CENTRAL BANK OF INDIA versus RAVINDRA AND ORS.

Citation: [2001] SUPP. 4 S.C.R. 323 · Decided: 18-10-2001 · Supreme Court of India · Bench: A.S. ANAND · Disposal: Disposed off

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Judgment (excerpt)

CENTRAL BANK OF INDIA 
v. 
RA VINDRA AND ORS. 
OCTOBER 18, 2001 
[DR. A.S. ANAND, C.J., K.T. THOMAS, R.C. LAHOTI, 
'N. SANTOSH HEGDE AND S.N. VARIAVA, JJ.] 
Code of Civil Procedure, 1908: Section 34 [as amended by the Code 
of Civil Procedure (Amendment) Act (66 of 1956) w.ej. 1.1.1957] 
Recovery of money-Suits for-By Banking Institutions against their 
borrowers-" Principal sum adjudged" and "such principal sum" -Bank sanc-
tioned loan to borrower-Loan carried 11% interest per annum-Bank insti-
tuted suit for recovery of money-Trial court decreed suit for the total outstand-
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ing amount inclusive of interest on the date of institution of suit with 8% future 
interest per annum-On appeal, High Court directed interest at 11% per 
annum to be payable only on the principal sum from the date of suit till 
realisation though the decree for the original amount was maintained-Cor-
rectness of-Held : Subject to contract between parties interest on loans and 
advances may be charged on periodical rests and also capitalised on remaining 
unpaid-Principal sum actually advanced coupled with the interest on periodi-
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cal rests so capitalised is the principal sum on the date of suit-The principal 
sum so adjudged is "such principal sum" on which interest pendente lite and 
future interest i.e. post decree interest may be awarded by court-However, 
penal interest cannot be capitalised. 
Recovery of money-Suits for-By Banking institutions against their 
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borrowers-Pleadings-Held: There must be an averment in the plaint that 
interests and capitalisation thereof are in accordance with the directions of 
RBI-A statement of account to this effect to be filed-Onus is on the borrower 
to show why the principal sum as claimed cannot be accepted and adjusted-
This practice would narrow down the scope of controversy and enable expedi-
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tious disposal of suits-Banking Regulations Act, 1949. 
Banking Regulations Act, 1949: 
Sections 21 and 35-A-Banking practice-Role of RBI-Directives/ 
circulars-Held: RBI should continue to issue directives/circulars dealing with 
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323 
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B 
c 
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324 
SUPREME COURT REPORTS 
(2001] SUPP. 4 S.C.R. 
rate of interest, periodical rests and capitalisation of interest-Such directives/ 
circulars are binding on the concerned parties-Such directives may be treated 
as standards for deciding whether interest charged is excessive, usurious or 
opposed to public policy. 
Interpretation of Statutes.: 
Rules of construction-Principles-Held: a construction, which leads to 
repugnancy or inconsistency, has to be avoided-Ordinarily, a word or expres-
sion used at several places in an enactment should be assigned the same 
meaning. 
Words and Phrases : 
"The Principal sum adjudged" and "such principal sum"-Meaning 
of-In the context of S.34( 1) of the Code of Civil Procedure, 1908. 
The petitioner-bank sanctioned a loan to respondent No. 1 on the 
guarantee of respondent Nos. 2 and 3. Respondent No. 1 executed a de-
mand promissory note and also executed term agreement of hypothecation 
of the vehicle. The loan carried interest at the rate of 11 % per annum with 
quarterly rests. The total outstanding inclusive of the interest charged as 
per agreement was Rs. 1,51,825 on the date the petitioner-bank filed a suit 
for recovery. The trial court passed a decree for Rs. 1,51,825 with future 
interest at the rate of 8% per annum from the date of the suit till realisa-
tion. An appeal preferred by the Bank before the High Court was partly 
allowed modifying the decree of the trial court by awarding interest at the 
rate of 11 % per annum. However, the High Court directed the interest at . 
the rate of 11 % per annum to be payable only on Rs. 99,000, which was 
stated to be the principal sum, from the date of the suit till realisation 
though the decree for Rs. 1,51,825, the amount due and payable on the 
date of the suit, was maintained. Hence this appeal. 
The following question arose before the Court: 
What is the meaning to be assigned to the phrases "the principal sum 
adjudged" and "such principal sum" as occurring in Section 34(1) of the 
Code of Civil Procedure, 1908 [as ahlended by the Code of Civil Procedure 
(Amendment) Act (66 of1956) w.e.f.1.1.1957], a question of frequent recur-
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rence and having far reaching implications in suits for recovery of money, 
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CENTRAL BANK OF INDIA v. RA VINDRA 
325 
specially those filed by banking institutions against their borrowers? 
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Disposing of th

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