BANK OF BARODA Vs. SARVOTTAM NAMKIN PVT. LTD.
DEBTS RECOVERY APPELLATE TRIBUNAL
BANK OF BARODA
Sarvottam Namkin Pvt. Ltd. And Ors.
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Allah Raham, J. -
(1.) THIS appeal impugns the order dated 9th August, 2010 passed by the learned Presiding Officer, DRT -II, Ahmedabad, whereby the Original Application No. 75 of 2007 filed by the appellant Bank against the defendant No. 5 was allowed and the defendants were jointly and severally directed to pay Rs. 17,20,975/ - with simple interest @ 6% thereon from 26th March, 2007 until realization and declaration of mortgage was also granted. The appellant is aggrieved against the award of interest @ 6% per annum from 26th March, 2007 i.e. pendente lite and future interest.
(2.) NONE has turned up to contest the appeal on behalf of the respondents though service has been effected upon them. The learned Counsel for the appellant informs that the defendants/respondents had also not contested the Original Application before the Tribunal.
(3.) I have heard Ms. Lodha, the learned Counsel for the appellant and have carefully perused the record. Her contention is that the impugned order simply awards interest @ 6% per annum from 26th March, 2007 without giving any reasons of awarding interest at this rate. She specifically refers to para 11 of the impugned order where interest @ 6% per annum from 26th March, 2007 is awarded. The contention of Ms. Lodha is that the order of the Tribunal awarding interest @ 6% per annum is absolutely arbitrary and not supported with any reasons. Her contention is that discretion is vested in the Tribunal by virtue of Section 34 of the Code of Civil Procedure to award interest other than contractual rate of interest but it should be supported with reasons. No doubt, the impugned order does not give reasons for awarding interest @ 6% per annum. She has cited a judgment of the Hon'ble Supreme Court reported in : I (2011) BC 503 (SC) : I (2011) SLT 83 : (2010) 10 SCC 640, Punjab & Sind Bank v. Allied Beverage Co. Pvt. Ltd. In this case the Tribunal had awarded interest @ 18% per annum with monthly rests. The same was upheld by the Appellate Tribunal. However, the Hon'ble High Court in its writ jurisdiction had reduced the rate from 18% with monthly rests to 14% per annum simple. The Hon'ble Apex Court had framed the question whether the High Court is justified in reducing the interest @ 18% per annum with monthly rests to @ 14% per annum with 12 monthly rests without appreciating the contractual rate of interest. The Hon'ble Apex Court had held that the award of simple interest @ 14% per annum is just and proper. We may quote paras 13 and 14 of the judgment as under:
13. By drawing our attention to the decision of this Court in Syndicate Bank, Chennai v. Mohan Brothers,, (2004) 10 SCC 549, it is contended that in view of proviso to Section 34(1) of CPC, if the liability in relation to the sum adjudged had arisen out of commercial transaction, the rate of such further interest may exceed 6% p.a. but shall not exceed the contractual rate of interest and the Bank is entitled to claim interest as per in the contract. It is true that in this decision, a three -Judge Bench, after finding that the decision in Central Bank of India's case (supra) shows that no reference has been made to the proviso which specifically deals with the awarding of interest arising out of commercial transactions, referred the issue to a larger bench. We were not informed about any decision by a Larger Bench contrary to the decision in Central Bank of India (supra). Even otherwise, considering factual aspects, even the Company agreed for settlement but was not successful due to financial difficulties and all other circumstances, we feel that the High Court has fairly neutralized the claim of the Bank as well as the sufferings of the Company and passed a workable order by reducing the rate of interest to 14% p.a., which would be simple interest, in respect of period pendente lite and future interest with effect from 4th July, 2003, the day on which the Bank filed an application before the DRT. Though request was made by the Company for further reduction upto 12% p.a., since it was a commercial transaction and the Bank being a nationalized Bank, we are not inclined to accede to their request.
14. The approach and the course adopted by the High Court is acceptable and we are not inclined to either enhance the rate of interest as claimed by the Bank or order further reduction as requested by the Company. Consequently, both the appeals are dismissed with no order as to costs.
In view of the above judgment, the pendente lite and future interest @ 14% per annum should have been awarded with effect from 26th March, 2007. The appeal therefore, deserves to be allowed and the order of Tribunal awarding interest @ 6% per annum and not 14% per annum deserves to be set aside. Hence, following order is passed.
The appeal is allowed to the extent that the rate of interest @ 6% per annum awarded by the Tribunal from 26th March, 2007 until realization is enhanced to @ 14% per annum from 26th March, 2007 until realization.
The costs of the appeal shall be on the parties.;
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