IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 677 of 1994(B)
1. STATE BANK OF INDIA
... Petitioner
Vs
1. M/S.RECK MARKETING AGENTS
... Respondent
For Petitioner :SRI.S.S.KALKURA, R.S.KALKURA
For Respondent :SRI.P.B.SAHASRANAMAN, K.JAGADEESH
The Hon'ble MR. Justice THOTTATHIL B.RADHAKRISHNAN
The Hon'ble MR. Justice S.S.SATHEESACHANDRAN
Dated :30/06/2010
O R D E R
THOTTATHIL B.RADHAKRISHNAN
& S.S.SATHEESACHANDRAN, JJ.
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A.S.No.677 of 1994
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Dated this the 30th day of June, 2010
JUDGMENT
THOTTATHIL B.RADHAKRISHNAN, J.
This appeal is by plaintiff, a statutory bank.
2. The first defendant is a partnership firm.
Defendants 2 onwards are its partners. The last two
among the defendants offered certain properties as
security to support the facility of bank guarantee
provided by the plaintiff for the business purposes of
the 1st defendant. The guarantee was executed in
favour of the Cement Corporation of India. That
guarantee was invoked. Resultantly, the plaintiff was
entitled to be paid the amount covered by the counter
guarantee, Ext.A2. On refusal, notice was issued to the
defendants including a claim for interest at 17.5% plus
A.S.No.677 of 1994
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1% penal interest. That demand was neither responded
to nor satisfied. The plaintiff sued. The defendants
remained ex parte. The court below passed a decree
for recovery of money, however, granting post-suit
interest only at 6% per annum.
3. In this appeal by the plaintiff bank, the
fundamental plea raised is that the court below acted
illegally in refusing to grant post-suit interest at the
pleaded rate i.e. 17.5% plus 1% penal interest.
4. The documents evidencing the transaction
between the parties do not disclose any particular rate
of interest. Notwithstanding that, the pleadings in the
plaint show that the transaction is a commercial one.
That is not refuted by the defendants. We also find that
the court below did not state any reason restricting the
rate of post-suit interest to be at 6%. Being a matter of
A.S.No.677 of 1994
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discretion, the court below ought to have reasoned its
decision as to the rate of post-suit interest. The bank
guarantee was obtained for a commercial purpose and
in connection with the commercial transaction of the
first defendant firm. That having been invoked, the
bank was entitled to treat counter guarantee as
generating sufficient ground to make a claim for
interest at commercial rate. Totality of the facts and
circumstances have to be taken into account while
exercising judicial discretion as regards the rate of
interest to be awarded pending suit under Section 34 of
the Code of Civil Procedure. We are supported in this
view by the decision of the Division Bench of this Court
in Catholic Syrian Bank Limited v. N.V.Varkey and
others {1987(2) ILR Kerala 331}. Taking the nature of
the transaction into consideration and having regard to
A.S.No.677 of 1994
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the absence of contest to the suit, we are of the view
that post suit interest at the rate of 12% per annum will
do complete justice between the parties.
In the result, the appeal is allowed in part,
modifying the decree of the court below and awarding
interest at the rate of 12% per annum, instead of 6%,
from the date of suit, till date of realisation, with
proportionate costs.
Sd/-
(THOTTATHIL B.RADHAKRISHNAN)
JUDGE
Sd/-
(S.S.SATHEESACHANDRAN)
JUDGE
sk/
//true copy//
P.S. to Judge.