HATKESH MEDICAL STORES AND ANOTHER Vs. CANARA BANK, BHAVNAGAR
LAWS(GJH)-1988-5-3
HIGH COURT OF GUJARAT
Decided on May 28,1988

Hatkesh Medical Stores and Another Appellant
VERSUS
Canara Bank, Bhavnagar Respondents


Referred Judgements :-

BANK OF BARODA V. TIGER ELEC. MOTORS [REFERRED TO]


JUDGEMENT

- (1.)The learned advocate for the appellants further submitted that the order passed by the learned Judge awarding interest at the fate of 17 1/2% from the date of the suit is unreasonable one. The agreed rate of interest is 15 % and if the defendants fell ta pay'the amount, then the Bank is entitled to recover penalty interest at the rate of 2% over and above 15 % interest. With regard to the question of reasonable interest, the Division Bench of this Court in the case of Bank of Baroda v. Tiger Elec. Motors, 5 (1985) G.L.H. 1021, has observed that if the prevailing rate of interest by the nationalised banks for commercial transactions and the agreed rate of interest are disturbed and lowered in absence of any compelling reasons, it would be the society which will be bearing the burden of such difference and not the defaulting debtor. The Court has further held that ordinarily interest in such commercial transactions should be awarded at the contractual rate from the date of the suit till the date of the preliminary decree and also upto the date on or before which the paymeat found or declared due under the preliminary decree is to be made by the mortgagor. Taking into consideration the fact that as the contractual rate of interest was 15 %, the decree passed by the trial Court awarding interest at the rate of 17 % requires to be modified and it is ordered that from 2nd April 1980 the Bank is entitled to recover interest at 15 % till its realisation on the principal amount of Rs. 47,787-53 p.
Appeal partly allowed.

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