IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 15TH JUNE 2009 / 25TH JYAISHTA 1931 AS.No. 919 of 1997() -------------------- OS.479/1995 of PRINCIPAL SUB COURT,ERNAKULAM .................... APPELLANT(S): DEFENDANT: --------------------------------------------- THOMAS NINAN, AGED 58 YEARS, S/O.P.N.THOMAS, COST ACCOUNTANT, PERLACHIRA, VYLOPPILLY LANE, AZAD ROAD, KALOOR, ELAMKULAM VILLAGE, COCHIN – 682 017. BY ADVS. MR.V.M.KURIAN, MR.MATHEW B.KURIAN, MR.A.V.THOMAS, MR.E.K.DIL RAJ. RESPONDENT(S): PLAINTIFF: -------------------------------------------- THE VYSYA BANK LTD., M.G.ROAD, ERNAKULAM, REPRESENTED BY THE BRANCH MANAGER. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 15/06/2009,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss K. SURENDRA MOHAN, J ------------------------------------------------------------ A.S. NO:919 OF 1997 ----------------------------------------------------------- Dated this the 15th June, 2009. JUDGMENT This is an appeal filed by the defendant in a suit for recovery of money. The defendant challenges the judgment and decree of the Sub Judge, Ernakulam in O.S.479/1995. As per the decree, an amount of Rs.40,993.55 has been allowed to be recovered with 6% interest on Rs.13,296.55 from the date of suit till payment and costs against the appellant/defendant. 2. The appellant/defendant was a member of the Investors Club of the respondent-Bank. He was utilizing the facilties of the club for buying and selling shares. On his request, the plaintiff- bank purchased 300 shares of Messrs. Sanghi Polysters Ltd on 13.4.1992 at Rs.125.85 per share. The total value of the shares purchased was Rs. 37,775/-. The appellant was requested to pay the said amount with service charges of Rs.377.55 totalling an amount of Rs.38,132.55. As per the practice of the Investors Club the amount was debited in the Special Savings Bank Investment Account of the defendant. The defendant failed to pay off the amount in spite of repeated demands. Therefore a Lawyer's notice was issued to him demanding the amount. He did not sent a reply, A.S.919/1997 2 nor did he pay the amount due. Therefore, the suit was instituted claiming interest at the rate of 24% per annum. 3. The appellant/defendant filed written statement and contested the suit. He admitted that he was a member of the Investor's Cub. The shares of Messrs. Sanghi Polysters were sold by the plaintiff in 1994 without informing the defendant. If those shares had been sold in April 1992 as instructed by the defendant, there would have been no liability for the defendant. According to him, there was no agreement for charging interest at the rate charged for overdraft bills for the amount standing overdrawn in the account of the defendants. Therefore, he disputed the liability to pay any interest. According to him the defendant was not doing business in shares but was only investing on long term basis. Therefore, he prayed for dismissal of the suit. 4. On the above pleadings, the court below framed five issues and tried the suit. Exts.A1 to A10 and B1 and B2 documents are marked in the suit. There is no oral evidence. 5. The court below considered the contentions of the rival parties and came to the conclusion that the amount of interest charged at the rate of 24% per annum was not excessive but was in accordance with the circular of the Reserve Bank of India applicable A.S.919/1997 3 to such transactions. Therefore, the suit was decreed for the amount shown in the plaint. But from the date of suit, interest at the rate of 6% only has been decreed. The appellant has filed this appeal against the said judgment and decree. 6. I have heard learned counsel for the appellant and the respondent. According to the learned counsel for the appellant, interest charged is excessive and he is not liable to pay the same. The appellant had not agreed to any particular rate of interest. Therefore, interest at the rate of 6% only can be charged. Counsel for the appellant referred to Ext.B2 document and submitted that Investors Club was a non-banking activity to which circulars and guidelines issued by the Reserve Bank of India are not applicable. What is mentioned in the second paragraph of Ext.B2 is that the idea of Investors Club which is totally a non-banking activity was mooted with an intention to serve the Investors Community etc. Therefore what is mentioned in Ext.B2 is that the activity of the Investors Club is a non-banking activity. But, in the present case, as per Ext.A10 purchase order, the bank has purchased shares on behalf of the appellant, utilizing its own funds. The purchase value of the shares also was debited to the account of the appellant. The above activity of financing or advancing the purchase price of the A.S.919/1997 4 shares purchased for the appellant is definitely a banking acttivity. Therefore, the circulars issued by the Reserve Bank of India are no doubt applicable to the said transaction. 7. It has been noted by the Court below that the amount demanded is not disputed by the appellant in his written statement. He also does not dispute the accounts maintained by the bank. The only contention in the written statement is that if the shares had been sold in April 1992 it would have fetched a better price. However, there is no evidence or material produced to show that the appellant had in fact given any such instructions to the Bank and that the Bank had not complied with the same. Therefore, the said contention has been rightly rejected by the court below. 8. Since it has been found that the circulars or guidelines issued by the Reserve Bank of India stipulating the rates of interest applicable from time to time, are applicable to the transaction between the appellant and the respondent, the respondent/bank is entitled to claim interest at the rate of 24%. The appellant has not disputed that the rate of interest claimed by the Bank is not the actual rate applicable as per the circular issued by the Reserve Bank of India. Therefore, the Court below has granted a decree for the amount claimed in the plaint. I find no reason to interfere with A.S.919/1997 5 the said decree. The Court below has decreed the suit for an amount of Rs.40,993.55 and interest at the rate of 6% per annum on Rs.13,296.55 from the date of suit till date of payment, with costs. There are no grounds to interfere with the said decree. The appeal therefore fails and is dismissed. No costs. K. SURENDRA MOHAN Judge jj A.S.919/1997 6 K. SURENDRA MOHAN, J. -------------------------------- A.S.NO: 919 OF 1997 ------------------------------- JUDGMENT Dated: 15th June, 2009.