TaxTMI 
TaxTMI 
2017 (11) TMI 1526
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....l liquidator, the Official Liquidator was directed to reassess the claims of the secured creditors and the workers as per the order dated 12-8-2016. The Official Liquidator accordingly reassessed the claims of the secured creditors amongst who was the Appellant SICOM. The Official Liquidator accordingly submitted his report and sought condonation of delay of 39 days in reassessment of the claims. 4 The Appellant-SICOM filed the instant application being Company Application (L) No.95 of 2017 for setting aside the reassessment made by the Official Liquidator and for adjudication of its entire claim as per its affidavit of debt dated 8-9-2016 and for adjudication of its claim to the extent of Rs. 5,73,35,714/as secured creditors. In the context of the application and the reliefs sought by the Appellant vide the said Company Application, the clause providing for payment of interest in the Mortgage Deed dated 4-9-1987 and the Mortgage Deed dated 5-12-1990 assumed importance. The Learned Single Judge considered the said application and as indicated above has allowed the Official Liquidator's report in terms prayer clauses (a), (b) and (d) and resultantly has rejected the ....
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....rests" is not appearing in the clause of the 1990 Mortgage Deed, the word "quarterly" is appearing, the said word therefore can be said to imply the payment of compounded interest. The Learned Counsel would contend that the said word "quarterly rests" had come up for interpretation before the Apex Court in the matter of Central Bank Of India Vs. Ravindra & Ors. (2002)1 Supreme Court Cases 367. The Learned Counsel would also contend that the banking practice is of payment of compound interest for which he placed reliance on the judgment of the Division Benches of this Court in M/s Good Luck Talkies & Ors. Vs. The Bank of Maharashtra 1982(1) Bom.C.R. 268 and State Bank of India Vs. Smt. Neela Ashok Naik & Anr. AIR 2000 Bombay 151. It was therefore the submission of Mr. Cama that the Learned Single Judge has erred in accepting the reassessment carried out by the Official Liquidator on the basis that the Appellant SICOM is entitled to only simple interest. 7 Per contra, the Learned Counsel appearing for the Official Liquidator Mr. Kamat would support the impugned order. It was the submission of the Learned Counsel that there has been a novation of the contract by the execution of the....
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....ing in the 1990 Mortgage Deed "The company agreed to pay interest on the said loan of Rs. 65,00,000/at the rate of 16.5% per annum with effect from 1st April 1990 payable quarterly on 31st January, 30th April, 31st July and 31st October every year and agreed to pay additional interest at the rate of 2.5% per annum on the total amount in default during the period of such default." 9 A reading of the aforesaid clauses therefore discloses that in so far as the clause in the 1989 Mortgage Deed is concerned, the interest was payable @ 15.5% by half "yearly rests" on the date specified in the said clause and the proviso was made to pay additional / compound interest @ 2.5% p.a. over and above the SICOM lending rate. In so far as the clause in the 1990 Mortgage Deed is concerned, it is not necessary to go into the background as to why the said Mortgage Deed was executed but probably it seems there were negotiations between the parties and thereafter the loan advanced to the company in liquidation, seems to be restructured leading to the novation of the contract. A reading of the said clause therefore discloses that the words yearly "rests" and "compound" are conspicuously absent in the ....
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....stablished practice and a series of judicial precedents upholding the same. Secondly, the underlying principle as noticed in several decided cases is that when interest is debited to the account of the borrower on periodical rests, it is debited because of it having fallen due on that day. Nothing prevents the borrower from paying the amount of interest on the date it falls due. If the amount of interest is paid there will be no occasion for capitalising the amount of interest and converting it into principal. If the interest is not paid on the date due, from that date the creditor is deprived of such use of the money which it would have made if the debtor had paid the amount of interest on the date due. The creditor needs to be compensated for deprivation. As held in Pazhaniappa Mudaliar Vs. Narayana Ayyar the fact situation is analogous to one as if the creditor has advanced money to the borrower equivalent to the amount of interest debited. We are, therefore, of the opinion that the expression "the principal sum adjudged" may include the amount of interest, charged on periodical rests, and capitalised with the principal sum actually advanced, so as to become an amalgam of princi....