KARUR VYSYA BANK LTD Vs. V T C BUILDERS

JUDGEMENT

(1.) THE appellant-applicant Bank filed the Suit for Recovery of Rs. 15,71,519/-. THE respondent-defendants sought relief before the DRT, Chennai, only with regard to the rate of interest i.e. at simple interest. THE appellant-applicant Bank did not agree for that and insisted on contractual rate of interest. THE defendants paid a sum of Rs. 15,42,945/- and they agreed to pay the entire balance amount with 6% simple interest from the date of plaint till 29.11.1999 and also the Court fee and Advocate fee. THE total interest amount, adding the Court fee and Advocate fee comes to Rs. 5,23,488/- and the balance amount of the suit claim was Rs. 28,574/-. THE learned Presiding Officer found that the balance payable comes to Rs. 5,52,062/- after giving credit to the amount already paid by the defendants. THE defendants paid the entire balance amount of Rs. 5,52,0627- by way of Cheque. Since the entire amount was paid, the learned Presiding Officer ordered on 30.11.1999 to pay 6% simple interest from the date of plaint till 29.11.1999 in view of the judgment of the Apex Court reported in N.M. Veerappa v. Canara Bank, II (1998) SLT 361=I (1998) CLT 88 (SC)=AIR 1998 SC 1101. THE learned Presiding Officer thus passed the order stating that subject to realisation of the Cheque issued by the defendants for an amount of Rs. 5,52,062/-, the TA is closed and the defendants are liable to be discharged from their liability and are discharged and the learned Presiding Officer has also ordered for return of title.

(2.) Unsatisfied with the award of interest at 6% simple interest from the date of entry till 29.11.1999, the appellant has come forward with this appeal. Counsel appearing for the appellant submitted that the Bank is entitled to the rate of interest as per the contract and the future interest from the date of plaint till realisation ought to have been awarded at the contractual rate. He relies upon the decision of the Apex Court reported in State Bank of India v. Yasangi Venkateswara Rao, I (1999) SLT 284=I (1999) CLT 105 (SC)=( 1999) 2 SC Cases 375, wherein the apex Court has held that rate of interest is a matter of contract between parties and thus an agreement that compound interest is to be charged in respect of the amount advanced against a mortgage cannot be interfered with by a Court. The Apex Court in this decision has observed that Section 21-A of the Banking Regulation Act had been validly enacted and if the parties agreed that in respect of the amount advanced against the mortgage, compound interest will be paid and the Court cannot possibly interfere and reduce the amount of interest agreed to be paid on the loan so taken.

(3.) RELYING upon this section the learned Counsel appearing for the appellant Bank argued that the Court cannot reduce the rate of interest and there is a contract between the Bank and the debtor with regard to the payment of interest at 22.75% per annum with compounded quarterly rests. The DRT has awarded 6% simple interest only from the date of plaint till the date of realisation.