PUNJAB NATIONAL BANK Vs. SISHU

JUDGEMENT

(1.) As the same question of law is involved in both these revisions, I would dispose of both these revisions through this common judgment.

(2.) Learned counsel for the petitioner submitted that it was not open to the prescribed Authority-cum-Sub-Divisional Officer (Civil), Kaithal to tinker with the contractual rate of interest and reduce it to 6.5% per annum as it was a loan advanced by the Bank. In support of this submission he has drawn my attention to State Bank of India v. Yasangi Venkateswara Rao, (1999) 1 JT (SC) 145 : (AIR 1999 SC 896) where the Hon'ble Supreme Court has held that the Court cannot interfere and reduce the interest on the amount of loan advanced by the bank as that the matter of contract between the parties. The mortgaging of a property is with a view to secure the loan and has nothing to do with the quantum of interest to be charged. In State Bank of India v. Yasangi Venkateswara Rao (supra), suit was for the recovery of money by the State Bank of India. Trial Court passed a preliminary decree and the same was substantially upheld by the District Court. In the second appeal which was filed, one of the contentions which was raised related to the charging of interest by the bank. After the decree of the trial Court by the Banking Laws (Amendment) Act 1 of 1984, new Section 21-A was inserted in the Banking Companies Regulation Act. The said Section reads as follows :"Notwithstanding anything contained in the Usurious Loans Act, 1918 or any other law relating to indebtedness in force in any State, a transaction between a banking company and its debtor shall not be reopened by any Court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive."

(3.) "Relying upon this provision, the contention of the appellant was that there would be no occasion for the Court to reduce the rate of interest which the borrower had contracted to pay."