CANARA BANK Vs. T T NANJUNDA

JUDGEMENT

(1.) HEARD. Though this is an Regular First Appeal of the year 1995, for one reason or the other the same has so far remained to be disposed of.

(2.) THE appellant-Canara Bank have a limited grievance in this appeal namely that the Trial Court has erred in awarding only simple interest as per the decree while in fact, under the law when the loan becomes overdue, Bank is permitted to enforce what is known as penal rate of interest which includes the amount which is added on because of the default and the Bank is also entitled to compound the same yearly. The appellant's learned Counsel submitted that the defendants had not filed any written statement before the Trial Court and that the Bank's case has been virtually uncontroverted. His submission is that in these circumstances, the Trial Court was in error in having refused to permit the compounding of the interest even though this happened at a subsequent stage after the computation was filed and the Court passed orders on the same. His submission therefore is that interference by this court is called for insofar as the terms of the decree are liable to be varied.

(3.) ON behalf of the respondents, the original defendants, a serious challenge is presented with regard to the very maintainability of the suit. This is really not on a point of law but something that emerges out of the documents executed between the parties and in the absence of a written statement, this Court would have been justified in precluding the respondents from raising any factual issues. However, in the interest of fairness and since it is really a mixed submission on the question of fact and law arising out of the interpretation of the documents, I have considered the submission on merits. The defendants' learned Counsel submitted that a perusal of the agreement executed between the parties will, very clearly indicate that there was to be a total 'repayment holiday' for the period 1986 up to 1993 and that the repayments were to commence in annual instalments from 31-12-1994 up to 31-12-2001. There is no dispute about the fact that clause (d) of the Schedule does provide for this. Her submission therefore is that this agreement has to be strictly construed insofar as the very first repayment from the defendants was to be on 31-12-1994 and if the suit was filed by the Bank in the year 1993 and the same came to be decreed in the year 1994 i. e. , on 23-11-1994, that the entire proceeding was virtually non est because no liability had arisen as on the date when the suit was filed or for that matter decreed. To this, the Bank's Counsel replied by pointing out that as and by way of collateral security, a mortgage deed was executed and that the deed in question very clearly stipulates that the interest will be payable half yearly and it is his submission that since the defendants were persistent defaulters for the payment of the interest, that the liability arose and that they were also liable to pay penal interest in keeping with the law in force. What is really contended is. that by virtue of the defaults committed by the defendants, that the cause of action for recovery had arisen and that the Bank was in these circumstances justified in recalling the loan along with interest.