different rates. The court admitted the claim for Rs. 1,51,514-8-0 but varied the rates of the interest for both periods. Issue No. 3 in the suit is in these terms: 'Is not the plaintiff entitled to the interest claimed in the plaint'? The trial court disposed of that issue as follows:

'In the absence of any evidence on the defence side the plaintiff is entitled to interest as per the terms of Ex. A. under Section 34 of the C. P. C., there is no prohibition to realise more than half the principal by way of interest. So the ruling reported in 29 Trav LJ 1275 (FB), relied on by the 1st defendant's counsel will not help him in any way as Section 31 of the old Travancore Civil Procedure Code will not apply to the case filed after the new C. P. C., has come into force. I therefore hold that theplaintiff is entitled to the interest claimed in the plaint'.

The decision of the Privy Council in 75 Ind App 300: (AIR 1949 PC 8), is clear authority tor the position that the judgment-debtor cannot be heard to contend in the execution proceeding that Section 31 (1) of the Travancore Code applied to the case and not Section 34 of Act V of 1908). We are not unaware that in Ouseph v. Araya Anthrajanam 1943 Trav LR 509, a Full Bench decision of the Travancore High Court presided over by T.M. Krishnaswami Iyer C. J., had held that Section 31 of the Civil Procedure Code (Travancore) was a substantive provision and not merely a bare rule of procedure.

The rule of the decision has however no application to the present case. The principle enunciated in 75 Ind App 300: (AIR 1949 PC 8), was only a reiteration of the earlier Privy Council rulings. A few among them may be cited here -- see Sri Raja Papamma Rao v. Sri Vira Pratapa, 23 Ind App 32 at p. 35 (PC); Girish Chunder Lahiri v. Soshi Shikhareswar Roy, 27 Ind App 110 at p. 124 (PC) and Udwant Singh v. Tokhan Singh, 28 Ind App 57 (PC).

7. Before disposing of A. S. No. 233 of 1957 another argument of the learned counsel for judgment-debtor No. 1 may also be referred to. On the authority of three decisions of the Travancore High Court reported in 26 Trav. L. J., Mr. Neelakanta Iyer contended that the decree awarding the full claim of Rs. 1,51,514/8/ was one passed without jurisdiction and hence void. It was therefore argued that it was open to his client to question its correctness or validity in the present execution proceedings.

The decisions relied upon were Rama Shenoi v. Kochukuria Tharakan, 26 Trav LJ 294; Abraham v. Indian Bank Ltd., 26 Trav LJ 351 and Mathai v. Chakko, 26 Trav LJ 612. The second of these cases related to a compromise decree and the other two to subsequent orders in execution based on agreement of parties varying the terms of the decree passed in the suit in such way as to contravene one or the other of the provisions in Section 31, Civil Procedure Code (Travancore).

The judgment in the second case contains observations to the effect that the section is binding on courts whether the decree is passed by the court itself after trial or whether the decree grants its sanction as a court decree to any compromise arrived at between the parties and that a court of law has no jurisdiction to circumvent or violate the provision. With respect we cannot agree that a decree passed by a court contravening Section 31 was a void one or that there was any question of jurisdiction involved in it.

So long as the suit was before a court competent to try it, it had jurisdiction to deal with all matters in controversy between the parties and because the decision did not conform to a particular provision of law it cannot be said that there was lack of inherent jurisdiction of the court to deal with the question. In one of the Privy Council cases cited earlier, 23 Ind App 32 (PC), the court which passed the decree had allowed a simple mortgagee to recover possession of the mortgage security in the event of the mortgage money remaining unpaid even after the specified time.

Lord Hobhouse who delivered the judgment in that case pointed out that the decree was not according to law and that in default of payment a simple mortgage gives to the mortgagee a right, not to possession but to sale, which he must workout in execution proceedings. His Lordship further observed that as the mortgagor, however, did not appeal, and did not seek relief by way of review until it was too late, the decree would stand and would be binding on the parties.

Assuming that the trial court went wrong in passing a decree for more than one half of theprincipal amount towards interest, we cannot visualise how the position is any the different than in that Privy Council case. Courts may some times pass wrong decisions and the aggrieved party's remedy is by way of appeal or review. We have however shown that the trial court did not contravene the provision in the latter part of Section 31 (1) as that provision was understood by the Travancore High Court.

Furthermore, the question whether Section 31 applied at all or Section 34 of the Act of 1908 applied was a point that was raised and decided in the case. The judgment-debtor cannot seek to get behind it. If his contention as to absence of jurisdiction is correct, a decision adverse to him by us now would also lie void and there would be nothing preventing him from re-agitating the question in a subsequent stage of the execution. To us theposition would appear to bo not only untenable, but even intolerable.

8. For the reasons stated above. A. S. No. 233 of 1957 fails and we dismiss it with costs.

9. The foregoing discussion would show that the lower court went wrong in upholding the judgment-debtor's second objection. On the authority of the decisions in 1948 Trav LR 1044 and 10 Trav LJ 367 and 29 Trav LJ 1275, we have held that the principal amount sued for in this case was Rs. 1,51,514/8/- and not the original amount lent, Rs. 75,000. The lower court while holding that the claim for Rs. 1,51,514 was tenable at the same time held in the second part of its order that the principal amount sued for was only Rs. 75,000 and that even according to Section 34 of the Act of 1908 interest on that amount alone was realisable until the date of the decree.

To our minds this is contradictory of what the court had said in the earlier part of its order. Further, it held that the trial court had no jurisdiction to award interest on the full plaint claim for the period the suit was pending before that court. Paragraph 7 of the order which contains the grounds for upholding the objection may be reproduced here:

'The second objection also relates to jurisdiction, and can therefore be entertained by the court. On the merits, the objection is well founded, as interest has been calculated not on the principal sum adjudged which is Rs. 75,000 but on the plaint amount. This is not warranted by the provisions of the Travancore Cochin Code, under which the suit was decided. The decree is therefore modified by allowing future interest from the date of the suit to the date of the decree to be computed at the rate prescribed on the plaint amount. Interest from the date of the decree will of course be computed on the aggregate sum adjudged, to be calculated in the above manner. The contention of the judgment-debtor is accepted to the above extent, and the amount realisable to the decree will be computed afresh.'

It needs no reiteration that the principal amount adjudged by the trial court was Rs. 1,51,514/8/-. This in itself is sufficient to entail the reversal of the lower court's view.

The decretal portion of the judgment in the case is as follows:

'In the result the suit is decreed in terms of the plaint with costs against the 1st defendant subject to the following modifications: Interest on the amount from the date of plaint till date of decree is 9 per cent. Further interest on costs at 6 per cent. Time to proceed against the hypotheca is three months'.

There is an express decision allowing interest for the period of the pendency of the suit on the full claim and it is not the execution court's function to sit in judgment over that adjudication. Putting the judgment-debtor's case at its highest, the decision was wrong, but the remedy as indicated earlier was by way of appeal or review. The decree shows that the plaint claim of Rs. 1,51,514/8/-together with interest thereon at 9 per cent. per annum till the date of the decree amounting to Rs. 18,562 and aggregating to Rs. 1,70,076/13/- and costs of the suit have been decreed to the plaintiffs Bank. It is this aggregate sum of Rs. 1,70,076/13/- and future interest as allowed by the decree and costs that are claimed in the execution application filed before the Trivandrum District Court. The decree-holders Bank are entitled to the claim as put forward as their claim is in terms of the decree.

10. We therefore, allow A. S. No. 110 of 1957, reverse the lower court's decision on this part of the case and hold that the decree-holders bank arc entitled to claim all the amounts shown In their execution application. Judgment-debtor No. 1, the respondent in this appeal, will pay the appellants Bank their costs.


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