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TMI Blog2000 (8) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... st and reduce it to 6.5 per cent, per annum as it was a loan advanced by the bank. In support of this submission he has drawn my attention to State Bank of India v. Yasangi Venkateswara Rao [1999] 95 Comp. Cas. 805, where the Supreme Court has held that the Court cannot interfere and reduce the interest on the amount of loan advanced by the bank as that is a matter of contract between the parties. The mortgaging of a property is with a view to secure the loan and has nothing to do with the quantum of interest to be charged. In State Bank of India s case ( supra ), the suit was for the recovery of money by the State Bank of India. The trial Court passed a preliminary decree and the same was substantially upheld by the district court. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that section 21A of the Banking Regulation Act which forbids the Courts from reopening the bank loans on the ground of excessive interest is not a law enacted by Parliament with respect to the item of banking." (p. 806) 4. The Supreme Court observed that the High Court could not come to the conclusion that Parliament had no jurisdiction to enact section 21A. There can be no doubt that section 21A deals with the question of the rate of interest which can be charged by a banking company. Entry 45 of List-I of the Seventh Schedule clearly empowers Parliament to legislate with regard to banking. The enactment of section 21A was clearly within the domain of Parliament. The section applies to all types of loans which are granted by a bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of interest at 6 per cent from the date of suit in mortgage suits for the recovery of bank loans was proper. It was also held that provisions of section 21A are not intended to override Central legislation namely the Code of Civil Procedure or the provisions of Order 34 rule 11 of the Code of Civil Procedure. 7. Learned counsel for the petitioner submitted that the law laid down in N.M. Veerappa s case ( supra ); decided on January 27, 1998, should not be followed but the law laid down in State Bank of India s case ( supra ) decided on January 21, 1999, should be followed as the decision in this case is later in point of time and also that the constitutionality of section 21A was directly involved. 8. In Everest Industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uture interest at 16.5 per cent was made in the suit itself, which admittedly is the contracted rate of interest. Therefore, the bank is entitled to claim interest in terms of the contract at 16.5 per cent from the date of lending till the date of filing of the suit. However, the Court has discretion under section 34 of the Civil Procedure Code to award interest. Admittedly, the loan was taken for construction of theatre. In other words, the loan was for a commercial transaction. In the facts and circumstances of this case, we consider it just and proper that the appellant should pay simple interest at the rate of 16.5 per cent per annum on the principal amount claimed in the suit from the date of the decree till the realisation." 9. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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