Aggrieved by the order dated 10th April, 2006 passed by Bihar State Consumer Disputes Redressal Commission (For short “State Commission”) in Complaint Case No. 41/1999, the original Opposite Party has filed the present appeal. The complaint before the State Commission was filed seeking a compensation of Rs.9,96,918/- including the refund of excess amount towards compound interest, legal expenses and compensation. The complaint was resisted by the Bank denying any deficiency on its part and they justified their action in charging compound interest on the strength of the term Loan agreement, etc. The State Commission going by the respective pleas and evidence produced by way of affidavit and material produced before it and in particular going by the RBI guidelines partly allowed the complaint by giving the following directions to the appellant bank:-- “In the fact and circumstances we direct he bank O.P. that while calculating the loan interest for the liquidation of the loan it must charge 15% per annum simple interest and the Bank is not entitled to charge interest more than this and not at the quarterly rest. If the bank has charged at higher rate and on quarterly rest, the amount so charged must be refunded back to the complainant. Both parties are directed to come on the table and calculate the interest on the principle amount and if any excess amount has been charged by the Bank it must be paid back to the complainant forthwith or adjusted towards the Principal. We are of the view that the complainant is not entitled for any compensation or interest, if after calculation it is found that excess amount has been charged by the Bank, because it does not come under the purview of deficiency in service. The matter relates with interpretation of the terms of agreement and the guidelines issued by the R.B.I.” We have heard Mr. Gautam Gupta, counsel for the appellant Bank and Mr. Vijay Kr. Singh, counsel for the Respondents and have considered their submissions. The impugned order and directions given by the State Commission are sought to be challenged primarily on the strength of Clause XII of the sanction letter dated 8/11/1990 and Clause VI of the Term Loan Agreement dated 27/12/1990 executed between the parties, which are as under:-- “Condition xii - in this connection, a term loan of Rs. 15 (Fifteen) lacs as demanded by you has also been sanctioned by the Bank to you on usual terms and conditions as laid down by the Bank in this regard. You will have to complete the necessary formalities in this regard. The loan has been sanctioned as a Term Loan at an interest of 15% p.a. The entire amount of loan and its interest will be liquidated by you by depositing at least 87% of the monthly rental proceeds in your loan a/c within the initial lease period for 5 years. You will have a facility of amortisation for four months on loan amount. Condition vi - The borrower shall pay the interest on the loan at the rate of 15% per annum with monthly/quarterly rests from the date of the advance calculated on the daily balance of the amount due. Further, the shall be entitled to charge, at its own discretion, enhanced rtes of interest on the account either on the entire outstandings for a portion thereof for any default in the payment of principal or interest as aforesaid, for much period as the default continues or for such time as the Bank deems it necessary. Charging of such enhanced rates shall be without prejudice to the Bank’s other rights and remedies under the agreement or otherwise. The said rate of interest would be automatically revised as per the directives which may be given by the Reserve Bank of India to the Bank from time to time and the Borrower agrees to pay the rate of interest as per the directives of the Reserve Bank of India from time to time. Such interest shall be payable with monthly/quarterly or such other rates as may be applicable.” Counsel for the Respondents does not dispute the existence of these documents but his contention is that the Term Loan Agreement being subsequent to the Letter of Sanction cannot be deemed to be the part and parcel of the loan sanction agreement. Besides it is contended that the Term Loan Agreement dated 27/12/1990 was not produced on the record of the State Commission and therefore, its effect has not been considered by the State Commission. Our attention is also invited to a clarification dated 19/10/1994 of the R.B.I. to the complainant in response to her communication dated 15th February, 1994. The main grievance of the complainant before the State Commission was that having regard to the nature of the loan sanctioned to the complainant (the loan was sanctioned for construction of premises to be leased out back to the Bank), the charge of compound interest at quarterly rest was unjustifiable and in any case amounted to unfair trade practice. The counsel for the appellant justifies the charge of compound interest on the strength of the above said Clauses of the agreements. In our view the Clauses of Agreements, which are binding on the parties have not received the kind of consideration at the hands of the State Commission, as it was required. The effect of the communication dated 19/10/1994 emanating from the R.B.I. is also required to be considered. That apart counsel for the appellant would assail the order of the State Commission on the strength of a later decision of the Supreme Court in the case of Canara Bank Vs. P.R.N. Upadhyaya & Ors. made in C.A. No. 4286 of 1998 dated 25-08-1998, which has the effect of explaining and over ruling the earlier decision of the Supreme Court in the case of State Bank of Patiala Vs. Harbans Singh Civil Appeal No. MANU/SC/0686/1994 : (1994) 1SCR933 on the basis of which the complaint was answered by the State Commission. Effect of this decision also needs to be considered. This would necessitate the remand of the matter to the State Commission. In the result, the appeal is partly allowed and the impugned order passed by the State Commission is set aside and the complaint is remanded back to the State Commission for deciding the same afresh in accordance with the Law in terms of the above directions. Parties are directed to appear before the State Commission on 22/11/2010. The State Commission is requested to dispose of the complaint expeditiously within a period of three months from the date of appearance of the parties. Parties are left to bear their own cost in these proceedings. | 
