Andhra Bank, Sultan Bazar, Hyderabad Vs. M/S. Manney Industries and Others - Court Judgment

Excerpt:
banking - sick unit - sections 34 and 96 of code of civil procedure, 1908 - appellant bank failed to recover money lent to respondents who became sick unit - suit filed by appellant and decreed by lower court for original amount with 6 percent interest - appellant aggrieved by interest filed application before high court - court having discretion in matter to be exercised judiciously - circumstances show that unit became sick immediately after commencement and not earned any income or yield - held, grant of 6 percent interest from date of suit upto realization is justified. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - since the appellant-plaintiff failed in recovering the amount due, filed the suit and the court below after considering the evidence granted decree for the original amount that has been claimed and with interest at 6% p. a person who has contractedparticular rate of interest, having failed inrepaying the amount due on the ground ofimproper utilisation, cannot be allowed toclaim minimum rate of interest from the dateof institution of the suit. normally, this court would not interfere with the discretion exercised by the lower court regarding the rate of interest provided it satisfied the reasons that have'been given by it are sound and reasonable. but despite that notice, the appellant failed to pay back the amount illegally collected from the respondent. ' in the special circumstances of the case, as found by the court below, which are sound and well founded, granting interest at 6% p.1. the plaintiff in os no. 185/83 on the file of the addl. dist. judge, rangareddy district at begumpet, secunderabad is the appellant herein and the present appeal is preferred against the judgment and decree in os no, 185/83. the appellant-plaintiff is a nationalised bank viz. andhra bank, sultanbazar branch, hyderabad, filed a suit for recovery of a sum of rs. 9,49,137-54 and they sought a decree against d1 to d7 (respondents 1 to 7) who are the partners and also against d8 (respondents herein) who created an equitable mortgage. the fact of amount that was lent to the sick unit which was meant for commercial purpose is not in dispute. the default committed by the respondent-defendants is also not in dispute. since the appellant-plaintiff failed in recovering the amount due, filed the suit and the court below after considering the evidence granted decree for the original amount that has been claimed and with interest at 6% p.a. from the date of suit till the date of realisation. while granting the decree with interest at 6% p.a. the lower court relied upon the decisions reported in s.p. majoo v. gangadhar, : [1969]3scr33 , jaigobind singh v. lachminarain, air 1940 fc 20; and also p.o. rao v. andhra bank ltd., : air1973ap245 . the appellant-bank being aggrieved that as it is a commercial transaction and as the amount that has been lent is only for commercial purpose and while the agreed contractual rate of interest is at 17% p.a. it is contended that the court below ought not have granted interest at 6% p.a. from the date of suit till the date of realisation.2. granting of interest subsequent to the filing of the suit as contemplated under s. 34 of code of civil procedure is discretionary one. the court may as per the proviso to section 34, cpc, which read as follows:'whether the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed at 6% per annum, but shall notexceed contractual rate of interest or wherethere is no contractual rate, the rate at whichmoneys are lent or advanced by nationalisedbanks in relation to commercial transactions.'on a reading of this proviso it can never be said that the court can grant only 6% p.a. interest from the date of institution of the suit, though the discretion has to be exercised judiciously. the discretion can be exercised on the basis of the proviso by granting interest from 6% p.a., to the contractual rate that has been entered into between the parties concerned. in this case, sufficient reasons have been given by the court below as to why interest at 6% p.a., from the date of suit till the date of realisation was granted. in a decision reported in p.g. rao v. andhra bank limited (supra) a divisional bench of this court is of the view that:'in suit for redemption the courts are under no obligation to award interest at the contractual rate after the date of redemption, even though that rate is not penal or excessive. award of interest for period subsequent to the date of the suit is discretionary with the courts.'the division bench relied upon the supreme court decision reported in s. p. majoo v. gangadhar (supra). the supreme court in turn relied upon the decision reported in jaigobind singh v. lachminarain (supra) wherein they have held that it is not absolutely obligatory on the courts to decree interest at the contractual rates after the dates of redemption in all circumstances even if it is not penal, excessive or substantially unfair and the courts have got discretion so far as interest payable subsequent to the date of the suit is concerned.3. the courts, undoubtedly, have got discretion but that discretion has to be exercised basing on the facts and circumstances that has been brought out therein. it is not an absolute rule that even in the case of commercial transactions where the amount lent for commercial purpose, the court must grant interest only 6% p.a. from the date of suit. ample discretion has been given to thecourts and the court is competent to grant, incommercial transactions, further interestwhich may exceed 6% p.a. but shall notexceed contractual rate of interest. if thecontract rate is 17% p.a., and the transactionis for commercial purpose, when there are nosufficient reasons for reducing the same,granting of interest at 6% p.a. from the date ofsuit till the date of realisation is ordinarilyunjustified. a person who has contractedparticular rate of interest, having failed inrepaying the amount due on the ground ofimproper utilisation, cannot be allowed toclaim minimum rate of interest from the dateof institution of the suit. if it is so every personwho contracted with higher rate of interestbut defaulted will exercise that option thoughthe amount borrowed (was) for commercialpurpose.4. this bench is of the view that the discretion has to be exercised judiciously and supported by reasons for granting interest at 6% p.a. from the date of filing of the suit or rate higher than 6% p.a., and below the contractual rate of interest. in this case the unit has become sick immediately after jts commencement and thereafter they could not pay the due amount and another person has taken over the unit and created an equitable mortgage and so under these circumstances and taking into consideration that they have not earned any yield or profit out of the transactions even from the inception of the unit itself and in view of the fact that the unit had become sick immediately after its commencement, the learned judge thought it fit and granted interest at 6% p.a., from the date of suit till the date of realisation. normally, this court would not interfere with the discretion exercised by the lower court regarding the rate of interest provided it satisfied the reasons that have'been given by it are sound and reasonable. we fortified our view even by the decision reported in state of m.p. v. nathabhai desaibhai, : air1972sc1545 , wherein the supreme court took into account the conduct of the parties and the reasons given by them which are as follows:'coming to the question of interest subsequent to the date of the institution of the suit, it was found that the appellant had unlawfully withheld the amount due to the respondent even after coming to know that the collection made was an illegal one. before instituting the suit, the respondent had issued a notice to the appellant, calling upon the appellant to pay the money illegally collected from it; but despite that notice, the appellant failed to pay back the amount illegally collected from the respondent. that being so, in our opinion, the high court was jusitified in awarding interest on the principal' amount from the date of the suit.'in the special circumstances of the case, as found by the court below, which are sound and well founded, granting interest at 6% p.a. from the date of filing of the suit till the date of realisation is perfectly justified and does not warrant any interference by this court.5. the appeal is dismissed accordingly. there shall be no order as to costs.6. appeal dismissed.