Gurdip Singh vs Union Bank of India and Others

Sarojnei Saksena, J.—The short point involved in this revision is whether the decree-holder bank, respondent No. 1, is entitled to recover interest at the rate of 11.5 per cent. as mentioned in the decree or the bank is entitled to recover interest at the rate of 6 per cent. per annum u/s 34, Civil Procedure Code.

The petitioner''s learned counsel relying on Krishan Lal v. State Bank of Patiala [1990] 1 PLR 133, contended that admittedly this loan was granted to the petitioner''s father for the purchase of a tractor, therefore, it was not a loan for a commercial purpose. Hence, the bank is not entitled to charge interest more than at the rate of 6 per cent. per annum u/s 34, Civil Procedure Code.

The respondent''s learned counsel contended that no doubt, the loan was taken for the purchase of a tractor, but this loan was advanced to the petitioner''s father at the agreed rate of interest. The petitioner''s father executed a mortgage deed in favour of the bank for repayment of this loan. He also executed various other documents in the bank''s favour and also hypothecated the tractor with its implements for realisation of the loan amount with interest. Therefore, relying on Santa Singh v. Punjab National Bank [1996] ISJ 114, Dal Singh v. Punjab National Bank [1995] PLJ 503, Chanan Singh v. Punjab National Bank [1992] ISJ 383 and Shriniwas Raghvendra Javalgekar v. Bank of Maharashtra [1995] ISJ13, he vehemently argued that since this loan was given to the petitioner''s father under transaction of mortgage, it cannot be said that the bank cannot charge interest at the agreed rate. On the facts of this case, the provisions of Section 34, Civil Procedure Code, are inapplicable as the bank is entitled to recover interest on the amount of loan under Order 34, Rule 11, Civil Procedure Code.

In my considered view, no doubt, the loan was given to the petitioner''s father for purchase of a tractor, but at the same time for obtaining this loan, the petitioner''s father executed a mortgage deed in favour of the bank. By filing the civil suit, the bank prayed for a decree for realization of the loan amount along with interest by sale of the mortgaged land measuring 74 kanals-13 marlas as detailed in the headnote of the plaint. Copies of the judgment, plaint and decree were placed before me for perusal. In the decree-sheet also, it is specifically mentioned that this is a suit for recovery of Rs. 66,958.65 along with pendente lite interest thereon at the rate of 11.5 per cent. per annum and also by selling the mortgaged land (described therein) and this suit was decreed. Thus, it is obvious that this was the loan which was advanced by the bank under the contract of mortgage. On that count, Krishan Lal''s case [1990] 1 PLJ 133 is distinguishable on facts because in that case there was no transaction of mortgage. In all the cases cited by the respondent''s counsel, it is held that once the loan is advanced on the basis of a mortgage, the provisions of Section 34 of the Civil Procedure Code, do not apply. The bank is entitled to recover interest at the agreed rate under Order 34, Rule 11 of the Civil Procedure Code.

Consequently, finding no merit in this revision, it is hereby dismissed.