CANARA BANK Vs. WAXOFIELD

JUDGEMENT

(1.) This appeal is directed against the judgment and decree dated 14-5-1997 passed by the learned District Judge, Bank Cases, Jammu, where by the plaintiff/appellant Bank was held to be not entitled to pendente lite interest on the suit amount, which stood fully satisfied by the defendants by payment of the entire suit amount by way of drafts. It appears that plaintiff/appellant -Canara Bank commenced a recovery suit for an amount of Rs. 16,84,559.56 along with future interest at the rate of 16% per annum and 2% penal interest with quarterly rests against the defendants/respondents, based on documents accompanying the plaint. It was during the currency of the Us before the Bank Court that an application came to be initiated by the defendants admitting the claim of the Bank with regard to the suit amount. It was further recited that an amount of Rs. Five lacs towards the liquidation of suit amount has already been deposited by the defendants during the pendency of the suit. In affirmation of the contents of the application, the Trial Court recorded the statement of the counsel appearing for the defendants/ respondents and also defendant 2, Mr. N. K. Jain. The Bank Court further found from the record that three drafts of Rs. Five lacks, and further three drafts worth Rs. Six lacs were handed over to the counsel appearing for the appellant /plaintiff Bank in the open Court on 1-4-1997 and 4-5-1997 respectively. This fact is further affirmed from the certificates obtained of the counsel appearing for the appellant /plaintiff Bank on the margin of the minutes of the file. Defend -ant-2 further handed over two drafts in the sum of Rs.3,21,625.50 to Mr. J. M. Bhatia, Chief Manager of the appellant/plaintiff Bank in the Court on 10-5-1997 and in affirmation of the payment, signatures of Mr. Bhatia have also been obtained on the minutes of the file. As regards the balance amount of Rs.2,62,934/- two FDRs were handed over by one Ajit Prashad Jain to the appellant/plaintiff-Bank for adjusting the deposit accounts of defendant-1, detail of which is explicated in the judgment of the Trial Court. The appellant/plaintiff Bank, however, acknowledged the receipt of the FDRs and its adjustment in the name of defendants- M/s Waxofield and in its affirmation, the statement of Mr. Joginder Mohan Bhatia, Manager of the appellant/ plaintiff Bank, was recorded. The Bank Court found that the entire suit amount of Rs. 16,84,559.56 stood fully paid up and in relying the judgments of this Court reported as Punjab National Bank v. Ashoka Chemists, Civil Suit No. 291 of 1987 and of Calcutta High Court reported in 1990 (1) All India Bank L J 213, held that under Section 34 of the CPC to award or refuse to award the interest is in the discretion of the Court. The Bank Court, therefore, by waiving off pendente lite interest held that the suit amount having been fully paid up. the suit by the plaintiff-Bank is dismissed. Aggrieved by the judgment and decree passed by the learned District Judge, bank Cases, the appellant/Plaintiff Bank has impugned its correctness in this appeal mainly on the ground that the bank Court has waived off the interest in exercise of discretion without any justification. That the Bank Court has rewarded the party by waiving off the interest without taking note of the fact that it has contested the case for a period of seven years. No plausible reasons have been given for non-consideration of the plea of the appellant/plaintiff-Bank for grant of contractual rate of interest. The Court has not appreciated in proper perspective the fact that the appellant/plaintiff Bank is liable to pay interest on deposits and similarly to charge interest on the advances, as agreed.

(2.) I have heard the learned counsel appearing for the respective parties and considered their rival contentions in context of the material on record.

(3.) It is not in dispute that the entire suit amount has been paid up by the respondents/defendants. The only dispute remains with regard to the payment of pendente lite interest after filing of the suit Mr. D. C. Raina, learned counsel appearing for the defendants/respondents vehemently urged that suit has been filed for an amount of Rs. 16,84,559.56 inclusive of interest up to 12th October, 1990. So is also, according to Mr. Raina, borne out from the statement of accounts annexed with the suit. This account was declared as Non-Performing Assets before 12-10-1990 for an amount of Rs. 16,84,559.56 inclusive of interest up-to-date. Mr. Raina further submitted that the entire amount has been paid through drafts and FDRs detailed in the judgment and decree impugned in appeal. Mr. Raina further submitted that revised guidelines for compromise settlement of chronic Non-Performing Assets (NPAs) of the public sector banks have been issued by the Reserve Bank of India dated 29-1-2003. The revised guidelines have covered Non-Performing Assets (NPAs) relating to sectors including the small sector. These guidelines for compromise settlement covered the NPAs up to Rs. Ten crores, which is in modification of guidelines set out in the Circular of 27th July, 2000 Mr. Raina has also produced the revised guidelines of the RBI dated January 29,2003. Mr. Raina further submitted that a communication dated 24-2-2003 has been addressed by the appellant/plaintiff Bank to the respondents/defendants for compromise settlement in terms of the new guidelines/scheme issued by the Reserve Bank of India for one time settlement. This fact has not been disputed even by Mr. Anil Mahajan, learned counsel representing the Bank. Mr. Anil Mahajan candidly conceded that the RBI scheme for one time settlement dated January 29, 2003 clearly provides a Settlement Formula amount and cut off date. On going through the aforesaid RBI revised guidelines for compromise settlement of chronic NPAs, it is clearly gatherable that under the heading "Guidelines for compromise settlement (ii) (a)", the cases of NPAs are classified as doubtful or at Loss as on 31st March, 2000, which read as under: