Inder Parshad
Vs. Union of India [1994] INSC 343 (20 June 1994)
Ramaswamy,
K. Ramaswamy, K. Venkatachala N. (J)
CITATION:
1994 SCC (5) 239 1994 SCALE (2)553
ACT:
HEAD NOTE:
The
Judgment of the Court was delivered by AHMADI, J.- The grievance of the respondent-association
in the High Court related to charging of compound interest on loans given to
its members for the purchase of tractors.
2. The
Division Bench of the High Court of Orissa presided over by the then learned
Chief Justice held that the agreement entered into by the bank with the
borrower did not stipulate the payment of compound interest and hence it was
unnecessary to examine if there existed such a stipulation, the same would have
been enforceable by the Bank. See paragraph 13 of the judgment. It is true that
in the body of the judgment reference has been made to the case of Bank of
India v. Karnam Ranga Rao1 and it is observed that since farmers do not have
regular source of income other than sale proceeds of their crops, and receive
the sale proceeds annually, they cannot be expected to have agreed to pay
interest with periodical rests. In paragraph 8 of the judgment the High Court
has observed :
"The
present, therefore, is a case which would make the finding of the Karnataka
High Court relevant insofar as the policy circulars of the Reserve Bank of India are concerned." But the High
Court ultimately decided in favour of the borrower because in its view the
agreement did not provide for periodical rests nor did it stipulate for payment
of compound interest, making the above-quoted observations obiter dicta. In
that view of the matter, we see no reason to interfere as the decision does not
ultimately rest on the aforequoted view based on the Karnataka High Court
decision.
We may
incidentally say that we have today by a separate judgment' dismissed the
Bank's appeal against the said decision. We dismiss this petition on the short
ground that the AIR 1986 Kant 242 + Corporation Bank v. D.S.Gowda,(1994)5SCC213
239 agreement on which the Bank's claim is founded does not provide for payment
of compound interest or interest with periodical rests.
Back