The contractual rate of interest in a commercial transaction by public financial institutions is the rule, and any departure is a rare exception, as per the Banking Regulation Act and the circular issued by the Reserve Bank of India.

N.P. Singh, J.

1. This appeal arises out of the judgment and decree dated May 11, 1991, passed by the Additional District Judge, Maihar, in Civil Suit No. 23-B of 1990 decreeing the suit.

2. Appellant No. 1 obtained a loan of Rs. 1,90,000 from the respondent-bank on March 24, 1981, for purchase of a truck with interest at 15 per cent, per annum with quarterly rests. He executed a pronote and hypothecated the truck to the respondent-bank. Appellants Nos. 2 to 4 stood as guarantors for the repayment of the loan amount. The loan was to be repaid in 40 monthly instalments of Rs. 4,750. Appellant No. 1 paid Rs. 1,00,000 in various instalments thereafter he failed to pay any instalments. Ultimately, the respondent-bank filed the suit for recovery of Rs. 1,71,736.45 and interest pendente lite and future.

3. The appellants filed their written statement denying the liability of the respondent-bank. The appellants also claimed that the branch manager of the bank was not competent to file the suit. The trial court, however, decreed the suit with 15 per cent, interest per annum.

4. Shri S. K. Dwivedi, learned counsel for the appellants, has contended that the branch manager was not competent to maintain the suit. Therefore, the decree passed is a nullity. The contention of Shri Dwivedi is not well founded.

5. Regulation 77 of the Reserve Bank of India authorises the bank officials to sign and verify the pleadings on behalf of the bank. Notification dated September 26, 1959, under Section 76 of the State Bank of India Act, authorises the agents which also includes branch managers of the bank to sign and verify the pleadings and documents on behalf of the bank. Therefore, the contention of Shri Dwivedi, that the decree passed in the suit on the basis of the plaint signed and verified by the branch manager is a nullity is not sustainable.

6. Secondly, Shri Dwivedi contended that the entries of books of account filed by the bank in support of claims made in the plaint were not legally tendered in evidence. Therefore, the claim of the respondent-bank was liable to be non-suited. The contention of Shri Dwivedi is unfounded.

7. Section 4 of the Bankers' Books Evidence Act, 1891, lays down that a certified copy of any entry in the banker's book, shall in all proceedings be received as prima facie evidence of the existence of such entry and shall be admitted in evidence of the matters, transactions and accounts therein recorded in every case. Therefore, entries of books of account filed by the respondent-bank in support of the claim was prima facie evidence of the existence of such entry and it was not required to be proved by any oral evidence.

8. Lastly, Shri Dwivedi contended that interest charged by the respondent-bank with quarterly rests is not permissible under the law. The contention of Shri Dwivedi is wholly unfounded.

9. The transaction entered into between the parties was admittedly a commercial transaction. It is well settled that in a commercial transaction by the public financial institutions the contractual rate of interest is the rule and any departure is a rare exception.

10. Section 21A of the Banking Regulation Act, 1949, is a bar to reopening by the court, the contractual rate of interest entered into between the commercial banks and its debtor, if the interest charged by the bank is consistent with the circular issued by the Reserve Bank of India.

11. Under Section 34 of the Code of Civil Procedure the court in a money decree may award interest exceeding six per cent, on a commercial transaction but not beyond the contractual rate.

12. In the instant appeal, the trial court has awarded 15 per cent, simple interest pendente lite and future interest which is the recognized rate of interest. The interest awarded by the trial court, therefore, cannot be said to be excessive.

13. For the reasons aforesaid, I do not find any infirmity in the judgment and decree under appeal. There is no merit in this appeal. It is dismissed accordingly b