UCO BANK Vs. SHANKAR ENTERPRISES

JUDGEMENT

(1.) The United Commercial Bank (UCO Bank) has preferred this First Appeal against the Judgment and decree passed by the Vth Additional District Judge, Gwalior, in Civil Original Suit No.6-B/1986, where in the suit preferred by the Bank, for the recovery of dues of Rs.1,68,593.91 Paise (which stood paid-up during pendency of Suit) pendente lite interest @ 5% has been awarded and the Appellant- Bank claims herein that instead of 5%, the Court should have awarded contractual rate of interest. This Appeal relates only to this solitary issue as to whether a Civil Court possess the power and discretion to grant interest as per the rate mutually agreed between the parties or at a lower rate for the period during which the suit remained pending with the Court (pendente lite interest only).

(2.) The facts of the case reveal that Shankar Enterprises being a Partnership Firm had obtained financial assistance from the Appellant-Bank and a Term Loan of Rs.65,000/- and a Cash Credit Facility of Rs.60,000/- was sanctioned in favour of the Firm, for which the Respondents No. 4 and 5 stood Guarantors and the Respondents no. 2 and 3 being Partners of the Firm were equally made responsible for the return of the Loan amount.

(3.) When the Partnership Firm, its Partners and Guarantors could not deposit the Loan amount including interest, a suit was filed on Date 12.09.1983 by the Bank for the recovery of Rs.1,68,593.91 Paise but during the pendency of the Suit, Defendant No.3 had deposited the entire Suit amount of Rs.1,68,593.91 Paise on Date 03.02.1988 vide Cheque No.101595 (including Principal and Interest Amounts) and upon its presentation before the Trial Court, the Counsel for the Bank had received the Cheque, although the same was not immediately encashed by the Bank, due to undisclosed reasons, but the fact remains that the entire due amount was deposited by the Respondents during the pendency of the Suit.