SHIV BUILDERS Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THIS first appeal is directed against a judgment and order dated 11th October, 2000 of the learned 4th Joint Civil Judge, Senior Division, Nagpur. By the impugned judgment and order, the suit filed by the respondent-bank for the recovery of its outstanding dues, has been decreed. The appellants are original defendant Nos. 1 to 3 to the suit. The trial Court while decreeing the suit has directed all the 5 defendants to the suit, including the appellants, to jointly and severally pay a total amount of Rs. 6,22,135. 85 alongwith future interest @ 16. 5% p. a. from the date of suit until payment. While referring to the date of institution of the suit in Clause 2 of the operative order, the learned trial Judge has referred to the date as 27th February, 1995. Both the learned Counsel are agreed that this is an inadvertent typographical error and the correct date from which interest would have to be paid, as the date of institution of the suit is 27th February, 1998. The learned trial Judge has also granted monthly instalments of Rs. 5,000/- to the appellants to pay the outstanding dues. There is a declaration that the dues of the appellant are secured by an equitable mortgage by deposit of title deeds in respect of two flats being flat No. 304-B and flat No. 308-H, which has been referred to in operative Clause 4 of the impugned order.

(2.) APART from the typographical error which has crept in the operative order of the learned trial Judge, this first appeal has been filed on a very narrow question namely, the correctness of the order of the learned trial Judge in so far as it awards future interest @ 16. 5% p. a. on the amount of Rs. 6,22,135. 85/ -. The contention of the appellants is that the future interest @ 16. 5% could only have been awarded on the principal sum which was advanced amounting to Rs. 5,00,000/- and that, therefore, the order of the learned trial Judge would require modification to that extent. Since this was the only point which was urged, the parties, through learned Counsel, had agreed that the matter may be heard and finally disposed of at the stage of admission. Record and proceedings were called for. With the assistance of the learned Counsel, I have perused the record and proceedings in so far as it is relevant for the disposal of this appeal.

(3.) IN the present case, a cash credit facility was granted by the respondent-bank to the appellants. The facility was initially granted to the extent of Rs. 3,00,000/- on 3rd June, 1990. The extent of the facility was enhanced to Rs. 4. 50 lakhs on 18th July, 1994 and to Rs. 5,00,000/- on 8th March, 1995. There is no dispute about the fact that the moneys were disbursed and availed of by the appellants. In so far as the question of interest is concerned, the documents on record would have no manner of doubt that the rate of interest that is agreed upon between the parties was in any event, that which has been allowed by the judgment of the learned trial Judge. Exhibit 21 is the letter of sanction dated 25th April, 1994, issued by the bank and Clause 12 thereof specifies that the rate of interest could be 1. 5% above or below, as the case may be, the State Bank advance rate subject to a minimum of 16. 5%. In Clause 23, which is the subsequent letter dated 7th March, 1995, whereby the cash credit limit was enhanced to Rs. 5,00,000/-, the minimum rate of interest that is provided for is 16. 75% per annum. The appellants executed a Demand Promissory note on 8th March, 1995 (Exhibit 24) agreeding to pay the amount of Rs. 5,00,000/- advanced by the bank together with a minimum rate of interest of 16. 75% per annum with quarterly rests. Similarly, Exhibit 26, which is the agreement for cash credit hypothecation of goods and Exhibit 27, which is the agreement for hypothecation of debts and assets, provide for interest @ 16. 75% per annum and 17. 25% per annum, respectively.