FIRST APPEAL None on 12 December 2002

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

Date of Decision: 20[th] December, 2010

H.P. Financial Corporation Appellant Versus Shri Roshan Lal Sethi & others Respondents

Coram

The Hon’ble Mr. Justice Sanjay Karol,J. Whether approved for reporting[1]? No.

For the Appellant: Mr.Ajay Kumar, Advocate.

For respondents: Mr.Y.Paul, Advocate, for respondent No.3. Mr.Janesh Gupta, Advocate, vice counsel for respondent No.4.

Sanjay Karol,J. (Oral)

This Regular First Appeal under Section 96 of the Code of Civil Procedure read with Section 20 of the Himachal Courts Act, 1976, has been filed by plaintiff. Judgment and decree dated 12.12.2002 passed by Additional District Judge, Shimla, in Civil Suit No.89-S/1 of 1995/91, titled as H.P.F.C. vs. Roshan Lal Sethi and others, has been assailed on a limited point. 2.It is the grievance of the plaintiff that even though contractual rate of interest proved on record by the parties was 14½ % per Whether the reporters of Local Papers are allowed to see the Judgment?

annum yet Court below decreed the suit and awarded interest only at the rate of 6% per annum.

necessary facts are referred to. 4.In the year 1982 plaintiff Corporation granted loan of `.2,39,000/- to the present respondents/predecessor-in-interest.

Various

documents, including hypothecation deed were signed by the parties. Defendants failed to adhere to the terms of the agreement and committed serious defaults. Left with no option, plaintiff filed the instant suit for recovery of `.2,85,010/- alongwith interest. Documents executed between the parties Ext.PA, Ext.PB and Ext.PC stand proved by the plaintiff. There is no challenge to this finding of the Court below.

5. In terms of deed of hypothecation rate of interest agreed between the parties is “4½ % (Four and half per cent) per annum above the bank rate as may be prevalent from time to time subject to a minimum of 14½ % (fourteen and half percent) subject to a rebate of 2% per annum if the installments of principal and interest are paid on due dates but with 3% penal interest on the amount of default and for the period of default”.

6. The Apex Court in Central Bank of India v. Ravindra and others, AIR 2001 S.C. 3095, has held as under:- “Award of interest pendente lite and post-decree is discretionary with the Court as it is essentially governed by S.34 of the C.P.C. dehors the contract between the parties. In a given case if the Court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced the Court may exercise its discretion in awarding interest pendente lite and post-decree interest at a lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner.”

7.

7. A Division Bench of this Court in Punjab National Bank and etc. vs. M/s Vidya Hatchery, etc. etc., AIR 1999 H.P. 24, has held as under:- “The Court has no discretion to grant different rate of interest than the contractual rate of interest from the date it is due and payable to the date it is actually paid. In case of commercial loans of the Banks, S.34 of the C.P.C. is to be applied in the context of circulars/directions issued by the Reserve Bank of India under Ss.

21 and 35-A of the Act. It cannot also be disputed that when a Bank advances loan on interest with quarterly rests, the interest is worked out at the close of every quarter and added towards the outstanding balance for the purpose of computation of interest after deducting the amount paid by the customer, if any. In such a case, the principal sum adjudged would be the original principal amount of loan and the amount of interest accrued thereon.”

8. In the instant case, I see no reason for reducing the rate of interest from the date of filing of the present suit till the realization of the decretal amount. Parties, with an open mind themselves entered into contractual agreement mutually setting the terms of interest. Consequently, plaintiff is entitled to the same.

9. For the aforesaid reasons, impugned judgment and decree is modified to the extent that the plaintiff is entitled to the decretal amount alongwith interest at the rate of 14½ % per annum instead of 6% per annum. However, there shall be no order as to costs.

20[th] December, 2010 (C)

(Sanjay Karol) Judge.