VASANT Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THE principal question raised in the appeal is about the interest awarded by the learned trial Court to the plaintiff Bank.

(2.) THE facts are that the plaintiff Bank had agreed to advance a loan of Rs. 34,000/- to the appellant-defendant against the security of gold ornaments required to be pledged by the appellant-defendant with the plaintiff Bank. For the purpose of availing the above loan facility, the defendant executed a demand promissory note for Rs. 34,000/- on 20-1-1981 in favour of the plaintiff Bank. The rate of interest stipulated in the said Promissory Note was 18. 5 per cent per annum with quarterly rests, which according to the plaintiff Bank, was agreed to by the defendant. Since the defendant failed to pay the amount of interest on the loan advanced by the plaintiff Bank, the total outstanding loan including interest applied quarterly, amounted to Rs. 44,511. 42 ps. calculated as on 21-10-1983. The plaintiff Bank, therefore, issued a letter by registered post A/d on 18-11-1983 requesting the defendant to pay the entire dues. The defendant executed a revival letter dated 20-1-1984 acknowledging the liability in respect of the above loan. It is the case of the plaintiff Bank that by reply dated 22-3-1984, the defendant expressed his inability to pay the dues in lump-sum and, therefore, requested the plaintiff Bank to grant him instalments and not to auction the gold ornaments. The plaintiff Bank was not ready to accept the amount in instalments; hence it served a notice by registered post through its Advocate, upon the defendant on 13-2-1985 requesting the defendant to pay all the outstanding dues against him to the plaintiff Bank. In reply sent through his Advocate, the defendant informed the learned Advocate of the plaintiff Bank that the defendant was ready to make the full payment of outstanding dues provided the plaintiff Bank was ready to return the gold ornaments to him immediately. In paragraph 3 of the said letter dated 22-2-1985 (Exh. 40), it is clearly stated that if no reply is received from the plaintiff Bank within 7 days of the said notice, the liability of the defendant to pay the interest on loan amount would come to an end. 2-A. It appears from the acknowledgment filed on record that the said reply of the defendant was received by the plaintiff Bank on 6-3-1985. However, the plaintiff Bank did not thereafter send any reply to the defendant or his Advocate, but immediately preferred the suit on or about 11-3-1985 for recovery of the amount of Rs. 56,886. 78 ps. , which was due on the date of the suit, including the principal amount as well as interest charged upto the date of the suit. The plaintiff Bank also claimed future interest from the date of the suit till realisation at the rate of 18 per cent per annum on the aforesaid principal amount. In default, the plaintiff Bank claimed that it should be allowed to sell gold ornaments mentioned in paragraph 9 of its notice and if still there remained any balance, liberty should be given to the plaintiff Bank to apply for a decree of the balance amount.

(3.) THE defendant replied to the plaint allegations in the suit by filing his written statement. According to the defendant, it was a personal loan advanced to him against the pledge of the gold ornaments and that the compound interest charged more than 12 per cent per annum was excessive, particularly in view of the notification issued under section 3 of the Usurious Loans Act, 1980. The defendant has further stated in his written statement that since he was ready to pay the whole of the decretal amount subject to the condition that the plaintiff Bank should return the gold ornaments immediately, the instant suit filed by the plaintiff Bank was unnecessary and, therefore, the plaintiff Bank should not be granted any interest as well as costs of the suit.