Canara Bank vs Deepanshu Agencies And Ors.

J.M. Malik, J

This order shall decide both the above mentioned appeals. Counsel for the appellant Bank present. Respondents who are personally served are absent. They be proceeded against ex parte. The learned Counsel for the appellant Bank has called into question the order passed by the learned Trial Court dated 18.2.2011 on the following grounds.

The learned Counsel for the appellant, first of all, has invited the attention of the Court towards the order passed by the learned Trial Court dated 30.12.2008 in S.A. 488/2008. It was submitted that the respondents had failed S.A. which was decided on the same day. The last portion of the said order runs as follows:

For the balance amount, the petitioner shall, within a period of thirty days from the date of being served with the copy of the affidavit by the Bank deposit with the Bank rupees ten lacs of the real NPA amount.

The remaining amount shall be cleared by the petitioner through the four quarterly equal instalments. The first instalment shall commence to be paid by the petitioner within the first week of April, 2009 and the other instalments shall be cleared by the petitioner in the same manner but not beyond Thursday, December 31, 2009. The real NPA amount along with interest at the rate of 10% simple and on the reducing balance on the notice amount from Tuesday, July 1, 2008 till the payment by the petitioner is the amount to be paid by him; such amount has been fixed for the petitioner after neglecting the submission made by Mr. Panwar, the learned Advocate on the Bank's entitlement to the BPLR rate of interest.

The Bank had accepted this order though it had issued notice under Section 13(2) of the SRFAESI Act wherein a demand in the sum of Rs. 1,80,75,646.03 w.e.f. 1.6.2008 had been raised. Again, according to the Bank, the contractual rate of interest was 17.75% p.a. with quarterly rests.

Thereafter, the appellant filed O.A. on 26.6.2009, wherein a demand in the sum of Rs. 2,13,15,686/- along with pendente lite and future interest was raised. The necessity to file the said O.A. had arisen because the respondents had not complied with the earlier orders passed by the learned DRT.

Thereafter, the respondent moved a miscellaneous application wherein the impugned order dated 18.2.2011 was passed. The relevant extract of the impugned order runs as follows:

The defendant-petitioners have, this day, tendered an amount of rupees eighty lacs. The amount tendered by the defendants during the pendency of the claim case meaning thereby its claim case has been supported and well proved by the admission of the defendants. The other feature is that the Bank's claim case appears itself as a suit for foreclosure wherein the Bank cannot claim the interest as of right; the Bank has been allowed that amount along with the simple, reducing balance based interest at the rate of eight percent for the period to start from Wednesday, July 1, 2009 till the full payment.

For such purpose, the defendants have been allowed, permitted by this Tribunal six quarterly instalments to start from the second week of April, 2011. The Bank shall, within a period of seven days from the date of receipt of this order, bring before the learned Registrar-in-charge of this Tribunal the original title deeds in respect of the secured asset described as the upper ground floor of the property bearing No. 6311/6, Padam Singh Road, Dev Nagar, Karol Bagh, New Delhi-110005 for the onward transmission to the defendants; that day, the petitioner-defendants shall tender the above amount to the Authorised Officer of the Bank in the presence of the learned Registrar-in-charge of this Tribunal. On receipt of such payment by the Authorised Officer, the learned Registrar-in-charge shall deliver the original title documents to the petitioner-defendant after obtaining from him the Certificate of Acknowledgement in the presence of the Authorised Officer of the Bank.

Counsel for the appellant submits that the said amount has not yet been paid.

The first grievance of the Counsel for the appellant is that the pendente lite and future interest should be granted from 1.7.2008 till the realisation of the amount. He further submits that the appellant is entitled to the contractual rate of interest. 1 find force in this argument in a measure.

In the cases reported in State Bank of India v. Sarathi Textiles & Ors., II (2009) BC 696: 2008 (3) SCALE 409, C.K. Sasankan v. Dhanalakshmi Bank Ltd., : I (2009) CLT 368 (SC): I (2011) BC 122 (SC): 2009 (2) DRTC 320 (SC) and Sardar Associates and Others v. Punjab & Sind Bank and Others, : III (2009) BC 705 (SC) : III (2009) CLT 186 (SC): AIR 2010 SC 218, it was held that it is the discretion of the Court to award the pendente lite and future interest which has to be exercised fairly. Section 19(20) of the DRT Act runs as follows:

19(20) The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due up to the date of realization or actual payment, on the application as it thinks fit to meet the ends of justice.

No rate of interest under the circumstances can be made a rule of thumb.

However, it is difficult to fathom as to why the learned Trial Court reduced the rate of interest from 10% to 8%. No just and reasonable reasons saw the light of the day so far as impugned order is concerned. Secondly, Counsel for the appellant points out that the above said loan was obtained for commercial purposes. The distinction has to be drawn between housing loan and commercial loan. So far as housing loan is concerned 10% p.a. simple rate of interest in respect of pendente lite and future interest appears to be correct but so far as commercial loan is concerned the rate of interest @ 8% to 10% p.a. appears to be on the lower side. I, therefore, accept the appeal to this extent and direct the respondents to pay the pendente lite and future interest w.e.f. 1.7.2008 till the full recovery @ 14% p.a. simple on reducing balance. The Bank is also entitled to recover the notice amount of Rs. 1,80,75,646.03 plus 14% p.a. interest. The Bank is directed to adjust the amount already paid. The appellant is also entitled to the costs of this case throughout. Counsel fee as per Bank's norms. The respondents are given three months time to pay off the entire loan otherwise the appellant Bank is directed to proceed under the SRFAESI Act. DRT-III is directed to issue recovery certificate in the O.A. within 20 days from today in terms of these lines. The order passed by the learned Trial Court stands modified.

Both the appeals stand disposed of.

Copies of this order be furnished to the parties as per law and one copy be sent to the learned DRT forthwith.