Once a loan is advanced with a specific rate of interest stipulated, the bank cannot unilaterally enhance the interest rate thereafter.

Mr. Justice M.R. Agnihotri, President— Union Bank of India has come up in appeal against the order dated 8th December, 1995 passed by learned District Forum, Kamal, whereby complaint filed by one Amar Singh, a Medical Practitioner of Karnal has been allowed and the appellant Bank has been directed to charge interest @ 15.5% per annum on the loan advanced to the complainant for the purchase of a Maruti Car, under "Professional and Self Employed Scheme of the Bank." According to the complainant the loan of Rs. 1,20,000/-was sanctioned to him by the Bank on 18th November, 1993 for the purchase of Maruti Car and according to the letter of allotment interest @ 15.5% was to be charged from him. However a couple of months later he received a letter that the policy of the Bank had since been revised and as per the new policy rate of interest chargeable would be 18.5% on the amount of loan. Aggrieved against this, the complainant approached the District Forum and in reply thereto, the Bank pleaded that the rate of interest @ 15.5% had been mentioned by the Bank official concerned by mistake, which was later detected and brought to the notice of the complainant. Learned District Forum after considering the evidence produced by the parties came to the conclusion, that the existing policy circular dated 7th July, 1993 issued by the Reserve Bank of India regarding the loans/ advances to certain categories of priority sector lendings was not applicable to the Medical Practitioners and, therefore, the rate of interest i.e. @ 18.5% mentioned in that circular letter was not applicable in the case of Medical Practitioners. Consequently, the complaint was allowed and the Bank was restrained from recovering the interest @ 18.5%.

2. In the appeal before us, learned Counsel for Union Bank of India has vehemently argued, that all loans for purchase of consumer durables were to attract interest @ 18.5% and even if a person had already taken loan at a lesser rate of interest, the rate could be enhanced unilaterally. We do not agree with the contention of the learned Counsel and are of the considered view, that once the loan was advanced to the complainant under an agreement with a specific rate of interest i.e. @ 15.5.% expressly stipulated therein, the same could not be enhanced by the Bank unilaterally thereafter. Obviously, if there was a subsequent change in the rate of interest either by the Bank's own decision or under directions received by them from the Reserve Bank of India or any other higher quarter, the revised rate of interest would apply only to the subsequent transactions and not to the agreements already entered into by the parties. Consequently, we do not find any justification to interfere with the detailed and well-reasoned order passed by the learned District Forum. The appeal is accordingly dismissed with no order as to costs.

Appeal dismissed.