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Thursday, December 6, 2012

Whether the Kerala Financial Corporation as per Clause 31 of the Sanctioning letter, the Corporation has a right to make enhancement of rate of interest on loan from time to time.


                                                              Non-Reportable
                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


              SPECIAL LEAVE TO APPEAL (CIVIL) No. 1118 OF 2011

Kerala Financial Corporation                             .. Petitioner
                                   Versus
C. G. Narayanan                                    .. Respondent

                                  O R D E R

1.    Petitioner - Kerala Financial Corporation  (for  short  “Corporation”)
sanctioned a loan of Rs.2,65,000/- to  the  respondent  and  the  order  was
communicated to the respondent by the Sanctioning Letter No.  C1/646/2245/75
dated 29.12.1975 (Annexure P/1).
 Corporation submits as per  Clause  31  of
the Sanctioning letter, the Corporation has a right to make  enhancement  of
rate of interest on loan from time to time.
According to  the  Corporation,
the respondent committed default in  making  regular  payment  of  the  loan
amount, consequently, the Corporation  enhanced  the  rate  of  interest  to
11.75% per annum.
Notice of enhancement of the rate of  interest  was  also
issued and served on the respondent.

2.     Aggrieved by the said notice, respondent filed a suit being O.S.  No.
479 of 1995 before the Munsif Court at Trichur, for an order of  declaration
that the respondent is liable to pay interest only at the rate of  5.5%  per
annum. 
 Learned Munsif Court decreed the suit as prayed  for.
 Corporation,
aggrieved by the said judgment of the  Munsif  Court,  preferred  an  appeal
being A.S. No.123 of 1991 before the District Court and the  District  Court
also dismissed the appeal.

3.    Aggrieved by the same,  the  Corporation  preferred  a  second  appeal
being S.A. No. 869 of 1996 before the High Court,  which  was  dismissed  by
the High Court.
 The concurrent findings recorded by the  courts  below  are
under challenge in this special leave petition.

4.    We notice that the Courts below,  including  the  High  Court,  placed
reliance on the judgment of the Kerala High Court in P.J. Mathew  v.  Kerala
Financial Corporation (1989) 1 KLT 904,  against  the  Corporation  claiming
the enhanced rate of interest, over and above 5.5% per annum.  Courts  below
found that, on facts, the respondent is entitled to get the benefit of  that
judgment.   
Judgment of the Kerala High Court in  P.J.  Mathew  (supra)  was
challenged by the Corporation before this  Court  in  SLP  (C)  No.  409/89.
That SLP was heard along with SLP No. 413/89 and was  dismissed  vide  order
dated 10.07.1989.

5.    Under  such  circumstances,  we  find  no  reason  to  entertain  this
petition and the same stands dismissed.


                                                             ……………………………..J.
                                             (K.S. Radhakrishnan)




                                                              ………………………………J.
                                             (Dipak Misra)
New Delhi,
December 4, 2012