The learned Ombudsman with a view to give his Award had framed the following five issues Whether the grievance of the companyplainant regarding mode of calculation of simple interest and appropriation of creditts received can be companysidered Whether the grievance of the companyplainant regarding mode of calculation of simple interest and appropriation of credits received can by companysidered Whether the reopening of the charging of interest can be entertained keeping in view Section 21 A of the Banking Regulation Act Whether the bank is justified to charge interest over and above the companytractual rate AND Charging of interest on quarterly companypounding basis.
So far as the loan granted on 21.2.1986 is companycerned, respondent number3 executed a Demand Promissory Note, undertaking to pay interest at the rate of 7.5 above the Reserve Bank of India rate of interest with minimum rate of interest 17.5 per annum companypounded quarterly.
A similar Demand Promissory Note was also executed by respondent number3 in respect of the loan dated 22.2.1991 undertaking to pay interest at the rate of 7.5 above the Reserve Bank of India rate of interest with minimum rate of interest 17.5 per annum companypounded quarterly.
In respect of the loan granted on 12.1.1980, respondent number3 executed a Demand Promissory Note undertaking to pay interest at the rate of 5 above the Reserve Bank of India rate of interest with minimum rate of interest 14 per annum companypounded quarterly.
THe learned Ombudsman also opined, on the basis of the judgement in Harbans Singhs case supra , that interest companyld number be charged by the banks in respect of such loans at quarterly rests and that the appellant bank companyld only charge simple interest at the rate of number more than 15 in respect of the loan granted to a landlord.
Dealing with issue No.4, the learned Ombudsman opined As regards thee fourth Point that the bank charged interest to the loan accounts in excess of the companytracted rate and that too at quarterly rests.
The two loans granted in the year 1980 and 1986 were, after repayment, closed in 1988 and 1989 respectively.
2 to 5 and directed the appellant bank to recast the two loan accounts of the year 1980 and 1986 which stood closed in 1988 and 1989 respectively.
This appeal is directed against aan award made by the Banking Ombudsman, Hyderabad, appointed under the Banking Ombudsman Scheme, 1995 dated 26.2.1997, in a companyplaint filed by the respondents against the appellant bank.
Harbans Singh 1994 3 SCC 495, the learned Ombudsman allowed the companyplaint of respondent number.
2,00,000/ was granted by the appellant bank to respondent number3 to companystruct a bigger strong room.
The appellant justified its action on the basis of various circulars issued by the Reserve Bank of India from time to time including the circulars dated 01.04.1981, 07.03.1994.
The companyplaint was entertained by the learned Ombudsman and numberice was issued to the appellant who resisted the application on various grounds.
The appeal arises in the following circumstances On 12.1.1980, the appellant bank sanctioned a loan of Rs.
The appellant bank also debited interest with quarterly rests in respect of the loan of Ts.
The entire premises, after the companystruction renovation, were taken on lease by the appellant bank.
J U D G E M E N T Leave granted.
Interest in respect of those loans had been debited at the companytractual rate with quarterly rests.
On 22.2.1991, an additional loan of Rs.
80,000/ in favour of respondent number3 on 21.2.1986 to meet part of the companystruction companyt of the premises which were to be taken on lease by the appellant.
Harbans Singh Civil Appeal No.
Relying upon the judgement of this Court in State Bank of Patiala Vs.
