ABOOBACKER Vs. CANARA BANK

JUDGEMENT

(1.) THE common question that arises for decision in this batch of appeals is the rate of interest applicable to agricultural 'crop loans' advanced by the Banks in respect of the periods prior to the suits, pendente lite and thereafter till realisation.

(2.) THE Canara Bank Branch at Sultan Battery (hereinafter referred to as 'the Bank') is the common plaintiff in all the suits. THE Bank filed the suits O. S. No. 88/89, 7/90, 125/89 and 126/89 for sale of the mortgaged properties before the Subordinate Judge's Court Sultan Battery against defendants for recovery of the money due under the demand promissory note with interest at the rate of 14. 5 per cent per annum compounded quarterly from the date of the suit till, the date of realisation. THE trial court decreed the suits also awarding interest and costs. As against those decrees the present appeals have been preferred by the assignees of the original defendants.

(3.) ON behalf of the appellants, the learned counsel raised the following contentions: (1) That the award of interest at the rate of 14. 5 per cent per annum for the period prior to the suit is illegal and it cannot at any rate exceed the contract rate of interest at 12. 5 per cent per annum. (2) That the levy of penal interest at the rate of 2 per cent per annum is unauthorised and illegal. (3) That the interest applicable to the period (i) from the date of the suit till the passing of the decree and (11) from the date of the decree till realisation, is only 6 % and not the contract rate. (4) That the interest can be awarded only on the principal amount and not on the suit amount which includes the interest till the date of suit or in other words the Bank is not entitled to claim the compound interest, half-yearly or quarterly rests. The above contentions generally cover three specified periods namely, the period prior to the suit, the period from the date of the suit till passing of the decree and the period from the date of the decree till realisation.