SYNDICATE BANK versus R. VEERANNA AND ORS.

Citation: [2002] SUPP. 5 S.C.R. 600 · Decided: 19-12-2002 · Supreme Court of India · Bench: SHIVARAJ V. PATIL, ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

A 
B 
SYNDICATE BANK 
v. 
R. VEERANNA AND ORS. 
DECEMBER 19, 2002 
[SHIVARAJ V. PATIL AND ARIJIT PASA VAT, JJ.] 
Bank/Banking-Suit by bank for recovery of loans granted to 
defendants- Defendants disputing higher rate of interest charged by the Bank-
C Earlier defwdants had acknowledged their liability-Trial court accepting 
defendants's contention and decreeing the suit accordingly-Decree affirmed 
by High Court-Held, it is not a case of automatically charging the increased 
rate of interest-Charge of higher rate is based on agreement between the 
parties-High Court erred in holding that principles of natural justice were 
violated as the defendants were not put to notice before enhancing the rate of 
D interest-Application of principles of natural justice cannot be read into the 
express terms of contract-Instructions gil'en by head office cannot vary the 
terms of contract between the parties-Besides, in view of the acknowledgment 
of liability by the defendants on the basis of enhanced rate of interest, it is not 
open to them to deny the payment on the ground that higher rate of interest 
E could not be charged-Trial court and High Court erred in refusing interest 
as claimed by the Bank-Decree passed by trial court and affirmed by High 
Court modified accordingly-Interest-Bank claiming higher rate of interest. 
F 
G 
H 
Hirata/ and Ors. v. Badkulal and Ors., 119531 4 SCR 758, relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 972 of 
1995. 
From the Judgment and Order dated 18.2.94 of the Kamataka High 
Court in R.P.A. No. 459 of 1987. 
Adarsh B. Dial, Ms. Sumati Anand and S. Ravindra Bhat, for. the 
Appellant. 
R.S. Hegde and P.P. Singh, for the Respondents. 
The following Order of the Court was delivered : 
600 
SYNDICATE BANK v. R. VEERANNA 
601 
Heard learned counsel for the parties. 
A 
This appeal is by the plaintiff-Bank aggrieved by the impugned judgment 
and decree of the High Court dismissing their first appeal and affirming the 
judgment of the trial court. The appellant-Bank filed suit for recovery of total 
amount of Rs. 16,15,091.05 against the defendants. The appellant advanced 
loan of three kinds to the defendant No. I and defendant Nos. 2 and 3 were B 
the guarantors. When the defendants failed to make payment of the amount 
borrowed, the plaintiff was constrained to file the suit. The defendants resisted 
the claim of the plaintiff on varicius grounds. In view of the pleadings of the 
parties, the trial court framed the following issues: -
"I. Whether defendants have agreed to pay interest at 5% per annum C 
above the Reserve Bank of India rate subject to minimum of 
11% per annum, to be compounded quarterly? 
2. 
Whether the interest claimed is highly excessive and exorbitant 
under the Usurious Loans Act? 
3. 
Whether plaintiff is not entitled to more than Rs. 21,500/- as . 
service charges? 
4. 
Whether defendants have acknowledged the debts and if not, 
whether the suit is barred by limitation? 
D 
5. 
Whether suit is bad for misjoinder of cause of action? 
E 
6. 
Whether defendants are entitled to instalments claimed? 
7. 
To what reliefs are parties entitled? 
Additional issues:-
I. 
Whether the plaintiff Bank is justified in unilaterally raising the F 
rate of interest? 
2. 
Whether the interest charges is correct?" 
The plaintiff-Bank examined its officers as PWs-1 and 2 and got marked 
documents as P-1 to P-40. The defendant No. I entered the witness box and G 
examined himself as DW-2 and one Krishnamurthy, a Chartered Accountant 
was examined on behalf of the defendants as DW-1. The defendants got 
marked documents as D-1 to D-40. The trial court, having considered and 
appreciated the evidence placed before it both documentary as we II as oral, 
recorded findings on issue Nos. I to 3 in the affirmative and on issue Nos. H 
602 
SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R. 
A S and 6 and additional issue Nos. I and 2 in the negative. As far as issue 
No.4 is concerned the trial court recorded a finding that the defendants have 
acknowledged all the debts and the suit claim of the plaintiff under three 
loans was within time. However, during the course of the argument before 
the trial court, learned counsel for the defendants disputed only about the 
B higher rate of interest charged by the plaintiff-Bank. The learned counsel for 
the defendants also made a specific statement that defendants give up all 
other contentions. It was further submitted that the defendants were r

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