Sc Decides The Rate Of Interest To Be Charged In Case Of Debt Recovery

Case title:

Rockline Construction Company v. Doha Bank QSC & Ors

Date of Order:

24th April 2023

Bench:

Justice Sanjay Karol and Krishna Murari

Parties:

Petitioner: Rockline Construction Company

Defendant: Doha Bank QSC & Ors

Facts:

• In the Special Leave Petition No.16537/2021, Rockline Construction Company v. Doha Bank QSC & Ors., this Court ordered that a judgement and order from the High Court of Bombay upholding the setting aside of a property sale by the Debt Recovery Appellate Tribunal, Mumbai, were not interfered with. The present Miscellaneous Application is filed to obtain clarification of this order.
• The auction sale confirmed in the applicant's favour on May 16th, 2007, was revoked, and the applicant is now entitled to a return of the whole sale price, as well as any accrued interest, after taking into account any business profits or losses. Regarding this deal, there has long been litigation between the parties. At this point, it should be noted that the history of the current case has been rocky, but for the sake of brevity, only pertinent orders are being mentioned.
• Oman International Bank S.A.O.G. v. M/s Rockline Construction Co. & Anr. was the subject of an order dated July 7, 2014, issued by the Mumbai-based Debt Recovery Appellate Tribunal in Miscellaneous Appeal No. 303/2010.
• It is undeniable that the abovementioned decree became final when this Court issued its decision on a Special Leave Petition submitted by Rockline Construction Company (supra) on 12.05.2022. It should be noted that much earlier than that, the four applicants had already filed a request for a refund of the money in accordance with the Mumbai Debt Recovery Tribunal No. 1's order dated 07.07.2014, which stated that the applicant was entitled to simple interest at 9% per year. 
• This order is the subject of the current application, which was issued by the Mumbai Debt Recovery Tribunal No. 1's Recovery Officer I on July 13, 2102.   This goes against the applicant's demand for interest at the rate and conditions that typically apply to commercial transactions.
• The fact that the appellant chose to appeal the same is also supported by the record and is evident from a cursory reading of the current application. 

Issue Raised:

Question was raised before the Supreme Court of India regarding the rate of interest to be charged in accordance with the debt recovery.

Arguments:

• The petitioner has submitted contemporaneous documentation to support its claim, which shows that the rate of interest that is typically paid on commercial transactions is 14.5% with monthly rests and is subject to fluctuation.
• There is no question that the petitioner contributed large sums to the auction offer in 2007.  
• It is undeniable that the applicant is entitled to interest given the aforementioned context.   The petitioner would be entitled to a certain rate and terms of interest, and the calculation of mesne profits are the only two disputed points that remain and need to be decided. Normally, we would have made the same decision ourselves, but since the appeal regarding it is currently before the adjudicatory authority—Appeal No. 8 of 2022, Debt Recovery Appellate Tribunal, Mumbai—we abstain from doing so, allowing the said fact­finding authority to do so, promptly and in accordance with the law.
• It is contended before us that the passage of time may have prevented the appeal. Given the ongoing, protracted litigation between the parties to the lawsuit, we believe this objection to be unpersuasive under the pertinent facts and circumstances.   Therefore, the applicant's right and entitlement to monetary claims cannot be denied based on the argument that the statute of limitations applies.
• Therefore, after carefully weighing the considerations presented in the application and the written responses submitted on behalf of the respondent, we decide to dismiss the current case as follows: A) On May 1, 2023, the parties must appear before the appellate authority and submit a copy of the order for record. B) The appellate authority must decide the applicant's appeal within two months, strictly on the basis of the merits and in accordance with the law because each day that passes would result in a loss due to the accrual of interest payments. The parties must work together closely. The question of limitation shall be resolved.
• The petitioner has the freedom to contact this Court should the necessity arise explicitly. 

Analysis:

• In the present case an application was filed for clarification with regards to an order passed by the honorable Supreme Court. 
• The High Court ordered to set aside the property in this case.
• The Mumbai Debt Recovery Tribunal No.1's Recovery Officer-I later ruled that Rockline Construction Company had been entitled to simple interest of nine percent per year rather than the interest rate that the company had claimed, based on market practise, where the rate of interest is 14.5% with monthly rests for commercial transactions.

Conclusion:

In the case of Rockline Construction Company v. Doha Bank QSC & Ors, the Supreme Court clarified the applicable interest rate on the reimbursement of a contested property transaction. The petitioner had asked the court for clarity over an earlier ruling upholding the revocation of a property sale by the Mumbai-based Debt Recovery Appellate Tribunal. In May 2007, the sale was approved in Rockline Construction Company's favour; however, it was later overturned. The petitioner had asked that the interest rate on the money placed in 2007 be set, along with the deduction of any mesne profit from the money being reimbursed.