STATE BANK OF INDIA Vs. SUKUMAR SAHA

JUDGEMENT

(1.) This appeal has been filed against the judgment dated 9.1.98 passed by the learned Single Judge of this Court in F.A. No. 45 of 1992. By the impugned judgment, the learned judge in exencise of the power under Section 34 of the Code of Civil Procedure read with order 34 of the C.P.C. directed the Debtor to pay the interest which will be claculated at 11 % P. A. and accordingly the appeal was allowed.

(2.) Being aggrieved by this order, the Bank has come on appeal. The case of the Bank is that the borrower agreed to pay interest 51/2% subject to the minimum interest of 11% P. A. The comtention of the Bank is that the Court has no power under order 34 of the Code of Civil Procedure to reduce the interest and/or bring it down below the agreed rate/contractual rate and in support of this contention, the learned Advocate for the Bank relies on AIR 1999 SC 896 (State Bank of India, Appellant V. Yasangi Venkateswara Rao, Respondent). That particular case arose out of a suit for recovery of money and that was decreed by the Trial Court by passing a preliminary decree and the same was up-held by the District Court. There was a Second Appeal and in that Second Appeal a point was raised regarding the charging of interest by the appellant-Bank. After the decree of the Trial Court by the Banking (Amendment) Act 1 of 1984 new Section 21-A was inserted in the Banking Regulation Act. Relying upon that provision it v as the contention of the appellant that there would be no occasion for the court to reduce the rate of interest which the borrower had contracted to pay. The High Court came to the finding that Section 21-A is not a valid piece of legislation. On appeal the Supreme Court held that Section 21 -A is a valid piece of legislation and that Section applies to all types of loan which were granted by Bank to the person/persons whether they are agriculturist of non-agriculturist. In paragraph-8. The Supreme Court has pointed out as follows :-

(3.) This case did not consider Section 34. That has been considered by the Division Bench of this Court in AIR 1986 Gauhati 71 (Must.Jubeda Khatun, Appellant V. Sulaiman Khan, Respondent) and the law has been laid down as follows:-