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Himachal Pradesh High Court · body

2006 DIGILAW 101 (HP)

Pushpa Bhatnagar v. H. P. M. C.

2006-04-10

K.C.SOOD

body2006
JUDGMENT K.C. Sood, J. 1. This second appeal arises out of the judgment and decree of learned District Judge, Shimla dated 1.9.1999. By the impugned judgment, learned District Judge while maintaining the decree, reduced the interest of 18% granted by the trial Court to 12% per annum during the pendency of the suit and at the rate of 6% till the realization of the decretal amount. 2. This appeal was admitted on 8.11.1999 on the following substantial questions of law: 1. Whether the District Judge was justified in modifying the judgment of the trial Court and reducing the rate of interest from 18% per annum to 12% per annum for the period prior to the suit and to 6% per annum for pendent lite and future interest in view of the fact that the transaction was the commercial transaction and the defendant was charging interest @ 18% per annum vide PW8/12 and PW8/13 and the statement of the defendant's witness? 2. Whether the learned District Judge has misread and misconstrued the pleadings of the parties and the evidence on record and drawn wrong inferences in reducing the claim of the plaintiff in respect of interest and has also misconstrued Section 34 C.P.C. which has vitiated the findings? 3. Heard Mr. Kuldip Singh Senior Advocate, learned Counsel for the appellant and Mr. Balbir Chauhan, Advocate, learned Counsel for the respondent. 4. The substantial questions of law are re-framed as under: Whether the plaintiff-appellant is entitled to commercial rate of interest at 18% per annum as claimed by her?. 5. Mr. Kuldip Singh, learned Senior Counsel for the appellant contends that the sale of apple to the defendant Corporation was a commercial transaction and therefore, the appellant would be entitled to interest at commercial rate, i.e., 18% per annum more so when the respondent Corporation itself charges interest at the rate of 18% per annum from its customers. FEW FACTS. 6. The defendant Corporation purchased "culled apples" under the "Support Price Scheme" which was designed and formulated to help the farmers to save them from financial crisis as the apple crop for the year 1989 was not marketable. Admittedly, "Culled Apple" sold to the defendant Corporation was bad. In fact, evidence of Ram Singh (PW9), labour contractor, shows that the good apple was purchased by him and it was only bad apple which were supplied to the defendant Corporation. Admittedly, "Culled Apple" sold to the defendant Corporation was bad. In fact, evidence of Ram Singh (PW9), labour contractor, shows that the good apple was purchased by him and it was only bad apple which were supplied to the defendant Corporation. In these circumstances, by no stretch it can be said that it was a commercial transaction justifying commercial rate of interest. Learned Senior Counsel for the appellant relying upon Canara Bank v. Mahadeo Appa Phadalare and Ors. AIR 1994 Bom 291 , submits that as the plaintiff sold the fruits to the defendant Corporation for further marketing, therefore, they would be entitled to commercial rate of interest. The ratio of Canara Bank is of no assistance to the appellant. In this case what the Court had held is that when an agriculturist seeks loan to gainfully employ the same in his agriculture pursuits he enters into a commercial transaction. 7. As already noticed, in this case, the apples were purchased by the defendant Corporation only to help the farmers who had a bad crop and were unable to market their fruit. The supply of the apple to the respondent Corporation was voluntary under the Scheme. It is no body's case that the defendant Corporation earned any profits out of it or purchased the fruits for profit and therefore, it cannot be said to be a commercial transaction to justify the commercial rate of interest. 8. Section 34 of the Code of Civil Procedure provides for the grant of interest on money decrees for payment of money. Section 34 reads: 34. 8. Section 34 of the Code of Civil Procedure provides for the grant of interest on money decrees for payment of money. Section 34 reads: 34. Interest.(1) Where and in so far as 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 six per cent 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 : Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent, 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 nationalized banks in relation to commercial transactions. Explanation-LIn the Sub-section, "nationalized bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). Explanation-ILFor the purpose of this Section, a transaction is a commercial transaction, if it is connected with the Industry, trade or business of the party incurring the liability. 9. It may be noticed that before the amendment of 1976 in the Code of Civil Procedure, the maximum interest which the Court could award was 6% per annum. However, in appropriate cases, the Court had the discretion to award interest at a lesser rate but in no case exceeding 6%. Now the Courts are empowered to increase post decretal interest in relation to a liability arising out of a commercial transaction on the principal sum adjudged. Explanation-II to Section 34 clearly says that a transaction would be commercial only if it is connected with trade or business of the party incurring liability. 10. The culled apples were not purchased by the defendant Corporation as a commercial transaction. Explanation-II to Section 34 clearly says that a transaction would be commercial only if it is connected with trade or business of the party incurring liability. 10. The culled apples were not purchased by the defendant Corporation as a commercial transaction. The apple was purchased under the "Support Price Scheme" to save the farmers from financial crisis as the culled apples were not marketable. There is nothing on the record to suggest even remotely that the Scheme was designed to earn profit. In view of the provisions of Section 34 of the Code of Civil Procedure, noticed above, the plaintiff is entitled to an interest pendente lite on principal amounting to rupees 1,30,253/-. Rs. 97,935/ outstanding balance of the fruit supplied and Rs. 32,318/- on account of interest upto the date of the filing of the suit as calculated by the learned District Judge at the rate of 12% per annum) along with an interest at the rate of 12% per annum from the date of the filing of the suit till the date of decree and at the rate of 6% per annum from the date of the decree till the realization of the decretal amount in full. In result the appeal is partly allowed with no order as to costs.