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2003 DIGILAW 232 (KAR)

UNION BANK OF INDIA, DHARWAD v. PARASURAM

2003-03-05

S.B.MAJAGE

body2003
MAJAGE, J. ( 1 ) ON the claim made for a sum of Rs. 30,203. 65 with interest @ rs. 21% per annum by the respondent, who was plaintiff in O. S. No. 51/1992 on the file of the Court of Munsiff at Navalgund, the Appellate court/iii Additional Civil Judge (Sr. Dn) at Dharwad held in R. A. No. 19/1997 that he is entitled to a sum of Rs. 16,244/- with interest @ rs. 18% per annum from the date of suit to till this realisation, though the Trial Court had dismissed his suit. Hence, aggrieved by the said judgment and decree passed by the Appellate Court, the appellant, who was defendant in said suit and respondent before the first appellate Court, has approached this Court by way of second appeal. ( 2 ) WHILE admitting the appeal on 31. 8. 1999, this Court framed following substantial question of law for decision:- Whether the Lower Appellate Court was justified in granting interest @ 18% p. a. on the amount found due when the rate of interest that was agreed to be paid on such deposit was stated to be only 6% p. a. as per Clause (5) of the Appointment as banks authorised agent for collection of Mini Deposit as per ex. D. 1 which was alleged to have been issued by the appellantbank to the respondent/plaintiff, at the time of his appointment? ( 3 ) HEARD argument. According to the learned Counsel for appellant/defendant, the appellate Court was wrong in awarding interest @ Rs. 18% per annum as against the agreed rate of interest i. e. 6% per annum, more so, when the transaction was not a commercial transaction. On the other hand, the learned counsel for the respondent/plaintiff, relying on a Division Bench decision of this court and a decision of the Apex Court submitted that the rate of interest to be awarded in a money suit is within the discretion of the court and the Appellate Court has rightly exercised its discretion giving reasons as to why the plaintiff is entitled to interest @ Rs. 18% per annum and consequently, there is no infirmity in the impugned judgment and decree. Perused the records carefully. ( 4 ) FACTS of the case have been narrated by the first appellate court. They are not disputed before this Court. 18% per annum and consequently, there is no infirmity in the impugned judgment and decree. Perused the records carefully. ( 4 ) FACTS of the case have been narrated by the first appellate court. They are not disputed before this Court. Further, the appellant/ defendant has not challenged the judgment and decree passed by the Appellate Court, by which the respondent/plaintiff is held entitled to a sum of Rs. 16,244/ -. The appeal is filed challenging the rate of interest awarded only. So, and in view of the short point involved, it is not necessary to repeat the facts. ( 5 ) WHAT is relevant and necessary to note is that the sum adjudged as payable to the respondent/plaintiff by the appellant/ defendant is Rs. 16,244/ -. However, the agreed rate of interest between the parties is admittedly Rs. 6% per annum as per Ex. D1, but the appellate Court has exercised its discretion and awarded interest @ Rs. 18% from the date of suit to till realisation. ( 6 ) NOW reference can be had to the provision contained in Section 34 of Code of Civil Procedure, as it relates to and governs the rate of interest to be awarded in such cases. Section 34. Interest - (1) Where and in so far a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding 6% per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court thinks fit. (Underline supplied) ( 7 ) A plain reading of the said provision, makes it clear that it refers to interest in respect of three stages. One relates to interest prior to and till the date of suit, with which we are not concerned in the present matter. The 2nd stage is current or pendente lite interest from the date of suit to till the date of decree. One relates to interest prior to and till the date of suit, with which we are not concerned in the present matter. The 2nd stage is current or pendente lite interest from the date of suit to till the date of decree. This is purely within the discretion of Court and consequently, it may award interest at such rate as it deems reasonable on the principal sum adjudged. This is not circumscribed even by the express contract between the parties. The third stage relates to the interest from the date of decree to till recovery or earlier date to be fixed by the Court, which cannot exceed Rs. 6% per annum unless the liability for the payment of money arises out of a commercial transaction in which event, as per the proviso to Section 34 (1) of C. P. C. , it may exceed Rs. 6% per annum but shall not exceed the contractual rate of interest and if there is no such contractual rate of interest, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. ( 8 ) IN the case of CANARA BANK vs B. SHESHAGIRI PRABHU and OTHERS1, even a Division Bench of this Court has held as under: -. . Section 34 C. P. C. refers to interest in respect of three stages. One relates to interest prior to and till the date of the suit. Interest prior to suit is awarded either under an agreement between the parties to pay interest or under some provision of law or on mercantile usage. Court of equity also awards interest under certain circumstances. The second stage as to interest is what is called the current or pendente-lite interest, from the date of suit till date of decree. The third stage relates to the `further interest or what is generally referred to as future interest awarded for the period between the date of the decree till the date of realisation. The Court below has referred, quite inaccurately, the latter two kinds together as further interest. So far as the current or pendente-lite interest is concerned, it is wholly within the discretionary jurisdiction of he Court and that discretion operates even though there be an express agreement between the parties stipulating a particular rate of interest till the date of decree, should the matter go to Court. So far as the current or pendente-lite interest is concerned, it is wholly within the discretionary jurisdiction of he Court and that discretion operates even though there be an express agreement between the parties stipulating a particular rate of interest till the date of decree, should the matter go to Court. The contract between the parties will not circumscribe that discretion of the Court. Section 34 puts the matter in the area of judgment and takes it out of the area of contract. By the 1976 amendment to C. P. C. among other things, a proviso and two explanations are introduced in Section 34. The proviso is in relation to `further interest or interest from the date of decree till the date of realisation which, otherwise under the terms of Section 34 (1), should not exceed 6 percent per annum. The proviso says that where the liability in relation to the sum so adjudged arises out of a commercial transaction, the rate of such further interest may exceed six percent per annum, but shall not exceed the contractual rate of interest, or where there is no contractual rate,. the rate at which moneys are lent or advanced by nationalised Banks in relation to commercial transactions. (Underline supplied) ( 9 ) RECENTLY, in the case of CENTRAL BANK OF INDIA vs ravindra AND OTHERS2, the Supreme Court has also held as under: -. . . Interest pendente lite and future interest (i. e. interest post - decree not exceeding 6 per cent per annum) shall be awarded on such principal sum i. e, the principal sum adjudged on the date of the suit. It is well settled that the use of the word may in Section 34 confers a discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit. . Thus, the matter is no more res-integra. ( 10 ) IN the present matter, interest challenged is the interest @ rs. 18% awarded from the date of suit to till realisation. If what has been provided in Section 34 of CPC and noted above are considered, the discretion exercised by the first appellate Court was well within its power so far as the interest awarded (@ Rs. ( 10 ) IN the present matter, interest challenged is the interest @ rs. 18% awarded from the date of suit to till realisation. If what has been provided in Section 34 of CPC and noted above are considered, the discretion exercised by the first appellate Court was well within its power so far as the interest awarded (@ Rs. 18% per annum) from the date of suit to till the date of decree is concerned, and it need not be interfered with by this Court. However, the same cannot be said with regard to the rate of interest awarded from the date of decree to till realisation, because the first appellate Court had no discretion to award interest @ exceeding Rs. 6% per annum from the date of decree as, admittedly, the amount adjudged as payable by the appellant was not out of a commercial transaction as is clear from the case set up by the parties and as such, that requires to be restricted to Rs. 6% per annum only. To hold so, no detail discussion is necessary. Accordingly, the question of law has been answered partly in affirmative and partly in negative. No other point has been canvassed nor remained to be considered in the matter. In the result, the appeal is allowed in part holding that the respondent/plaintiff is entitled to Rs. 16,244/- with an interest @ Rs. 18% per annum from the date of suit to till the date of decree whereas, @ Rs. 6% per annum from the date of decree to till realisation on Rs. 16,244/- from the appellant/defendant and accordingly, the impugned judgment and decree stand modified. Inthe circumstances, parties are directed to bear their respective cost. --- *** --- .