Corporation Bank vs Dinesh Chandra and Company and Others

W.M. Sambre, J.—Aggrieved by the judgment and decree passed by the Addl. Small Cause Court, Nagpur, in Civil Suit No. 2/1981, on 23.2.1984, the applicant Bank has come in revision.

It is the contention of the applicant bank that an over-draft facility was given to the Non-applicants against the deposit of Rs. 1,00,000/- for fixed deposit. The non-applicants have utilized the said facility over and above the guarantee which was to the extent of Rs. 75,000/- against the Fixed Deposit Receipt for one year. But the non-applicants exceeded the limits and utilised the facility of Rs. 1,00,000/- against Fixed Deposit Receipt of Rs. 1,00,000/-. As such for utilization of the amount of Rs. 25,000/- the non-applicants are liable to pay interest at the rate of Rs. 15% per annum which was claimed by the Bank, but the claim of the Bank was dismissed by the trial Court on the ground that there is no understanding and no contractual agreement to the effect that interest at the rate of 15% per annum will be paid on the excess amount than permissible utilization by the Bank.

Some facts are clear that the Fixed Deposit was made on 31.1.1978 and that was in operation for one year upto 3.1.1979. During this period i.e. from the date when the fixed deposit receipt was deposited with the Bank, the Bank allowed the facility of loan to the extent of Rs. 1,00,000/ and that without any application a sum of Rs. 1,00,000/- was paid to the non-applicants and thereafter, after a period of one year the said fixed deposit receipt was adjusted against the said loan of Rs. 1,00,000/- and the non-applicants have paid interest for the first half at the rate of 6% per annum and thereafter at the rate of 8% per annum under the Negotiable Instruments Act. It is the case of the applicant Bank that the non-applicants were liable to pay at the higher rate for utilizing the excess amount over and above Rs. 75,000/- and the Bank is liable to recover the said amount and as such a suit came to be filed.

It is the contention of the non-applicant that no doubt non-applicants utilized the amount advanced by the Bank against the F.D.R. of Rs. 100,000/- and the non-applicants have already paid interest as permissible under the Negotiable Instrument Act and as such they do not owe to the Bank as there was no understanding to pay interest at the rate of 15% per annum. Moreover, it is contended that against the F.D.R. deposit with the Bank, the Bank itself has advanced Rs. 1,00,000/- and the agreement was that interest to be paid. In fact, there is no agreement at all and as admitted by the applicant Bank itself that suit is under Negotiable Instrument Act and permissible interest is 6% and 8% per annum. As such the non-applicants have already paid interest and the excess claimed is not permissible for the reasons on the understanding which was with the Bank for 6% and 8% interest per annum and not 15% per annum. The Bank has not produced and documentary evidence that the non-applicants have undertook to pay interest at the rate of 15% per annum for the excess over and above Rs. 75,000/- utilized by them.

Shri Samudra, the Learned Counsel for the applicant has stated that it is a practice that the limit against the fixed deposit receipt is only 75% and the parties are liable to pay interest at the rate of 6% and in case the advances are above 75% then Bank is entitled for 15% interest on the basis of the regulations which are prescribed by the Reserve Bank of India, on the excess amount claimed by the Bank as recoverable from the non-applicants. He has admitted that there is no agreement in writing out the Bank is acting upon the regulations laid down by the Reserve Bank of India, as per prevailing practice. It is further argued by Shri Samudra, the Learned Counsel for the applicant, that in the absence of any agreement there is no other go for the Bank but to act on the basis of regulations.

There was no agreement with the parties that they will have to pay higher interest for the mount utilized by them. In these circumstances, I see no reason to interfere with the order passed by the trial court.

In the result, the revision application stands dismissed. In the circumstances, there will be no order as to costs.