Delhi High Court Rules in Favor of Plaintiff in Friendly Loan Dispute
In a significant legal ruling, the honorable Justice Neena Bansal Krishna presiding over the case of a friendly loan dispute has delivered a verdict in favor of the plaintiff, bringing an end to the protracted legal battle. The judgment, delivered on August 4, 2023, sheds light on the intricacies of friendly loans, usurious loans, interest rates, limitation, and acknowledgment of debt.
The case involved the plaintiff extending a personal loan of Rs. 5 Crores to the defendant in good faith to support the latter’s hotel project. Subsequently, the defendant sought additional financial help, and the plaintiff agreed to provide a further loan of Rs. 2.5 Crores. The entire loan transaction was documented through emails and supported by relevant documents, forming crucial evidence in the plaintiff’s favor.
In a key finding, the Court emphasized the nature of the transaction, dismissing the defendant’s claim that the loan was an investment and highlighting the defendant’s failure to present compelling evidence to support his defense. The Court stated, “The plaintiff has proved his Account Statement of Axis Bank… and the testimony of the plaintiff which is corroborated by the documents and the admissions of the defendant as reflected in the emails, proves that a loan of Rs. 2.4 crores was given by the plaintiff to the defendant.”
Regarding the interest rate on the loan, the Court ruled that the stipulated rate of 5% per month was excessive, and instead awarded interest at 6% per annum from the date of loan disbursement until the date of payment by the defendant. The Court drew upon the Usurious Loans Act, 1918, to justify the decision, stating, “It is quite evident that the stipulated rate of interest @ 5% p.m. is excessive within the meaning of the Usurious Loans Act, 1918 as the general rate of interest at the time the transaction was entered into was in the range of 6-8% p.a.”
Addressing the limitation issue raised by the defendant, the Court pointed to the defendant’s repeated acknowledgments of the outstanding liability through various emails. These acknowledgments constituted a fresh contract in accordance with Section 25(3) of the Indian Contract Act, 1872, extending the period of limitation. The Court remarked, “The suit of the plaintiff is thus, within limitation.”
The Court granted relief to the plaintiff, decreeing a total amount of Rs. 2,44,80,000/- (Rupees Two Crore Forty Four Lakhs and Eighty Thousand only) towards the loan amount, along with a transaction fee of 2% and interest at 6% per annum. The plaintiff was also awarded the costs of the suit.
Date of Decision: : 04th August, 2023
SUDHIR JAIN vs P. MITTAL
