RSA No.149 of 2006(O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.149 of 2006(O&M) Date of decision: 12.5.2009 Gurmej Singh ......Appellant Versus Hisar-Sirsa Kshetriya Gramin Bank and others ......Respondents CORAM:- HON'BLE MR. JUSTICE RAKESH KUMAR GARG * * * Present: Mr. Sandeep Kotla, Advocate for the appellants. Mr. A.S. Gagrha, Advocate for Mr. P.K. Dutt, Advocate for respondent No.1. * * * Rakesh Kumar Garg, J. This is defendant's second appeal challenging the judgment and decrees of the Courts below whereby suit of the plaintiff-respondent for recovery of an amount of Rs.237449/- was decreed against the defendants along with future interest at the rate of 15.5.% with half yearly rests from the date of filing of the suit. The appellant had availed loan from the respondent-Bank and had executed various documents and agreed to return the loan amount along with interest as claimed by the plaintiff-respondent. Upon notice, defendants No.1 to 4 appeared. However, vide order dated 8.5.2003 they were proceeded against ex parte. On the basis of the ex parte evidence, the trial Court decreed the suit of the plaintiff for recovery of a sum of Rs.237449/- from the defendants along with future interest at the rate of 15.5.% with half yearly rests from the date of filing of the suit. The appellant filed an appeal challenging the findings of the trial Court qua interest only and it was pleaded that the trial Court has not RSA No.149 of 2006(O&M) 2 taken into consideration the fact that the loan was for agricultural purposes and not for any other purpose as it was not a commercial loan and it was contended that since the loan was for agricultural purposes, the trial Court should have awarded only 6% interest per annum. However, while dismissing the appeal, the Lower Appellate Court observed that the appellant was bound by the mortgage deed and therefore, the respondent- bank was entitled to the interest as awarded. Still not satisfied, the appellant has filed the instant appeal. The controversy is only with regard to the rate of interest in this appeal. Relying upon judgment of this Court in the case of Balvinder Singh v. M/s Basaikhi Ram Saina Ram 2008(2) RCR (Civil) 467, learned counsel for the appellant, has argued that if the money lender stipulates an unreasonable rate of interest in the pronote, the Court is not bound to award the same rate of interest. On the other hand, learned counsel for the respondent has relied upon a judgment of the Hon'ble Supreme Court of India in the case of State Bank of India v. Yasangi Venkateswara Rao 1999 ISJ (Banking) 232 and has argued that it does not matter whether the petitioner is an agriculturist or non-agriculturist and the simple fact remains that he had entered into a mortgage with the respondent-Bank and therefore, the respondent-Bank is entitled to recover the contractual rate of interest. I have heard learned counsel for the parties. The judgment relied upon by the appellant is not applicable as the same relates to a case of loan advanced by a money lender whereas in the present case a contract was executed and the appellant agreed to pay a particular rate of interest and there is no challenge to the aforesaid condition. RSA No.149 of 2006(O&M) 3 Moreover, this Court in the case of Gurnam Singh versus UCO Bank 1996 (3) PLR 624 has held that advancement of loan for purchase of a tractor is not a loan for agricultural purpose only and in such cases the provisions of Section 34 of the Code are not applicable and the bank is entitled to charge interest to claim compound interest at the rate of interest prescribed in the contract. The Hon'ble Supreme Court of India in Yasangi Venkateswara Rao's case (supra), held that there can be no doubt that Section 21-A deals with the question of the rate of interest which can be charged by a banking company. The enactment of Section 21-A was clearly within the domain of the Parliament. The said Section applies to all types of loans which are granted by a banking company, whether to an agriculturist or a non-agriculturist, and, therefore, reference by the High Court to Entry 30 of List II was of no consequence. In our opinion, the said Section 21-A had been validly enacted. Thus, the argument raised by the counsel for the appellant is devoid of force. Thus, no substantial question of law arises in this appeal. No merits. Dismissed. May 12, 2009 (RAKESH KUMAR GARG) ps JUDGE RSA No.149 of 2006(O&M) 4