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Judgment
J.M. Malik, J
The main question, around which the instant appeal revolves, is whether the Court can alter or reduce the rate of interest agreed between the parties in an agreement. The facts are these. The learned Trial Court vide its order dated 6.9.2006 issued a recovery certificate in the sum of Rs. 10,85,685/-jointly and severally against the appellants and respondent Nos. 2 to 7 who were arrayed as defendant Nos. 1 to 9 before the learned Trial Court. The costs of the case were also awarded in favour of the State Bank of India, respondent No. 1. The appellants were further directed to pay pendente lite and future interest @ 12% p.a. with quarterly rests w.e.f. 19.3.1993 i.e. the date of filing of OA till the recovery was affected.
The learned Counsel for the appellants has picked up a conflict with the rate of interest agreed between the parties from the very start of receipt of loan. In this context, he has invited the attention of this Court towards the order passed by Mr. Justice M.C. Jain, my learned Predecessor, dated 6.9.2007, in this appeal itself, which is reproduced as hereunder:
I have heard the learned Counsel for the applicants on this application under Section 21 of the RDDBFI Act, 1993. The OA was filed by the 1st respondent -Bank for the recovery of Rs. 10 lakh and odd with interest @ 23.75% p.a. Inviting my attention to the cross-examination of AW 1 Mr. Y.D. Makhija (witness of the Bank), the learned Counsel points out that he admitted that the rate of interest @ 23.75% p.a. was more than the rate of interest mentioned in the documents. He also admitted that the rate of interest of 13.5% was fixed as the defendant No. 1 (applicant herein) was the SSI unit and the facilities were sanctioned under entrepreneur development programme in Rural Delhi. The learned Counsel has also invited my attention to the affidavit filed by Mr. Vipin Kumar Chadha (witness of the Bank) wherein he stated that at the time of filing of OA, the outstanding amount was Rs. 10,85,685/-which had come down to Rs. 9,58,031.65. The learned Counsel points out even then, the DRT has decreed the OA for the principal sum of Rs. 10,85,685/-. The learned Counsel has also referred to different paras of this application under Section 21 of the Act including one regarding the fact that the appellant No. 2 lost his elder son aged about 23 years about six months back in a fatal road accident. He, according to him, is a completely broken man. Still, he is prepared to wipe out his liability as may be found due by this Tribunal on the decision of the appeal.
Under the circumstances, I order for the issuance of notice of this application to the respondents, fixing 15.11.2007. The notice may be made over to the Counsel for the applicants for service on the respondents by Registered Post/Speed Post/personally. Affidavit of service be filed at least a week prior to the next date of hearing. Meanwhile, it is provided in case the applicants deposit a sum of Rs. 5 lakh within two weeks from today, execution proceedings shall remain stayed. This amount of Rs. 5 lakh shall be deposited with the respondent-Bank to be kept in a separate interest bearing account and the deposit would be subject to further orders that may be passed on hearing the application. List on 15.11.2007.
He also invited my attention towards another order passed by this Court dated 30.10.2009 which is reproduced as follows:
Counsel for the parties heard. At the very outset, the Counsel for the appellant submits that he will deposit Rs. 2 lakh within four weeks with the Bank concerned. Subject to this condition, the application stands disposed of. For showing the compliance, the case is fixed for 30.11.2009.
Pleadings are already complete. The case is fixed for 'final disposal' on 16.2.2010.
Counsel for the appellant submits that it therefore means that the appellants have paid Rs. 7 lacs. The learned Counsel for the appellants did not pick up a conflict with the agreement entered into between the parties dated 9.4.1987. The relevant para 3 runs as follows:
(3) Interest on your account will be charged at the rate of Rs. 3% below S.B.I. ADVANCE rate minimum 13.5% p.a. with quarterly rests. The interest rate is subject to revision at the discretion of the Bank from time-to-time. In case of default/non-adherence to the Bank's financial discipline/requirement. The Bank will be at liberty to charge interest at penal rate.
This fact was mentioned repeatedly in various other documents.
The learned Counsel for the appellants vehemently argued that this is a special case. The attention of the Court was invited towards the statement of Mr. O.K. Ahluwalia. In his cross-examination, Mr. D.S. Ahluwalia made the following statement:
This scheme was meant for promoting entrepreneurship amongst the rural people by helping them to set up business venture by providing loans to them at subsidised rate of interest which was 3% below the SBI advance rate.
The normal advance rate of interest at the relevant time was 16.5% p.a. with quarterly rests. I have not brought any document with me to show the above rate of interest.
The interest is charged on quarterly intervals only daily balance irrespective of the fact whether it is mentioned or not mentioned in the loan documents. Our Bank used to follow the same practice of charging of interest at quarterly intervals even under the special scheme meant for rural entrepreneurs. It is incorrect to suggest that we were not competent to charge interest in this case at quarterly intervals because it was not so mentioned in the loan documents.
Learned Counsel for the appellants vehemently argued that the reasons detailed in the above mentioned order dated 6.9.2007 the deduction of the amount from the very start is called for. He argued that the rate of 23.75% p.a. for such like cases is too high, excessive and unconscionable. He submitted that the Court should order that the Bank should reframe the accounts where the appellants should be directed to pay interest @ 13.75% p.a. with quarterly rests. He invited the attention of this Court towards Section 19(20) of the RDDBFI Act which 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.
Learned Counsel for the appellants opined that this section gives discretion to this Court to reduce the principal suit interest as well. Counsel for the appellants has referred to the judgment reported in Plasto Pack, Mumbai and Another v. Ratnakar Bank Ltd., : II (2001) BC 611(SC): (2001) 6 SCC 683.
All these arguments lack conviction. The Court cannot question the agreement entered into between the parties, particularly when it is not challenged. It has to be presumed that both the parties must have signed the documents with open eyes. No party can be permitted to turn back and make an attempt to wriggle out of the liability fastened by the agreement. The rate of interest entered into between the parties can be questioned in only one circumstance that is if and when the parties challenge the agreement itself. The learned Counsel for the appellants himself admitted that he was placing reliance on the agreement. Consequently, the appellants cannot be permitted to challenge the agreement. The defendants are bound to pay the amount in accordance with the said agreement that is to say that the appellants would pay a sum of Rs. 9,58,031.65. It may be mentioned here that the said amount came down to Rs. 9,58,031.65 as the fresh statement was recasted as per Ravindra's judgment.
Now, I turn to the pendente lite and future interest. learned Counsel for the appellants has cited various authorities of Hon'ble Delhi High Court, other Hon'ble High Courts and the Hon'ble Supreme Court out of which the noteworthy decisions by the Apex Court are reported in Central Bank of India v. Ravindra and Others, : I (2002) BC 150 (SC): IV (2001) CLT 127 (SC): (2002) 1 SCC 367; State Bank of India v. Sarathi Textiles & Ors., II (2009) BC 696 : 2008 (3) SCALE 409; and C.K. Sasankan v. The Dhanalakshmi Bank Ltd., : 1 (2009) CLT 368 (SC): I (2011) BC 122 (SC): 2009 (2) D.R.T.C. 320 (SC).
It was also submitted that the main appellant is without any job now-a-days.
Keeping in view all the facts and circumstances, I find considerable force in his argument. The view taken by the Hon'ble Apex Court in the judgments referred to above has been that it is the discretion of the Court to award pendente lite and future interest, which is to be exercised fairly, and no rate of interest under the circumstances can be made a rule of thumb.
The pendente lite and future interest can be reduced. I, therefore, direct that the defendants would pay simple interest @ 6% p.a. from the date of filing of this case till realisation on reducing balance basis. The defendants are given three months' time to pay off the entire loan. The appellants would pay the costs imposed by the learned Trial Court for the pendency before the learned Trial Court. However, there shall be no order as to costs so far as this appeal is concerned.
The appeal stands disposed of.
Copies of this order be furnished to the parties as per law and another copy be sent to the learned DRT.