LexPUNJAB AND SIND BANK versus M/S. ALLIED BEVERAGE COMPANY PVT. LTD. AND ORS.
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[2010] 11 S.C.R. 1123 PUNJAB AND SINO BANK v. M/S. ALLIED BEVERAGE COMPANY PVT. LTD. AND ORS. (Civil Appeal No. 8443 of 2010) OCTOBER 1, 2010 [P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.] A B Interest: Rate of interest - Cash credit facility granted by Bank to a Company - Company suffered losses - Its account C with Bank declared as Non-performing Assets - Recovery suit - ORT directed Company to pay outstanding dues alongwith 18% p.a. thereon with monthly rests - High Court modified the order of the ORT by reducing the pendente lite and future interest to 14% p.a. with 12 monthly rests - Held: High Court D fairly neutralized the claim of the Bank as well as the sufferings of the Company and passed a workable order by reducing the rate of interest to 14% p.a. which would be simple interest - The approach and the course adopted by the High Court acceptable - Recovery of Debts due to Banks and Financial E Institutions Act, 1993 - s. 19(20) - Banking Regulation Act, 1949 - s.21A - Code of Civil Procedure, 1908 - s.34. The appellant-Bank granted to the respondent- Company the cash credit facility duly secured by way of hypothecation of company's assets. The Company suffered set back in its business and its account with the Bank was declared as Non-performing Assets. F The Bank sent a legal notice to the directors of the Company under the Securitization and Reconstruction of G Financial Assets and Enforcement of Security Interest Act, 2002 calling them to pay the outstanding dues along with interest due thereon. The Company approached the bank for settlement of the accounts. However, the lite and H 1124 SUPREME COURT REPORTS (2010] 11 S.C.R. A future interest. The ORT allowed the application. The DRAT upheld the decision of the ORT. The Company filed the writ petition. The High Court modified the order of the ORT by reducing the pendente lite and future interest w.e.f. 04.07.2003 to 14% p.a. with monthly rests, against B the rate of interest @ 18% p.a. with monthly rests, awarded by the ORT. The Bank filed the instant appeal. Dismissing the appeal, the court HELD: The provisions of Section 19(20) of the C Recovery of Debts due to Banks and Financial Institutions Act, 1993, Section 21A of the Banking Regulation Act, 1949 and Section 34 CPC are relevant while considering the rate or quantum of interest payable pendente lite and future interest. In the instant case, the D Company had agreed for settlement but it was not successful due to financial difficulties and all other circumstances. The High Court fairly neutralized the claim of the Bank as well as the sufferings of the Company and passed a workable order by reducing the rate of interest E to 14% p.a., which would be simple interest, in respect of period pendente lite and future interest. The approach and the course adopted by the High Court is acceptable and no order is passed to either enhance the rate of interest as claimed by the Bank or further reduce as F requested by the Company. [Paras 9, 13, 14) [1129-G; 1137-F-G; 1138-A] G H Central Bank of India v. Ravindra and Others (2002) 1 sec 367 - relied on. N.M. Veerappa v. Canara Bank (1998) 2 SCC 317; Syndicate Bank, Chennai v. Mohan Brothers and Ors. (2004) 10 sec 549 - referred to. PUNJAB AND SINO BANK v. ALLIED BEVERAGE 1125 COMPANY PVT. LTD. AND ORS. Case Law Reference: (2002) 1 sec 367 (1998) 2 sec 311 (2004) 10 sec 549 relied on referred to referred to Para 11 Para 10 Para 13 CIVIL APPELLATE JURISDICTION : From the Judgment & Order dated 24.08.2007 of the High Court of Delhi at New Delhi in Civil Writ Petition WP (C) No. 6069 of 2007. WITH C.A. No. 8444 of 2010. A B c Rajiv Dutta, Kumar Dushyant Singh, R. Nedumaran, Deepak Bhattacharya, Rajesh Kumar, Priyanka Kumari, Satish Aggarwal, Gurbir Singh Raikhy, Surya Kant for the appearing D parties. The Judgment of the Court was delivered by P. SATHASIVAM, J. 1. Leave granted. E 2. These appeals are directed against the judgment and order dated 24.08.2007 passed by the High Court of Delhi at New Delhi in Writ Petition (C) No.6069 of 2007 wherein the Division Bench of the High Court disposed of the writ petition filed by Mis Allied Beverage Company Pvt. Ltd. (hereinafter F referred to as "the Company") modifying the order dated 09.06.2005 passed by the Debts Recovery Tribunal-Ill, Delhi (hereinafter referred to as "the ORT") in Original Application No. 47 of 200
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