Bank of Baroda vs Shrihari Moreshwar Vaze and others

The only grievance made by the appellants'' learned counsel, Mr. Aras, before us is that the learned trial judge did not grant any penal interest to the appellants while decreeing the suit. In support of this contention, learned counsel relies upon a directive issued by the Reserve Bank setting out instances where scheduled commercial banks "may be justified in charging penal rates".

While Mr. Aras contends that this directive is binding upon the scheduled commercial banks, he does not say, as indeed he cannot, that it was also binding on the learned trial judge. Even on that score, all that the directive does is to give a discretion to the scheduled commercial banks to charge penal rates as this is borne out by the words "may be justified in charging penal rates". (The underlining is ours.)

Further, for not granting penal interest, the learned trial judge has given cogent reasons, namely, that the promissory note and the letter of hypothecation did not stipulate for any penal interest in case of default and that even under the law, the plaintiffs (appellants before us) are not entitled to claim any penal interest. It is difficult to fault this reasoning given by the learned trial judge.

No case for interference is made out. Appeal dismissed.