(Prayer: Original Side Appeal filed under Order XXXVI Rule 9 of the Original Side Rules read with Clause 15 of the Letters Patent against the order and decretal Order dated 9.6.2008 made in Company Application No.1823 of 2007 in C.P.No.230 of 2004 on the file of this Court.)

R. BANUMATHI,J

1. Being aggrieved by the order dated 9.6.2008 made in C.A.No.1823 of 2007 in C.P.No.230 of 2004 directing the appellant to pay a sum of Rs.13,71,401/-, which was due and payable by him as on 31.12.2007, the appellant has preferred this appeal.

2. The brief facts, which led to the filing of this appeal, are as follows:

The appellant and his late father availed home loan from RBF Nidhi Limited in HML No.66 for a sum of Rs.1,90,000/- repayable with interest at the rate of 24% per annum and executed a demand promissory note and also executed a registered mortgage deed in document No.7993/1990 on 1.11.1990. The appellant and his father also borrowed a sum of Rs.2,90,000/- from RBF Nidhi Limited in HML No.67 repayable with interest at the rate of 24% per annum. In respect of HML No.67, the appellant executed demand promissory note and also executed a registered mortgage deed in document No.7994/1990.

3. In respect of HML Nos.66 and 67, appellant was due to pay a sum of Rs.4,75,383/- and 12,55,639/- respectively. On 10.2.2000, the Company sent notice demanding payments under HML Nos.66 and 67. Though the appellant initially rebutted the execution of mortgage deeds, by notice dated 7.4.2000, the appellant sought for details of statement of accounts. On 29.06.2000, the Company sent reminder letter demanding payment dues under the loan accounts. In July, 2000, the appellant filed suit for redemption - O.S.No.4300 of 2000 before the City Civil Court, Chennai for a preliminary decree declaring the amount due by the appellant to the RBF Nidhi Fund. In I.A.No.10886 of 2000, the appellant also sought for an injunction bringing the property to sale. An exparte Preliminary decree was passed in O.S.No.4300 of 2000 on 11.12.2002 . On 1.8.2005, the appellant had sent a communication agreeing to repay the balance amount.

4. One G.Krishnan filed Company Petition in C.P.No.230 of 2004 for winding up of RBF Nidhi Limited. By an Order dated 17.04.2006, the Court has appointed the Official Liquidator as provisional liquidator of RBF Nidhi Limited. As per the list of borrowers submitted by C.E.O. of the Company, appellant has been shown as a debtor to the tune of Rs.4,75,383/- in respect of HML No.66 and Rs.12,55,639/- in respect of HML NO.67 with further interest at the rate of 24% per annum from 1.1.2000. In C.A.No.1823 of 2007, the Official Liquidator has filed the report seeking for a direction to direct the appellant to pay the said amounts due in respect of HML Nos.66 and 67 and in the event of non-payment of the decretal amount, the Official Liquidator may be permitted to sell the property and adjust the sale proceeds towards the entire loan outstanding amount along with interest.

5. The appellant resisted the application contending that even after the preliminary decree, RBF Nidhi Limited has failed to discharge its obligation in furnishing the accounts. It was further averred that RBF Nidhi Limited did not take any steps to set aside the exparte decree and without discharging its obligations in furnishing the accounts, RBF Nidhi Limited cannot proceed against the property.

6. Upon consideration of contentions of both parties, the learned single Judge directed the Official Liquidator to file a calculation memo waiving the penal interest and to charge interest at the rate of 12 percent per annum on the outstanding principal amount as on 31.12.1999. As per the direction of the Court, the Official Liquidator filed the memo and as per the memo of calculation, the amount payable by the appellant was quantified at Rs.13,71,401/- as on 31.12.2007. By the impugned order, the learned single Judge directed the appellant to pay a sum of Rs.13,71,401/-, which was due and payable by the appellant as on 31.12.2007 within a period of two months from the date of receipt of copy of the order.

7. Challenging the impugned order, the learned counsel for the appellant contended that the learned single Judge ought to have taken into consideration that RBF Nidhi did not take steps to set aside the exparte decree nor filed the appeal. It was further submitted that when a decree was passed in the redemption suit - O.S.No.4300 of 2000 (dated 11.12.2002), RBF Nidhi Limited through the Official Liquidator was not justified in filing Company Application. It was further submitted that Nidhi is obligated to produce the accounts, but RBF Nidhi has never produced the accounts. Main contention of the appellant is that after passing the preliminary decree in O.S.No.4300 of 2000, no limitation is provided for passing of the final decree and it is always open to the appellant/plaintiff to seek for final decree and therefore the Company Application filed by the Official Liquidator was not maintainable.

8. In the suit - O.S.No.4300 of 2000, at Para 2 of the decree, it was declared as under:

"....... that a decree upon taking the account referred to above and if the plaintiff herein pays into Court the amount so found or declared due to the defendant herein and on payment of same by the plaintiff herein and that nothing is due to the defendant, directing the defendant herein to deliver it to the plaintiff herein all the documents in its possession and the power relating to the mortgaged property and retransfer the mortgaged property to the plaintiff herein and put the plaintiff herein in possession of the mortgaged property on or before 11.2.03."

9. Laying emphasis upon Paragraph 2 of the decree in O.S.No.4300 of 2000, the learned counsel for the appellant contended that in view of the categoric direction issued in paragraph No.2 of the decree, directing the mortgagee/RBF Nidhi Limited to deliver the documents on payment of the amount, the decree is to be treated as a final decree. It was further submitted that since there was a direction in the decree to pay the amount, RBF Nidhi Limited was obligated to produce the accounts and having failed to discharge its obligation, necessary adverse inference has to be drawn against RBF Nidhi to the effect that the entire dues have been paid and discharged.

10. Learned counsel for the appellant contended that it was not incumbent upon the appellant to file a separate Application for passing a final decree and in support of his contention, the learned counsel placed reliance upon a decision of the Supreme Court in Shub Karan Bubna v. Sita Saran Bubna, (2009) 9 SCC 689 [LQ/SC/2009/1719] . Pointing out the difference between the preliminary decree in mortgage suits and in partition suits and observing that the concept of final decree in mortgage suit is different from the concept of final decree in partition suit, inasmuch as the preliminary decree in mortgage suit decides all the issues, the Honourable Supreme Court has held as under:

19......... There is a fundamental difference between mortgage suits and partition suits. In a preliminary decree in a mortgage suit (whether a decree for foreclosure under Rule 2 or a decree for sale under Rule 4 of Order 34 of the Code), the amount due is determined and declared and the time within which the amount has to be paid is also fixed and the consequence of non-payment within the time stipulated is also specified. A preliminary decree in a mortgage suit decides all the issues and what is left out is only the action to be taken in the event of non-payment of the amount. When the amount is not paid the plaintiff gets a right to seek a final decree for foreclosure or for sale.

20. ....

21. A preliminary decree for partition only identifies the properties to be subjected to partition, defines and declares the shares/rights of the parties. That part of the prayer relating to actual division by metes and bounds and allotment is left for being completed under the final decree proceedings. Thus the application for final decree as and when made is considered to be an application in a pending suit for granting the relief of division by metes and bounds.

22. Therefore, the concept of final decree in a partition suit is different from the concept of final decree in a mortgage suit. Consequently an application for a final decree in a mortgage suit is different from an application for final decree in partition suits.

11. There is no force in the contention that the decree passed in O.S.No.4300 of 2000 itself is to be treated as a final decree. By perusal of the plaint in O.S.No.4300 of 2000, it is seen that the prayer in the suit was to pass a preliminary decree declaring the amount due from the plaintiff or the defendant to the plaintiff and to take accounts. As seen from the judgment in O.S.No.4300 of 2000 (dated 11.12.2002), only a preliminary decree was passed by the Court, which reads as under:

Evidence of P.W.1 already recorded. Recorded (sic. Records) perused. Claim proved. Preliminary decree is passed as prayed for with costs. Time for furnishing accounts 2 months.

12. In the counter filed in C.A.No.1823 of 2007, the appellant has clearly averred that he has been away at Singapore on business and was not able to apply for passing of a Final Decree and that the Application for the final decree could be applied within three years and in the mean time the Company went into liquidation and all proceedings are stayed from the date of presentation of the winding up proceedings. Thus, the appellant himself was quite conscious that the judgment and decree passed in O.S.No.4300 of 2000 (dated 11.12.2002) was only a Preliminary Decree and that it was incumbent upon the appellant to take out an Application for passing a Final Decree within three years. In the suit filed by the appellant O.S.No.4300 of 2000, when the Court has passed the Preliminary Decree (dated. 11.12.2002), the appellant cannot contend to treat the same as a Final Decree.

13. In the Preliminary Decree passed in O.S.No.4300 of 2000, two months time was granted for furnishing accounts and on furnishing accounts and on payment of the amount by the appellant, documents are to be handed over within two months i.e., on or before 11.2.2003. The learned counsel for the appellant vehemently contended that no limitation period is prescribed and that at any time the final decree Application can be filed by the mortgagor. It was further submitted that a Preliminary Decree in a mortgage suit decides all the issues and what is left out is only the action to be taken either for recovery of the amount/deposit of the amount and therefore no limitation is prescribed for filing an Application for passing of a Final Decree.

14. Mr.S.R.Sundar, learned counsel for the Official Liquidator has submitted that an Application for passing of the Final Decree is governed by residuary Article 137 of the Limitation Act under which Application for passing of Final Decree is to be filed within three years from the date when their right to apply accrues. In support of his contention, the learned counsel for Official Liquidator placed reliance upon judgments of the Supreme Court in SUDESH VITHAL HANAMSHETH AND ANOTHER VS. SADANAND SHIVRAO KOPPAL AND OTHERS, ((1998) 8 SCC 591 [LQ/SC/1996/64] ) and MONOTOSH KUMAR MITRA VS. AMARENDRANATH SHAW AND OTHERS, ((2000) 2 SCC 672 [LQ/SC/2000/367] ). Learned counsel also placed reliance upon judgments of single Judges of Madras and Kerala High Courts viz., STATE BANK OF INDIA VS. KASIM AND OTHERS, (1999(III) CTC 109) and K.KUNJAMMA AND OTHERS VS. BHAGEERATHY AMMA GOMATHY AMMA AND OTHERS, (AIR 1991 KERALA 111).

15. Under Order 34 Rule 8(3) of C.P.C, an application is necessary for the passing of a final decree in a suit for redemption. The amendment of Order 34 Rule 8 by Act 21 of 1929 by inserting sub-rule (1), the words on application made by the plaintiff makes it clear that an Application by the mortgagor for a final decree has to be filed. Any such Application filed falls within the residuary Article 137 of the Limitation Act.

16. The limitation to file an Application under Order 34 Rule 8(1) of C.P.C. to pass a final decree for other than the preliminary decree for redemption of usufructuary mortgage, starts running and continues to run its course from the date of expiry of period fixed in the preliminary decree. Making a distinction on the applicability of limitation as regards limitation of a proceeding for passing a final decree between other types of mortgages and usufructuary mortgage, in the case of K.PARAMESWARAN PILLAI V. K.SUMATHI, (AIR 1994 SC 191 [LQ/SC/1993/696] ), the Supreme Court has held as under:

..... It is, therefore, clear thatthe limitation to file an application under Order 34 Rule 8(1) to pass a final decree for redemption, other than the preliminary decree for redemption of usufructuary mortgage, starts running and continues to run its course from the date of expiry of the period fixed in the preliminary decree, unless it is stayed or suspended or the time prescribed in the preliminary decree is extended by an order of the court. In its absence on expiry of the limitation of three years from the date fixed in the preliminary decree expired under Article 137 of the Schedule to Limitation Act, 1963 (Article 181 of Schedule I of old Act), the plaintiff is debarred to enforce the right to pass the final decree. But in the case of preliminary decree for redemption of usufructuary mortgage no limitation begins to run until deposit is made though there is a conditional preliminary decree and default was committed by the mortgagor for compliance thereof.

17. In MONOTOSH KUMAR MITRA VS. AMARENDRANATH SHAW AND OTHERS, ((2000) 2 SCC 672 [LQ/SC/2000/367] ), the Supreme Court held that an application for passing of the final decree is governed by residuary Article 137 of the Limitation Act, 1963, under which application for passing of final decree has to be filed within three years from the date when the right to apply accrues. If the right to apply for final decree had accrued to the plaintiff on default being committed by the defendants in payment of the first instalment itself, the application for passing of final decree would be required to be filed within three years from the date of default.

18. Insofar as usufructuary mortgage, as per Article 61 of the Limitation Act, the limitation period is provided for the suit to redeem or recover possession of the immovable property of mortgaged property as thirty years from the date of accrual of right to redeem and recover possession. In the case of usufructuary mortgage, the amount determined by the Court as payable by the mortgagor is to be deposited before the right to redeem is lost. In usufructuary mortgage, usufructuary mortgagor is not entitled to seek any extension of time as the limitation period is prescribed under Article 61 of the Limitation Act.

19. Referring to the various decisions and considering the scope of Order 34, Rules 7 and 8, in K.KUNJAMMA AND OTHERS VS. BHAGEERATHY AMMA GOMATHY AMMA AND OTHERS, (AIR 1991 KERALA 111), the Kerala High Court observed as under:

9. On a reading of Rr.7 and 8, it is apparent that the deposit of the amount has to be made before the right of redemption is lost. Even if the mortgagee is entitled to get a final decree debarring the plaintiff-mortgagor from all right to redeem the mortgaged property, such a claim has to be made within the period of limitation. Article 61 of the Limitation Act prescribes a period of 30 years to redeem or recover possession of immovable property mortgaged and time begins to run when the right to redeem or recover possession accrues. The period of limitation for foreclosure by a mortgagee is also 30 years and the starting point of limitation is the same. The deposit can be made by the mortgagor so long as the relationship of mortgagor and mortgagee subsists. It cannot be said that the relationship subsists even after the expiry of the period of limitation prescribed under Article 61 of the Limitation Act. The period of limitation is not in any way extended by the passing of the preliminary decree. The right of the mortgagee to get a final decree debarring the plaintiff from all right to redeem the property will also come to an end on the expiry of 30 years from the date on which the mortgage money becomes due. The mortgagor cannot, therefore, wait for years and years and then make a deposit and file an Application for a final decree. In other words, the deposit of the amount found due in before the date fixed in the preliminary decree or within the period of limitation prescribed in Article 61 of the Limitation Act viz., within 30 years from the date on which the mortgage money has become due.

20. In the instant case, the mortgage was a simple mortgage in which the appellant filed the suit O.S.No.4300 of 2000 for redemption. In the decree, time for payment, time for settling accounts and for payment of the amount was fixed as two months from the date of decree i.e., on or before 11.2.2003. When once the time has commenced to run, it was not suspended because of the filing of the winding up petition. After getting preliminary decree for redemption of the mortgage, mortgagor/appellant cannot sleep over the matter for years and contend that he can deposit the mortgage money at his will and pleasure and thereafter seek for a final decree by filing the application contemplated in Rule 8(1) of Order 34 C.P.C. The appellant is not justified in contending that no period of limitation is prescribed for making out an Application for final decree. In paragraph No.4 of the counter affidavit, the appellant himself has categorically averred that the Application for final decree could be applied within three years and that he was away at Singapore on business and therefore was not able to apply for passing of the final decree.

21. It is seen from the available materials that RBF Nidhi called upon the appellant to pay the amount by issuing notices on 4.6.2001 16.8.2001 and 16.10.2002. Upon receipt of the said notices, by a communication dated 1.8.2005, the appellant had stated that he has paid to his account upto Rs.6 lakhs and above and that he is willing to settle the balance of money after the negotiation within three months. Even though the appellant has undertaken to settle the balance money the appellant has not taken any further steps to deposit the amount. Having undertaken to pay the amount, now the appellant cannot resile from his undertaking to settle the dues. There is no force in the contention that the right of the respondent to recover the amount is extinguished.

22. The learned counsel for the appellant then contended that for the amounts of Rs.1,90,000/- plus Rs.2,90,000/- borrowed, RBF Nidhi has levied interest of 24% per annum and the interest charged is excessive and unfair and is hit under Usurious Loans Act. As rightly contended by the learned counsel for Official Liquidator, the loan was obtained by the appellant by mortgaging the property. Under the mortgage deed, the appellant has agreed to pay interest at 24 percent per annum. Since the mortgage is covered under the terms of the contract, it is not open to challenge the rate of interest. The appellant is estopped from challenging the rate of interest. Taking note of the amount paid by the appellant, the learned single Judge directed the Company in liquidation to waive the penal interest and calculate the interest at the rate of 12 percent per annum and the appellant was directed to pay the amount based on the calculation memo, wherein the interest calculated at the rate of 12 percent per annum. Therefore, the plea that the rate of interest levied was excessive is no longer available to the appellant.

23. As rightly pointed out by the learned single Judge, having undertaken to pay the balance amount within three months after negotiations, the appellant is not justified in resiling back from his undertaking. Having regard to the facts and circumstances of the case, the learned single Judge rightly directed the Company in liquidation to waive the penal interest and levy the interest at the rate of 12% per annum. We do not find any reason to interfere with the order of the learned single Judge directing the appellant to pay a sum of Rs.13,71,401/- as on 31.12.2007 within a period of two months. Since the appellant has not chosen to pay the amount within the time stipulated by the learned single Judge, the appellant is bound to pay the interest at the same rate of 12 percent per annum from 1.1.2008 till the date of realisation.

24. For the fore-going reasons, the appeal is dismissed. The appellant is directed to pay Rs.13,71,401/- with subsequent interest at the rate of 12% per annum from 1.1.2008 within a period of four months from the date of receipt of copy of this Judgment. On failure of the appellant to pay the amount within the stipulated time, it is open to the Official Liquidator to proceed with the matter in accordance with law. However, there is no order as to costs. Consequently, the connected miscellaneous petition is also dismissed.