1. Upon the filing of a suit or claim under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the contractual relationship between the parties stands terminated. The Tribunal possesses a discretion to award interest based on the specific circumstances of the case, guided by the principle of justice.
2. In the present matter, the applicant Bank proved its case through unchallenged documentary evidence, including the loan agreement, disbursement memo, and statement of account, establishing the defendant's failure to regularize the account. The defendant chose to remain absent from the proceedings.
3. Considering the prevailing context, including a drastic fall in global and domestic interest rates, and adhering to the legal principle precedent set by the Apex Court in Central Bank of India Vs. Ravindra & Others, the interest on the outstanding amount is awarded at the rate of 12% per annum with monthly rests from the date subsequent to the legal notice date until realization, rather than the higher contractual rate.
4. The application is allowed. The defendant is directed to pay the principal sum of Rs. 21,99,188.38 as of 16.12.2022, along with the determined interest and costs within thirty days. Failing payment, recovery may be effected from the sale of hypothecated or other properties.
