State Bank of India Vs Smt. B. Karunamba

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THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND

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THE HON’BLE SRI JUSTICE V.SURI APPA RAO

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A.S.NO.864 OF 1994

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JUDGMENT: {Per the Hon’ble Sri Justice V.Suri Appa Rao}

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This appeal is filed against the judgment and decree dated 26.07.1993 in O.S.No.11 of 1987 on the file of the Subordinate Judge, Siddipet, whereby the suit filed by the plaintiff was decreed for a sum of Rs.3,45,000/- together with 14% simple interest from the date of loan transaction i.e. April 1981 till the date of the suit and at the rate of 10% simple interest from the date of the suit till the date of redemption. Aggrieved by the rate of simple interest at 14% awarded by the Court below, the State Bank of India-plaintiff filed this appeal claiming interest at the contract rate of 16.25% per annum.

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Admittedly, the transaction is a commercial transaction. Learned Subordinate Judge has granted interest at the rate of 14% per annum on the basis of Exs.A2 and 3. It is also an admitted fact that the rate of interest will be fluctuating as per the Reserve Bank of India {“the RBI” for brevity} Guidelines from time to time. The suit transaction is of the year 1987 and the suit was disposed of in the year 1993. Exs.A2 and A3 clearly indicate that the rate of interest is only 14% subject to the fluctuations as per the RBI Guidelines. Therefore, the learned Subordinate Judge was not justified in restricting the interest at 14% per annum instead of 16.25% as claimed by the appellant-plaintiff.

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The appeal is, therefore, allowed with costs, awarding interest at the contract rate of 16.25% per annum from the date of the suit i.e. from 23.02.1987 till the date of realisation.

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(B.PRAKASH RAO, J)

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__________________ (V.SURI APPA RAO, J)

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6^th December 2010 RRB

State Bank of India v. Smt. B. Karunamba

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State Bank of India v. Smt. B. Karunamba

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