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Judgment
S. Ravi Kumar, Chairperson
This Appeal is preferred under Section 20 of Recovery of Debts due to Banks and Financial Institution Act, 1993 (RDDB & FI Act) against the order dated 21.9.2017 in OA 248/2013 on the file of DRT-III, Chennai.
Appellant herein filed the above referred OA for recovery of a sum of Rs.17,00,913/- with interest at 10% per annum with monthly rests and this OA when taken up for hearing, defendants 1, 2 and 4 to 8 remained ex parte and out of 8 defendants, defendants 1 and 2 are principal borrowers, D3 is guarantor who died and his legal heirs are brought on record as D4 to D8.
Tribunal below granted a recovery certificate for the OA amount of Rs.17,00,913/- with future interest at 8% per annum (simple) from the date of application till the date of realisation. Aggrieved by the grant of simple interest at 8% by reducing the contractual rate of interest of 10% with monthly rests, appellant preferred the present appeal.
Heard both sides.
Advocate for appellant submitted that Tribunal below has not recorded any reasons for denying the contractual rate of interest pendent lite, i.e., from the date of application till date of order and as per settled law, it is the duty of Tribunal below to give reasons for reducing the contractual rate of interest. It is submitted that only against that finding, present appeal is preferred.
On the other hand, advocate for respondents submitted that loan availed is a housing loan and the borrowers are employees and that the Tribunal below rightly reduced the rate of interest to simple interest taking into consideration the nature of loan and the capacity of the borrowers. It is submitted that there are no grounds to interfere with the impugned order.
I have perused the material papers and the impugned order dated 21.9.2017. As seen from the record, defendants have not contested the OA and that they remained ex parte. Though appellant claimed 10% interest as seen from the document i.e., Demand Promissory Note dated 18.3.2003, the agreed rate of interest is 9.75% which is also referred in the loan agreement. As rightly pointed out by the advocate for appellant, Tribunal below did not assign any reason, leave alone sufficient reasons, for reducing the contractual rate of interest, particularly, when the defendants have not contested the claim.
As per the terms of Loan Agreement under Article 2.3, interest has to be computed on monthly rests, at contractual rate. It is also mentioned in the said agreement under Article 2.3 that interest and other charges shall be computed on the basis of a year of three hundred and sixty five days. When there is specific agreement between the parties for payment of interest and the same is not in disputed by the defendants, either by filing written statement or by contesting the claim, reducing the contractual rate of interest pendent lite without assigning any reasons thereof, in my view, is not a correct approach. Therefore, order of Tribunal below to that extent is liable to be modified.
For the above reasons, recovery certificate of Tribunal below is modified to the extent that defendants 1, 2 and 4 to 8 shall be liable to pay the amount of Rs.17,00,913/- together with future interest at 9.75% per annum with monthly rests from the date of application till the date of order, i.e., 21.9.2017 and thereafter at 8% per annum (simple) till realisation.
RA 81/2018 is accordingly allowed. No costs.