Jammu & Kashmir High Court
State Bank Of India vs Sh. Ghulam Nabi And Anr. on 20 January, 1998
Equivalent citations: AIR1998J&K46, AIR 1998 JAMMU AND KASHMIR 46
Author: Arun Kumar Goel
Bench: Arun Kumar Goel
ORDER Arun Kumar Goel, J.
1. Heard learned counsel for the appellant.
This appeal is directed against the judgment passed by Additional District Judge. Ramban in File No. 26 Civil, dated 3-6-1987. By impugned judgment trial Court has decreed the suit of the appellant, (hereinafter referred to as plaintiff) for the recovery in the sum of Rs. 23755.55 against the defendants. But neither the cost of the suit nor pendente lite interest from the date of the filing of the suit till the realisation has been granted in the present appeal, the plaintiff has made precise grievance in this behalf.
2. Brief facts giving rise to this case need to be noticed which are as under:-
Defendant No. 1 approached plaintiff-Bank for grant of loan in the sum of Rs. 15,000/-. This prayer of defendant No. I war, favourably considered and the loan was duly provided to him by the plaintiff. For due repayment of this loan, defendant No. 2 furnished continuing personal guarantee, wherein amongst other things he undertook to repay outstanding amount with interest and costs etc. in terms of loan documents. Defendants Nos. 1 and 2 executed hundi Ex.PW and endorsed it in favour of the plaintiff-Bank, defendants executed agreement of hypothecation Ex.PW-1 and defendant No. 2 also executed agreement of guarantee Ex.PW-2.
3. Availing of loan and execution of these documents stood proved from the ex parte statementofPW 1 Mr.R.K.Mailer, who appeared in the Court below on behalf of plaintiff. After considering the exparte evidence produced by the plaintiff, suit of the plaintiff was decreed as aforesaid without interest and costs.
4. Shri Gupta learned counsel appearing for the plaintiff has forcefully urged that the trial Court has fallen into error by not allowing interest from the date of the filing of the suit till the realisation with rests and also cost of the suit. According to him, loan in question was availed by defendant No. 1 for commercial purposes and, therefore, his client is entitled both under law as well as under contract to the said interest. Mr. Gupta has placed reliance on Section 34 of CPC as well as precedents in this behalf.
5. Non-allowance or allowing interest at a lesser rate, than the contracted one is within the discretion of the Court, but exceptional circumstances have to be made out so as to enable the Court to exercise such a discretion in favour of the loanee. In thiscontext it may be appropriate to notice that grant of contractual rate of interest on the loan amount is the rule and departure from it an exception. In case without any justifiable cause, if rate of interest is reduced, it will be putting premium in favour of a defaulter and further discourage an honest loanee who is repaying the amount as per loan documents not to pay the same. This, it will further result in deliberate defaults even by those who had been making payment regularly qua their liabilities towards the banks and other financial Institutions from whom they had availed finances.
6. While going through the impugned judgment, it isclear that no reason any whatsoever has been given by the trial Court in disallowing the interest. In case the trial Court wanted to exercise the discretion vested with it in this behalf, then it was required to give cogent and justifiable reasons for the same to justify the non-
allowing of interest. In this case no reasons have been given by the trial Court while not allowing;
interest when it passed the decree. In addition to| this no foundation was laid by the defendants! making out an exceptional case, enabling the trial Court either to disallow interest or allow it at at lesser rate than the contracted one.
7. Consequently, the decree passed by the trial Court deserves to be modified and it is ordered accordingly.
8. Next question that arises for consideration is at what rate interest is to be allowed in the present case. While going through the pleadings, there is no foundation laid for claiming interest with rests as was urged by Shri Gupta. Learned counsel submitted that in Hundi Ex.PW there is mention of payment of interest at the rate of 2% P.A. above the State Bank of India advance rate subject to a minimum of 14.5% P.A. withquarterly1 rests is there. Therefore, according to him, this Court should allow interest to the plaintiff of 14.5% P.A. with quarterly rests w.e.f. 2nd February, 1985 till the date of payment.
9. In this context, when a reference made to Ex.PW-1, it is clear that there is no mention of interest having been agreed to be paid by the defendants with rests. Similarly, there is no mention of any such rests in the ex parte statement of Branch Manager examined by plaintiff-Bank in the court below. Thus, it is clear that in two documents there are two different rates of interest i.e. Ex.PW speaks of interest with quarterly rests whereas in Ex.PW-1, there is no mention of interest with rests being payable by the defendants. Shri Gupta submitted that benefit of Ex.PW should go to his client.
10. This argument prima facie appears to be quite attractive as well as alluring, but when examined in depth, it does not stand the test of judicial scrutiny. This is not a case of rustic, illiterate litigant. The plaintiff-Bank is an Institution having big network including proper legal assistance. As already noticed hereinabove, there is no prayer made for allowing interest with rests in the prayer clause of the plaint. In addition to this, there are two different rates of interest in the loan documents i.e. in Ex.PW the Hundi and Ex. PW-1, the agreement of hypothecation, one with rests and other without it. Benefit of such a discrepancy is not to go to the plaintiff. Thus it is held that the plaintiff'is entitled to interest @ 14.5% P.A. simple from the date of suit till realization.
11. On the question of costs in the considered opinion of this Court, trial Court was not at all justified in declining the claim of the plaintiff, as no case was made out by the defendants in that behalf. Accordingly, it is held that the plaintiff is also entitled to costs of suit.
12. For the aforesaid reasons, interest is allowed @ 14.5% simple w.e.f. 2nd February, 1985 till the date of realization of suit amount with costs throughout and the decree is modified accordingly.