1. The Appellant / Defendant has projected the Second Appeal as against the Judgment and Decree, dated 24.02.2006, in A.S.No. 112 of 2005 on the file of the learned District Judge, Karur, dated 13.06.2003 in O.S.No. 315 of 2000, passed by the learned Sub Judge, Karur.
The Plaint facts:
2. According to the Respondent / Plaintiff, the Appellant/Defendant borrowed a sum of Rs.2,00,000/-, on 02.12.1997 from it and that the Appellant / Defendant has executed a suit promissory note agreeing to pay interest thereon at 25.20% p.a. and to pay the principle sum and interest either to the Respondent/Plaintiff or order on demand. The Appellant/Defendant has paid interest up to 31.10.1999. In spite of repeated requests and demands, the Appellant/Defendant has not paid the amount so far.
3. The Appellant/Defendant is not an Agriculturalist. Therefore, the Respondent/Plaintiff has claimed an interest at 25.20% p.a., at the aggrieved rate. Hence, the Respondent/Plaintiff has filed the suit praying for a decree being passed against the Appellant / Defendant in regard to the principle sum of Rs.2,00,000/-, due under the pronote and interest thereon on 25.20% p.a., from 01.11.1999 till 01.08.2000, amounting in all to Rs. 2,37,800/- together with costs.
The Written Statement pleas of Appellant / Defendant:
4. The suit pronote is a rank forgery. The Respondent / Plaintiff has created the same. The Appellant / Defendant has never borrowed any amount from the Respondent/Plaintiff and never executed any promissory note. Therefore, the Appellant/Defendant is not liable to pay any amount, much less a sum of Rs.2,37,800/- as described in the plaint. There is no cause of action for the suit.
5. Before the Trial Court, on behalf of the Respondent/Plaintiff, witnesses PW 1 and 2 have been examined and Ex. A-1 to A-3 have been marked. On the side of Appellant/Defendant, no documents have been marked and no witness has also been examined.
6. The Trial Court has framed three issues in the main suit for adjudication. On an appreciation of oral and documentary evidence available on record, the Trial Court has come to a clear and categorical conclusion that the Appellant/Defendant has received a loan of Rs.2,00,000/- from the Respondent/Plaintiff's Firm and executed Ex. A-2 pronote and for the suit promissory note, the consideration has been by means of a cheque, which has been established as per evidence of PW 1 and 2 and also as per Ex. A-2 and A-3 documents and resultantly decreed the suit in favour of the Respondent/Plaintiff by directing the Appellant / Defendant to pay the suit sum of Rs.2,37,800/-, and also for the principal sum of Rs.2,00,000/- to pay an interest of 25.20% p.a., from the date of filing of the suit viz., 03.08.2000, till date of decree and thereafter at 6% p.a., from the date of decree till date of realisation, together with costs.
7. Feeling aggrieved against the Judgment and Decree of the Trial Court in O.S.No. 315 of 2000, dated 13.06.2003, the Appellant/Defendant has focussed the Appeal suit in A.S.No. 112 of 2005, before the First Appellate Court, viz., the District Judge, Karur.
8. The First Appellate Court / District Judge, Karur, in A.S.No. 112 of 2005, while delivering the Judgment, on 26.02.2006, has inter alia observed that the Appellant / Defendant has not established that he is an Agriculturalist, either at the time of receipt of the loan amount from the Respondent/Plaintiff and even at the time of filing of the suit also, he has not pleaded that he is an Agriculturalist and entitled to claim the relief of Tamil Nadu Debt Recovery Relief Act Benefits. Further, when the Appellant/Defendant has not established that he is an Agriculturalist then he is not entitled to claim the benefits of the Debt Relief Act and resultantly held that the Judgment and Decree passed by the Trial Court in O.S.No. 315 of 2000, dated 13.06.2003, are not liable to be altered and resultantly dismissed the Appeal.
9. Being dissatisfied with the dismissal of A.S.No.112 of 2005, by the First Appellate Court/District Judge, Karur, the Appellant / Defendant has filed the present Second Appeal as an aggrieved person before this Court.
10. At the time of admission of the Second Appeal, the following substantial questions of law have been framed for determination:
(1) Whether the Courts below are right in awarding interest at the rate of 25.20% contrary to the rate of interest provided under Tamil Nadu Moneylenders Act, 1957?
(2) Whether the Courts below are right in awarding exorbitant interest at the rate of 25.20% on the loan borrowed by the appellant contrary to Section 3 of Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003 (TN Act No. 38 of 2003)?
(3) Whether the Courts below are right in awarding interest at the rate of 25.20% contrary to the Provisions of the Tamil Nadu Moneylenders Act, 1957 which provides interest at the rate of 9% for the secured debt and 12% in case of unsecured debt?
(4) Whether the Courts below are right in enforcing the promissory note dated 02.12.1997 despite the fact that such contract is non-enforceable in view of Section 23 of the Indian Contract Act?
The Contentions, Discussions and Findings on point Nos. 1 to 3:
11. At the outset, the Learned counsel for the Appellant/Defendant informs this Court that he has restricted his challenge only to the quantum of interest awarded by both the Courts at 25.20% p.a., for the suit pronote from the date of plaint till date of decree.
12. It is the contention of the Learned counsel for the Appellant/Defendant that the Trial Court and the First Appellate Court have committed an error in awarding an interest of 25.20% interest for the suit pronote from the date of plaint till date of decree, when they have granted 6% interest from the date of decree till date of realisation of the amount. In effect, the Learned counsel for the Appellant/Defendant submits that the core question that involves in this Second Appeal is that whether both the Courts below are correct in awarding 25.20% interest for the suit pronote from the date of filing of the suit (paint) till date of decree, as per Section 34 of the Civil Procedure Code.
13. The Learned counsel for the Appellant / Defendant mainly relies on Section 34 of the Civil Procedure Code, which speaks of interest and according to the Learned counsel for the Appellant/Defendant, a Court of Law as per Section 34 of the Civil Procedure Code is empowered to award interest pendente lite on such rate which Court of Law thinks reasonable. To lend support to the said contention, the Learned counsel for the Appellant/Defendant relies on the decision of this Court T.G.Balaguru Vs. Ramachandran Pillai reported in (2010) 2 MLJ 861 and 862, wherein it is held as follows: Section 34 C.P.C., leaves it to the discretion of the Court as to what interest is to be decreed by way of pendente lite interest. So far as future interest or further interest is concerned, that too also is left entirely to the discretion of the Court, but subject to a limit of 6%. However, the added proviso would remove the limit to the future interest in a arising out of a commercial transaction. But, the proviso does not take away the discretion left to the Court, nor does it limit the scope of exercise of such discretion. Defendant borrowed the amount for meeting his family expenses. While so, there was no justification for awarding interest pendente lite at the rate of 24% p.a., during the pendency of suit and the same is to be reduced to 9% p.a.
14. He also seeks in aid of the decision of this Court in Dr.S.K.Doraisamy Vs. N.Elangovan and three others reported in 2001 (3) CTC 539, wherein it is laid down that: the Plaintiff failed to prove that suit transaction is commercial transaction and that the interest has been awarded @ 12% p.a., and no at 24% as claimed by the Plaintiff.
15. At this juncture, the Learned counsel for the Appellant/Defendant by referring to Ex. A-2, pronote for Rs.2,00,000/-, dated 02.12.97, executed by the Appellant/Defendant, to and in favour of Respondent/Plaintiff submits that nowhere in the pronote, it is mentioned that the transaction is a commercial transaction and the recitals in Tamil in Ex. A-2 pronote, dated 2.12.1997 ascribe the reasons for urgent need and for family necessity the loan of Rs.2,00,000/- has been taken.
16. It is to be pointed out that a perusal of Ex. A-2 pronote, dated 2.12.97 also speaks of Business purpose. But the contention of the Learned counsel for the Appellant / Defendant is that the Appellant/Defendant is an Agriculturalist and therefore, the benefits of Tamil Nadu Agriculturists Relief Act (IV of 1938) are to be showered on the Appellant/ Defendant. One cannot ignore an important fact that if a person claims that he is an Agriculturalist, then the onus squarely rests on him to prove that he comes within the purview of the definition of Agriculturalist under the Tamil Nadu Agriculturists Relief Act (IV of 1938).
17. The Trial Court has found that the Appellant / Defendant has not established to the satisfaction that he is an Agriculturalist entitled to the benefits of the Tamil Nadu Agriculturists Relief Act (IV of 1938).
18. Though in the written statement, the Appellant/Defendant has taken a plea that the pronote is a forgery one and concocted, etc., both the Courts have come to a positive concurrent, conclusion that Ex. A-2 pronote, dated 02.12.1997, has been executed by the Appellant/Defendant, to and in favour of the Respondent/Plaintiff and therefore, it is held by this Court that the Appellant/Defendant has borrowed a sum of Rs.2,00,000/- from the Respondent/Plaintiff and executed Ex. A-2 pronote.
19. Coming to the aspect of claiming of interest as per Section 34 of the Civil Procedure Code, as a matter of fact, Section 34 of the Code of Civil Procedure enjoins that the rate of current interest and future interest are within the domain of a Court of Law. The normal rate is that the contract rate of interest must be granted by a Court of Law at the time of passing of a decree. Section 34 of the Civil Procedure Code envisages that in addition to pendente lite and future interest, additional interest adjudged on such principal sum for the period prior to the institution of the suit can also be granted by the Court. Ordinarily an interest can be awarded either by means of agreement between the parties or under the statute or even under custom, the general provision of Section 34 of the Code of Civil Procedure is founded upon Equity, Justice and Fair play has opined by this Court. The award of interest can only be an principal sum adjudged. Also a Court of Law has no discretion to award interest beyond the rate of 6%. But a Court of Law has still a discretion to grant or not to grant any interest and in awarding interest, to determine at what rate it should be awarded subject to the maximum of 6% interest up to the date of suit is a matter of substantive law. Section 34 of the Code of Civil Procedure does not refer to payment of interest under the first head as per decision of Joseph Vs. Union f India reported in AIR 1957 Ker 3. The right to claim interest prior to the suit is a substantive one; whereas pendente lite, interest is one of procedure, within the discretion of a Court of Law as per decision of Basant Kumar Misra Vs. Roshanalal Shrivastava reported in AIR 1954 Nag 300. Interest on the suit claim can be granted as per Section 34 of the Code of Civil Procedure only from the date of suit.
20. Section 34 of the Code of Civil Procedure deals with post litigation interest. Whereas it is established that an amount of legally due to a party was not paid to it, the party responsible for withholding the same must pay interest at a rate considered reasonable by a Court of Law, as opined by this Court.
21. Section 34 of the Code of Civil Procedure empowers a Court of Law to award reasonable Pendente lite and future interest at 18% p.a., and the same is allowed as per decision of Canara Bank Vs. Jain Plastic Moulders and Others reported in AIR 2000 Delhi P 421, at P 427.
22. Section 34 of the Code of Civil Procedure applies only where there is a decree for payment of money. It cannot be gainsaid that interest to be awarded after the suit is within the discretion of a Court. Future interest is really in the nature of damage for being kept out of money.
23. In the instant case even though a Court of Law has power to grant appropriate rate of interest, this Court on an over all assessment of the facts and circumstances of the present case, in an integral manner holds that the Respondent/Plaintiff is entitled to claim interest at the rate of 25.20% p.a., for the principal sum of Rs.2,00,000/- from the date of Ex. A-2, pronote, dated 02.12.1997, till date of filing of suit (filing of the plaint) from the Appellant/Defendant and in respect of period from the date of filing of the suit, dated 3.8.2000 till date of decree, this Court grants interest at the rate of 18% p.a., for the suit Ex. A-2, pronote and thereafter, this Court grants interest at the rate of 6% p.a., from the date of decree till date of payment. Moreover, it is not established on behalf of the Appellant/Defendant that the interest of 25.20% mentioned in Ex. A-2 pronote, dated 02.12.1997, is a usurious one, for the simple reason that the Appellant/Defendant with his eyes wide open after knowing the contents of Ex. A-2, pronote, which are written in Tamil has affixed its signature over the revenue stamp in the pronote for a consideration of Rs.2,00,000/- etc. As such, this Court holds that it is not open to the Appellant/Defendant to take a contra plea much to the exclusion of documentary evidence as per Ex. A-2 pronote, dated 02.12.1997 (furthermore in Ex. A-2, suit pronote, the word 'Business purpose' is also mentioned of). Therefore, this Court comes an inevitable conclusion that the Appellant/Defendant is not entitled to seek a relief either under the relevant provisions of Tamil Nadu Moneylenders Act 1957 or under Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003 (TN Act No. 38 of 2003) and accordingly, the points 1 to 3 are so answered.
The Contentions, Discussions and Findings on point No. 4:
24. Though a question of law has been framed whether both the Courts are right and enforcing the promissory note, dated 02.12.1997, despite the fact that such contract is not acceptable in view of Section 23 of the Indian Contract Act, this Court is of the considered opinion that the terms of Ex. A-2 pronote, dated 2.12.1997 on going through the same, it cannot by any stretch of imagination be said that it is an unsustainable contract and also it cannot be said that it is opposed to public policy as per Section 23 of the Indian Contract Act, 1872.
25. Per contra, Ex. A-2 pronote, dated 02.12.1997, is an enforceable one against the Appellant / Defendant and accordingly, the point No.4 is answered against the Appellant / Defendant.
26. In the result, the Second Appeal is allowed in part, leaving the parties to bear their own costs. It is held by this Court that the Respondent/Plaintiff is entitled to claim interest at the rate of 25.20% p.a., for the principal sum of Rs.2,00,000/- from the Appellant/Defendant from the date of suit pronote, dated 02.12.1997, till date of filing of the suit and in respect of the period from the date of filing of the suit, viz., 03.08.2000, till date of decree, this Court grants an interest of 18% p.a., and thereafter at the rate of 6% p.a., from the date of decree till date of payment. Consequently, the Judgment and Decree passed by the Trial Court in O.S.No. 315 of 2000, dated 13.06.2003 and A.S.No. 112 of 2005, dated 24.02.2006 are modified. The connected Miscellaneous Petition is closed.