Punjab National Bank vs Progressive Polyplast Co. Pvt. Ltd. and Others

Shivaraj V. Patil, J.—Heard learned counsel for the parties. This appeal is by the decree holder-Bank. The appellant filed a suit for recovery of money against the respondents. The said suit was decreed to recover a sum of Rs. 10,54,7427- alongwith future interest at the rate of 18% p.a. to be calculated on the principal amount from the date of institution till realisation. The decree further directed that the principal amount shall be calculated after adjusting the amount received by the Bank during the pendency of the suit. Pursuance to the said decree, the appellant initiated execution proceedings. The Executing, Court took the view that the amount of Rs. 10,54,742/- can not be taken to be "the principal amount" for the purpose of calculation of future interest from the date of institution of the suit. In this view refused the award of interest of the decree amount of Rs. 10,54,742/-.

Aggrieved by the order of Executing Court, the appellant filed C.R. No. 608/1991before the High Court. The High Court dismissed the C.R. in limine at the stage of admission. Under these circumstances, the appellant is before this Court in this appeal. 3.The learned counsel for the appellant placed reliance on the Constitution Bench Judgment of this Court in Central Bank of India v. Ravindra and ors. (2001-3)129P.L.R. 837 (S,C.) to contend that principal sum adjudged would be the sum of actualloan plus the amount of interest on periodical rests which according to the contract between the parties or the establish banking practice, stood capitalised. He drew our attention of para 42 of the said judgment in which it is held that the interest once capitalisedceases to be interest and becomes a part of principal sum or capital. As is evident fromthe suit, the claim made by the appellants as on the date of filing the suit was Rs. 10,54,742/- which included the principal loan amount borrowed and interest accrued up to the filing of the suit. Learned counsel for the respondents was not in a position to dispute this legal position. In this view of the matter, this appeal is entitled to succeed. The impugned order of the High Court as well as that of the Executing Court are set aside and we hold that, the appellant is entitled the interest on the principal amount of Rs. 10,54,742/-. The appeal is allowed accordingly. There shall be no order as to costs.

R.M.S.