APHC010191392009 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3367] FRIDAY,THE TENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE V SRINIVAS FIRST APPEAL NO: 223/2009 Between: SANDIREDDY VENKATA SUBBA REDDY, S/O. BALI REDDY R/O. BALAJINAGAR, NELLORE. ...APPELLANT AND 1. UMMAREDDY PUSHPAVENAMMA, W/O. MASTAN REDDY BALAJI NAGAR, NELLORE. PRESENTLY RESIDING AT CHENNAREDDY PENCHALA REDDY, DOOR NO. G-117, SIMHAPURI CENTRE, 2. MANJULA BHAI, W/O. KAILASH KUMAR JAIN, AGE NOT KNOWN R/O. 14/66, KAPU STREET, NELLORE DISTRICT. 3. MADDINA VENKATESWARLU NAIDU, S/O. KOTAIAH R/O. 26/404, POSTAL COLONY, NELLORE. (R2 AND R3 ARE NECESSARY PARTIES IN THIS APPEAL VIDE COURT ORDER DATED 9.4.25 IN I.A.NO.2 OF 2016 (MEMO) IN A.S.NO.223 OF 2009. ...RESPONDENT(S): Aggrieved by the decree and Judgment in O.S.No.49 of 2004 on the file of II Additional Senior Civil Judge, Nellore dated 29-1-2009. IA NO: 1 OF 2008(ASMP 9173 OF 2008 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased IA NO: 1 OF 2009(ASMP 337 OF 2009 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, 2 the High Court may be pleased to take up the order dated 15-12- 2008 in ASSR.No. 5727 of 2008 directing the office to return the appeal for presentation before the appropriate court, for being mentioned, to direct the office to entertain the appeal in view of the value of the appeal being Rs.8,50,956.81 paise and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. IA NO: 2 OF 2009(ASMP 338 OF 2009 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to condone the delay of 98 days in representing the ASSR.No. 5727 of 2008 and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. IA NO: 3 OF 2009(ASMP 339 OF 2009 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the time till 19-2-2009 for payment of the deficit court fee delay of 242 days in payment of Rs. 7,920/- and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. IA NO: 1 OF 2016(ASMP 200 OF 2016 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased expedite the hearing of AS No.223/2009 by fixing an early dated for the disposal of appeal IA NO: 2 OF 2016(ASMP 10322 OF 2016 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased 3 Counsel for the Appellant: CHAMARTHY LEELA SRINNIVASA VARMA Counsel for the Respondent(S): 1. MADHAVA RAO NALLURI 2. A JAYANTHI The Court made the following: JUDGMENT: This regular appeal under Section 96 Code of Civil Procedure (hereinafter referred to as ‘CPC’) is directed against the decree and judgment in O.S.No.49 of 2004 dated 29.01.2008 on the file of the Court of learned I Additional Senior Civil Judge at Nellore. 2. The plaintiff, before the Trial Court, is the appellant herein. The respondents herein are the defendants. 3. The appellant instituted the suit against the respondents for recovery of an amount of Rs.3,89,227/- with interest based on Ex.A.1 mortgage deed dated 10.08.1994 and costs. 4. Before adverting to the material and evidence on record and nature of findings in the judgment of the Trial Court, it is 4 necessary to scan through the case pleaded by the parties in their respective pleadings. 5. The case of the plaintiff/appellant in brief in the plaint was as follows: i). On 10.08.1994, the defendant No.1 borrowed an amount of Rs.50,000/- from the plaintiff by executing Ex.A.1 simple mortgage deed agreeing to repay the same with compound interest in yearly rests at 24% per annum on or before 10th of every month and if she failed to pay the same, the plaintiff is entitled to charge penal interest and the defendant No.1 executed mortgage deed with an intention to create equitable mortgage over the suit schedule property on even date with the plaintiff covered under Ex.A.2 registered settlement deed dated 09.10.1989, handed over Ex.A.2 to the plaintiff. 5 ii). On 10.08.1994, the defendant No.1 also borrowed another sum of Rs.10,000/- by executing a promissory note. Inspite of repeated demands and even issuance of Ex.A.3 legal notice dated 09.08.2000 for repayment by the plaintiff, the defendant No.1 did not pay the amount due under Ex.A.1 registered mortgage deed. iii). Then the plaintiff came to know that the defendant No.1 sold the part of the schedule property in favour of 2nd defendant under Exs.A.5 and A.6 registered sale deeds, dated 29.05.1995 and 13.09.1995 respectively. The defendant No.2 executed Ex.A.7 power of attorney in favour of the defendant No.3 on 16.05.2003 in respect of the property purchased by her. Thereby, the defendant Nos.2 and 3 are added as proforma parties and no relief claimed against them. Hence, the suit. 6 6. The defendant No.1 denying the allegations in the plaint and contending in the written statement as follows: On 10.08.1994, she received Rs.10,000/- only from the plaintiff by executing a demand promissory note. After one year, she discharged the due amount. The interest claimed by the plaintiff at compound rate is not tenable, excessive, and absurd as well against the Rule of “Damdupat.” The mortgagee is entitled to collect simple interest on the mortgage amount. Hence, prays to dismiss the suit. 7. On these pleadings, the Trial Court settled the following issues and additional issue for trial: “1.Whether the borrowed amount of Rs.50,000/- on 10.08.1994 and executed registered mortgage deed on that amount are true, valid, and binding on the defendant? 2.Whether the suit is liable to be dismissed on the ground of execution of registered mortgage deed 7 covered under the registered settlement deed dated 09.10.1989? 3.Whether the interest claimed by the plaintiff at compound rate is not tenable and excessive and also absurd? 4.Whether the plaintiff is entitled for the suit amount as prayed for? and 5.To what relief?” Additional Issue: Whether the Rule of Danduput is applicable or not? 8. At the trial, on behalf of the plaintiff, P.Ws.1 and 2 were examined while relying on Exs.A.1 to A.7 in support of his contentions. On behalf of the defendant No.1, he was examined as D.W.1 and got marked Ex.B.1. 9. After evaluating the oral and documentary evidence, the Trial Court concluded that the first defendant had borrowed a sum of ₹50,000 from the plaintiff. To secure the loan, he executed a registered mortgage deed (Exhibit A.1) and deposited the settlement deed (Exhibit A.2), thereby creating an equitable mortgage over the suit schedule property. The 8 Court found that the plaintiff successfully proved his claim against the first defendant. However, the Court reduced the interest rate from the originally agreed compound interest of 24% per annum to a simple interest of 12% per annum until the expiry of the redemption period, and thereafter to 6% per annum until full realization of the amount. Accordingly, the suit was decreed in favor of the plaintiff. 10. It is against this decree and judgment, the appellant/plaintiff preferred this appeal. 11. Heard Sri Chamarthy Leela Srinivasa Varma, learned counsel for the appellant/plaintiff and Sri Y.Ramesh Babu, learned counsel representing Sri Madhava Rao Nalluri, learned counsel for the respondent No.1/defendant No.1. 12. Sri Chamarthy Leela Srinivasa Varma, learned counsel for the appellant/plaintiff, strongly contends that the first defendant is legally bound to pay interest as stipulated in the mortgage deed marked as Exhibit A.1. He argues that once the Trial Court accepted that the defendant had borrowed the 9 amount under Ex.A.1, it erred in reducing the agreed rate of interest, which is contrary to established legal principles. He further submits that the legal provisions relied upon by the Trial Court are not applicable to the present case, particularly in relation to altering the contractual terms of the mortgage deed concerning the rate of interest. Therefore, he asserts that the Trial Court’s finding on the reduction of interest is legally unsustainable and prays that the appeal be considered favorably. 13. In support of the above contentions, he relied upon a pronouncement of Allahabad High Court in Sarju Ram Baranawar v. Taji Bibi1 as well a judgment of the Hon’ble Supreme Court in Secretary/General Manager, Chennai Central Co-operative Bank Ltd. v. S.Kamalaveni Sundaram2. 14. Per contra, Sri Y.Ramesh Babu, learned counsel representing Sri Madhava Rao Nalluri, learned counsel for the 1 1961 SCC OnLine All 201 2 2011 (2) ALD 91 (SC) 10 respondent No.1/defendant No.1 strenuously submits that the Trial Court by following the law laid down by the Hon’ble Supreme Court in Cheruvu Nageswaraswami v. Rajah Vadrevu Viswasundara Rao3, rightly scale down the interest from compoundable interest at 24% to simple interest at 12% per annum up to expiry of period of redemption, which requires no interference of this Court; that there are no valid grounds urged by the appellant to meddle with the said finding made by the Trial Court, thereby, prays to dismiss the present appeal with costs. 15. It is an undisputed fact that the defendants, particularly the first defendant, did not file any appeal challenging the findings of the Trial Court. The Trial Court had held that the first defendant borrowed a sum of ₹50,000 from the plaintiff by executing the registered mortgage deed (Exhibit A.1) and depositing the settlement deed (Exhibit A.2), thereby creating a mortgage over the suit schedule property 3 (1953) 2 Supreme Court Cases 67 11 in favor of the plaintiff. As the plaintiff successfully established his claim against the first defendant and no appeal has been preferred by the defendants on these findings, the scope of the present appeal filed by the appellant/plaintiff is confined solely to the issue of the rate of interest awarded by the Trial Court. 16. It is against this backdrop, the only point that arises for determination need consideration now; “whether the Trial Court erred in scale down the interest stipulated in Ex.A.1 mortgage deed, dated 10.08.1994, if so, the findings made by the Trial Court regarding the rate interest requires interference?” 17. POINT : On perusal of Ex.A.1 mortgage deed, it categorically manifests that the defendant No.1 agreed to pay interest at 24% per annum on or before 10th of every month, in case she failed to pay the same, the plaintiff is entitled to charge penal interest on yearly rests. But, the Trial Court by relying upon 12 the observations of Hon’ble Supreme Court in Cheruvu Nageswaraswamy case (referred to supra-3), scaled down the interest from compoundable interest at 24% per annum to simple interest at 12% per annum up to expiry of period of redemption. 18. This Court has no quarrel with the proposition laid down by the Hon’ble Supreme Court in the above judgment that “stipulation as to payment of compound interest in case of default, being held to a penalty by both the courts below, the High Court should not have allowed interest @ 7.5% compound with yearly rests.” 19. But, in the present case on hand, there is a categorical term in Ex.A.1 mortgage deed, as stated supra, regarding liability to pay the interest, thereby, the above decision is not at all applicable to the present case on hand, on which the Trial Court totally relied to scale down the interest. 20. Now, coming to the entitlement of plaintiff to get the interest as stipulated in Ex.A.1 mortgage geed, it is the 13 categorical observation made by the Allahabad High Court in Sarju Ram Baranawar case (Division Bench-referred to supra-1), which as follows: “15…….on behalf of the mortgagee, appellants, it was argued that the courts below were not entitled to interfere with the terms of the contract. In agreeing with the contention Mukerji and Bennet, JJ. Observed: “Under the law of the land, a contract has to be respected and cannot be interfered with except on well-known lines. Mere vague grounds of equity will not justify a Court in interfering with the terms of the contract.” 21. Furthermore, it is more relevant to mention the certain observations made by the Hon’ble Supreme Court in S.Kamalaveni Sundaram case (referred to supra-2), which are as follows: “11. Section 34 of the Code of Civil Procedure, 1908 (CPC) empowers the Court to award interest for the period from the date of the suit to the date of the decree and from the date of the decree to the date of payment where the decree is for payment of money. Section 34 of 14 the CPC does not empower the Court to award pre-suit interest. The pre-suit interest would ordinarily depend on the contract (express or implied) between the parties or some statutory provisions or the mercantile usage……..” 11. In view of the settled legal position as above, this Court has no hesitation to say that the Trial Court grossly erred in scale down the interest as agreed by both parties in Ex.A.1 mortgage deed, which is nothing but contrary to the law. 12. In view of the above discussion, the findings of the Trial Court with respect to the scaling down of interest warrant interference, as they are contrary to the terms stipulated in the mortgage deed marked as Exhibit A.1. Accordingly, it is necessary to direct the first defendant to pay interest as claimed by the plaintiff, in accordance with the terms of Ex.A.1, from the date of its execution, i.e., 10.08.1994, until the date of redemption. Therefore, the appeal has merit and deserves to be allowed. It is needless to mention that the 15 other findings recorded by the Trial Court do not require any interference by this Court. 13. In the result, the appeal is allowed by modifying the decree and judgment dated 29.01.2008 passed in O.S.No.49 of 2004 on the file of the Court of learned I Additional Senior Civil Judge at Nellore, regarding the rate of interest entitled by the plaintiff, consequently, directed the first defendant to pay a sum of Rs.50,000/- with compound interest at 24% per annum in yearly rests from the date of execution of Ex.A.1 mortgage deed, dated 10.08.1994 till the date of decree and thereafter, at 12% per annum till realization. The other findings arrived by the Trial Court in the judgment shall remain in-tact. There shall be no order as to costs. Interim orders granted earlier if any, stand vacated. Miscellaneous petitions pending if any, stand closed. ______________________ JUSTICE V.SRINIVAS Date: 10.10.2025 Krs 16 169 THE HON’BLE SRI JUSTICE V.SRINIVAS APPEAL SUIT No.223 of 2009 DATE: 10.10.2025 Krs