JUDGMENT D. P. Sood, J.—The plaintiff bank, a body corporate established under the State Bank of India Act, 1955, deals in advancing the loan to various persons who intend to run their business. Defendant No. 1 is one of such like industrial unit to whom loan to the extent of Rs. 2, 00,000 (two lakhs) (cash credit working capital loan) was sanctioned after observing codal formalities. Interest & 15% per annum 1-1/2% below the State Bank of India advance rate, calculated on daily balances with quarterly rests in accordance with the practice and subject to enhancement by the Reserve Bank of India, was agreed to be paid by them to the plaintiff-bank. Defendant No. Ps firm is an Association of which defendants 2 to 8 including the President and Secretary were the members. Defendant No. 9 stood as a guarantor and in case of default, he agreed to pay the amount personally in accordance with the terms and conditions laid in guarantee deed Ex. PW 1/6, dated 10-3-1983. The defendants also executed various other documents like delivery letter, demand promisory note (Ex. PW 1/2 and Ex. PW 1/3 respectively) on the same date 10-3-1983. In addition, defendants 2 to 7 also executed an affidavit to the plaintiff bank agreeing jointly and severally to pay the outstanding amount. It would also be pertinent to detail here that Smt. Dev Kumari, defendant No. 5, also deposited her title deeds of the property contained in khata khatauni No. 10 min/18 min, khasra No. 54 measuring 178-25 square metres, alongwith the house standing thereupon and shown in jamabandi for the year 1980-81 pertaining to mauza Hira Nagar, Hamirpur, H. P. with the plaintiff bank by way of equitable mortgage on the date of execution of the other documents—10-3-1983. 2. The defendants availed of the cash credit facility and started their business but became irregular in the payment of the amount by failing to comply with the terms and conditions of the loan agreement. The failure to pay regular instalments towards the liquidation of the loan amount resulted into correspondence in between the plaintiff bank and the defendants on various dates, namely, 20-3-1984 (Ex. PW 1/17), 19-10-1984 (Ex. PW 1/18), 24-12-1985 (Ex. PW 1/19) and 30-12-1985 (Ex. PW 1/20). Some of the letters referred to above v/ere replied to by the defendants on 17-10-1984 (Ex. PW 1/21), 13-12-1985 (Ex. PW 1/22) and 24-1-1986 (Ex. PW 1/17), 19-10-1984 (Ex. PW 1/18), 24-12-1985 (Ex. PW 1/19) and 30-12-1985 (Ex. PW 1/20). Some of the letters referred to above v/ere replied to by the defendants on 17-10-1984 (Ex. PW 1/21), 13-12-1985 (Ex. PW 1/22) and 24-1-1986 (Ex. PW 1/23). The correspondence did not result in payment of the outstanding balance amount by the defendants. In fact, the industrial unit of the defendants had become a sick unit. It would also be noteworthy to detail that the defendants unit being a small scale industrial unit, H. P. Khadi and Village Industries Board (hereinafter referred to as the Board) under a special scheme, recommended the case of the defendants for the advancement of the loan by the plaintiffs-bank at the initial stage and further it had agreed to give interest subsidy benefit to the defendants by asking the plaintiff-bank to charge 4% per annum interest from the defendants on the loan advanced till the unit continued to be in production and the remaining 11% per annum interest on the loan advanced from (hem. The plaintiff-bank also sent registered letters (Ex. PW 1/24 to Ex. PW 1/27) and registered AD letters (Ex PW 1/28 to Ex. PW 1/32), but they were received back by them. On 31-3-1985 and 31st of December, 1985, two balance confirmation letters Ex. PW 1/15 and Ex. PW 1/16 were also sent which were acknowledged by Shri Prem Chand, defendant No. 2, being the President of defendant ls Association. Ultimately, despite the defendants promise to repay the outstanding amount and receipt of the notices (Ex. PW 1/17 to Ex. PW 1/20), they failed to liquidate their liability. The above said facts and circumstances culminated into the filing of the instant suit against the defendants for the recovery of an amount of Rs. 2, 44,660.73 paise. 3. Defendants resisted and contested the suit by raising preliminary objections with respect to the maintainability of the suit in the present form and also that the suit is bad for non-joinder of necessary parties-the Board. On merits, it was contended that Shri J. L. Sood was not competent to file the suit. They admitted the advancement of the loan, execution of the various documents but contested the suit not having been filed by a competent person and also disputed the interest being charged by the plaintiff-bank. Defendant No. 5 also contested the creation of equitable mortgage. 4. They admitted the advancement of the loan, execution of the various documents but contested the suit not having been filed by a competent person and also disputed the interest being charged by the plaintiff-bank. Defendant No. 5 also contested the creation of equitable mortgage. 4. On the pleadings of the parties, the following issues were framed vide order dated 20-4-1987: 1. Whether the Himachal Pradesh Khadi and Village Industries Board is a necessary party, if so, its effect ? OPD 2. Whether Shri J. L. Sood is competent to file this suit on behalf of the plaintiff ? OPP 3. To what rate of interest the plaintiff is entitled to recover and from whom ? OPP 4. Whether defendant No. 5 created equitable mortgage with respect to the property as per details given in the plaint ? OPP 5. Whether the plaintiff-bank is entitled to recover Rs. 2,4,660.73 or any other amount from the defendants ? OPP 6. Relief. Both the parties led evidence in support of their respective claims. 5. I have heard the learned Counsels for the parties at length and have also carefully examined the entire record as also the submissions made by the learned Counsels appearing for the rival parties. I now proceed to decide the suit issue-wise. Issue No. 1 6. Learned Counsel for the plaintiff-bank, relying upon the principles laid down in United Provinces v. Mt. Atiqa Begum and others, AIR 1941 FC 16 ; Bindeshwari Chaudhary v. Dr. Sheo Nandan Upadhya and others, AIR 1973 Pat 347 and Om Prakash Tewari v. State Bank of India and others, AIR 1989 Alld 43, has urged that neither there was any privity of contract between the plaintiff bank and the Board nor the latter had any interest in the suit, nor any relief has been sought for by the plaintiff against the said Board and in such circumstances, the Board is neither a necessary nor a proper party. 7. The mere perusal of Order I, Rule 3 of the Code of Civil Procedure indicates that it is always open to the plaintiff to implead such party as it deems fit and proper and once such party is impleaded, the court is not justified in dismissing the suit for multifariousness without reference to the terms of the contract. 7. The mere perusal of Order I, Rule 3 of the Code of Civil Procedure indicates that it is always open to the plaintiff to implead such party as it deems fit and proper and once such party is impleaded, the court is not justified in dismissing the suit for multifariousness without reference to the terms of the contract. Another procedural provision contained in Order I, Rule 10 empowers the Court to implead such parties to the suit which are necessary or proper. A person would be a necessary party if he ought to have been joined, that is to say, in whose absence, no effective decree can be passed at all. He would be a proper party to be impleaded if his presence is necessary for an effectual or complete adjudication. 8. In the instant suit, privity of contract is in between the parties to the suit in question. In fact, the Board is not in any way concerned with the terms and conditions relating to the advancement of the loan or repayment thereof. Further, the Board had agreed to extend interest subsidy benefit to the loanee in case the latter owned a small scale industrial unit and this benefit had been given under a statutory scheme applicable in the case of such loanees. It is well settled that in order a party may be added as a defendant in the suit, he should have a legal interest in the subject-matter of the litigation—legal interest not as distinguished from an equitable interest, but an interest which the law recognises. A person who would be only indirectly or commercially affected by the result of the litigation, cannot be impleaded as a party as a person having a direct interest in the subject-matter in dispute. The expression "all the questions involved in the suit" cannot be read as "questions involved between the parties to the suit". [See Bindeshwari Chaudharys case (supra)]. In the instant case, the Board, as observed, had simply bound itself to the payment of interest on the loan advanced to the defendants and that too till the time, their industrial unit/Association continued to remain in production. What was the amount of loan advanced or how it was to be repaid, were not the contractual terms entered into in between the parties to the suit in question and the Board.. What was the amount of loan advanced or how it was to be repaid, were not the contractual terms entered into in between the parties to the suit in question and the Board.. Thus, in that view of the matter, the Board having no legal interest, cannot be directed to be arrayed as a defendant in the present suit. Further, the plaintiff-bank has not sought any relief against the Board. This fact also cements the conclusion arrived at on this aspect of the case. Accordingly, issue No. 1 is decided against the defendants and in favour of the plaintiff. Issue No. 2 9. In support of this issue, Sh. J. L. Sood has appeared as PW 1. He was the Principal Officer of the plaintiffs bank at Hamirpur at the material time. He was also duly authorised to file the suit, sign the requisite documents for the purpose of recovery of the loan through Court and to pursue the litigation. No question assailing his authority to file the suit in question has been put to him. Also, the defendants have not adduced any evidence in support of their claim that PW 1 had no authority or that he was not a competent person to file the instant suit. Thus, in view of the unrebutted evidence, issue No. 2 is held in the affirmative. Issue No. 4 10. In support of this issue, PW 1 has proved photo-stat copy of sale deed (Ex. PW 1/10), the original of which is Ex. PW 1/I0-A, jamabandis (Ex. PW 1/11 and Ex. PW 1/12) for the year 1980-81, abstract of recitals regarding the equitable mortgage in the register of bank in the form of Ex. PW 1/13. Apart from it, confirmation of equitable mortgage letter bearing signature of defendant No. 5 (Ex. PW 1/14) has also been proved by him. No evidence in rebuttal has been produced in respect of this issue. Accordingly issue No. 4 is also decided in the affirmative in favour of the plaintiff and against the defendants. Issue Nos. 3 and 5 11. Both these issues are co-related, as such, I proceed to decide them together. PW 1/14) has also been proved by him. No evidence in rebuttal has been produced in respect of this issue. Accordingly issue No. 4 is also decided in the affirmative in favour of the plaintiff and against the defendants. Issue Nos. 3 and 5 11. Both these issues are co-related, as such, I proceed to decide them together. As regards the rate of interest the plaintiffs claim is that it was settled @ 15% per annum i. e. 1-1/2% below the State Bank of India advance rate, calculated at daily balances with quarterly rests in accordance with the practice of the bank and subject to enhancement under the* directions of the Reserve Bank of India. The stand of the defendants is that only a simple interest @ 11% per annum was agreed to be charged. In addition thereto, it was agreed that plaintiff-bank would charge 4% interest rate from them under the interest rate subsidy scheme pursuant to the recommendation made by the Board to the plaintiff-bank at the time of the advancement of the loan and ultimately accepted by them. It is contended that remaining interest was, to be paid by the Board during the period in which industrial unit (defendant No. 1) remained under production. 12. In this respect, plaintiff-bank have produced S/Sh. J. L. Sood and Laxmi Chand, PWs 1 and 2 respectively as witnesses on their behalf and in support of their claim In rebuttal, Shri Prem Chand, defendant No. 2 and Harbans Lai have appeared as DW 1 and DW 2 respectively. In respect of the subject pertaining to the subsidy interest, DW 1 has proved letters Ex. DW I/A and Ex. DW 1/B and other photostat copies Ex. DW 1,/C to Ex. DW 1/F. These letters were issued to or by the Board showing that only 4% interest as contended by the defendants, was to be charged from them during the period, their Association remained in production. DW 2 has proved the genuineness of the Unit alongwith forwarding letters Ex. DW 2/A to Ex. DW 2/C respectively. He further states that the defendants Association remained in production till 27-5-1984 whereafter their unit stopped working properly. Letter to this effect is Ex. PX/3. 13. DW 2 has proved the genuineness of the Unit alongwith forwarding letters Ex. DW 2/A to Ex. DW 2/C respectively. He further states that the defendants Association remained in production till 27-5-1984 whereafter their unit stopped working properly. Letter to this effect is Ex. PX/3. 13. Now weighing the entire facts and circumstances produced and proved on record, it is clear that an application for advancement of loan bore the endorsement of the Board whereby interest subsidy benefit was to be given to the defendants. Also, as per the correspondence referred to above, the Board h *d agreed to pay the remaining agreed interest over and above 4% interest per annum which was to be charged from the defendants unit during the period of continuance of the production by their unit. In that view of the matter, though Board had no legal interest in the subject-matter of litigation, yet, it had made itself liable commercially to pay some part of the interest to the plaintiff-bank on the loan advanced to the defendants under the scheme. Thus, to my mind the contention of the learned Counsel for the defendants that during the period of production i. e. from 10-3-1983, the date of advancement of the loan till 27-5-1984, i. e. the date on which defendants* unit was found to be sick—not properly working, the defendants are entitled to the benefit of interest rate subsidy, is sustainable. Thus, I hold that plaintiff-bank would be entitled to 4% per annum interest on the loan advance/outstanding balance amount from 10-3-1983 to 27-5-1984 and thereafter to the simple interest which was chargeable under the directions of the Reserve Bank of India at the material time. 14. The suit amount includes interest <9 15% calculated on daily balances with quarterly rests as per practice of the bank. However, these instructions to charge interest with quarterly rests or half yearly rests have not been issued by the Reserve Bank of India. Rather, it is per practice of the bank that they have charged the same from the plaintiff-bank. The perusal of documents Ex. PW 1/36 and Ex. PW 1/37 shows that the directions issued by Reserve Bank of India with respect to the chargeable interest pertain to simple interest and not otherwise. Thus, I hold that at the material time, the interest chargeable was 14% per annum on the loan advanced. 15. The perusal of documents Ex. PW 1/36 and Ex. PW 1/37 shows that the directions issued by Reserve Bank of India with respect to the chargeable interest pertain to simple interest and not otherwise. Thus, I hold that at the material time, the interest chargeable was 14% per annum on the loan advanced. 15. During the course of arguments, vide order dated 13-11-1992, the plaintiff bank was directed to file a fresh statement of account in view of the ceiling imposed upon the chargeable interest by the Reserve Bank of India vide documents Ex. PW 1/36 and Ex. PW 1/37 respectively. Statement (Ex. PY) has been filed. According to this statement the suit amount on the date of filing the suit comes to Rs. 2,26,004. The correctness of the fresh statement is not in dispute. As such, the plaintiff-bank is held entitled to recover the outstanding balance amount to this extent. Issues 3 and 5 are decided accordingly. RELIEF 16. In view of my findings on the aforesaid issues and also in view of statement Ex. PY, a decree in the sum of Rs. 2,26,004 is passed in favour of the plaintiffs-bank and against the defendants. The plaintiffs are also held entitled to interest in future & 12% per annum from the date of the suit till its realisation to be calculated on the principal amount of Rs 1,96,000 only. The plaintiff shall also be entitled to proportionate costs. Decree sheet be prepared and the file, after due completion, be consigned to the record room. Order accordingly.