State Bank of India vs Allied Metal Products and Others

J.S. Khehar, J.—The plaintiff-appellant i.e. the State'' Bank of India filed a suit for recovery of Rs. 3,03,269.90 paise against the respondents-defendants. The suit which was preferred on 3.9.1981 was decreed on 31.7.1991. While decreeing the suit, the trial court held the appellant-plaintiff Bank entitled to recover an amount of Rs. 3,03,269.90 paise from the respondents-defendants jointly and severally by sale of the mortgaged immovable property and other property of the respondents-defendants. In addition, the trial Court found the appellant-plaintiff Bank to be entitled to interest at the rate of 16% per annum with effect from 3.9.1981 i.e. the date of filing of the suit till the recovery of the entire decretal amount.

An appeal was preferred by Darshan Lai Garg (arrayed as respondent No. 2 in the instant R.S.A.) on his own behalf as well as on behalf of M/s Allied Metal Products. At the time of hearing of the aforesaid appeal by the Additional District Judge, Yamuna Nagar at Jagadhri, the said Darshan Lai Garg made a statement that he was not desirous of pressing the appeal except regarding the rate of interest awarded by the trial Court. In this behalf, it was submitted by the said Darshan Lai Garg that M/s Allied Metal Products suffered heavy losses and was penniless and could not afford to pay interest at the rate of 16% per annum awarded by the trial Court. His claim was that the rate of interest should be reduced from 16% to 10% per annum since the same Bank i.e., the State Bank of India was charging interest at the rate of 10% per annum from one of the sister concerns of M/s Allied Metal Products. For reasons of specificity, it was mentioned that the State Bank of India was charging reduced rate of interest at the rate of 10% from M/s Bharat Darshan Steel Limited. On these two considerations, a prayer was made by Darshan Lai Garg for the reduction of the rate of interest.

The lower appellate Court, after taking into consideration the aforesaid two-fold assertions, felt that the ends of justice would be met if the rate of interest was reduced from 16% per annum as awarded by the trial Court to 12% per annum from the date of institution of the suit i.e. from 3.9.1981 till the date of payment.

The appellant-plaintiff Bank has contested the reduction of rate of interest by the lower appellate Court from 16% to 12% per annum. In my view, the controversy in the present appeal is squarely covered by a judgment of the Supreme Court of India in N.M. Veerappa Vs. Canara Bank and Others, , wherein the Apex Court held that before 1929, it was obligatory for the Court to award interest at the contracted rate from the date of filing of the suit till the date fixed for payment. However, after 1929, it was no longer obligatory on the part of the Court to require the payment of interest at the contracted rate. After the amendment, a discretion is vested in the Court for determination of pendente lite interest as also for interest payable after the date of decision. In other words, it is not obligatory on the Court to award interest at the rate mentioned in the contract between the parties. In other words, the Court has a discretion to fix interest. In exercise of the aforesaid discretion, the lower appellate Court found that the ends of justice would be met if the rate of interest is reduced from 16% to 12% per annum in doing so, the Court took into consideration the financial constrains of M/s Allied Metal Products as also the fact that the appellant-plaintiff Bank was charging interest at the rate of 10% from the sister concern of the respondents-defendants. In my considered view, the lower appellate Court was fully justified in exercising its discretion in awarding the rate of interest payable by the respondents-defendants. I am also of the considered view that the aforesaid discretion was rightly exercised by taking into consideration the relevant factors.

For the reasons recorded above. I find no merit in the instant appeal. The same is accordingly dismissed. There shall, however, be no order as to costs.