STATE BANK OF INDIA Vs. SHARMA PROVISION STORE

JUDGEMENT

(1.) This appeal is directed against the judgment passed by Additional District Judge Kishtwar in suit No. 21/civil on May 25, 1996. By means of impugned judgment while passing ex parte decree for Rs. 22,347/- against defendants future interest has been reduced to 6 per cent instead of 14 per cent as claimed in the suit. Interest has been allowed from the date of Institution of the suit till realisation of the decretal amount. Defendants have also been burdened with costs of the suit. According to appellant-Bank interest ought to have been allowed at the rate of 14 per cent with quarterly rests as claimed.

(2.) Facts in this case are within narrow compass. A suit came to be filed by the appellant against respondents. Respondent No. 1 is the sole property concern of Surjit Kumar and he approached the appellant for grant of Rs. 15,000/- as loan being an educated youth belonging to village Thakrai, Tehsil Kishtwar. This loan was availed by respondent No. 1 for commercial purposes i.e. for carrying on his business and had been duly guaranteed by respondent No. 2 Sanjeev Kumar Gupta. From the file of the trial Court basis of the suit made out is the demand promissory note dated 5-6-1991 executed by Surjit Kumar in favour of Sanjeev Kumar Gupta, respondent No. 2 undertaking to pay the said amount for value received with interest from the date of pronote dated 5-6-1991 with quarterly rests. This document has been proved as Mark 'A' by PW B.L. Ramdasi. In addition to this document Mark 'B' has also been proved, this is a letter of delivery of D.P. Note Mark 'A' to the Bank by Surjeet Sharma. Mark 'C' is the affidavit purported to have been filed by Surjeet Sharma stating therein that he had not taken any kind of loan from Industries department or any other Bank. Document Mark 'D' is the Rent note of the premises in question. Similarly witness has also proved the arrangement letter Mark 'E' and agreement of Hypothecation Mark 'F', as well as guarantee agreement Mark 'G'.

(3.) So far arrangement letter Mark 'E' is concerned, it speaks of interest at present being 4 per cent to be applied at rests, what would be the rest is not specified and was subject to revision from time to time. No benefit can be derived by the appellant bank from this document as it is not signed on its behalf. In order to take advantage of this letter it had to be shown that the terms of it were accepted by both the parties, that is not the situation in the present case, no doubt, it is signed by Surjeet Sharma and Sanjeev Kumar Gupta. Then comes the document Mark 'F' which is the agreement of Hypothecation of goods, which is executed by both the respondents at page 2 thereof clause 2nd deals with interest. A perusal of it shows that no rate of interest is mentioned therein. Similarly, there is no mention of rate of interest in the Guarantee Agreement. No doubt, in the statement of account filed by the appellant-bank and marked as Exhibit PW-BL, interest has been debited to the account. It hardly needs to be emphasised here that appellant bank is entitled to interest but at what rate and with what rests has to be spelt out by the loan documents subject to which the loan was granted by the appellant-bank which was availed by the loanee and had been guaranteed by the Guarantor. No doubt, in his oral statement PW-B.L. Ramdasi had stated that the respondents are liable to pay interest at the rate of 14 per cent per annum. Such a statement is of no consequence, unless it is proved that interest was firstly agreed to be paid at particular rate with rests, mere statement by the bank official in Court is of no consequence. Payment of interest is a matter of contract for reasons held, known to bank officials. Rate of interest had not been mentioned at all in any of the documents. As already observed in D.P. Note executed by the loanee-respondent 1 in favour of his guarantor-respondent No. 2, vide Mark 'A' and delivered by both of them to appellant-bank vide Mark B, there is no mention of any interest. Similar is the position in respect of agreement of Hypothecation, as noticed hereinabove, wherein no interest has been mentioned. That being so, it is clear that there is no privity of contract for payment of interest by respondents to the appellant-bank.