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Issues: Appeal against preliminary decree, liability under mortgage deed, calculation of interest, authority to vary interest rate, payment of decretal dues in installments.
The judgment pertains to an appeal against a preliminary decree passed by the Civil Judge in favor of the respondent Bank. The defendants, a partnership firm and its partners, executed a registered simple mortgage deed in favor of the plaintiff Bank in 1969, obtaining a loan of Rs. 2,00,000. The suit was filed in 1979 claiming Rs. 3,79,199-50 with future interest at 16% per annum. The defendants raised several grounds in defense, and issues were framed accordingly. The trial Judge passed a preliminary decree directing the defendants to pay the amount with interest at 16% per annum by a specified date, failing which a decree for sale would be passed. The defendants appealed against this decree. The first contention raised in the appeal was regarding the effect of a promissory note obtained by the plaintiff from the defendants in 1978. The appellant argued that the promissory note extinguished the earlier mortgage transaction. However, the Court held that the mere execution of a promissory note does not discharge the liability under a mortgage deed unless specifically accepted as such. Promissory notes are typically executed as additional security and acknowledgment of dues. The next issue raised was regarding the calculation of interest. The appellant contended that the amount directed to be paid included interest, which was violative of the law. However, the Court found that as per the mortgage deed, the Bank was authorized to calculate interest at six monthly rests and treat unpaid interest as part of the principal, allowing for the charging of interest on the total amount due. This practice was upheld by previous judicial decisions. Another argument was made regarding the Court's discretion to reduce interest from the date of the contract. The appellant claimed that the Court could vary the terms of the contract under Order 34, Rule 11(a)(i) of the Civil Procedure Code. However, the Court found no reason to alter the contractual rate of interest in this case, considering the nature of the parties involved and the commercial purpose of the loan. Lastly, the defendants requested to pay the decretal dues in installments. After considering the circumstances, the Court permitted the defendants to pay the amount in installments, with a specific payment schedule and default clause. The appeal was dismissed with costs, and the defendants were directed to bear the costs of the appeal.
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