IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Civil Writ Petition No.11208 of 2010 Date of Decision : September 15, 2010. State Bank of India .....Petitioner versus Debt Recovery Appellate Tribunal and others .....Respondents CORAM : HON'BLE MR.JUSTICE SURYA KANT. Present : Mr.Rakesh Gupta, Advocate, for the petitioner. -.- 1. Whether Reporters of Local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? --- Surya Kant, J. (Oral) The petitioner-State Bank of India is aggrieved by the order dated 19.10.2004 (Annexure P-8) passed by the Debts Recovery Tribunal, Chandigarh, which has been further upheld in appeal by the Debts Recovery Appellate Tribunal, Delhi, vide order dated 12.4.2010 (Annexure P-9). The controversy pertains to non-payment of the agricultural loan advanced by the petitioner-bank to the Punjab State Tubewell Corporation Limited-respondent No.3. It may be noticed at the outset that the issue of non-payment of the principal amount no longer survives. The only question which requires determination is as to whether the impugned orders permitting the C.W.P.No .11208 of 2010 2 petitioner-bank to charge simple interest @ 10% per annum from very inception, are contrary to the binding terms and conditions of the 'agreement' as well as the guidelines issued by the Reserve Bank of India. This very contention was raised by the petitioner-bank before the Debts Recovery Appellate Tribunal also, who after taking note of Clause-6 of the 'agreement' between the parties, which inter-alia recites that “the bank shall charge interest @ 10.00% per annum”, held as follows:- “13. All these arguments have left no impression upon the Court. Now, the above quoted clause 6 of the Loan Agreement is clear, specific and irrevocable the same leaves no room for ambiguity. This clearly means that 10% p.a. Simple interest was to be paid. There is no contingency in the contract. The name of NABARD is conspicuously missing from the above said Loan Agreement. There is no condition that if the amount is not disbursed by the NABARD the respondent will pay enhance rate of interest. 14. This must be borne in mind that mutual and free consent is sine quo non ingredient of valid agreement. There are proposals only. There is no concluded contract. There is not even a piece of evidence which may go to show that the same were accepted by the other parties. The loan agreement puts the case of the respondents in an impregnable position. This piece of evidence over shadows the rest. The arguments advanced by the learned counsel for the appellant not in any way whittle down the value of the above said agreement. 15. The appellant cannot resile from the abovesaid C.W.P.No .11208 of 2010 3 agreement. Oral evidence is otherwise not admissible under Section 92 of the Indian Evidence Act. This is well settle that the bank cannot unilaterally change the terms of the contract. The counsel for the respondents have placed reliance on the following authorities reported in AIR 1925 Privy Council 232 (Noorbhai Vs. Karuppan Chetty; Air 2003 SC 4630 (City Bank vs. Standard Chartered Bank) Para 48 at page 4644; AIR 1994 Delhi 162 (M/s Magnum Fibers Vs. M/s Glocha Properties); Air 1958 Kerala 195 (V47 C 91) Hajee Vs. E Murugesa Mudaliar; Air 1960 Supreme Court 588 (M/s Alopi Parshad and Sons Limited versus Union of India) which neatly dovetail with the facts of this case......” It may also be noticed that the Appellate Tribunal has referred to in extenso the correspondence between the petitioner-bank and the borrower company before holding that they had mutually agreed to charge and pay simple interest @ 10% per annum, and the absence of any agreement to the contrary, unilateral attempt to increase the rate of interest by the petitioner-bank was not binding on the Corporation. Learned counsel for the petitioner vehemently contends that since the 'agreement' between the parties does not contain any express provision to charge “simple interest”, the Tribunals fell in grave error in holding that the parties agreed to charge and pay the “simple interest”. I have given my thoughtful consideration to the contentions raised on behalf of the petitioner. In my considered view, a stringent clause of 'agreement' has to be interpreted strictly and carefully so as to avoid its penal C.W.P.No .11208 of 2010 4 consequences. Similarly, in the absence of any ambiguity in the clause, no external aid from the Reserve Bank of India instructions/circulars is called for as these circulars are otherwise not binding on the respondent- Corporation. Respondent No.3-Corporation never agreed to nor is a party to these circulars, has rightly relied upon Clause-6 of the agreement which provides charge of interest @ 10.00 % per annum. This clause cannot be construed to mean that 10% per annual interest would amount to 'compound interest'. Such an interpretation shall amount to re-writing the terms and conditions adverse to the interest of the borrower. Dismissed. September 15, 2010 (SURYA KANT) Mohinder JUDGE