IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION WRIT PETITION NO.1967 of 2004 WRIT PETITION NO.1967 of 2004 WRIT PETITION NO.1967 of 2004 AND AND AND WRIT PETITION NO.3814 of 2004. WRIT PETITION NO.3814 of 2004. WRIT PETITION NO.3814 of 2004. M/s. Budhihalkar Hotels Pvt. Ltd. & Others ..Petitioners versus The Sangli Bank Limited & Others ..Respondents Mr.Uday Bobade i/b. A.Z. Mookhtiar for the Petitioner Mr.S.S.Patwardhan for the Respondent No.1 CORAM : D.K.DESHMUKH & CORAM : D.K.DESHMUKH & CORAM : D.K.DESHMUKH & R.Y.GANOO, JJ. R.Y.GANOO, JJ. R.Y.GANOO, JJ. DATED : 11th June, 2008. DATED : 11th June, 2008. DATED : 11th June, 2008. JUDGMENT (Per R.Y.Ganoo, J.) JUDGMENT (Per R.Y.Ganoo, J.) JUDGMENT (Per R.Y.Ganoo, J.) 1. These two petitions are being disposed off by a common judgment as the point involved therein is common. 2. For the purpose of disposing of these two petitions it would be proper to state few facts which are relevant. The petitioner No.1 is a limited company which had engaged itself in hotel business. The petitioner Nos.2 to 4 are the guarantors. Respondent No.1 is a bank who had advanced loan to the petitioner No.1. The -2- respondent No.1 had agreed to advance loan to the petitioner No.1 for the purpose of carrying on its business and the total loan which was sanctioned was to the tune of Rs.44.92 lakhs. The equity ratio stipulated was 65:35. The respondent No.1 from time to time advanced loan to the petitioner No.1 and it was the responsibility of the petitioner No.1 to get margin money to the extent of 35%. The petitioner No.1 failed to comply with its monetary obligation and that is why the respondent No.1 filed a Special Civil Suit No.644 of 1994 in the Court of Civil Judge, Senior Division, Kolhapur. The said suit was contested by the petitioners and written statement came to be filed disputing the claim of the respondent No.1. The petitioner No.1 filed counter claim in the suit filed by the respondent No.1 for recovery of Rs.1,39,31,910/- on the ground that the respondent No.1 did not advance money from time to time as agreed and that resulted in not completing the project in time. According to the petitioner No.1, the petitioner No.1 suffered losses as the business could not be carried out in time. This counter claim came to be filed on 18.1.1996. It was allowed on 21.4.1997 and as the Court fee was not -3- originally paid on the counter claim, the court fee came to be paid on 3.7.1999. 2. After the establishment of Debt Recovery Tribunal, the Civil Suit filed by the respondent No.1 came to be transferred to the Debt Recovery Tribunal, Pune (for short DRT). The said claim of the respondent No.1 came to be numbered in the DRT as OA No.122-P/2001. The DRT decided the claim of the respondent No.1 by judgment and order dated 2nd May, 2002 and issued recovery certificate in favour of the respondent No.1 for recovery of Rs.36,13,567.20 and granted interest at the rate of 15% per annum with quarterly rest from the date of the application i.e. 24th November, 1994 till realisation of the amount. Cost of the application was also awarded. Charge of the said amount was ordered to be kept on the property hypothecated/mortgaged in favour of the applicant. Right of redemption was ordered to be extinguished three months after the date of the said Order. The counter claim filed by the petitioner No.1 was dismissed. -4- 3. Being aggrieved by this judgment and Order dated 2nd May, 2002 passed by DRT, two appeals came to be filed on behalf of the petitioners against the respondent No.1 before the Debts Recovery Appellate Tribunal (for short Appellate Tribunal) being Appeal No.89 of 2002 and Appeal No.108 of 2003. These appeals were heard and decided by the learned Member of the Appellate Tribunal and by judgment dated 15th October, 2003 the learned Member of the Appellate Tribunal dismissed the appeals thereby confirming the judgment and Order dated 2nd May, 2002 passed by the DRT. 4. Being aggrieved by the aforesaid two orders the petitioners have filed these two petitions. The petitioners have prayed that the order passed by the DRT as well as the Appellate Tribunal should be set aside. 5. We have heard learned Advocate Mr. Bobade appearing on behalf of the petitioners and learned Advocate Mr.Patwardhan appearing on behalf of the respondent No.1. With the assistance of the learned Advocates of both sides we have gone through the record, and in particular the judgments -5- impugned in the present writ petitions. In so far as grant of claim in favour of the respondent No.1 to the extent of Rs.36,135,67.20 we wish to express that the DRT as well as the Appellate Tribunal have considered the evidence placed before the Tribunal in its proper perspective and have rightly arrived at a conclusion that the petitioners have failed to comply with its monetary obligations and that is how respondent No.1 was entitled to claim Rs.36 lakhs and odd as set out in the Recovery Certificate. 6. The petitioner No.1 claimed that the respondent No.1 did not comply with its obligation of releasing the funds from time to time and that resulted in disturbance in the work schedule of the petitioner No.1. As against this, it is the stand of the respondent No.1 that the petitioner No.1 was not paying the margin money from time to time as per the Agreement of loan and that is how the respondent No.1 cannot be held responsible for not advancing money from time to time. In our view, the learned Member of the DRT as well as the learned Member of the Appellate Tribunal have rightly gone into the relevant questions and have -6- rightly granted Recovery Certificate. To that extent, there is no need to interfere with the Order dated 2nd May, 2002 passed by the DRT and the Order dismissing the appeals dated 15th October, 2003. 7. The next point which was raised by the learned Advocate for the petitioners was with regard to the rejection of the counter claim by the DRT. In so far as this aspect is concerned, perusal of the judgement of DRT would go to show that the learned Member of the DRT came to the conclusion that the counter claim was filed by the petitioner No.1 beyond the period of limitation and was required to be rejected. It is noticed that the DRT considered the counter claim on merits also and gave a finding that the counter claim can not be granted. We have considered the judgment delivered by the DRT. In so far as the observations of the DRT that the counter claim was beyond the period of limitation , we are unable to agree with the said finding. It is the case of the respondent No.1 that the cause of action arose to the petitioner No.1 on 7th November, 1994 and it is contended by them that the counter claim should -7- have been filed within three years from 7th November, 1994. It is pertinent to note that counter claim came to be filed on 18th January 1996 and the learned 2nd Joint Civil Judge, Senior Division had granted the said counter claim by order dated 21th April, 1997. It is noticed that the petitioner No.1 had not deposited the court fee at the time of filing of the counter claim and thereafter by Order passed by the learned 2nd Joint Civil Judge, Senior Division, Kolhapur, the Court fee was directed to be paid, and the Court fee was paid on 3rd July, 1998. It is seen that the DRT had come to the conclusion that because the court fee came to be paid on 3rd July, 1998 the counter claim is beyond the period of limitation. This observation of the learned trial Judge is not proper. Once the counter claim was filed by the petitioner No.1 on 18th January, 1996 and more so when it was allowed on 21st April, 1997 such a counter claim was in any case within three years from 7th November, 1994 and as such the said counter claim was within the period of limitation though the court fee came to be paid afterwards i.e. on 3rd July, 1998. In our view, the date on which the court fee came to be paid should not been -8- considered. With these observations we hold that the counter claim was filed within the period of limitation. 8. Now we deal with the merits of the said counter claim. The petitioner No.1 had examined Mr.Suryakant Patil on their behalf. The petitioners have claimed loss of income which is projected for the year 1991-1992 and 1995-1996 after repayment of loan regularly as as 5187910.00. The discussion as to how the calculation for counter claim were made is found in the Judgment of the DRT while deciding point No.3. Perusal of the same would clearly go to show that the DRT had rightly observed that the petitioner No.1 had not placed before the Court material in terms of cogent evidence to show that the petitioner No.1 suffered losses on account of the conduct on the part of the respondent No.1. The learned Member of the DRT has rightly considered the aspect as regards non placing of appropriate material before it and has rightly observed that the counter claim put up by the petitioner No.1 was not properly substantiated and that the counter claim can not be granted on hypothetical figures. Having considered the -9- figures and the reasoning given by the DRT we are in agreement with the said reasoning. In order to claim loss of income it was absolutely necessary for the petitioner to place before the Court cogent evidence as to how they have suffered losses. The Petitioners have placed before the DRT certain figures which were hypothetical and there was no supporting evidence. It is in these circumstances, the counter claim put up by the petitioner No.1 was rightly rejected by the DRT and that the finding of the DRT was rightly confirmed by the Appellate Tribunal. 9. With the aforesaid discussion we have no hesitation in confirming the judgment and order passed by the DRT to the extent of the claim to the tune of Rs.36 lakhs and odd amount. We also confirm the order of DRT by which the counter claim was rejected. 10. The next point which was raised by the learned advocate for the petitioners was in regard to charging the interest on the amount which was advanced from time to time. It was argued by the learned advocate for the petitioners that the -10- charging of interest at 15% per annum with quarterly rest was incorrect and in any case DRT ought not have granted interest at the rate of 15 % per annum with quarterly rest from the date of application till realisation. Learned Advocate Mr. Patwardhan appearing on behalf of respondent No.1 opposed this submission and pointed out that in terms of Deed of Mortgage dated 5th February, 1989, the petitioners had agreed with respondent No.1 that petitioners shall pay the principal amount with interest at the rate of 15% per annum and consolidated service charges at 1% per annum at quarterly rest. The learned Advocate appearing on behalf of the respondent No.1 contended that if there has been an agreement between the parties to pay interest at quarterly rest, the DRT as well as the Appellate Tribunal were right in granting interest at the rate of 15% per annum with quarterly rest. In so far as this aspect is concerned, we have noted that interest was agreed to be paid at quarterly rest. This is so on the basis of Deed of Mortgage. A copy of Mortgage Deed was made available to the Court in the course of hearing of this Writ Petition. It is seen that the Deed of Mortgage specifies the rate of interest at -11- 15% per annum at quarterly rest. It is also seen that a promissory note came to be executed by the petitioner No.1 on 8th February, 1991 wherein the rate of interest specified was 15% per annum with quarterly rest. If this be so, it cannot be disputed by the petitioners that the rate of interest agreed between the parties was 15% per annum with quarterly rest. The question is whether the judgment and order dated 2nd May, 2008 as regards granting interest at the rate of 15% per annum at quarterly rest from the date of application till date of realisation needs to be confirmed. In this connection we have considered the provisions of Section 34 of the Code of Civil Procedure and we are inclined to give benefit of discretion conferred upon the Court to the petitioners with reference to the question of grant of interest after the date of passing of the decree namely 2.5.2002. It is true that the petitioners had agreed to pay interest at the rate of 15% per annum at quarterly rest as per the Mortgage Deed. It is required to be mentioned that in the impugned Order dated 2.5.2002, there is no specific discussion as to why the DRT granted interest at the rate of 15% per annum with quarterly rest from -12- the date of application till realisation. In our view, considering the nature of the transaction and the fact that presently the Petitioners are in heavy losses and have not been able to run their business in profitable manner, in the peculiar facts and circumstances the petitioner need not be saddled with interest at the rate of 15% per annum with quarterly rest, particularly with regard to the period after the passing of the Order dated 2nd May, 2002 till realisation. In our view, if the interest at the rate of 15% per annum with quarterly rest is ordered to be paid upto the date of judgment and Order dated 2nd May, 2002 and thereafter at the rate of 15% per annum i.e. from the date of judgment till realisation, it would meet the ends of justice. 11. For the reasons mentioned aforesaid, we are inclined to modify the judgment and Order dated 2nd May, 2002 in the above terms and dispose of these two writ petitions. Hence the following order is passed. ORDER ORDER ORDER -13- The Order dated 15th October, 2003 passed by Debts Recovery Appellate Tribunal at Mumbai in Appeal No.89 of 2002 and 108 of 2003 is set aside and in place of Judgment and Order dated 2nd May, 2002 passed by the Debt Recovery Tribunal, Pune in Proceeding OA No.122-P/2001 the following Order is substituted. . Issue Recovery Certificate in favour of the applicant for recovery of Rs.36,13,567.20 together with the interest at the rate of 15% per annum with quarterly rest from the date of application i.e. 24th April, 1994 till 2nd May, 2002 and thereafter at the rate of 15% per annum from 2nd May, 2002 till the realisation of the amount and for the cost of the application from the opponents. . Charge of the said amount is kept on the property hypothecated/mortgage in favour of the applicant. . Right of Redemption shall stand extinguished three months after the date of this order. -14- . The counter claim made by the opponent stands dismissed. . This Order shall form part of the Recovery Certificate. . Writ petitions stand disposed of as above with no order as to costs. (D.K.Deshmukh, J.) (D.K.Deshmukh, J.) (D.K.Deshmukh, J.) (R.Y.Ganoo, J.) (R.Y.Ganoo, J.) (R.Y.Ganoo, J.) -15-