IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN THURSDAY, THE 11TH JUNE 2009 / 21ST JYAISHTA 1931 WP(C).No. 16583 of 2007(Y) -------------------------------------- PETITIONER(S): ---------------------- 1. I.V. NARAYINI, W/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. 2. I.V. VIJAYAN, S/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. 3. I.V. SOBHANA, D/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. 4. I.V. PRASANNA, D/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. 5. I.V. SHUBHAJA, D/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. BY ADV. MR.A.BALAGOPALAN MR.A.RAJAGOPALAN MR.K.SANEESH KUMAR SMT.KALA G.NAMBIAR RESPONDENT(S): ------------------------- 1. KARANNUR SERVICE CO-OPERATIVE BANK LTD.NO.F-1244, REPRESENTED BY ITS SECRETARY, THALAKKULATHUR, KOZHIKODE. 2. I.V. ARAVINDAN, S/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. 3. I.V. SHIVANANDAN, S/O.CHANDUKKUTTY, KARINGAALI MEETHAL, ANNASSERY DESOM, THALAKULATHUR AMSOM, KOZHIKODE TALUK. BY THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 16583/2007-Y APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE AWARD PASSED BY THE ARBITRTOR IN A.R.C. NO.403/2005-06 DATED 31/05/2005. EXT.P2: COPY OF THE R.P. NO.138/2006 DATED 22/03/2006 FILED BY THE PETITIONERS. EXT.P3: COPY OF THE ORDER PASSED BY THE CO-OPERTIVE TRIBUNAL IN R.P. NO.138/2006 DATED 28/03/2007. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// P.S. TO JUDGE rs. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 16583 of 2007 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 11th June, 2009. J U D G M E N T The petitioners, along with respondents 2 and 3, availed a loan of Rs. 2 lakhs from the respondent-Co-operative Bank on the security of immovable properties belonging to them. The petitioners defaulted instalments of repayment of the loan amount. The Bank initiated proceedings before the arbitrator under Section 69 of the Kerala Co- operative Societies Act. The arbitrator passed Ext. P1 award directing the petitioners and respondents 2 and 3 to pay the amount due with 20% interest with effect from 1-6-2005 till realisation. The petitioners challenged the same in a revision petition before the Kerala Co-operative Tribunal. The Tribunal confirmed the liability of the petitioners and respondents 2 and 3 to repay the amount, but the rate of interest was reduced from 20% to 16%. The petitioners are challenging Ext. P3 order of the Tribunal. 2. The contention raised by the petitioners is that the interest pendente lite can only be 6% and not the contract rate. The petitioners also rely on the decision of the Supreme Court in N.M. Veerappa v. Canara Bank, AIR 1998 SC 1101 in support of their contention that after the filing of the suit, only 6% interest can be levied. 3. Although notices were issued to the respondents including the 1st respondent-Bank, there is no appearance for them. 4. I have considered the contentions of the petitioners. 5. On a reading of the judgment cited by the counsel for the petitioners, I find that in that decision, the Supreme Court has not laid down as a proposition of law that in all cases of recovery of loan amounts, the interest pendente lite shall only 6%. It is settled law that the fixation of rate of interest pendente lite by the court depends on the facts and circumstances of each case. Here, the Tribunal has W.P.C. No. 16583/2007 -: 2 :- found that the petitioners have taken loan for business purpose. As per the loan agreement, the rate of interest payable was 18% with 3% penal interest in case of default in payment of instalments. Co- operative Banks like the 1st respondent gives loan to its customers from amounts taken on loan from the Apex Society, for which loan amount, they also would have to pay interest at the contract rate. Therefore, at least in so far as the co-operative societies are concerned, this Court may not be justified in reducing interest, especially in case of business loans. However, taking into consideration the facts and circumstances of the case, particularly the fact that the 1st respondent has not chosen to enter appearance and contest the matter, I direct that the interest be reduced to 14%. In all other respects Ext. P3 order would stand. The petitioners shall continue to pay instalment amounts as directed in Ext. P3 with the above modification regarding interest rate on final settlement. If the petitioner commits default in payment of the instalments, the petitioners would not be entitled to the benefits of this judgment and the writ petition would stand dismissed. The writ petition is disposed of as above. Sd/- S. Siri Jagan, Judge. Tds/