JUDGMENT
R.D. Shukla, J.
1. The appeal is directed against the judgment and decree dated April 28, 1993, of III Additional District Judge, Dewas, passed in Civil Suit No. 19-B of 1992, whereby the plaintiff’s suit for recovery of Rs. 3,60,931.80 paise has been decreed with a direction of payment of interest at 14 per cent, per annum from the suit till realisation of the same with a further direction for recovery by sale of property pledged.
2. This appeal has been filed by the defendants challenging the rate of interest with a further prayer of grant of instalments. The main decree in the case has not been challenged.
3. The plaintiff’s case, in brief, is that the plaintiff-bank granted a cash credit hypothecation facility of limit up to Rs. 50,000 to defendant No. 1 at the request of defendant No. 2. A demand promissory note exhibit P-23 was executed. The defendants were granted cash credit facility of Rs. 1,00,000, vide promissory note exhibit P-30 and further OBD facility of Rs. 50,000, vide exhibit P-21. The defendants further executed a document, letter of undertaking exhibit P-31. A letter of hypothecation exhibit P-27 was also executed. The defendants obtained the loan, but failed to pay. As per the bank’s accounts Rs. 3,60,931.80 paise was found due against the defendants, vide exhibit P-52.
4. The defendant’s case, in brief, is that the defendant applied for grant of facility of loan of Rs. 2,00,000 on February 3, 1983, and, thereafter, for grant of facility of Rs. 4,00,000 on April 15, 1983, for reviving the sick business but as the same was not granted by the bank and the defendant had no working capital, he had to incur losses and the industrial unit came to a close. The rate of interest was also disputed. It was further prayed that the industrial unit started by the defendants became sick because of non-co-operation by the bank and, therefore, the bank is not entitled to get any money from the defendants.
5. After finding almost all the issues in favour of the plaintiff, the learned trial judge granted the decree, as above. Hence, this appeal.
6. The contention of learned counsel for the appellants is that the question whether interest should be awarded on the principal amount claimed from the date of suit is within discretion of the court and, therefore, as the bank itself was the defaulter by not granting and extending the credit limit, they should not be allowed interest as claimed. Learned counsel placed reliance on a case in AIR 1970 SC 1545.
7. We are in agreement with the principle enunciated therein, but in that case the money awarded was illegally retained. This is not the case here. The money was actually advanced to the defendants, who failed to pay and a person who is a defaulter cannot claim extension of the limit and further cannot be allowed to claim exemption from payment of interest as the credit limit was not extended and he had no working capital which resulted in closure of the industrial unit.
8. Learned counsel, thereafter, submitted that the agreement with respect to interest was on the amount actually advanced and, therefore, the plaintiff-bank is not entitled to get the interest from the date of suit. It was also submitted that the interest awarded, i.e., 14 per cent, per annum is on the higher side.
9. As against it, learned counsel for the plaintiff-respondent has submitted that the provisions of Order 22, rule 11, Order 34, rules 4 and 5 and Section 151 of the Code of Civil Procedure do not apply to amounts advanced on mortgage of movables. Disputing the claim of the appellants as to the grant of instalments it has further been submitted that as the recovery of money due is to be done by attachment and sale of property hypothecated to the bank and, therefore, instalments cannot be granted under the inherent powers of the court.
10. As the fact of quarterly “interest” rests and the compound interest was challenged, though, with feeble voice, it has been submitted by learned counsel for the respondent that the quarterly interest is in consonance with banking practice.
11. We were taken through the evidence on record. There is no dispute that the rate of interest agreed was 15 per cent, per annum. The plaintiff has pleaded this fact in para 3(1) of its plaint. The same has not been specifically denied by the defendants in the written statement. This amounts to admission.
12. The learned trial judge has granted only 14 per cent, interest from the date of suit till realisation of the same. This discretion has been exercised in favour of the defendants. In fact, the money was advanced for running an industrial unit. The property was hypothecated and, therefore, the normal mode of recovery would be attachment and sale of the property so hypothecated. In such a situation, the grant of facility of instalments cannot be accepted (See United Bank of India v. New Glencoe Tea Co. Ltd. [1987] 62 Comp Cas 762 (Cal) and AIR 1987 Guj 29). So far as the compound interest is concerned, it can be mentioned here as the loan transaction was commercial, therefore, in such a situation the contractual rate of interest can be awarded. It may further be observed that the quarterly interest is further a normal bank practice and, therefore, the same cannot be said to be illegal (see [1987] 1 MPLR 83). In such commercial transaction of present days where inflation is the normal rule interest at 18 per cent, per annum on commercial transaction cannot be said to be usurious or illegal (F. A. No. 270/94(1), decided on February 2, 1995). Even otherwise the defendant has not deposited money in instalments. Only Rs. 50,000 has been deposited towards the decretal amount. Thus, we do not find bona fides on the part of the defendants as to the payment of the decretal amount. Under these circumstances, it would not be proper to grant the facility of instalments.
13. As a result, the appeal fails and is dismissed with costs. Counsel fee Rs. 1,000.