State Bank Of India vs Sunrise Data Preparation Centre & ...
2010 Latest Caselaw 3576 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI
%                       RFA NO. 271 OF 1996
+                                     Date of Decision: 2nd August, 2010



#      STATE BANK OF INDIA                                     ...Appellant
!                                                 Through: Mr. S.L. Gupta

                                 Versus
$      SUNRISE DATA PREPARATION
       CENTRE & ORS.                                         ...Respondents
^                                                            Through: None.


       CORAM:
*      HON'BLE MR. JUSTICE P.K.BHASIN
1.   Whether Reporters of local papers may be allowed to see the
     judgment? (No)
2.   To be referred to the Reporter or not? (No)
3.   Whether the judgment should be reported in the digest? (No)
                          JUDGMENT

P.K.BHASIN, J:(ORAL)

The appellant bank is aggrieved by the judgment and decree passed

by the learned Additional District Judge in a suit filed by it under the

provisions of Order XXXIV of the Code of Civil Procedure for recovery of

` 383591.20 along with interest thereon at the contractual rate of 17.5% per

annum with quarterly interest from the date of filing of the suit till the date

of realization to the extent interest has been awarded only at the rate of 6%

per annum.

2. The appellant bank had filed the suit for recovery of ` 3,83, 591.20

against respondents nos. 1 and 2 herein as the principal borrowers and

respondents nos. 3 and 4 as the guarantors. Respondent no. 3 while offering

guarantee for the repayment of the financial facility awarded to the

respondents nos. 1 and 2 for their business had created an equitable

mortgage by way of deposit of title deeds in respect of his property no.

57/59, Punjabi Bagh, New Delhi.

3. The suit had to be filed since the respondents had failed to clear

bank's dues on becoming due as per the loan agreement. None of the

defendants had contested the suit and as far as defendant no. 3, respondent

no. 3 herein, is concerned, he had volunteered to make the payment of the

suit amount since he wanted to get back the title deeds of his property.

Consequently, the trial Court decreed the suit but while decreeing the suit it

awarded interest at the rate of 6% per annum only though the contractual

rate of interest as per the loan and guaranty documents executed between

the parties was 17.5% per annum with quarterly rests.

4. There was no representation on behalf of the respondents at the time

of the hearing of the appeal and so only the counsel for the appellant had

made his submissions.

5. Learned counsel for the appellant submitted that even though the

grant of pendente lite and future interest and its rate was in the discretion of

the Court but that discretion was to be exercised judiciously and in the

present case there was no justification whatsoever for scaling down the rate

of interest from 17.5% per annum to 6% per annum. Learned counsel

further contended that appellant bank had filed a suit after waiting for

almost three years from the date when its money became due from the

respondents-defendants and even in the suit respondent no. 3 came out with

his offer to make the payment of the suit amount after six years of the filing

of the suit and as far as the principal borrowers are concerned, they did not

even contest the bank's claim. Learned counsel further contended that even

the respondent no. 3, who was the guarantor, had offered to make the

payment of the suit amount because he had realized that if the principal

borrowers would not be paying the bank's dues his property would be put

to auction and there was every possibility of his property fetching lower

price than the prevalent market price. It was also contended that even the

costs of the suit were not granted to the plaintiff without assigning any

reason by the trial Court.

6. Considering all the facts and circumstances, this Court is also of the

view that the learned trial court was, in the facts and circumstances

narrated above was not justified in scaling down the rate of interest to 6%

per annum as against the agreed contractual rate of 17.5% per annum with

quarterly rests. I am also in an agreement with the submission that

discretion which vests in the Court in the matter of grant of pendente lite

and future interest has to be exercised judiciously and for good reasons

only the defaulter borrowers should be shown indulgence in the matter of

rate of interest. In the present case, respondents nos. 1 and 2 had availed of

the financial facilities granted to them by the appellant bank in the year

1986 and thereafter they became defaulters in repayment. The respondent

no. 3 guarantor also did not come forward immediately on receipt of

demand notice to make the payment to the appellant bank and instead

waited for about seven years before coming forward with the offer of

repayment of the bank's dues as claimed in the suit. So, the denial of

interest to the plaintiff by the trial Court at the contractual rate was not

justified. The learned trial Court has also not given any reason for not

awarding costs of the suit of the appellant bank and I am of the view that

there was no justification in denying the same.

7. In the result, this appeal succeeds. The trial Court's judgment and

decree is modified to the extent that the appellant bank would get interest

on the decretal amount @ 17.5% per annum from the date of the filing of

the suit till the date when respondent no. 3 actually made payments. The

appellant shall also be entitled to costs throughout.

P.K. BHASIN,J

AUGUST 2, 2010 pg