Civil Court Had Jurisdiction, Bank’s Penal Interest Claim Unsubstantiated”: Punjab and Haryana High Court in Loan Dispute

In a significant ruling, the Punjab and Haryana High Court settled a long-standing dispute pertaining to a tractor loan repayment. The judgment, delivered on April 2, 2024, by Hon’ble Mrs. Justice Alka Sarin in the case of Manager, The Uchana Primary Co-Op Agri. Dev. Bank Samiti vs. Jog Raj (Since Deceased) Thr Lrs, revolved around the jurisdiction of the civil court and the legality of the bank’s claim for penal interest.

The judgment focused on two primary legal issues: the jurisdiction of the civil court in such matters and the validity of the penal interest claimed by the bank.

Jog Raj had taken a loan from the appellant bank for purchasing a tractor. After receiving a notice to repay Rs. 21,600, he paid Rs. 13,000, considering it full settlement based on bank statements showing a ‘nil’ balance. However, the bank issued another notice demanding Rs. 18,610 as penal interest. This led to a legal battle questioning the bank’s demand and the jurisdiction of the civil court in this matter.

Jurisdiction Issue: Justice Sarin noted, “Civil Court had jurisdiction to try and entertain the present suit.” The defendant-appellant did not contest evidence of jurisdiction at the Trial Court and did not press this issue at the First Appellate Court, thus affirming the Trial Court’s decision on jurisdiction. [Para 8]

Loan Waiver and Penal Interest: The court observed that the plaintiff-respondent’s payment of Rs. 13,000 was considered a full settlement, as reflected in the bank’s statements. The claim for penal interest by the defendant-appellant bank was not supported by valid documentation or evidence. [Para 9]

Decision: The High Court dismissed the Regular Second Appeal, finding no merit in the appeal and no substantial question of law arising from the case. The appeal and any pending applications were disposed of.

Date of Decision: April 2, 2024

Manager, The Uchana Primary Co-Op Agri. Dev. Bank Samiti vs. Jog Raj (Since Deceased) Thr Lrs