Narayanan Kochukunju and Another vs John Thomas and Others

Sankaran J.

Defendants 1 and 2 are the Appellants. In resisting the Plaintiffs'' suit for recovery of the moneys due under Ex. A hypothecation bond, these Defendants had contended that the interest claimed in the plaint is excessive and that Plaintiffs are entitled to claim only the principal amount together with a moiety of the same by way of interest up to the date of the suit. The rate at which the interest was calculated by the Plaintiffs was also objected to. The lower Court repelled these contentions and gave a decree to the Plaintiffs for recovery of the plaint amount with interest from the suit properties. Defendants have, therefore, come up in appeal.

The execution of Ex. A bond as well as the liability under it are admitted by the contesting Defendants who are the Appellants. Their main contention i3 about the calculation of the interest due to the Plaintiffs. In the plaint calculation, the arrears of interest for each year have been added on to the principal and subsequent interest is calculated for the total amount. Plaintiffs adopted this kind of calculation on the strength of the provision contained in Ex. A that the arrears of interest will also be treated as principal carrying further interest. Plaintiffs cannot take advantage of such a provision contained in the bond so as to claim compound interest which is prohibited under law. Ho doubt, the parties are at liberty to enter into a contract that the interest due at the end of each year would be treated as a separate principal by itself carrying further interest at the stipulated rate. In such a case the amount duo by way of arrears of interest for each year would be treated as a fresh loan. The necessary consequence is that the interest due on such amounts also will have to be limited to a moiety up to the date of the suit as per Travancore CPC , Section 81. This position is now conceded on behalf of the Respondents also. The ruling in Philiippose v. Geevarhhese Kathanar 29 T.L.J. 1276 is also to the same effect. Accordingly we uphold the Appellants'' contentions that in calculating the amount due to the Plaintiffs on the date of the suit, the interest on the principal amount for each year from the date of Ex. A up to the date of the suit has to be treated as a separate principal amount and that the interest on such sums has to be separately calculated subject to the limitation imposed by Travavancore CPC - Section 31.

The second point urged on behalf of the Appellants is that even though the stipulation in Ex. A is to pay interest at 12 per cent, they are bound to pay interest only at 8 per cent, for the period subsequent to 23-5-1112 on which date the Agriculturists'' Belief Act of Travancore AIR (III [3] of 1112) came into force. In order that the Appellants could get the benefit of that Act, it is necessary for them to establish that they are agriculturists as defined in that Act. But it is seen that these Defendants bad not set up any such definite plea in their written statement. No one of them has gone into the box to give evidence that they are agriculturists as defined in the Act. Under such circumstances, the plea that interest has to be limited to 6 per cent on the strength of the Agriculturists'' Relief Act has necessarily to be negatived.

Then there is the contention that interest from 1-12-1116 onwards bad to be limited to i per cent, because the debt is one to which the Debt Belief Act of Travancore (11 [3] and III [3] of 1116) applies. Plaintiffs'' answer to this contention is that the debt due under EX. A is one which is exempted from the operation of the Debt Relief Act. It is clear from Ex. A that the debt represents the balance of purchase money due to the hypothecates who had sold the first two items in the bond to the hypothecators. For such balance of purchase money, the vendor had undoubtedly a lien on the properties sold. The only question for decision is whether such lien has been extinguished or abandoned by him when he accepted Ex. A hypothecation bond from the vendees. The bond expressly recites that the consideration represents the balance of purchase money due to the hypothecatee. There is nothing in Ex. A to indicate that the Defendants had any intention that by the execution of the bond the vendor''s lien was to be extinguished or abandoned. The mere fact that the vendor accepted the security of an additional item also for the amount due to him by way of balance of purchase money when he took Ex. A bond from the vendees, does not mean that the vendor''s lien is displaced or lost. The new contract embodied in EX. A is not in any way inconsistent with the subsistence of the lien in favour of the vendor in respect of the amount due to him as balance of purchase money. Accordingly, we uphold the Plaintiffs'' contention that the debt due under Ex. A is one to which the Debt Relief Act does not apply. It follows, therefore, that Plaintiffs are entitled to claim interest at the contract rate.

On behalf of the Respondents, a statement has been filed in this Court showing the correct amount due on the date of the suit. The calculation made in that statement is in accordance with the principle laid down in 29 T. L. J. 1275 already referred to. That statement is, therefore, accepted as correct and the amount due to the Plaintiffs on the date of the suit is fixed as Rs. 1470-8-10. To the extent the p''aint amount is thus reduced, the Appellants have succeeded in their contentions.

In the lower Court both the parties have been directed to suffer their respective costs. On behalf of the Respondents, an objection memorandum has been filed in this Court where in it is contended that the lower Court erred in disallowing Plaintiffs'' costs. The objection memorandum was tiled only on 31-8-1960 and as such it is a belated one. Apart from this aspect of the matter, we are. not satisfied that there is any valid ground for this Court to interfere with the lower Court''s exercise of it. discretion in respect of the direction regarding costs. It is to be remembered that the Defendants contested the suit only in respect of the excessive nature of the amount claimed by the Plaintiffs by way of interest. They have also substantially succeeded in that contention. It is further seen that along with the written statement they had deposited in Court on 80-12-1119, the amount which they admitted to be due to the Plaintiffs. Under these circumstance, the lower Court''s direction that the parties should suffer their respective costs does not call for any interference. Accordingly Plaintiffs objection memorandum is dismissed.

In the result this appeal is allowed only to the extent indicated above and the lower Court''s decree is modified by fixing the amount due to the Plaintiffs as Rs. 1470-9-10. The principal amount due under Ex. A will carry interest at 9 per cent from the date of the suit to the date of the decree. Subsequent interest on the aggregate will be at 6 per cent. The amount deposited by Defendants in Court on 80-12-1119 will be duly credited and the same deducted from the amount decreed in favour of the Plaintiffs. Subject to these modifications, the lower court''s decree is confirmed. Plaintiffs'' objection memorandum is dismissed. In the circumstances of this case, the parties are to suffer their respective costs of this Court also.