Best Choice Enterprises vs J. Sons Agencies

Indermeet Kaur, J.—This appeal has impugned the judgment and decree dated 09.1.2004 which has endorsed the finding of the trial judge dated 18.3.2003 whereby the suit of the plaintiff M/s J. Sons Agencies has been decreed for Rs. 25,278/- along with interest @ 18% per annum.

The contention before this Court is that the interest granted during the pendency of the suit and the period thereafter @ 18% per annum is against the canons of law and not justified either in terms of Section 34 of the CPC or under the provisions of the Interest Act.

This is a second appeal. It had been admitted on 08.12.205. The substantial question of law formulated, reads as under:

Whether the finding in the impugned judgment dated 09.1.2003 qua the quotient of interest is perverse finding? It so, its effect?

Perusal of the record shows that the parties had dealings with one another; both were partnership firms. Defendant had issued a cheque in the sum of Rs. 28,513.25 to the plaintiff which on presentation was dishonoured. Legal notice dated 10.11.1993 was issued to the Defendant. On 15.11.1993 payment of Rs. 14526/- was made by the plaintiff; contention of the Defendant was that this amount settled all the dues of the plaintiff. This defence set up by the Defendant had not been accepted by the two fact finding Courts below which finding has not been challenged before this Court. What has been challenged before this Court is only the quotient of interest which has been granted in favour of the plaintiff. As per the Appellant there was no contract either written or oral between the parties on the percentage of interest; such an exorbitant percentage could not have been granted.

Perusal of the record shows that issue No. 5 had been formulated on this point, it reads as follows:

To what amount, as the principal and as the interest, the plaintiff is entitled to recover from the Deft.? OPP

The claim of the plaintiff as decreed for the suit amount i.e. Rs. 25,278/- along with pendentelite and future interest @ 18% per annum. Admittedly the cheque in question was for Rs. 28,513/- of which Rs. 14,526 stood paid on 15.11.1993. Balance sum recoverable by the plaintiff was Rs. 14,256/-. This is also evident from the notice dated 10.11.1993. In para 8 of the plaint, the plaintiff has calculated a sum of Rs. 10,470/- as interest @ 18% per annum which has been calculated up to 10.5.1994 i.e. five days after the filing of the suit and Rs. 550/- as charges of the legal notice.

Admittedly, there was no agreed rate of interest between the parties. No discussion has also emanated in the judgment of the two Courts below on this point. The Interest Act, 1978 gives power to the Court to allow interest at a rate not exceeding current rate of interest. The transaction in this case related to the year 1993. Section 34(1) of the CPC permits interest pendentelite to be awarded at a reasonable rate and rate of 6% is prescribed for the period after the passing of the decree. This is in those cases where there is no contract to the contrary.

In Mahesh Chandra Bansal v. Krishna Swaroop Singhal, (1997) 10 SCC 681 the Supreme Court had the occasion to examine the percentage of interest to be awarded on a suit for recovery for the period during which the suit was pending before the trial court which was of the year 1980; 12% per annum had been allowed in that case.

In Brig. R.C. Datta (Retd) Vs. Dr. Rajiv Anand and Another, a Bench of this Court had held that in the absence of any documentary evidence to support the grant of interest @ 24% per annum, interest granted @ 10% per annum from the demand raised i.e. from the date of notice which in that case was 08.5.1995 would be justifiable.

In the instant case, admittedly there was no contract written/oral stipulating any particular rate of interest. The current rate in the year 1993 cannot be in any manner exceed 12% per annum. The impugned judgment is accordingly modified and to meet ends of justice interest @ 12% per annum be awarded on the balance principal sum of Rs. 14,256/- w.e.f. 15.11.1993 (date of demand of legal notice, when half of the disputed amount Rs. 14256/- was paid) till the date of realization. Decree be calculated in terms of the affronted modification. It is pointed out by learned Counsel for the Appellant that a sum of Rs. 35,600/- is lying deposited in this Court. If any amount is in excess, the same be refunded back to the Appellant.

Appeal is disposed of in the above terms.

Pending application is also disposed of.