The DRAT upheld the DRT's discretion in granting simple interest for the post-OA period in the Recovery Certificate.
The Debts Recovery Appellate Tribunal (DRAT), Chennai Bench of Justice S. Ravi Kumar (Chairperson) reviewed an appeal and observed that the discretion exercised by the DRT in granting simple interest for the period post-filing of the OA, as opposed to the contractual rate of interest, is legally valid and cannot be interfered with unless shown to be arbitrary or devoid of proper application of mind, which was not established in this case.
The present appeal was filed against the order dated 10.11.2020 passed by the DRT-III, Chennai, in OA No. 117/2016. The appellant had initiated proceedings before the DRT seeking recovery of ₹5,94,35,009/- from the respondents. The appellant contended that the defendants had availed credit facilities, executed a promissory note on 30.10.2013, and secured the loan amount through the hypothecation of goods. Additionally, defendants 2 and 3 executed a guarantee agreement on the same date. Due to the defendant’s failure to discharge the loan liability, the appellant filed the OA for issuance of a recovery certificate.
The defendants filed their written statement in response to the claim. Upon considering the pleadings and evidence, the tribunal allowed the OA and issued a recovery certificate for ₹5,94,35,009/- with simple interest at 10% per annum from the date of the OA until realization. Aggrieved by the tribunal’s decision to grant only simple interest for the period post-filing of the OA, the appellant preferred this appeal, seeking the contractual rate of interest for the subsequent period.
The Appellate Tribunal, after hearing arguments, noted that the tribunal below had already granted the contractual rate of interest until the filing of the OA. For the period thereafter, the tribunal exercised its discretion to award simple interest. It was emphasized that the granting of interest for the subsequent period lies within the discretion of the tribunal, which can only be interfered with if the discretion was exercised arbitrarily or without proper application of mind.
The Appellate Tribunal found no fault in the exercise of discretion by the DRT and observed that the appellant failed to demonstrate any arbitrariness or lack of reasoning in the impugned order. Consequently, the appeal was held to be devoid of merit and dismissed. Both parties were directed to bear their own costs, and all pending interlocutory applications were closed.
Mr. : M. Muthukumarn, Advocate represented the Appellant.
Mr. P. Subbu Reddy, Advocate appeared for the Respondent.
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