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2003 DIGILAW 573 (MP)

State Bank of Indore v. Nisar Mohammad Khan

2003-04-22

A.K.AWASTHY

body2003
Judgment ( 1. ) THE applicant/plaintiff has filed this appeal against the judgment and decree dated 29. 1. 1990 passed by IVth Additional Judge to the Court of District Judge. Chhatarpur in Civil Suit No. 1-B/88 wherein the applicants prayer for allowing the interest at the rate of 15% per annum was rejected. ( 2. ) THE admitted facts of the case are that the plaintiff/bank, State Bank of Indore is a nationalised Bank having its branch at Galla Mandi, Chhatarpur. It is also a common ground that respondent No. I/defendant Nisar Mohammad Khan is the owner of the shop of Steel Furniture and the plaintiff/bank provided to defendant No. 1 cash credit facility upto Rs. 50,000/- and that on 27. 11. 84 defendant No. 1 executed the demand promissory note in favour of the plaintiff/bank. It is also the common ground that respondent No. 2/defendant No. 2 stood as a guarantor for the payment of amount on behalf of respondent No. 1/defendant No. 1. It is also an admitted fact that the defendants agreed to pay the interest with the rate of 15% per annum with quarterly rest. ( 3. ) THE appellant/plaintiff has pleaded that on 27. 11. 1984 the defendant No. 1 executed deed of mortgage of his house situated at Rani Talaiya, Chhatarpur and deed of hypothecation of the goods in the shop was also executed by defendant No. 1, That defendants have not paid the amount of Rs. 69,563. 45 even after the service of the legal notice and as such a decree be passed for the principal amount along with the interest at the rate of 15% per annum. ( 4. ) THE defendants have pleaded that the loan was provided by the plaintiff Bank to defendant No. 1 under the scheme for Educated unemployed. That the plaintiff was not provided him the adequate facility to run the business. That his financial condition is not good and as such the facility of payment of amount by the instalment be provided to the defendant No. 1. ( 5. ) THE appellant/plaintiff has examined Sharad Kumar (P. W. 1), O. P. Garg (P. W. 2 ). That no witness was examined by the defendant. The learned Trial Court after hearing the arguments passed the judgment and decree in favour of the appellant/plaintiff that appellant/ plaintiff is entitled to get Rs. 69,563. ( 5. ) THE appellant/plaintiff has examined Sharad Kumar (P. W. 1), O. P. Garg (P. W. 2 ). That no witness was examined by the defendant. The learned Trial Court after hearing the arguments passed the judgment and decree in favour of the appellant/plaintiff that appellant/ plaintiff is entitled to get Rs. 69,563. 45 which the interest at the rate of 6% per annum and the amount to be paid by the defendant in the monthly instalment of Rs. 1,000/ -. ( 6. ) THE appellant has assailed the impugned judgment and decree on the ground that the transaction between the appellant and the respondents was of commercial in nature and the learned Trial Court has wrongly declined in awarding the agreed rate of interest. That the learned Trial Court has erred in granting the instalment facilities to defendants. It is also alleged by the appellant that the learned Trial Court has not properly assessed the evidence to hold that the appellant/plaintiff has failed to establish that house No. 3 at Rani Talaiya, Chhatarpur was mortgaged by the defendant with the plaintiff Bank. ( 7. ) SHARAD Kumar (P. W. 1) has stated that he is the Branch Manager of the State Bank of Indore and on 27. 11. 84 defendant No. 1 took the tune of Rs. 50,000/- and executed the agreement Ex. P/1. From the perusal of Ex. P/1, it is clear that the defendants have agreed to pay the interest at the rate of 15% per annum with a quarterly rest. Defendant has not examined himself nor produced any evidence to the effect that the plaintiff/bank provided the loan to the defendant No. 1 under the Scheme of Educated Unemployed. From Ex, P/1 it is clear that the transaction of loan in-between the plaintiff/bank and defendant was of purely commercial nature. ( 8. ) THE proviso of Sub-section (1) of Section 34 is not mandatory nature and it is not imperative for the Court to grant interest at the contractual rate. But considering the primary object of inserting the proviso, the contractual rate should normally be awarded unless exceptional circumstances to refuse to grant such relief exists. The grant of interest at the rate less than the contractual rate, will amount to giving premium to those who trade upon the money of others. But considering the primary object of inserting the proviso, the contractual rate should normally be awarded unless exceptional circumstances to refuse to grant such relief exists. The grant of interest at the rate less than the contractual rate, will amount to giving premium to those who trade upon the money of others. The discretion under Section 34 (1) of the Civil Procedure Code should be used judiciously in the light of the facts of every case. The 6% per annum rate of interest granted by the Trial Court is abysmally lower than the agreed rate of interest of 15% per annum with quarterly rest. Learned Trial Court has not assigned any valid reason of depriving the plaintiff/bank the interest at the rate of 15% per annum and awarding the interest at the rate of 6% per annum. Consequently, it is held that the plaintiff/bank is entitled to get the interest at the rate of 12% per annum. ( 9. ) LEARNED Counsel for the respondents has submitted during the arguments that the respondents/defendants has paid the entire amount in the instalments as ordered by the impugned judgment and decree. Consequently, the prayer of the appellant/plaintiff to set aside the order of the learned Trial Court regarding the payment of the decred amount in instalments has become infructuous. ( 10. ) LEARNED Counsel for the appellant has not pressed his prayer for realisation of the decretal amount from the property which was mortgaged by defendant No. 1. ( 11. ) CONSEQUENTLY, the appeal is hereby partly allowed. The impugned judgment and decree so far as it relates to the payment of interest is modified and it is ordered that the defendants will pay 12% per annum interest to the plaintiff/bank. Parties to bear their own costs on the appeal. The decree be drawn up accordingly.