PUNJAB NATIONAL BANK Vs. JUKTAR SINGH

JUDGEMENT

(1.) THIS is plaintiff's appeal under section 96 of the Code of Civil Procedure and is directed against the judgment and decree dated 26 -2 -1982 passed by Shri M.M. Baurey, IV Additional Judge to the Court of District Judge, Bilaspur in Civil Suit No. 9 -B of 1981.

(2.) THE respondent No.1 had borrowed a sum of Rs. 29,000/ - from the appellant bank for purchasing a four wheeler matador pickup van. It may be noticed that the said respondent held a motor driving licence and presumably wanted to start his own business. The agreement about the aforesaid loan contained a clause for payment of interest at the rate of 5% above the bank rate with a minimum of 11% per annum with quarterly rest. From the statement of account (Ex. P.13), it appears that the said respondent paid instalments up to 1975, though somewhat irregulary and failed to pay thereafter. From their statement, it would appear that he had paid about Rs.12,000/ - in various instalments. However, since the amount remained uncleared, the appellant -bank filed the present suit for recovery of Rs. 50,425/ - as balance due to them. This amount included the interest as per the contract and was accompanied by further prayer of grant of interest at 14% per annum. The learned trial Judge, on appreciation of oral and documentary evidence on record, decreed the entire claim including the claim of interest at 14% with quarterly rest. However, while awarding interest from the date of the suit till realisation, the learned Judge awarded the same at the rate of 5% per annum. According to the learned trial Judge, the officers of the bank were negligent in not taking any effective step towards recovery of the loan in question. The appellants are satisfied with decree of their claim up to date of the suit, but have preferred this appeal challenging the grant of interest pendente lite.

(3.) SUBMISSION of the learned counsel for the appellant is that because of section 49 of the Reserve Bank of India Act, all directions given by the said bank are binding upon the appellant -bank, which include direction regarding interest referring to Ss.20 and 21 of the Banking Regulations Act, the learned counsel pointed out the obligations of the appellant bank to obey the directives of the Reserve Bank of India on every matter including the rate of interest. It is, therefore, submitted that since the rate of interest charged by the bank is controlled by the Reserve Bank of India under the statutory power, the Court exercising its powers under section 34 Code of Civil Procedure cannot award anything less than the contracted rate of interest. According to the learned counsel, grant of interest at the rate of 5% per annum from the date of the suit till realisation amounts to Court granting loan on a lesser rate of interest than statutorily mandated. It is, therefore, submitted that the impugned -judgment and decree should be modified by awarding interest pendente lite at 14% per annum with quarterly rest.