[2025:RJ-JP:47414-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil First Appeal No.1070/2025 State Of Bank Of India, Body Corporate Constituted Under The State Bank Of India Act, 1955, Having Its Corporate Office At State Bank Bhawan, Madam Cama Road, Nariman Point, Mumbai, Maharashtra 400021 And Local Head Office At Tilak Marg, C-Scheme, Jaipur And Branches All Over India Amongst Other Branch Offices One Of Its Branch Office At Having Its S.m.e.c. Branch Office At Plot No. Sp-1 Road No. 1, Vkia, Sikar Road Jaipur Through Its Chief Manager Heera Lal Choudhari, S/o Sh Dularam Choudhari Aged About 49 Years, Occupation Service At S.m.e.c. Branch Office At Plot No. Sp-1, Road No. Vkia, Sikar Road, Jaipur. ----Appellant Versus 1. M/s Abhinav Farma, Through Its Proprietor Ramveer Singh Tanwar S/o Chagan Singh Tanwar Shop No. 4, Plot No. 40, Ram Nagar B, Jhotwara, Jaipur (Rajasthan) 302012. 2. Ramveer Singh S/o Chagan Singh, Proprietor Of M/s Abhinav Farma Resident Of Plot No. 121A, Balvihar Colony, Kalwad Road, Jhotwara, Jaipur 302012 (Rajasthan). ----Respondents For Appellant(s) : Mr.Jayant Vaze Jaipuria, Adv. For Respondent(s) : HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE MANEESH SHARMA Order 24/11/2025 1. The present appeal assails the order passed by the Commercial Court No.4, Jaipur Metropolitan-II dated 29.01.2025 solely on the ground that the Commercial Court has failed to interpret the Circular issued by the Reserve Bank of India dated 01st September, 2001 and has wrongly [2025:RJ-JP:47414-DB] (2 of 3) [CFA-1070/2025] held that interest cannot be charged after loan account has been declared as Non-Performing Assets (‘NPA’). 2. Learned counsel for the appellant submits that Clause 3.1.1 states otherwise and interest ought to be allowed. 3. We noticed that by the impugned judgment, the learned Commercial Court framed the following issues:- oknh i{k ds mDr vfHkdFkuksa ds vk/kkj ij U;k;ky; }kjk fuEufyf[kr fook|d fcUnq fojfpr fd;s x,%& 1& vk;k oknh izfroknhx.k ls gq, okf.kT;d laO;ogkj ds vk/kkj ij izfroknhx.k ls 10]53]116 :i;s ¼v{kjs nl yk[k frjsiu gtkj ,d lkS lksyg :i;s½ o bl jkf’k ij nkok nk;jh dh fnukad 21-10-2019 ls rk;kse olwyh 13-25 izfr’kr okf"kZd C;kt dh nj ls C;kt izkIr djus dk vf/kdkjh gS\ &&oknh 2- vk;k oknh okn O;; ,oa esgurkuk odhy izkIr djus dk vf/kdkjh gS\ &&oknh 3- vuqrks"k \ 4. The above issue No.1 has to be examined in the light of Circular issued by the Reserve Bank of India which is binding on the appellant. As per the Circular dated 01.09.2001, the Reserve Bank of India issued instructions relating to the Prudential Norms on Income Recognition, Asset, Classification and Provisioning-Pertaining to Advances having defined Non-Performing Assets in Clause 2.1. It was proceeded to examine the income recognition aspect. It would be apposite to quote Clause 3.1 for the above purpose:- “3.1 Income Recognition – Policy 3.1.1 The policy of income recognition has to be objective and based on the record of recovery internationally income from non-performing assets (NPA) is not recognised on accrual basis but is booked as income only when it is actually received. Therefore, the banks should not charge and take to income account interest on any NPA. 3.1.2 However, interest on advances against term deposits, NSCs, IVPs, KVPs and Life policies may be taken to income account of the due date, [2025:RJ-JP:47414-DB] (3 of 3) [CFA-1070/2025] provided adequate margin is available in the accounts. 3.1.3 Fees and commissions earned by the banks as a result of re-negotiations or rescheduling of outstanding debts should be recognised on an accrual basis over the period of time covered by the re-negotiated or rescheduled extension of credit. 3.1.4 If Government guaranteed advances become NPA, the interest on such advances should not be taken to income account unless the interest has been realised.” 5. Clause 3.1.1, as quoted above, is unambiguous and without going into any complexities if we read the language of Clause 3.1.1 it is apparent that the banks have been disallowed to take income account interest on any NPA. Thus, when the account of the respondent had been declared NPA on 23.05.2018, the Bank could not have calculated interest thereafter. Accordingly, the Commercial Court has passed a decree in favour of the appellant of a sum of Rs.8,43,769/- sans the interest from the date of declaration of NPA. The issue, therefore, has been decided in favour of the Bank to the aforesaid extent alone. 6. We do not find any reason to further interfere in the decision making process as adopted by the Commercial Court to reach to the aforesaid conclusions. 7. No other ground has been raised. The appeal is accordingly dismissed. 8. All pending applications stand disposed of. (MANEESH SHARMA),J (SANJEEV PRAKASH SHARMA),ACTING CJ Himanshu Soni/11