GENERAL CONSTRUCTIONS Vs. THE SOUTH INDIAN BANK LIMITED

JUDGEMENT

(1.) The component of interest has become disproportionate to the component of the principal sum actually advanced more so because of the pendency of this Appeal Suit for 20 long years.

(2.) The appellants who are the partnership firm and its partners availed two overdraft facilities of Rs.2,00,000/- each and a fully secured loan of Rs.1,72,000/- from the respondent Bank. The agreed rates of interest for the two overdraft facilities were 17% per annum and 19.5% per annum and that for the fully secured loan was 19.5% per annum. The stipulation as regards the rates of interest were incorporated in the various loan documents evidenced by Exts.B6, B13, B31, B36 and B49. The court below has decreed the suit for a sum of Rs.13,57,642/- which includes the sum of Rs.5,72,000/- towards the principal and Rs.7,85,642/- towards the interest. It is a conceded fact that the A.S. No. 757/1996 component of interest did exceed the component of the principal sum even on the date of the suit or the decree. The court below has awarded interest at the rate of 15% per annum from the date of suit and the amount now due under the decree has swelled upto a whopping sum of Rs.59,66,653/-.

(3.) The only ground urged by the appellants is that the rate of interest is liable to be scaled down applying the dictum in Central Bank of India v. Ravindra [2002 (1) KLT 743 (SC)]. The appellants relied on paragraph 55(8) of the judgment which inter alia reads as follows:-