NEELA ASHOK NAIK Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THE appellants had taken a loan of Rs. 95,000 for the purchase of a Maruti omnibus on May 16, 1991, and appellant No. 2 stood guarantor for the said loan and in order to secure due repayment of the same, the appellants executed certain documents, namely, terms and conditions letter, hypothecation agreement, guarantee agreement and form of agreement all dated May 16, 1991. Three fixed deposits to the tune of Rs. 85,000 were taken as collateral guarantee under the form of agreement dated May 16, 1991. The appellants paid a few instalments and thereafter stopped paying the loan amount. A sum of Rs. 9,500 was adjusted from the said fixed deposits on November 21, 1991. Since no payments were made by the appellants, the respondent-bank filed a suit for recovery of a sum of Rs. 1,42,000 from the appellants with interest thereon from December 21, 1993, till final payment. The rate of interest from the time of taking loan until the filing of the suit and even thereafter varied from time to time and the same was to be compounded quarterly. During the pendency of the suit the balance of the fixed deposit receipt amount along with interest to the tune of Rs. 1,20,340 was sought to be adjusted on November 11, 1994, which was stated to be the date of maturity of the said fixed deposits.

(2.) THE appellants had in fact contested the suit mainly on the ground of rate of interest payable on the said loan which according to them was 15. 5 per cent. The trial court came to the conclusion that the respondent had established that a sum of Rs. 1,42,395 was due from the appellants to the respondent and the appellants were directed to pay the said amount with interest at the rate of 19. 75 per cent. per annum compounded quarterly from December 21, 1993, till the date of final payment. The appellants were also directed to pay costs and other expenses in terms of Order XXA of the Civil Procedure Code. The amount of the fixed deposits which was adjusted after the filing of the suit was to be reduced from the decretal amount.

(3.) IN fact, the appellants had taken the plea in pare. 6 of their written statement that any instalment which had fallen overdue was required to be deducted from the three fixed deposits to the tune of Rs. 85,000 but the respondent did not take any steps to adjust the same.