TaxTMI 
TaxTMI 
2002 (12) TMI 505
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the defendants. The appellant advanced loan of three kinds to the defendant No. 1 and defendant Nos. 2 and 3 were the guarantors. When the defendants failed to make payment of the amount borrowed, the plaintiff was constrained to file the suit. The defendants resisted the claim of the plaintiff on various grounds. In view of the pleadings of the parties, the trial court framed the following issues :- "1. Whether defendants have agreed to pay interest at 5 per cent per annum above the Reserve Bank of India rate subject to minimum of 11 per cent per annum, to be compounded quarterly? 2. Whether the interest claimed is highly excessive and exorbitant under the Usurious Loans Act ? 3. Whether plaintiff is not entitled to more than Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts give up all other contentions. It was further submitted that the defendants were ready to pay the loan amount due from them with agreed rate of interest compounded with quarterly rests but they were not ready to pay the higher rate of interest as claimed by the plaintiff under the pretext that the RBI has enhanced the rate of interest. The learned trial Judge in view of the submissions, as can be seen from the judgment, has recorded that the only point that came up for decision was as regards the charging of higher rate of interest by the plaintiff. The trial court decreed the suit of the plaintiff for recovery of Rs. 9,82,963.47 against the defendants with current rate of interest at the rate of 11% per annum from the date of the suit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e contract. Learned counsel added that the claim of the Bank was substantiated by the accounts maintained by the Bank and the extracts were produced before the trial court. Further in 1978, the defendants acknowledged their liability of the amount and the amount calculated was on the basis of the enhanced rate of interest on the basis of the agreed terms between the parties. According to him, it was not open to the defendants, having acknowledged the liability, to contend that the rate of interest charged was on higher side. It was also the submission of the learned counsel for the appellant that once the plaintiff placed the evidence before the Court to establish that it was entitled to charge higher rate of interest it was for the defenda....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terest and charged the higher rate also do not stand to the reason in the light of the evidence placed on record including the afore-mentioned documents. In our view, the trial court was wrong in saying that the interest could not be enhanced without the consent of the defendants on the face of the agreements to Ex. P-1, P-5 and P-11. The rate of interest was enhanced as per the agreement between the parties and there was no question of taking separate consent from the defendants again. The High Court while holding that the party is bound to pay the interest at the agreed rate took the view that the Bank could not automatically charge the increased rate of interest merely on the basis of rise of interest on account of RBI circulars. It i....