Canara Bank vs Shankar Lal And Ors.

J.M. Malik, J

Counsel for the parties present. The appellant Bank has called into question the judgment rendered by the learned trial Court on 11.1.2011. The dispute which arose before this Court is only with regard to the award of pendente lite and future interest. The learned trial Court granted pendente lite and future interest @ 10% w.e.f. 26.7.2009 on a sum of Rs. 57,33,501.90.

The contention of the Bank is that the Bank is entitled to get the contractual rate of interest at 16.25% instead of 10%. He points out that the credit facilities availed of by the respondents were for commercial purposes and, therefore, contractual rate of interest is fully justified. He also submits that a distinction has to be drawn between simple housing loan and the loan given for commercial purposes.

On the other hand, the Counsel for the respondent contends that the pendente lite and future interest granted by the learned trial Court is in accordance with the law laid down by the Hon'ble Apex Court time and again.

I see merit in the arguments advanced by the Counsel for both the parties. 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) D.R.T.C. 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. No rate of interest under the circumstances can be made a rule of thumb. Moreover, Section 19(20) of the RDDBFI Act provides, "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 upto the date of realization or actual payment, on the application as it thinks fit to meet the ends of justice".

Keeping in view the facts and circumstances and particularly the fact that the loan availed of by the respondents was of commercial nature, I hereby enhance the rate of pendente lite and future interest to 13% p.a. simple on the above mentioned amount on reducing balance basis. The appellant Bank is directed to furnish to the respondents a statement of account prepared in accordance with this order, within a week. The respondents are directed to pay the balance outstanding amount to the Bank within one month from today. On receipt of the payment, the Bank is directed to issue a 'No Dues Certificate' and hand over the physical possession of the premises in dispute to the respondents along with title deeds, within four days.The impugned order of the trial Court stands modified to this extent only.

The appeal stands disposed of.

Copies of this order be furnished to the parties and another copy be sent to the learned DRT.