BEFORE THE HON’BLE MAHARASHTRA STATE

CO-OP APPELLATE COURT MUMBAI,

BENCH AT NAGPUR
Appeal No. 39 /1949
--- --- Appellant
Versus
--- --- Respondents

Appeal Memo
Appeal u/s 97 of M.S.C. Act,1960 against the Decree & Order
passed on dated 31.03.1949 by the Coop Court No. 2 at Nagpur
in Dispute No. 58 of 21234.
The above named Appellant respectfully submits as under:-
Prefatory Para

A…1 That, the Respondent No. 1, ABCCoop Bank Ltd.

(Here-in-after referred as the said ABCBank) is the Disputant in the
impugned Dispute No. 58/2008 decreed by the Coop Court No. 2 at
Nagpur in-which the Appellant and the Respondents Nos. 2, 3, 4 &
5 were the Opponents. (Here-in-after referred as the said Dispute
58.)

A…2 That, the Appellant had filed his Amended Written

Statement which is attached with the Original Written Reply and is
marked as “Exhibit-31” (at relevant pages No 41 to 62 in the
annexed “List of Documents”). (Here-in-after referred as the
Written Statement.)
A…3 That, the Learned Trial Court framed Issues at
“Exhibit – 86” (at relevant pages No 6 in the annexed “List of
Documents”). However, after filing the Amended Written Statement
(attached with the Original Written Reply at “Exhibit-31”), this
Appellant filed an Application u/p Order XIV rule 5 of CPC to
Amend the Issues at “Exhibit – 230” (at relevant pages No 61 to 68
in the annexed “List of Documents”).

The Learned Trial Court passed an Order on the

said Application and re-casted the Issues which are also attached
along-with the said Application at “Exhibit-230”.

In its Order under Application to Amend the Issues

at “Exhibit-230”, the Learned Trial Court partly allowed the same
and stated/confirmed there-in that the Issues sought to be
Amended were already covered in the previously framed
Original Issues. Therefore this Appellant had filed his Written
Arguments in the Trial Court and is also making pleadings in
this Appeal in-conformity-with the contentions raised/made-out
in “Exhibit-230”.

A…4 That, in the Original Trial/Dispute, the

Appellant did not appear in witness-box because he did not want
to prove any document because all documents on-which the
Appellant wanted to rely-upon were already Exhibited by the
Disputant/ABCBank. Hence adverse inference cannot be drawn
against this Appellant for his not appearing in witness box.

A…5 That, this Appellant does not have sufficient funds

to pay fees of an advocate and hence is filing this Appeal through
his friend PQR as his Power of Attorney who is not an Advocate.
This Appellant is aware that the said Power of Attorney will not
be authorised to argue the Appeal as a matter of his right but
will only be allowed to answer/ /explain/clarify the queries (if
any) raised by this Hon’ble Appellate Court regarding the
pleadings in this Appeal.

A…6 That, for the sake of convenience and for better

explaining the matter, this Appellant has capsulised his pleadings in
the following Five Points as under:-

---- Point No. 1 ----

Letter of Credit Limit of Rs. Six Crores

1..1 Question of Law & Fact involved:-

Whether the Bank has an authority to charge

interest in the account where the Contractual Rate of Interest
stated in all security documents (ie:- DP Note, Hypothecation
Agreement and Guarantee Agreement) of a credit facility is Blank
and also where the Appellant/Guarantor has specifically pleaded
in his Written Statement that the Agreed Rate of Interest was
Nil and also where the Disputant Bank has not rebutted the said
contentions by filing a Rejoinder or giving Addl. Evidence to
that an effect. - - - - - - - - - No.

1..2 Material on Record relied by the Appellant:-

(i) ****Demand Promissory Note dated 24.04.1947 (ie:-
“Exhibit No. 82” at page No.1 in the annexed
List of Documents) for Rs.6 Crores,

****Hypothecation Agreement dated 24.04.1947 (ie:-

“Exhibit No. 83” at page No. 2 to 6 in the

List of Documents) for Rs.6 Crores,

****Guarantee Agreement dated 24.04.1947 (ie:-

“Exhibit No. Along with D-17” at page
No.7 to 8 in the List of Documents) forRs.6
Crores.

(ii) ****Demand Promissory Note dated 03.09.1950 (ie:-

“Exhibit No. D-22” at page No 9 in the
annexed List of Documents) for Rs.6 Crores,

****Hypothecation Agreement dated 03.09.1950 (ie:-

“Exhibit No. D-21” at page No. 10 to 14 in
annexed List of Documents) for Rs.6 Crores,

****Guarantee Agreement dated 03.09.1950 (ie:-

“Exhibit No. D-17+1” at page No. 15 to 16
in the List of Documents) for Rs.6 Crores.

(iii) In his Amended Written Statement

Attached with Original Written Reply at
“Exhibit No.-31” dated 22.08.2019 (at page No. 40 to
59 in the annexed List of Documents) (Relevant Para
No. 5(a) on page No, 54), this Appellant has stated
that, (Quote) “That, to prove a fallacy in the claims
 of the Disputant Bank, the Opponents state that
because they were not agreeable to pay any interest
to the Disputant Bank, the Disputant Bank had
agreed not to charge any interest in the matter.
Hence the mutually agreed rate of interest was
“NIL” and therefore the interest clause in the
Demand Promissory Note was intentionally kept
blank. Therefore the Disputant ABCCoop Bank had
no authority to charge any interest in the matter and
the same should be reversed/scaled down”
(Unquote).
(iv) Submitted the Written Arguments with the List of
Documents annexed there-to at “Exhibit - 255” (at
page No.71 to 88 in the annexed List of Documents)
explaining all pros and cons of the Dispute.

1...3 Absence of Material on Record:-

(i) It is pertinent to note that the Respondent ABCBank

has not rebutted the above contentions by filing a
Rejoinder to that an effect and/or

(ii) Has not made any statement in the Additional

Evidence filed by the ABCBank’s Witness, Mr.
Jitendra Moze vide dated 21.06.1949 at “Exhibit-210”
(at page No.89 to 94 in the annexed List of Documents)
to rebut the above contentions.

(iii) There does not exist any material on record to prove

that this Appellant/Guarantors have agreed to pay
 any interest to the Respondent ABCBank in any
agreement/contract executed by him.

1..4 Judgments Relied:-

That, for this contention that, “The Respondent

ABCBank has no authority to charge and claim any interest
in the Letter of Credit Limit”, this Appellant had relied on the
ratio derived in the following reported judgments in support of his
arguments in the Trial Court and is also relying on the same in
this Appeal and enclosing copies there-of for ready reference.

(i) 1989 ISJ Banking 204 (Gauhatti)

(Ibrahim Ali v/s Haji Abdul Latif)

There was no mention of any interest in the contract.

Hence the Hon’ble Gauhatti High Court held that, “The
Documents do not show that the Plaintiff is entitled to
interest. There is no material to show that the Plaintiff is
entitled to interest under the Interest Act. Accordingly the
Decree as regards to the interest cannot be sustained and is
liable to set aside.”

(ii) I (1990) BC 494 (DB) (Madras)

(Syndicate Bank v/s D. Muthian)

In this matter, the Respondent Borrower

executed a Demand Promissory Note dated 16.02.1970 in-
which the agreed rate of interest was 9% and on 12.07.74, the
Borrower had agreed to enhance the interest rate to 14.5% per
annum.
 In this case, the Bank charged interests at the
rate of 11% from 09.01.1971, 12% from 01.06.1973, 13%
from 16.02.1974, 14.5% from 28.07.1974, 15.5% from
01.08.1974, 21% from 16.02.1975, 18% from 01.07.1975 and
17.5% from 01.03.1978 and argued that the enhanced rate of
interests were charged as-per the directions of the Reserve
Bank of India.

However, relying on the “AIR 1983 Kant

143’ between (D. S. Gouda v/s Corporation Bank) (u/s 21A of
BR Act, 1949) the Hon’ble Madras High Court stated that “In
commercial transaction, before enhancement of charged rate
of interest, Banks have to obtain a consent of the Borrower
for such enhancement and cannot be unilaterally allowed to
enhance the rate of interest” and therefore disallowed the
enhanced rate of interest from 9% to 14.5% up-to 28.08.1974”.

1..5 What should have been the liability of the

Appellant in-respect of Letter of Credit Limit?

In the circumstances, this Appellant states that,

where a Bank has computed, charged and claimed interest over
and above the agreed/contractual rate of interest, then in such
circumstances, the Bar provided under section 21A of the B.R.
Act will not operate against the authority of a Court to re-
compute and scale-down the quantum of such excess interest
charged.
 In-respect of the Letter of Credit Limit, the
liability of this Appellant Guarantor, after reversing all interest
entries, should not have exceeded over the principal
contractual/promised amount of Rs.6,00,00,000/- (Rupees Six
Crores only) as stated in the Contract/Promissory Note.