Dismissed

Punjab National Bank Thr Branch Manager v. Kana and Others

Rajasthan HC20 Jul 2022CFA/20/1992

Case brief

AI extract

What is this about?

The Rajasthan High Court dismissed a first appeal by Punjab National Bank seeking recovery of an agricultural loan. The Court upheld the trial court's finding that the outstanding amount was exempt under bank circulars and that interest should be calculated at 9% per annum, relying on RBI directives and the precedent in Bank of India v. Karnam Ranga Rao.

What the court decided

AI extract

Punjab National Bank Thr Branch Manager… — Contract and Commercial Disputes | Rajasthan HC (2022)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Civil First Appeal No. 20/1992

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Punjab National Bank, Branch Manager, Reengus District Sikar through the Branch Manager, Shri Sohan Lal son of Shri Data Ram aged About 45 Years, at present resident of Reengus, District Sikar (Rajasthan).

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---- Plaintiff- Appellant

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Versus

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Kana

¶7

Bhura

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both sons of Shri Shiv Nath Ahir resident of village Anantpura Tehsil Amer, District Jaipur.

¶9

Narain Lal

¶10

Ram Kumar

¶11

Mangi Lal (deceased)

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Laxmi Narain alias Laxman (deceased)

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sons of Shri Balu alias Balma Ahir resident of Anantpura, post Chimanpura via Govindgarh, Tehsil Amer, District Jaipur

¶14

---- Defendants- Respondents

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For Appellant(s) : Mr. Pratyush Sharma for Mr. Vinod Kumar Tamoliya For Respondent(s) : None

¶16

HON'BLE MR. JUSTICE SUDESH BANSAL

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Judgment

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JUDGMENT RESERVED ON : 18/07/2022 JUDGMENT PRONOUNCED ON : July _20^th _, 2022

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BY THE COURT:

¶20

This first appeal under Section 96 CPC has been filed by plaintiffappellant against the judgment and decree dated 12-8-1991 passed by the District Judge Jaipur District, in Suit No.82/1981, whereby and whereunder dismissed the suit for recovery of Rs.13,570.07 and future interest.

¶21

The facts of the case are that respondents defendants No.1&2 (hereafter `the defendants’) obtained agricultural loan of Rs.4000/- from

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(2 of 6)

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[CFA-20/1992]

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plaintiff Bank on 31-1-1970 and mortgaged certain agricultural land, and defendants Nos.3 to 6 are legal representatives of the guarantor. Plaintiff claimed that loan was to be repaid in six monthly instalments along with interest at the rate of 5% above the rate of Reserve Bank of India, but minimum 9% per annum. Since defendants No.1&2 failed to repay the agricultural loan, the plaintiff filed the suit for recovery of agricultural loan on 9-11-1981.

¶25

On issuing notices respondents-defendants No.1&2 (hereafter `the defendants’) filed written statement on 26-9-1986 and denied to have taken any loan and stated that the agent appointed by plaintiff bank obtained signatures of many agriculturists but no amount was paid to agriculturists. The said agent obtained signatures of defendants also, but no amount was given to them. The defendants are not bound by such documents. It was further stated that the plaintiff bank never cleared the accounts to defendants nor they have taken any loan.

¶26

Defendants also filed amended written statement on 22-3-1991 and placing reliance on Bank’s circular (Ex.A-1) stated that since defendants are agriculturists and the amount in question is agricultural loan, they are entitled for exemption upto an amount of Rs.10,000/-.

¶27

On the basis of pleadings of parties the trial court framed nine issues. First, Whether plaintiff is a corporate body and Mohan Lal Sharma is entitled to file the suit? Second, whether according the contents of paras No.3&4, defendants No.1&2 executed mortgage deed dated 17-1-1970 and mortgaged their agricultural field in favour of plaintiff bank and obtained loan of Rs.4000/-? Third, whether defendants No.3to 6 are real brothers of Ramdev, who executed guarantee deed dated 31-1-1970 for loan of Rs.4000/- obtained by defendants No.1&2, and therefore, they are

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(3 of 6)

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[CFA-20/1992]

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responsible for repaying the loan of defendants No.1&2? Fourth, whether statement of loan as shown in schedule-A was maintained properly, which was made understood to defendants and who executed acknowledgments on 12-6-1971, 30-6-1071, 31-12-1971, 30-9-1973, 31-12-1983, 8-51985, 20-1-1976, 3-7-1978 and on 1-12-1979? Fifth, whether plaintiff bank is entitled to recover from defendants Rs.13570.07 principle with interest at the rate of 15% from 9-11-1981 with quarterly and six monthly increase and are entitled to recover the amount from auction of mortgaged land of khasra No.417, 418, 419 and 562 measuring 27 bighas and 6 biswa in village Anantpura Chimanpura sub tehsil Govindgarh District Jaipur? Sixth, whether loan documents are forged? Seventh, whether defendants are entitled for Rs.500/- six monthly instalments for repaying the loan? Eights, Relief? Seventh-A, whether according to amended written statement, defendants are entitled for exemption upto loan of Rs.10,000/-?

¶31

Plaintiff examined two witnesses Pw.1 Jagdish Chandra Khanna, Pw.2 Mohan Lal Sharma and Pw.3 Kuldeep Singh Kamal and exhibited documents. Defendants examined Dw.1 Kana.

¶32

The trial court considered oral and documentary evidence led by both parties and decided issues No.1,2,3,4,6 and 7 in favour of plaintiff Bank. But relying on judgment in case of Bank of India Vs. Karnam Ranga Rao [AIR 1986 Karnataka 242] and circular of the bank, issues No.5 and 7A and 8 have been decided against plaintiff Bank and dismissed the suit vide impugned judgment dated 12-8-1991.

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Being aggrieved of the judgment and decree present first appeal has been filed.

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Heard learned counsel for plaintiff bank and perused the impugned judgment and decree as also other material available on record.

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(4 of 6)

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[CFA-20/1992]

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Learned counsel for plaintiff Bank has argued that the trial court has wrongly dismissed the suit of plaintiff bank and it has wrongly placed reliance on judgment in case of Karnam Ranga Rao (supra) and prayed for setting aside the judgment and to decree the suit.

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Heard. Considered.

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A perusal of the judgment in case of Karnam Ranga Rao (supra)

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indicates that the High Court in para No.11 observed as under:-

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“The courts cannot re-open any account maintained by Banks relating to transaction with its customers on the ground that the rate of interest charged, in the opinion of courts, is excessive or unreasonable. Section 21A of the Banking Regulation Act is a restraint on such power of Courts. However, in any case, if it is proved that the interest charged by Banks on loan advanced is not in conformity with the rate prescribed by the Reserve Bank, then the Court could disallow such excess interest and give relief to the party notwithstanding the provisions of Section 21A. Banks are bound to follow the directives or circulars issued by the Reserve Bank prescribing the structure of interest to be charge on loans and any interest charged by Banks in excess of the prescribed limit would be illegal and void. Banks cannot charge compound interest with quarterly rests on agricultural advances.”

¶42

In para No.21 of the judgment it was observed:-

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“21. To sum up the above discussion: the circulars/ directives of the Reserve Bank direct that agricultural advances should not be treated on par with the commercial loans in the matter of application of the system of compounding interest. The farmers do not have any regular source of income other than sale proceeds of their crops is an acknowledged fact. They get income generally only once a year. They are, therefore, not in a position to pay interest as usual fixed intervals like monthly, quarterly, and half yearly, Banks should not compound interest on current dues. Banks should not also charge interest with monthly, quarterly or half yearly rests on overdue loans. Perhaps, it may not be illegal to charge interest with yearly rests.”

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(5 of 6)

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[CFA-20/1992]

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The trial court considering the fact only an amount Rs.4000/- was advanced to defendants and the bank filed the suit for recovery of Rs.13,570.07 admittedly calculating interest as per commercial loans. Therefore, the trial court relying on judgment in case of Karnam Ranga Rao (supra) calculated the interest at the rate of 9% per annum on principle amount of Rs.4,000/- and adjusting the amount paid by defendants on different dates found that only Rs.5,520/- remained to be recovered from defendants. The trial court further relied on Ex.A-1, according to which the plaintiff bank itself exempted persons who obtained agricultural loans and their due amount was less than Rs.10,000/-.

¶47

This is not in dispute that loan of Rs.4000/- was extended on 31-11970 for agricultural purpose to install diesel engine at well of defendant agriculturist. The plaintiff bank charged interest @ 9% with half yearly rest and thereafter claimed interest @ 15% with quarterly rest. The documents of bank from Ex.1 to 27 are on record to prove the factum of granting loan and for rate of interest. The defendant-loanee does not deny signatures/ thumb impression on mortgage deed dated 17-1-1970 and on other documents executed in favour of bank. As per agreed terms, interest should not exceed to 9% per month, and there is no evidence about any execution of agreement for increase of interest @ 15% per month.

¶48

Therefore, bank is entitle to recover its principle loan amount of Rs.4,000/- @ 9% interest per month. Loan was sanctioned on 31-1-1970. Calculating interest @ 9% from date of loan to date of passing the judgment by the trial court comes to Rs.7,770/-, thus total amount is Rs.4000+7770=11,7770 only. As per detail of bank statement (Ex.16) defendants loanee paid Rs.600/- on 12-12-1970, Rs.400/- on 27-12-1974 and Rs.1500/- on 1-7-1976 against principle loan amount. Interest @ 9%

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(6 of 6)

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[CFA-20/1992]

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paid is Rs.3,750/-. Thus defendants loanee are entitled for deduction of Rs.6250/-, out of total due amount of Rs.11,770/, which comes to Rs.5,520/only.

¶52

It is an admitted case that bank issued letter Ex.A-1 to defendants, as admitted by counsel for plaintiff bank to provide relief in due agricultural loan upto limit of Rs.10,000/-. Issue No.7A had already been held in favour of defendant, findings of this issue are not suffering from any perversity or illegality.

¶53

Thus outstanding agricultural loan does not exceed the limit of Rs.10,000/-, therefore bank is not entitled for decree to recover its due loan amount of Rs.5,520/- in view of exempting the agricultural loan amount upto the limit of Rs.10,000/- vide its letter Ex.A1.

¶54

On appreciation of evidence on record as a whole, findings of the trial court regarding issues No.5,8 and 7A are found well supported with circulars of plaintiff bank and Reserve Bank of India and the judgment in case of Karnam Ranga Rao (supra) , and this court does not find any perversity or infirmity in the findings. The same are found well within jurisdiction and parameters of law, which do not suffer from any perversity. 14. The upshot of the aforesaid discussion is that the impugned judgment passed by the trial court requires no interference by this court and the same deserves to be upheld and is upheld. There is no force in the first appeal filed by plaintiff bank and the same is accordingly dismissed.

¶55

Record of trial court be sent to trial court.

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(SUDESH BANSAL),J

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Arn/5

Punjab National Bank Thr Branch Manager v. Kana and Others

Case brief

What is this about?

What the court decided

Punjab National Bank Thr Branch Manager v. Kana and Others

Case brief

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