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Madhya Pradesh High Court · body

1999 DIGILAW 121 (MP)

Rajesh Trading Co. v. State Bank of India

1999-02-09

B.A.KHAN, SHAMBHOO SINGH

body1999
JUDGMENT This appeal is directed against judgment and decree dated 13.9.96 passed by First Addl. Judge, to the Court of Dist. Judge, Dhar in civil suit No. 6-B/80 decreeing the suit for respondent-bank for an amount of Rs. 3,33,643/- with 18% interest p.a. Though appellants have assailed the impugned judgment and decree on variety of grounds but their counsel Mr. Maltare has limited the challenge only to the issue of rate of interest. Therefore, the total controversy centers around whether interest was awardable at 12% p.a. on the principal amount or at 18% p.a. No other issue was argued or conveyed before us. It transpires that appellant No. 1, a partnership firm approached respondent-bank on 6.3.77 for demand draft purchase facility by way of loan in connection with its business of sale of cotton and the bank sanctioned credit limit upto Rs. five lacs subject to usual terms and conditions on submission of requisite documents. Thereafter appellant firm fell in red and allegedly failed to discharge its liability leading to the filing of civil suit No, 6-B/80 by respondent-bank. The suit was decreed for the principal amount of Rs. 3,33,643/- alongwith 18% interest p.a. LC for appellant Mr. Maltare submitted that respondent-bank had accepted the judgment of this Court in two identical appeals (F.A. Nos. 67/68 and 63/84) in which the interest was ordered to be charged at the rate of 12% p.a. These two appeals also arose between the same parties, sister concerns of the present appellant firm and in an identical circumstances. He accordingly prayed for parity being restored and wanted this Court to follow the judgments in these two appeals and to reduce the interest from 18% to 12% p.a. He additionally sought support from the communication of respondent-bank dated 27.12.97 which impliedly conveyed the bank's willingness to settle the matter at 12% interest. Lastly he pointed out that there was no agreement of interest between the respondent-bank and appellant-firm. The trial Court had fallen back upon the guarantor's agreement to award interest at 18% p.a. Mr. Maheshwari, LC for bank resisted the appeal by explaining the nature of transaction. According to him it was not a case involving the advancement of a loan by the bank but a case wherein appellant-firm had obtained a cash credit facility to promote its business. Maheshwari, LC for bank resisted the appeal by explaining the nature of transaction. According to him it was not a case involving the advancement of a loan by the bank but a case wherein appellant-firm had obtained a cash credit facility to promote its business. Therefore, according to bank norms no interest agreement was required to be executed between the firm and the bank and on the contrary guarantor's agreement providing for the interest rate assumed crucial importance in the transaction. He also submitted that in identical appeal F.A. No. 67/84, judgment was rendered exparte and there was no occasion to the bank to draw attention of the Court to guarantor's agreement containing 18% rate of interest. Record shows that M/s. Rameshwar Dayal & Company, M/s. Hardeo Motilal and Sons and M/s Rajesh Trading Company were sister concerns and had approached the respondent-bank in identical circumstances to obtain cash credit facility in connection with their respective business. All the three firms had committed default in similar circumstances constraining the bank to institute recovery suits against them which were decreed with 18% interest on the principal amount. All the three filed appeals (F.A. No. 67/84, 63/84 and present appeal F.A. No. 3/97). F.A. 67/84 was decided by this Court vide judgment dated 12.9.95 modifying the trial Court decree by providing for 12% interest per annum instead of 18% p.a. It is true that this appeal was decided exparte and that bank's request to set-aside the exparte judgment was rejected. But it is equally true that bank had not taken any further steps to assail this judgment on the ground that the guarantor's agreement containing 18% interest provision had escaped the attention of the Court. The same holds true about F.A. No. 63/84 in which judgment was passed in the absence of appellant therein. But the Court refused to set it aside with a view to restore parity and ensure equal treatment rejected intra-parties. Considering all this and to maintain uniformity in judicial verdicts, we feel inclined to fall in line and to follow the judgments rendered by this Court in identical F.A. Nos. 67/84 and 63/84. Taking a contrary view in this appeal would convey impression of a differential treatment being given to appellant herein and generate a feeling of discrimination of sorts. Considering all this and to maintain uniformity in judicial verdicts, we feel inclined to fall in line and to follow the judgments rendered by this Court in identical F.A. Nos. 67/84 and 63/84. Taking a contrary view in this appeal would convey impression of a differential treatment being given to appellant herein and generate a feeling of discrimination of sorts. Moreover, respondent-Bank also appears to have shown its willingness to settle the matter in the light of other two identical transactions as borne in its communication dated 27.12.97 which is taken on record and pursuant whereto appellant-firm had deposited the principal amount with 12% interest alongwith the legal expenses of Rs. 50,000/- on 13.12.97. In all it had deposited Rs. 10,58,140/- and shown its bonafides and dispute was now limited to only Rs. three lacs or so, if interest rate was taken at 18% p.a. Therefore, all things considered we allow this appeal partly by providing that interest chargeable would be 12% p.a. instead of 18% and direct the bank to discharge the securities of appellant-firm on deposit of the amount based on this calculation. The impugned decree of the trial Court shall stand modified to that extent. No order as to costs. Registry to draw up the decree accordingly.