INDIAN BANK Vs. MANISHA SHIKA TANI WELFARE TRUST

JUDGEMENT

(1.) In Items 3 and 14, under the heading 'Adjourned Motion' of the cause list, there were seven applications appearing today, and of those it was submitted by Counsel for the parties that G. A. No. 5179 of 1999, G. A. No. 475 of 1999, G. A. No. 40 of 2000 and G. A. No. 609 of 2000 had already been disposed of. The remaining three applications, G. A. No. 5018 of 1999, G. A. No. 4148 of 1999 and G. A. No. 125 of 2000 at their instance taken up for hearing, and disposed of by the following order.

(2.) By an agreement dated March 6, 1985 it had been agreed among one Kiran Construction and Development Corporation, Manisha Shika Tani Welfare Trust, Bans hall Builders and Indian Bank, that the bank would grant a 'premises loan' of an aggregate sum of Rs. 13,92,000.00 to be shared equally by Kiran Construction and Development Corporation and Manisha Shika Tani Welfare Trust, and that they would repay their respective shares with interest at the rate of "18% per annum." It had also been agreed that both Kiran Construction and Development Corporation and Manisha Shika Tani Welfare Trust would construct and let out to the bank, the entire first floor of the building to be constructed at an agreed rent. The terms and conditions of the agreement included that the bank would not pay the monthly rent to the Corporation or the Trust but would adjust the amount towards the repayment of the respective loans. The Corporation and the Trust had half share each in the first floor. The loan had been granted by the bank and the building had been constructed. The bank had entered into possession of the first floor. The rental amounts payable to the respective owners were being adjusted as agreed towards the repayment of the loan. The Corporation and the Trust were in breach of the terms of the loan agreement and the bank instituted two separate suits, against the parties respectively. The suit which had been instituted by the bank against Kiran Construction and Development Corporation had been disposed of by an order dated Aug. 1,1995.

(3.) The Corporation in its application had prayed for orders which would in effect dispose of the suit. The Honourable Judge in the order dated Aug. 1.1995 considered as to whether in disposing of the application the defendant could submit to a decree and, if so, whether interest pendent lite, interest on judgement and costs could be determined by the Court. The facts and circumstances were similar to those in the present case. During the pendency of the suit filed by the bank the defendant had made an application in the suit for a direction on the plaintiff to refund the excess deductions which the plaintiff had made from the rentals. It had been similarly alleged by the defendant, who was the petitioner in this application, that it would appear from the schedule of accounts furnished by the bank that as on July 6, 1987 the balance in respect to the petitioner was Rs. 7,20,018.47 and after giving credit for the rentals, the amount as on Oct. 31, 1999 stood at Rs. 4,69,079.00, which, according to the bank as pleaded in their affidavit-in-opposition, was due towards interest. It was also submitted on behalf of the petitioner, that there was no disclosure by the bank as to when the principal amount had been fully adjusted. He submitted that if the bank had charged simple interest computed at the rate of 15% per annum, as had been directed by the Reserve Bank of India, and as the parties had agreed, or simple interest at the rate of 12% per annum as had been allowed by the Honourable Judge in the order dated Aug. 1, 1995, the loan would then have been repaid in 1993, and the petitioner would be entitled to refund of a sum of Rs. 8,06,670.022 which had been retained by the bank wrongfully. It was further submitted, that the bank purported to charge compound interest at the rate of 18% per annum and that was wholly against the directive of the Reserve Bank of India and in violation of the terms of the agreement between the parties and of course against the order dated Aug. 1, 1995. According to counsel for the petitioner, the Bank had also failed and neglected to pay the municipal rates and taxes which it was bound to pay in accordance with the agreement.