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Judgment
S.N.H. Zaidi, J
This application has been filed by the appellant in accordance with the order dated 23.7.2012 of the Delhi High Court made in W.P(C) No. 4355/2012 for re-examination of the issue whether in view of the pleadings filed before this Tribunal, the prime lending rate (PLR) or the Base Rate Policy of the Bank would apply for awarding the pendente lite and future interest on the amount of debt determined in the O.A. by the DRT. The circumstances of the case indicate that O.A. No. 23/2005 filed by the Bank against the appellant/applicants was allowed by DRT-II, Delhi on 5.3.2009 for the recovery of Rs. 31,71,036.77 along with pendente lite and future interest @ 13.25% per annum compounded with quarterly rests. In the appeal ( No. 235/2010) filed by the defendants, the appellants did not pick any conflict qua the principal amount of debt determined by the Tribunal below and only the awarded rate of interest was disputed on the ground that it was on the higher side. This Tribunal while disposing of the appeal, vide order dated 16.12.2010, directed that the appellants would pay pendente lite and future interest at the PLR. The appellants filed a Miscellaneous Case ( No. 470/2011) under Section 152, CPC for modification of the said order along with an application (MC No. 476/2011) seeking condonation of delay in filing the modification application. They also filed a writ petition [WP (C) No. 6301/2011] before the Delhi High Court against an order of the Recovery Officer who was seized with the R.C. issued on the basis of the order dated 5.3.2009 of the DRT. In the said writ petition, the Counsel for the petitioners, on instructions, stated that the petitioners would not dispute the amount (of interest) to be paid at PLR and prayed for some indulgence to clear the amount and the Hon'ble Court, while disposing of the writ petition on 29.8.2011, granted time to the petitioners to pay the amount on or before the given date and the respondent Bank was required to give calculation of interest to the petitioners within a week. The petitioner/appellants filed CM. No. 412/2012 before the High Court seeking direction to the Bank for preparation of the calculation as per its Base Rate Policy and the Hon'ble Court, vide order dated 10.1.2012, directed the Bank to produce the calculation-sheet giving details of the amount due from the petitioners as per its Base Rate Policy. The Hon'ble Court, while disposing of C.M. No. 16402/2011 on 21.3.2012 filed by the petitioner/appellants, directed for placing the pleadings along with documents before this Tribunal so that the controversy could be examined by this Tribunal, before whom the applications (MC Nos. 470 and 476/2011) filed by the petitioners were pending. This Tribunal, vide order dated 29.6.2012, dismissed both those applications and directed the Bank to furnish an updated statement of account to the applicant within the given time. The appellants assailed the order dated 29.6.2012 of this Tribunal by way of a writ petition [W.P(C) No. 4355/2012] before the Delhi High Court and the Hon'ble Court while setting aside that order on 23.7.2012 has directed this Tribunal to re-examine the issue on merit as to whether the PLR or the Base Rate Policy would apply (to the pendente lite and future interest) on the amount of debt determined by the Tribunal below in the O.A.
I have heard the submissions of Mr. Shakeel Akhtar, the learned Counsel appearing for the appellant/applicants and Mr. A.K. Sharma the learned Counsel for the respondent Bank/non-applicant and perused the record.
A perusal of the record would show that the appellant/applicants were sanctioned two credit facilities, namely, term loan of Rs. 23 lacs on 19.2.2002 and OCC limit of Rs. 7 lacs on 12.11.2002, with interest @ 13.25% per annum compounded monthly, variable from time-to-time as per the RBI's directives and the Bank's policy. The Tribunal below, while disposing of the O.A. filed by the respondent Bank charging the interest at the above rate plus 2% penal interest, had awarded the pendente lite and future interest @ 13.25% per annum compounded on quarterly basis instead of monthly rest as claimed. The appellant/applicants had challenged the claim of interest in paragraphs (h) and (k) of the grounds of appeal filed against the said order on the ground that the claimed amount was arrived at by applying exorbitant rate of interest/penal interest dehors the directives of the RBI issued in that regard and the Bank had failed to place relevant documents, including the RBI circular/directives on the basis of which interest was said to have been charged by it. Despite these averments, the appellant/applicants did not dispute their liability of payment of the principal amount of debt as determined by the Tribunal below while arguing on appeal and had confined their challenge only to the awarded rate of pendente lite and future interest contending it to be on the higher side. No plea qua the applicability of either BPLR system (Benchmark Prime Lending Rate) or Base Rate System was raised in the appeal. This Tribunal, while referring to Section 19(20) of the RDDBFI Act and citing the case law, had disposed of the appeal by the order dated 16.12.2010 with the observation that it had the discretion to award the pendente lite and future interest and ordered that the appellants would pay such interest at the PLR.
It is pertinent to note that the RBI had replaced the BPLR system by the Base Rate System w.e.f. 1.7.2010 vide Circular RBI/2009-10/390, DBOD No. Dir. BC 88/13.03.00/2009-10, dated 9.4.2010 wherein Para 2 it has been said that:
In the light of the comments/suggestions received, it has been decided that Banks switch over to the system of Base Rate. The BPLR system, introduced in 2003, fell short of its original objective of bringing transparency to lending rates. This was mainly because under the BPLR system, Banks could lend below BPLR. For the same reason, it was also difficult to assess the transmission of policy rates of the Reserved Bank to lending rates of Banks. The Base Rate system is aimed at enhancing transparency in lending rates of Banks and enabling better assessment of transmission of monetary policy. Accordingly, the following guidelines are issued for implementation by Banks.
Base Rate:
(i) The Base Rate System will replace the BPLR system with effect from July 1, 2010. Base Rate shall include all those elements of the lending rates that are common across all categories of borrowers. Banks may choose any benchmark to arrive at the Base Rate for a specific tenor that may be disclosed transparently. An illustration for computing the Base Rate is set out in the Annex. Banks are free to use any other methodology, as considered appropriate, provided it is consistent and is made available for supervisory review/scrutiny, as and when required.
(ii) Banks may determine their actual lending rates on loans and advances with reference to the Base Rate and by including such other customer specific charges as considered appropriate.
(iii) In order to give Banks some time to stabilize the system of Base Rate calculation, Banks are permitted to change the benchmark and methodology any time during the initial six month period i.e. end-December 2010.
(iv) The actual lending rates charged may be transparent and consistent and be made available for supervisory review/scrutiny, as and when required.
Applicability of Base Rate:
(v) All categories of loans should henceforth be priced only with reference to Base Rate. However the following categories of loans could be priced without reference to the Base Rate: (a) DRI advances (b) loans to Banks' own employees (c) loans to Banks' depositors against their own deposits.
(vi) The Base Rate could also serve as the reference benchmark rate for floating rate loan products, apart from external market benchmark rates. The floating interest rate based on external benchmarks should, however, be equal to or above the Base Rate at the time of sanction or renewal.
(vii) Changes in the Base Rate shall be applicable in respect of all existing loans linked to the Base Rate, in a transparent and non-discriminatory manner.
(viii) Since the Base Rate will be the minimum rate for all loans, Banks are not permitted to resort to any lending below the Base Rate. Accordingly, the current stipulation of BPLR as the ceiling rate for loans up to Rs. 2 lakh stands withdrawn. It is expected that the above deregulation of lending rate will increase the credit flow to small borrowers at reasonable rate and direct Bank finance will provide effective competition to other forms of high cost credit.
(ix) Reserve Bank of India will separately announce the stipulation for export credit.
When the loans in question were sanctioned in 2002, neither the BPLR system nor the Base Rate system of lending rates was applicable to the Banks but at the time of filling the O.A. in 2005, the BPLR system had come into operation from 2003. The Tribunal below without referring to the BPLR system had awarded the pendente lite and future interest at the contractual rate with the modification of compounding effect to quarterly rest from monthly rest. The Base Rate System had become effective from 1.7.2010, as per the aforesaid RBI circular/guidelines. I am, therefore, of the considered view that since the Base Rate system was introduced by the RBI in 2010 after the O.A. had already been disposed of by the Tribunal on 5.3.2009, therefore, the said system would have no application in the instant case. I am also of the view that though at the time of sanction of the loans, the BPLR system was also not applicable and the loans were sanctioned with specified rate of interest, yet since at time of the disposal of the O.A. the BPLR system had come into effect and since in W.P. (C) No. 6301/2011 the Counsel for the petitioner/appellants had not disputed the payment of interest at the PLR, therefore, the pendente lite and future interest could be awarded as per the BPLR system. It would also be appropriate to mention that this Tribunal, white disposing of the appeal, had also ordered for the payment of interest at the PLR which, as already stated, was also accepted by the Counsel for the appellant/applicants before the Hon'ble High Court in the writ petition. In view of the foregoing discussion and on a careful examination of the issue, it is held that as per the pleadings filed before this Tribunal, the BPLR system instead of Base Rate System would apply to the instant case for awarding the pendente lite and future interest. The respondent Bank is accordingly directed to file an updated calculation sheet of interest at the then prevailing BPLR from the date of filing the O.A. within four weeks with a copy to the applicants. The determined amount of debt along with interest pendente lite and future shall be paid by the appellant/applicants @ BPLR within four weeks thereafter. Application stands disposed of accordingly.
Copy of this order be furnished to the parties as per law.