STATE BANK OF INDIA Vs. UMANATH GANPAT NADKARNI

JUDGEMENT

(1.) THIS appeal arises from the judgment and decree dated 21st August, 1996 passed by the Civil Judge, Senior Division, Quepem, in Special Civil Suit No. 79/92/a. By the impugned decree the trial Court has decreed the suit and the respondents are directed to pay a sum of Rs. 1,03,088/- with interest at the rate of 15. 5% per annum with quarterly rests from 30-6-1992 till 23-11-1992 and further to pay simple interest at the rate of 6% per annum from the date of filing of the suit till the date of final payment.

(2.) THE facts, in brief, relevant for the decision are that the appellant herein advanced a sum of Rs. 95,000/- in the form of agricultural term loan for the purpose of poultry development to the respondent No. 1 on the strength of guarantee furnished by the respondents Nos. 2 and 3. In terms of the agreement, the respondent agreed to repay the loan at the rate of interest of 12% per annum with quarterly rests. After obtaining the loan, the respondent did not pay the instalments as agreed upon and therefore, the appellant served a legal notice dated 3-11-1992 calling upon the respondent to pay the entire dues with interest. Since the respondent did not pay the same, the appellant filed the suit claiming total sum of Rs. 1,03,088/- with interest at the rate of 15% per annum with quarterly rests from 30-6-1992 till the date of final payment. The respondent contested the claim of the appellant and submitted that the respondent had suffered heavy losses and therefore, could not make the payment regularly. The respondent denied the liability to pay interest at the rate over and above 6% per annum as per the Reserve Bank directives for the loans granted in the form of agricultural term loans. The trial Court decreed the suit as already stated above while holding that the appellants have admitted that the loan was given for agricultural purpose and the respondents alleged that they could not repay the loan due to the losses incurred in the business.

(3.) SHRI R. G. Ramani while assailing the impugned judgment and decree, submitted that the trial Court ought to have held that the proviso to section 34 of the Code of Civil Procedure was directly attracted in the case and therefore, ought to have awarded the future interest at contractual rate. According to the learned Advocate, the reasons given by the trial Court for restricting the rates of interest at 6% per annum are untenable in law. Once it is not disputed that the loan was granted for the purpose of poultry development, merely because the same is granted under the scheme of agricultural term loan, that would not entitle the respondent to restrict the payment of interest at the rate of 6% per annum, and therefore, the trial Court erred in not granting future interest at contractual rate. In support of his submission, the learned Advocate sought to rely upon the decisions in the matter of (Canara Bank v. Mahadeo Appa Phadtare and others),: 1995 Bank. J. 400 : A. I. R. 1994 Bombay 251, (Central Bank of India v. Ravindra and others), reported in 1997 Bank. J. 127 (S. C.) : 1996 (5) S. C. C. 279, (Corporation Bank v. D. S. Gowda and another), reported in 1995 Bank. J. 217 (S. C.) : 1994 (5) S. C. C. 213, (Bank of India v. Harish Chandra Shrivastava and another), reported in 1998 (I) B. C. 362 and in the matter of (State Bank of India v. M/s. Himalaya Engineer Works and others), reported in 1997 (II) B. C. 599.