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Judgment
T.Mallikarjuna Rao, J
Aggrieved by the Decree and Judgment dated 04.07.2014 in O.S. No.114 of 2011 passed by the learned V Additional District Judge, Tirupati (for short "the trial Court"), the appellant/plaintiff preferred this Appeal questioning the correctness of the Decree and Judgment passed by the trial Court.
The appellant/plaintiff filed a suit for money recovery based on the chit agreement dated 24.08.2009.
For the sake of convenience, the parties will hereinafter be referred to as arrayed in the Original Suit.
The case of the plaintiff/company is that it has been doing chit-fund business, the 1st defendant joined as a member of the chit-fund scheme, and he was allotted Ticket No.FTOO1VJ-26, the total value of chit being Rs.40,00,000/- to be subscribed at Rs.1,00,000/- per month for 40 months and that the 1st defendant signed the chit agreement on 24.08.2009; 1st defendant participated in the chit auction on 20.09.2009 and became highest bidder, having agreed to forego Rs.14,00,000/- out of Rs.40,00,000/-, the balance amount was distributed among all the members that 1st defendant paid Rs.13,00,000/- only till the date of payment and future liability being Rs.27,00,000/-.The 1st defendant had furnished defendants 2 to 6 as guarantors that the guarantors had executed an agreement of guarantee on 24.10.2009 in favour of the plaintiff company. After that, all the defendants executed a promissory note on 24.10.2009 for Rs.27,00,000/- as collateral security. While the matters stood thus, the 1st defendant paid 18 installments and thereafter committed default from 10.03.2010; he had to pay 22 installments that, despite repeated demands made by the plaintiff company, failed to pay the same. Hence the plaintiff company got issued a legal notice on 19.02.2011 to the defendants to repay Rs.22,00,000/-, but they could not pay the due amount, constrained the same, and the plaintiff company filed the suit.
The 1st defendant filed a written statement, for which the defendants 2 to 6 adopted the same by filing an adoption memo. He denied all the allegations made in the plaint and further contends that he had deposited the title deeds of his property and that though he paid certain documents, the plaintiff company had not deducted the same and was claiming excess interest; he insisted on sureties for the collateral purpose that he is ready to pay the remaining installments. He further contends that as per the contents in the plaint, the chit commenced on 24.08.2009 and would expire in December 2013, but the suit was filed on 25.03.2011. The suit is filed based on the fabricated accounts without allowing him to pay the remaining installments.
Based on the above pleadings, the Trial Court framed the issues, which are as under:-
1) Whether the plaintiff/firm is entitled for the suit amount as prayed for?
2) To what relief?
On behalf of the plaintiff/company, P.W.1 was examined and marked Exs.A.1 to A.20, and on behalf of the defendants, no oral or documentary evidence was adduced.
After considering the evidence on record, the trial Court partly decreed the suit with costs for Rs.16,09,264/- and D.1 to D.6 are jointly and severally liable to pay the suit amount with interest @ 12% per annum from the date of the suit till the date of decree and after that @ 6% per annum from the date of decree till the date of realization.
I have heard the arguments of learned Counsel for both parties.
Sri P. Durga Prasad, learned Counsel for the appellant/plaintiff, contends that the trial Court erred in not decreeing the suit as prayed for after deducting the amounts on the respective dates of payment and by adding accrued interest but not by deducting from the principal amount; and also erred in not taking into consideration the calculation memo filed by the plaintiff and ought to have decreed the suit. The reasons assigned by the trial Court in the impugned Judgment are neither sustainable nor tenable in the eye of the law.
In spite of several adjournments, learned counsel for the respon-dents/defendants did not appear to argue his case. Hence, the arguments of learned counsel for the respondents, was treated as heard.
Having regard to the pleadings in the suit, the findings recorded by the trial Court and in the light of the rival contentions and submissions made before this Court, the points that would arise for determination are:
1) Should the amount of Rs.8,33,012/- deducted on 30.03.2013 by the appellant/plaintiff as a lein be appropriated in the first instance towards the interest?
2) Whether the Judgment passed by the trial Court needs any interference?
POINT NOs.1 & 2:
The plaintiff/company examined its Manager N. Nadamuni Prasad as P.W.1 and marked Exs.A.1 to A.20 documents. Though, the 1st defendant had filed the written statement, as seen from the Judgment of the trial Court, he has not let in evidence to support his pleas taken in the written statement. However, in the cross-examination, P.W.1 deposed that they had calculated simple interest as shown in the statement of account under Ex.A.20. The trial Court has decreed the suit with costs for Rs.16,09,264/-against D.1 to D.6 with joint and several liability. The plaintiff preferred this Appeal challenging the Judgment of the trial Court on the ground that Rs.8,33,012/- was adjusted by the trial Court towards the entire suit claim, i.e. Rs.24,42,276/- instead of adjusting the said amount towards the interest amount first, such adjustment can be seen from the trial Court judgment.
The plaintiff/company claimed the suit for recovery of Rs.24,42,276/; the trial Court deducted Rs.8,33,012/- out of the said amount and partly decreed the suit for Rs.16,09,264/-. The defendants have not questioned the correctness of the Judgment by preferring an appeal regarding the said adjustment.
As seen from the evidence of P.W.1, the 1st defendant has no other chits in their Branch except the suit chit; D.2 is a member of their chit; D.3 is also a member of their chit. Further, P.W.1 admitted that the chit of D.3 for Rs.8,33,012/- was adjusted by them on 30.03.2013 to the chit of D.1 as a lien. As already observed, D.1 and D.3 have not disputed to make such adjustments.
At this juncture, it is pertinent to refer to the Judgment reported in Kancherla Purushotham vs Kadimcherla Nageswara Rao and another A.I.R. 1979 A.P. 48 (F.B.), wherein a Full Bench of the Composite High Court of Andhra Pradesh observed as under:
“40. xxxx In Rex v. Jaggopal Prasad (7) 1941 (2) MLJ 307 a Bench of the Madras High Court held that open payment should be credited in the first instance towards the interest as on the dates on which they were made. This was followed in Muthaiah Thever vs. Lakshmanan Pandithar (8) 1948(2) MLJ 500 by Govindarajachari, Justice. There are other authorities of A.P. High Court in which this method of appropriation is followed, name-ly in Srinivasulu v. Kondappa (9) 1960 A.P. 174 wherein Ranganadham Chetty, J observed that under Section 60 of the Contract Act the creditor has got a right to appropriate the amount towards interest, if he chooses and that right subsists even to the stage of trial of the suit. Explanation-1 to Section 8 relates to the debts incurred on or before 1.10.1932 and where the debt was of 15.06.1953 the provision which has direct application is Section 13 of the Act and to that section there is no explanation similar to Section 8 curtailing the creditor's right under Section 60 of the Contract Act. Parthasarathi, J also took the same view in P. Subrarama Chetty vs. Audi-seshan Sarma (10) (1970) 2 An. W.R.P. 215. The learned Judges referring the present matter to the Full Bench also expressed the same view that Section 13 does not in any way after the normal rule that in the case of a debt due with interest any payment received without any definite appropr-iation on the one side or the other, in the first instance, it has to be applied towards satisfaction of interest then outstanding, provided it is not over and above the Statutory rate of 5 ½% per annum, and it does not include interest on interest, and thereafter to the principal. For the reasons given above, I am in entire agreement with the view taken by the Division Bench referring the matter to this Full Bench.”
By following the same, this Court views that the trial Court is not justified in adjusting Rs.8,33,012/- out of the suit claim instead of adjust-ing the same towards the interest. Accordingly, the points are answered in favour of the appellant.
As a result, the Appeal is allowed with costs. Consequently, the suit in O.S.No.114 of 2011 dated 04.07.2014, on the file of V Additional District Judge, Tirupati, is decreed with costs for a sum of Rs.24,42,276/- with interest at 12% per annum from the date of filing of the suit till the date of decree and thereafter at 6% per annum from the date of decree till the date of realization. Out of the decretal amount, the payment of Rs.8,33,012/-made on 30.03.2013 shall be appropriated first towards interest as of the payment date, and the remaining shall be adjusted towards the principal amount.
Consequently, miscellaneous petitions pending, if any, in this Appeal shall stand closed.