Development Credit Bank Ltd. vs Rajiv Chadha And Ors.

J.M. Malik, J

The respondents availed finance facility in the nature of term loan against property vide agreement for a sum of Rs. 20 lacs only repayable in 97 monthly installments of Rs. 35,315/- spanning from 04.09.2008 to 04.09.2016. In order to secure the repayment of subject loan respondent mortgaged his immovable property bearing No. J-92 (WZ-24), Milap Market, Beri Wala Bagh, Subhash Nagar, New Delhi-110027 by depositing title deed alongwith memorandum of deposit of title deed. The loan account was classified as non-performing asset on 17.03.2010. Notice under Section 13(2) of the SARFAESI Act was accordingly issued wherein a demand in the sum of Rs. 21,50,166/- as on 17.03.2010 was raised. The respondents filed an application under Section 17 of the SARFAESI Act and the Ld. Trial Court vide its order dated 20.01.2011 directed the respondents to pay amount of Rs. 16,36,440/- with simple interest @ 10% p.a. on reducing balance payment on Rs. 18,99,124/- from 01.06.2009 till the full payment i.e. 31.03.2011 from the date of the order.

I have heard the counsel for the parties. The Ld. Tribunal held that it cannot accept the penalty charges to the extent of Rs. 19,125/- which may even constitute the part of such agreement contrary to Section 25 of the Indian Contract Act, 1872 which is against public policy. I am of the considered view that such like finding is not legally tenable. The appellant is entitled to impose the penalty charges as was held by in celebrated authority reported in Mardia Chemicals Ltd. Vs. Union of India, 2004 (4) S.C.C. 311.

The second contention raised by the respondents was that they have deposited Rs. 2,11,900/- on 31.078.2009. That will stand adjusted. The statement of accounts goes to show that on 31.07.2008 principal outstanding was Rs. 16,36,440/-. It is not understood as to how that amount can be taken into account. Notice under Section 13(2) of the SARFAESI Act goes to show that the account was declared NPA as on 17.03.2010 to the tune of Rs. 21,50,166/-. It is difficult to fathom as to how the Ld. DRT-III has calculated the said amount pertaining to 31.03.2008. I see no flaw or defect in the statement submitted by the bank which has been placed on record. Respondents are, therefore, directed to pay a sum of Rs. 21,50,166/- as on 17.03.2010.

Now I turn to the question of pendent elite and future interest. The Ld. DRT has granted pendent elite and future interest @ 10% p.a. simple. The Ld. Counsel for the appellant vehemently argued that bank is entitled to contractual rate of interest.

I see no merit in this submission. A distinction has to be drawn between the housing loan and commercial loan. For the purpose of housing loan interest @ 10% p.a. is correct. This view finds support from the authorities reported in State Bank of India vs. Sarathi Textiles & Ors. 2008 (3) Scale 409, C.K. Sasankan v. Dhanalakshmi Bank Ltd. (2009 (2) D.R.T.C. 320 (S.C.)) and Sardar Associates and Others Vs. Punjab & Sind Bank and others, AIR 2010 (SC) 218 wherein it was held that it is the discretion of the court to award the pendent elite and future interest which has to be exercised fairly. Again, 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.

It is also ordered that the appellant bank is entitled to the costs of this case throughout. Counsel fee as per bank's norms. The respondent is hereby given 45 days time to pay off the entire debt failing which nothing will preclude the bank to proceed against the appellant as per law. In case the debt stands deposited within the prescribed period the bank will issue 'no due certificate' and return the title deeds within four days of the entire payment.

The appeal stands disposed of. Copies of this order be furnished to the parties as per law and one copy be sent to the Ld. DRT forthwith.