Punjab National Bank vs Madan Mohan Sharma and Others

Narendra Kumar Jain, J.—Heard learned Counsel for the parties.

The plaintiff/appellant filed a suit for recovery of a sum of Rs. 2,09,727.80p. against the defendant/respondents pleading therein that the defendant No. 1 took a loan of Rs. 1,93,000/- to purchase a truck but he failed to pay the loan amount in time despite request made to him, therefore, the plaintiff''s suit be decreed.

The defendants No. 2 and 3 filed their separate written-statement. The trial court framed 26 issues. The plaintiff, in support of its case, examined PW-1 Ram Bharosi Lal and exhibited 24 documents. The defendant No. 2 remained absent after filing of the writtenstatement, therefore, ex-parte proceedings were drawn against him. The defendants No. 1 and 3 were present but no evidence was led on their behalf. The trial court decreed the plaintiff''s suit and ordered that since it was the agriculture loan therefore the plaintiff is entitled to interest at yearly rest and not at quarterly rest.

The learned Counsel for the appellants made the following submissions - (1) the trial court committed an illegality in holding that loan advanced to the defendant No. 1 in the present case was the agriculture loan and not the commercial loan whereas it was the commercial loan as the loan was advanced to purchase the truck; (2) the trial court committed an illegality in awarding interest on the decretal amount at yearly rest treating it to be the agriculture loan whereas, it being a commercial loan, the interest should have been awarded at quarterly rest; and (3) the trial court committed an illegality in awarding future interest at the rate of 6% only.

The learned Counsel for the respondents defended the impugned judgment and decree passed by the trial court and prayed for dismissal of the appeal.

I have considered the submissions of the learned Counsel for the parties and examined the impugned judgment as well as the record of the trial court.

There is no dispute in between both the parties that the loan was advanced in the present case to purchase the truck and it is a commercial loan. The trial court relied upon the judgment of the Karnataka High Court in H.P. Krishna Reddy v. Canara Bank, Bangalore AIR 1985 Kar 228, but I fail to understand as to how the said judgment is helpful and relevant in the facts and circumstances of the present case. In the said judgment, there was no dispute in between both the parties that the loan was advanced for agriculture purpose and Karnataka High Court took a view that, it being an agriculture loan, the guidelines/circulars of the Reserve Bank of India are binding on the Bank and the interest was awarded at an yearly rest in place of quarterly rest. So far as the present case is concerned, the loan was advanced to purchase the truck and, in these circumstances, it cannot be held to be the agriculture loan and, in my view, the trial court committed an illegality in applying the ratio of the case decided by the Karnataka High Court in H.P. Krishna Reddy v. Canara Bank, Bangalore AIR 1985 Kar 228.

So far as award of interest at quarterly or yearly rest is concerned, the learned Counsel for the appellant does not dispute that had it been the agriculture loan the interest would have been charged at yearly rest but, in the present case, the loan was advanced for commercial purpose therefore award of interest at quarterly rest is absolutely illegal. I have also took a view in preceding para that it was the commercial loan and not the agriculture loan, therefore the plaintiff Bank is entitled for interest on the due amount at quarterly rest.

So far as interest at the rate of 12.5% on the due amount till the date of filing of the suit awarded by the trial court, is concerned, the same has wrongly been awarded and it is enhanced from 12% to 12.5%.

So far as award of interest at the rate of 12.5% from the date of filing of the suit i.e. 14th August, 1987 till the date of decree is concerned, it is directed that it will be charged at quarterly rest in place of yearly rest as directed by the trial court.

So far the question in respect of award of future interest i.e. from the date of decree till realization of the decretal amount is concerned, the trial court has awarded the interest for this period at the rate of 6% per annum. The submission of the learned Counsel for the appellant is that it should be at the rate of 12.5% itself. The Constitution Bench of the Hon''ble Apex Court in the Central Bank of India Vs. Ravindra and Others, considered the powers of the Court with regard to award of interest in the context of Section 34 of the CPC and in Para 55(8) of the judgment the Hon''ble Court held that award of interest pendente lite and post decree is discretionary with the court as it is essentially governed by Section 34 CPC dehors the contract between the parties. In a given case if the court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced, the court may exercise its discretion in awarding interest pendente lite and post decree interest at a lower rate or may even decline awarding such interest. The Constitution Bench of the Hon''ble Apex Court has thus clearly held that u/s 34 of the CPC the Court in its discretion can award interest pendente lite and post decree interest at a lower rate or may even decline awarding such interest.

In the present case the trial court while exercising its discretion has awarded 6% interest for future period i.e. from the date of decree till the date of realization of the decretal amount. I do not find any illegality in the said finding of the trial court. However, the interest at the rate of 6% per annum for future period will be charged at quarterly rest.

In view of the above discussions, the appeal is partly allowed. The impugned judgment dated 15th February, 1994 passed by the District Judge, Dholpur in Civil Suit No. 71/1987 is modified and it is held that the plaintiff/appellant will be entitled to charge interest at the rate of 12.5% at quarterly rest on the due amount till the date of passing of the decree; and at the rate of 6% per annum at quarterly rest for future period i.e. from the date of decree till the date of realization. The parties are left to bear their own costs.