People facing civil cases with regard to housing loans availed by them cannot be asked by banks to pay interest from the date of filing of the case till the date of realisation of the amount at the rate at which the loan was given, the Madras High Court bench here has said.

Allowing an appeal filed by a couple against Ind bank Housing Ltd, Justice S Palanivelu said only a concerned court could fix the rate of interest by exercising its discretionary powers under order 34 Rule 11 of the Code of Civil Procedure(CPC).

He agreed that the rates of interest charged by Banks could not be subjected to judicial scrutiny as per Banking Regulation Act. But a division bench of the Madras High Court had held that courts need not order payment on contractual rate because CPC order could not be overriden by the banking reguation act, he said.

The Judge modified an order passed by the 7th additional City Civil Court in Chennai directing appellants to pay interest at the rate of 15.5 per cent and said it was enough to pay interest at six per cent.

According to the appellant, a widow, her husband had taken a loan of Rs five lakh in 1995 to purchase a flat from Tamil Nadu Housing Board.

Since he defaulted payments since 1996, the bank filed a civil suit in 1998 and it was ordered in its favour in 2002.

She filed the appeal in 2006 challenging the 'exhorbitant interest' rate awarded by the lower court.