JUDGMENT

Sathish Ninan, J

1. A suit for recovery of money due under a loan transaction, dismissed as hit by the rule of Damdupat and on the ground that the suit is premature for non- expiry of the loan period, is under challenge by the plaintiff Banking Company.

2. The first defendant availed a loan of `80,000/-

from the plaintiff on 11.12.2003 on execution of necessary loan documents and furnishing security. In terms of the agreement, the loan amount is to carry interest at the rate of 16.5% per annum with half yearly rests. The loan was repayable in 240 equal monthly instalments. On default in payment in terms of the agreement the loan was recalled and the suit was filed.

3. The court below applied the rule of Damdupat and held that as the amount of interest claimed in the suit is in excess of the principal amount of `80,000/- the plaintiff is disentitled to the claim. The dismissal of the suit on the said ground is unsustainable. The Rule of Damdupat has its origin under the pristine Hindu law. The constitutional bench of the Apex Court in Central Bank of India v Ravindra and Others ((2002) 1 SCC 367) held that interest may be charged on periodical rests and can also be capitalised i