VIJAYA CHOWLA Vs. VIJAYA BANK BANGALORE

JUDGEMENT

(1.) I have heard both the learned Advocates. The dispute in this case hinges around the question as to whether the petitioners' who were the judgment-debtors are eligible to claim counter interest on the amounts deposited by them with the Bank towards payment of the decretal amount. In this case, a decree came to be passed against the petitioners' for Rs. 46,921-08 with interest at the rate of 18% P. A. and certain costs. The petitioners' made the repayments in various small amounts ranging from Rs. 1,500/- to Rs. 8,000/- over a period of about 4 years. There is no dispute about the fact that they repaid approximately Rs. 73,000/- to the Bank. According to them, the bank has received an amount which totally satisfies the decree and for this purpose, petitioners' learned Advocate submits that there cannot be a one-way transaction which benefits the Bank and prejudiced the petitioners in the matter of recovery proceedings. Relying on certain observations in an earlier decision of this Court in the case of Life Insurance Corporation of india v B. R. Honnappa and Others, learned Advocate submits that by a reverse procedure, the judgment-debtor is equally entitled to the computation of interest for the entire period on each of the sums that have been repaid. The submission is that if that interest were to be added on to the amount of Rs. 73,000/-which has in fact been repaid to the Bank, that it will more than satisfy the decree. It was precisely this contention which the executing Court has rejected and the petitioners' have directed this civil revision petition against that order.

(2.) THE learned Advocate who represents the Bank has vehemently objected to the sanctioning of any such procedure. He points out that the financial institution is the aggrieved party which has virtually been forced to adopt recovery proceedings and that finally, having obtained a decree, that the bank had to wait for 4 long years during which the petitioners kept paying small amounts of money in bits and pieces and that at the end of this period they took up an untenable contention that no further amount was due. Learned Advocate has produced before me a clear-cut statement drawn up by the Bank which progressively shows the outstanding amount along with accrued interest and the periodic deductions that are made from the aggregate each time an instalment payment was received. He submits that if this computation were to be scrutinised that it will be abundantly clear that the petitioners have got the benefit of interest in the sense that had the instalment not depleted the outstanding interest on the higher amount would have accrued which has not been done. He therefore submits that the concept of claiming counter interest is misconceived and that it just cannot be sanctioned. To this, the petitioners' learned advocate has contended that the amounts paid by the petitioners should have been separately computed and progressive interest added on to these amounts which according to her would have compounded over a period of time and thereby, the case made out by the petitioners that the decree has been satisfied would still hold good.

(3.) THE Courts have, over the years very clearly accepted the manner in which repayments are to be appropriated. The Bank has followed the accepted formula which the Courts have held to be the correct one and I see no defect in the methodology, that has been adopted by the Bank. The counter interest that is talked about by the petitioners is automatically taken care of when the instalment depletes the outstanding and instead of computing counter interest and then offsetting against the interest that has accrued to the decree-holder, the judgment-debtor would be in all circumstances better of if the outstanding dues were to be straightaway reduced. Even in the present case, if the total amounts paid were to be awarded interest at the rate of 6% which is all that the petitioners' would be entitled to, it would mean that the head of outstandings would keep adding on the interest at the rate of 18% p. a. and the difference between the two heads would be far higher than what is at present reflected. Not only can such a procedure not to be sanctioned but it is equally relevant to record that it would not be in the interest of the debtor to whom, the most favourable formula would always be applied.