A. Subbulakshmy, Chairperson - (1.)THE Bank filed Original Application (OA) for recovery of a sum of Rs. 99,45,588/- with interest at 18.75% per annum compounded quarterly from the date of application till the date of realisation. After contest that OA was allowed declaring that the defendants are jointly and severally liable to pay the amount with interest at 18.75% p.a. compounded quarterly from the date of application till the date of realisation and also to proceed with the mortgaged property in case of default of payment within three months.
(2.)As against that order, review application was filed by two defendants D1 and D2. In that Review Application, the defendants contended that the loan granted by the Bank to them is a farm loan and it is an agricultural loan and in agricultural loan the interest cannot be compounded quarterly and penal interest is also not payable and the Bank is not entitled to claim or enforce varied rate of interest and the interest has to be brought down and the liability of the defendants will be less and as it is a farm loan i.e. agricultural loan, interest has to be calculated on that rate and decree has to be passed and so the decree passed by the Presiding Officer, DRT, has to be interfered with. The respondent Bank filed objection for the review application contending that the review application is not maintainable. The review application was heard by the Presiding Officer, DRT, Bangalore, and the Presiding Officer, DRT, allowed that review application declaring that the loan was sanctioned for the development of estate of 1st defendant and it is an agricultural loan and for agricultural loan interest compounded with quarterly rests is not permissible and the defendants never agreed to pay compounded interest and accordingly held that the applicant Bank is entitled to recover from the defendants jointly and severally a sum of Rs. 28,53,700/- with costs, past, current and future interest at 12.5% p.a. simple from the date of lending till the date of recovery. Aggrieved against this order in the review application, the appellant Bank has preferred this appeal.
Counsel for the appellant Bank submitted that the loan was sanctioned for development of estate, development of estate is not agricultural loan and so the defendants are not entitled for the lesser rate of interest on agricultural loan and the order passed by the Presiding Officer, DRT, in the review application is liable to be set aside and the order passed in the OA has to be restored. Counsel for the respondents defendants submitted that the loan was granted only for agricultural purpose and so interest has to be calculated only on that rate and the order passed by the Presiding Officer, DRT, in the review application is perfectly justified and it does not warrant any interference.

(3.)ON a perusal of the agreement Ex. A-4, it is seen that the amount was lent by the Bank for development of estate. The 1st defendant is Thorimalai Estate. The rate of interest stipulated in the agreement is 12.5% p.a. with quarterly rests. In the Form of Letter Handing Over Title Deeds of Properties given by the defendants to the Bank, it is stated that the defendants applied their loan application for financial facility in the form of agricultural advance. It is also stated in the agreement that the loan was sanctioned for development of estate. So, the short point that arises for consideration is whether the loan sanctioned for development of estate is an agricultural loan or commercial loan. Counsel for the respondents defendants strenuously argued that development of estate which is mainly for agriculture and so interest has to be calculated only on the agricultural loan. Counsel for the appellant Bank submitted that development of estate cannot come under the category of agricultural loan. What is seen from the documents is that the loan was sanctioned for development of estate and the defendants also deposited the title deeds only for agricultural loan.