GUPTA AGRICULTURAL UDYOG Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) PUNJAB National Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 transacting banking business of various branches filed suit through its Adampur Branch Manager against M/s Gupta Agricultural Udyog, Mandi Adampur through its partner Suresh Kumar, Dev Karan and Gulzari Lal for the recovery of Rs. 1,48,155.80 on the allegations that M/s Gupta Agricultural Udyog, Mandi Adampur which is a partnership firm applied to it for the grant of certain credit facilities including term loan of Rs. 30,000/-, cash credit limit to the extent of Rs. 50,000/-. Loan proposal was scrutinized. Loan to the extent of Rs. 30,000/- and cash credit limit to the extent of Rs. 50,000/- was sanctioned. Shri Gulzari Lal stood guarantor for repayment of the loan. Suresh Kumar and Dev Karan are partners of the said firm. Interest was agreed to be paid @ 11% per annum. Various loan documents were executed including the hypothecation deed and mortgage deed. Loan was to be repaid in instalments. Pronote dated 18.7.79 was also executed. Machinery was hypothecated. Defendants failed to repay the loan amount.

(2.) DEFENDANTS went ex parte. Additional Senior Sub Judge, Hissar vide order dated 31.8.94 decreed the suit of the plaintiff bank with costs. Future interest was awarded at the agreed rate from the date of suit till realisation of the decretal amount. It was directed that future interest shall be calculated only on the principal amount. Decretal amount was directed to be paid along with interest and costs within 6 months failing which the plaintiff bank would be at libety to realise the amount by way of sale of the mortgaged property and hypothecated property. It was also directed that in case the claim of the bank remains unsatisfied, the defendants would be personally liable for the repayment of the remaining amount. Punjab National Bank went in appeal. Appeal was allowed by the Additional District Judge, Hissar vide order dated 10.9.97. In appeal, the bank was allowed interest at the agreed rate on the amount of Rs. 1,48,155.80 which was adjudged to be principal sum while the trial court had allowed interest at the agreed rate on the amount of Rs. 80,000/-.

(3.) IN this appeal, thus, two points arise : namely : (i) whether interest should have been allowed on Rs. 80,000/- or it could have been allowed on Rs. 1,48,155.80 ?; and (ii) whether interest at the agreed rate could have been awarded from the date of suit till the decree of the trial court and at this rate further from the date of decree till realisation or the court could have awarded interest at a lesser rate for these periods in the exercise of its discretion vesting in it under section 34 of the Code of Civil Procedure (CPC).