SYNDIC ATE BANE Vs. M T SETHUMADHAVAN

JUDGEMENT

(1.) this is one more of several cases wherein a bank is required to approach the High Court for rectification of the decree passed against a defaulting borrower only because the trial court has not awarded the rate of interest that the institution is entitled to receive in law. The solitary submission advanced by the appellant's learned Advocate is that the institution is the aggrieved party in this case insofar as the transaction was a purely commercial one, the money is having been borrowed for commercial purposes and in the event of non-payment, that no indulgence whatsoever can either be asked for or granted as this would be manifestly unjust to the lender institution. A division bench of this court recently had occasion to observe as follows in the decision in the case of Vijaya Bank Ltd. V. Ganapathy Filaments :

(2.) the court while considering the provisions of Section 34 of the C.P.C., had occasion to take cognizance of the proviso to that Section and to hold that it is the contractual rate of interest that would be applicable, but what is significant is that the division bench also had occasion to observe that it is more an issue of propriety insofar as, the non-awarding of the higher rate of interest would encourage acts of dishonesty. I need to add to those observations to the extent of stating that given the present economic conditions, it would be a travesty of Justice if interest at the rate of 6% or some such figure were to be awarded to the institutions and this would make it more profitable for the borrowers to default rather than to repay the loans. Quite apart from that, having regard to the length of these litigations which the banks are forced into in such cases, it would virtually be doing an abnormally good turn to the defaulting party at the expense of a banking institution which is not and can never be the scheme of the law.

(3.) the hearing of this appeal was expedited and on the last date of hearing, the respondents' learned Advocate requested the court not to dispose of the appeal on the ground that his client would approach the bank for an amicable settlement. That Order was passed on 29-3-1995 and the Order very clearly indicated that no further time would be granted if a solution had not been arrived at by 13-6-1995. The appeal has been listed for hearing today and has been called out and taken up in normal course. The appellant's learned Advocate is present, but neither the respondents nor their learned Advocate are present before the court. I have taken note of the fact that this case had proceeded ex parte before the trial court and it is very clear under these circumstances that the respondents have nothing to say.