BORROWER LIABLE TO PAY INTEREST EVEN WHEN LENDER REFUSES TO ACCEPT PAYMENT

     Supreme Court, Delhi High Court, Advocate, Legal, Law

The Common understanding is if Lender has refused to accept the repayment of Loan, then the Borrower’s Liability to pay the interest ceases from the date of such refusal.

However, this does not seems to be the correct proposition of Law. In an recent judgment titled Balwinder Singh Vs. Mithoot Finance (P) Limited and Ors Ld National Consumer Dispute REdressal Commission (NCDRC), (Revision Petition No. 2194 of 2015, Decided On: 23.07.2020 ) refused to accept the argument of the Borrower that he has tendered to repay and imposed an interest on the borrower even for the period subsequent to the said offer to repay. 

While coming to this conclusion , LD NCDRC relied on the Judgment of Hon'ble Supreme Court in the matter of Alok Shanker Pandey Vs. Union of India &Ors., II (2007) CPJ 3 (SC) has observed as under:- 


“9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B."


The Proposition settled by NCDRC in the above judgment is "Borrower has to suffer for the misdeeds of Lender (refusal to accept the Principal)." This proposition, in the authors submission, is unjust and unreasonable, but is law of the land.  


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