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Punjab National Bank Vs. Kaveri Food Products (India) Pvt. - Court Judgment

LegalCrystal Citation
CourtDRAT Madras
Decided On
Judge
Reported inII(2003)BC44
AppellantPunjab National Bank
RespondentKaveri Food Products (India) Pvt.
Excerpt:
.....agreement, packing credit facility, term loan, etc., interest to be charged is with monthly rests upto 14.3.1976 and thereafter interest to be charged at quarterly rests, but the presiding officer, drt, has awarded interest with quarterly rests as per the loan document and the award of interest at quarterly rests as ordered by the presiding officer, drt, is liable to be set aside in respect of this award of interest. he further submitted that even as per the reserve bank of india (rbi) circular, interest at monthly rests has to be charged and only as per the documents and rbi circular the interest is claimed at monthly rests but the presiding officer, drt, has passed the order in the original application (oa) as quarterly rests and it is not sustainable and it is opposed to the.....
Judgment:
1. The appellant Bank has filed this appeal to set aside the order passed by the Presiding Officer, Debts Recovery Tribunal, Bangalore, on 31.10.2000. The only contention raised in the appeal is with regard to the rate of interest. The Presiding Officer, DRT, has passed order directing issue of Recovery Certificate as prayed in the plaint and the claim or interest by the applicant Bank is regulated as per the loan document with quarterly rests and directed the Bank to file a Statement on these lines within two weeks from the date of order and thereafter to issue Recovery Certificate. The Bank is much aggrieved as against the order passed by the Presiding Officer, DRT, in respect of the interest awarded.

2. Counsel for the appellant Bank submitted that as per the documents hypothecation agreement, packing credit facility, term loan, etc., interest to be charged is with monthly rests upto 14.3.1976 and thereafter interest to be charged at quarterly rests, but the Presiding Officer, DRT, has awarded interest with quarterly rests as per the loan document and the award of interest at quarterly rests as ordered by the Presiding Officer, DRT, is liable to be set aside in respect of this award of interest. He further submitted that even as per the Reserve Bank of India (RBI) Circular, interest at monthly rests has to be charged and only as per the documents and RBI Circular the interest is claimed at monthly rests but the Presiding Officer, DRT, has passed the order in the Original Application (OA) as quarterly rests and it is not sustainable and it is opposed to the contract. He further submitted that if the interest at monthly rests upto 14.3.1976 is calculated and thereafter with quarterly rests, the total difference as on date comes to Rs. 12,01,421.09 p and the order of Presiding Officer, DRT has to be modified.

3. Counsel for the respondents submitted that as per the statement of account, only quarterly rests has been charged. The statement of account reveals that interest at monthly rests was charged and afterwards in 1997 interest with quarterly rests was charged. The Bank has charged interest on monthly rests basis only in cash credit account upto March, 1976 as evidenced by Ex. A-195 and thereafter the Bank has charged interest at quarterly basis. The Bank has charged interest at quarterly rests in regard to the term loan, packing credit facility and working capital term loan from the inception of account as evidenced by Ex. A-195 and on these accounts at no point of time interest was charged on monthly rests. So the Bank has charged interest on monthly rests basis only in cash credit account upto March, 1976. The instructions given by the RBI shows that there was no guideline prior to 1976 prohibiting charging of interest on monthly rests.

4. Counsel for the appellant Bank submitted that charging of interest on monthly rests by the applicant Bank for the period 1973 to 1976 based on the document is justified and the defendants are bound by the contract. The Promissory Note executed (Ex. A-3) shows interest with monthly rests. Similarly, Ex. A-4 also shows the rate of interest on monthly rests basis. So there was agreement to pay interest with monthly rests. The applicant Bank has claimed interest with monthly rests only upto 14.3.1976 and thereafter with quarterly rests. Only as per the contract and on the loan documents the applicant Bank has claimed interest with monthly rests upto 14.3.1976 and thereafter with quarterly rests. Since the parties are governed by documents to pay interest with monthly rests and as the Bank has also charged interest with monthly rests upto 14.3.1976 as claimed by the applicant Bank, the order passed by the Presiding Officer, DRT, with regard to the award of interest is not sustainable and it is liable to be modified.

5. The order of the Presiding Officer, DRT, is modified and Recovery Certificate is ordered to be issued calculating interest with monthly rests in cash credit account upto 14.3.1976 and thereafter at quarterly rests. The order of the Presiding Officer, DRT, is modified to this extent indicated above. In the result, the appeal is allowed and the order of the Presiding Officer, DRT, is modified to the extent indicated above and the Presiding Officer, DRT, Bangalore, is directed to issue modified Recovery Certificate in the light of the above observation. No costs.


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