Case: Indian Insurance and Banking Corporation Limited Vs. Mani Paravathu and Another

SHAH, J.1. These are two cross appeals against the decree passed by the High Court of Kerala in appeal from a decree in a suit for enforcing a hypothecation bond.2. C. George and his two brothers were carrying on business in hill produce in the name and style of "K. E. S. Sons". The Indian Insurance and Banking Corporation Ltd. - hereinafter called "the Bank" - advances loans under a "loan agreement" to K. E. S. Sons on the security of goods of that firm. The Bank threatened to take proceedings against C. George on the allegation that he had clandestinely removed certain goods pledged with the Bank. In order to secure the amount due to the Bank, on May 10, 1948, a deed of hypothecation was executed for Rs. 42, 813/- by C. George and Mani Paravathu and Mariyamma respectively father-in-law and wife of C. George. It is common ground that this deed was by way of an additional security for the amount due under the loan account.3. The Bank commenced an action in the Court of the Sub-ordinate Judge, Parur, for recovery of the amount due under the hypothecation bond from the three executants. The Trial Court decreed the claim for Rs. 39, 704/3/9 and interest at the rate of 9% from the date of the suit. Against that decree Mani Paravathu and Mariyamma appealed to the High Court of Kerala. In appeal, the High Court reduced the decretal amount to Rs. 33, 529/- and awarded interest at the rate of 6% on the amount decreed. Against the decree of the High Court, two appeals have been filed in this Court with certificate.4. The Bank claims that the High Court was in error in reducing the decretal amount by Rs. 6, 175/- Mani Paravathu and Mariyamma claim that no decree at all should have been passed against them.5. There is, in our judgment, no substance in either appeal. In the view of the High Court, the Bank had failed to exercise proper control over the goods which were entrusted to them under the loan agreement with K. E. S. Sons; that they had failed to give credit for the money realized by sale of the good under that agreement; that the Bank was bound to account for the goods that actually existed in the godown at the time when the deed of hypothecation was executed; and that the stock available in the godown on the date of the deed of hypothecation was as shown in Ext. W. It was common ground before the High Court that the goods at the time of the execution of the deed of hypothecation were of the value of Rs. 16, 585/-, but the Bank had given credit only for Rs. 10, 410/-, and the Bank was bound to give credit for the difference, i.e. Rs. 6, 175/-. The learned counsel appearing on behalf of the Bank has not been able to suggest any adequate ground which may justify us in disagreeing with the view of the High Court.6. It is true that the High Court has reduced the rate of interest from 9% to 6%. But interest, after the date of the suit, is always in the discretion of the Courts, and the normal rate of Court interest is 6%. We Therefore do not see any reason to hold that the High Court committed any error in reducing the rate of interest.7. There is no substance in the appeal filed by Mani Paravathu and Mariyamma also. The High Court held that the goods in the possession of the Bank at the date of the deed of hypothecation were not as shown in Ext. B, but they were as shown in Ext. W. The contention of Mani Paravathu and Mariyamma that Ext. W. was a forgery has not been accepted as correct. Both the Courts below have accepted Ext. W. as genuine, and no ground is made out for interfering with the conclusion of the High Court.8.

Decision:
0[ds]5. There is, in our judgment, no substance in either appeal. In the view of the High Court, the Bank had failed to exercise proper control over the goods which were entrusted to them under the loan agreement with K. E. S. Sons; that they had failed to give credit for the money realized by sale of the good under that agreement; that the Bank was bound to account for the goods that actually existed in the godown at the time when the deed of hypothecation was executed; and that the stock available in the godown on the date of the deed of hypothecation was as shown in Ext. W. It was common ground before the High Court that the goods at the time of the execution of the deed of hypothecation were of the value of Rs. 16,but the Bank had given credit only for Rs. 10,and the Bank was bound to give credit for the difference, i.e. Rs. 6,The learned counsel appearing on behalf of the Bank has not been able to suggest any adequate ground which may justify us in disagreeing with the view of the High Court.6. It is true that the High Court has reduced the rate of interest from 9% to 6%. But interest, after the date of the suit, is always in the discretion of the Courts, and the normal rate of Court interest is 6%. We Therefore do not see any reason to hold that the High Court committed any error in reducing the rate of interest.7. There is no substance in the appeal filed by Mani Paravathu and Mariyamma also. The High Court held that the goods in the possession of the Bank at the date of the deed of hypothecation were not as shown in Ext. B, but they were as shown in Ext. W. The contention of Mani Paravathu and Mariyamma that Ext. W. was a forgery has not been accepted as correct. Both the Courts below have accepted Ext. W. as genuine, and no ground is made out for interfering with the conclusion of the High Court.8.