Authority: High Court of Madras (Hon'ble Mr. Justice P. Velmurugan and Hon'ble Mrs. Justice K. Govindarajan Thilakavadi)

Order Date: 29.09.2026

Case Overview

  • Parties: Appellants – Rahul Ranganathan (and LRs) vs Respondent – M/s Industrial Venture Capital Limited.
  • Original Suit: C.S.No.21 of 2002 filed by the respondent for recovery of Rs 1,45,93,508.31 (principal Rs 59,87,400 plus interest at 24% p.a.).
  • Background: The appellant allegedly obtained a personal loan of Rs 59,87,400 on 11.01.1996 to purchase 3,52,200 equity shares of Neptune Inflatables Ltd at Rs 10 per share with a premium of Rs 7 per share. The shares were pledged as security under the agreement (Ex.P2) titled “Loan Agreement”.
  • Dispute: The appellant contended that Ex.P2 was a share purchase agreement, not a loan, and argued that no interest was payable. The respondent maintained that the document was a loan agreement, the loan was acknowledged (letter dated 06.01.1999, Ex.P3), and interest was due under the Interest Act and CPC.
  • Procedural History: The appellant failed to file a written statement, lost the right to do so, appealed to the Supreme Court (which refused to entertain the appeal but allowed cross‑examination). The Single Judge decreed in favour of the respondent on 17.08.2016. The present Original Side Appeal (O.S.A. No.205 of 2018) sought to set aside that decree.
  • Key Evidence: Ex.P2 (Loan Agreement), Ex.P3 (Acknowledgement letter), Ex.P4 (Legal notice dated 06.12.2001). The court examined the contents of Ex.P2, noting Clause 3 required repayment on demand and Clause 4 stipulated that interest would not be charged only if the lender realised excess proceeds from share sale, which did not occur.
  • Legal Reasoning: The court held that the written instrument governs; oral submissions could not override the clear terms of Ex.P2. Absence of an express interest clause does not preclude interest under the Interest Act. The court cited Supreme Court precedents confirming that interest is payable when not expressly barred.

Final Outcome

  • The appeal was dismissed; the original decree dated 17.08.2016 stands.
  • The agreement Ex.P2 is confirmed as a loan agreement.
  • Interest is awarded at 6% per annum (as per the Single Judge’s discretion under Section 34 CPC and the Interest Act).
  • No costs were awarded to either party.
  • The connected miscellaneous petition is closed.

Topics: Loan Dispute, Interest Award