State Bank of India vs Sharma Provision Store and Another

Arun Kumar Goel, J.—This appeal is directed against the judgment passed by Additional District Judge Kishtwar in suit No. 21/civil on

May 25,1996. By means of impugned judgment while passing ex parte decree for Rs. 22,347/- against defendants future interest has been

reduced to 6 per cent instead of 14 per cent as claimed in the suit. Interest has been allowed from the date of Institution of the suit till realisation of

the decretal amount. Defendants have also been burdened with costs of the suit. According to appellant-Bank interest ought to have been allowed

at the rate of 14 per cent with quarterly rests as claimed.

Facts in this case are within narrow compass. A suit came to be filed by the appellant against respondents. Respondent No. 1 is the sole

property concern of Surjit Kumar and he approached the appellant for grant of Rs. 15,000/-as loan being an educated youth belonging to village

Thakrai, Tehsil Kishtwar. This loan was availed by respondent No. 1 for commercial purposes i.e. for carrying on his business and had been duly

guaranteed by respondent No. 2 Sanjeev Kumar Gupta. From the file of the trial Court basis of the suit made out is the demand promissory note

dated 5-6-1991 executed by Surjit Kumar in favour of Sanjeev Kumar Gupta, respondent No. 2 undertaking to pay the said amount for value

received with interest from the date of pronote dated 5-6-1991 with quarterly rests. This document has been proved as Mark 'A' by PW B.L.

Ramdasi. In addition to this document Mark 'B' has also been proved, this is a letter of delivery of D.P. Note Mark 'A' to the Bank by Surjeet

Sharma. Mark 'C' is the affidavit purported to have been filed by Surjeet Sharma stating therein that he had not taken any kind of loan from

Industries department or any other Bank. Document Mark 'D' is the Rent note of the premises in question. Similarly witness has also proved the

arrangement letter Mark 'E' and agreement of Hypothecation Mark 'F', as well as guarantee agreement Mark 'G'.

So far arrangement letter Mark 'E' is concerned, it speaks of interest at present being 4 per cent to be applied at rests, what would be the rest is

not specified and was subject to revision from lime to time. No benefit can be derived by the appellant bank from this document as it is not signed

on its behalf. In order to take advantage of this letter it had to be shown that the terms of it were accepted by both the parties, that is not the

situation in the present case, no doubt, it is signed by Surjeet Sharma and Sanjeev Kumar Gupta. Then comes the document Mark 'F' which is the

agreement of Hypothecation of goods, which is executed by both the respondents at page 2 thereof clause 2nd deals with interest. A perusal of it

shows that no rate of interest is mentioned therein. Similarly, there is no mention of rate of interest tn the Guarantee Agreement. No doubt, in the

statement of account filed by the appellant-bank and marked as Exhibit PW-BL, interest has been debited to the account. It hardly needs to be

emphasised here that appellant bank is entitled to interest but at what rate and with what rests has to be spelt out by the loan documents subject to

which the loan was granted by the appellant-bank which was availed by the loanee and had been guaranteed by the Guarantor. No doubt, in his

oral statement PW-B.L. Ramdasi had stated that the respondents are liable to pay interest at the rate of 14 per cent per annum. Such a statement

is of no consequence, unless it is proved that interest was firstly agreed to be paid at particular rate with rests, mere statement by the bank official

in Court is of no consequence. Payment of interest is a matter of contract for reasons held, known to bank officials. Rate of interest had not been

mentioned at all in any of the documents. As already observed in D.P. Note executed by the loanee-respondent 1 in favour of his guarantor-

respondent No. 2, vide Mark 'A' and delivered by both of them to appellant-bank vide Mark B, there is no mention of any interest. Similar is the

position in respect of agreement of Hypothecation, as noticed hereinabove, wherein no interest has been mentioned. That being so, it is clear that

there is no privity of contract for payment of interest by respondents to the appellant-bank.

In view of the aforesaid, trial Court had fallen into error while decreeing the suit ex parte having allowed 6 per cent interest from the date of filing of

the suit till the date of realisation of the amount in terms of impugned decree. This part of the decree is not supportable tn law.

Respondent No. 1 though present in this Court was ex parte during the course of proceedings before the trial Court. Faced with this situation

learned counsel appearing for the appellant urged that since none of the respondents had either chosen to file written statement and or to contest

the case before the Court below besides having also not filed any appeal in this Court against the decree in question as such the appeal deserves to

be allowed or alternatively it was also urged that interest allowed at the rate of 6 percent calls for no interference in this appeal.

In the considered opinion of this Court the matter is not that simple as being put forth on behalf of appellant-bank. Here a reference needs to be

made to provisions of Order 41, Rule 33 of the CPC 1977 (1920 A.D.), which is to the following effect:

Power of Court of Appeal.- The Appellate Court shall have power to pass any decree and make any order which ought to have been passed

or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court

notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although

such respondents or parties may not have filed any appeal or objection and may, where there have been decreed in cross-suits or where two and

more decrees are passed in one suit, be exercised in respect of all or any of the decree, although an appeal may not have been filed against such

decree;

In the face of this provision, coupled with the documents on the basis whereof appellant had filed the suit, this is a fit case where power vested in

this Court needs to be exercised and to pass a decree which ought to have been passed notwithstanding the fact that appeal had not been filed by

any of the respondents. Here it may also be appropriately pointed out that the Court has to diligently as well as cautiously examine a case which is

laid ex parte before it as there is no adversary of the plaintiff to point out deficiency of his case. Whether the suit is within time, or whether the

documents are properly executed as well as are properly stamped etc. have to be minutely examined by the Court in such a situation. When the

present case is examined in the light of this position, it is clear that grant of interest in the impugned decree cannot be sustained. This is an

exceptional situation which authorises this Court in the present appeal to pass such decree as ought to have been passed or as the nature of the

case demands. Similarly discretion vested in this Court under the aforesaid provision of law will not be refused to be exercised simply because

respondents have not either filed an appeal or cross-objections.

It may further be pointed out that the exercise of discretion as already observed in favour of respondents in the appeal of the appellant- bank is

rendered necessary with a view to adjust rights of the parties in accordance with justice, equity and good conscience and above all, law. In this

case this Court is further satisfied that there are good reasons for invoking the powers vested in it under Order 41, Rule 33 CPC (supra) and

interference is also necessitated on the basis of ex parte evidence examined by the plaintiff during the course of trial in the Court below.

Not only this but if in the peculiar facts and circumstances of this case this power is not exercised it will result in failure of justice upholding

complete negligence and lack of judicial examination of the record by the trial Court and further in no case impugned judgment can be sustained so

far as it relates to the grant of interest as ordered by the trial Court in the impugned judgment. In support of this view, reference can usefully be

made to Koksingh Vs. Smt. Deokabai, and S. Sankarappa Gounder Vs. K.C. Gopalan and Others, .

For the reasons detailed hereinabove, this appeal is dismissed and the decree passed by the trial Court in File No. 21/Civil on 25-5-1996 by

Additional District Judge, Kishtwar in s'uit titled; State Bank of India v. Sharma Provision Store and another, is modified, thereby directing that

appellant-bank is entitled to a sum of Rs. 15,000/- only with proportionate costs and the relief of interest as granted by the Court below shall stand

rejected.

Costs on the parties.