Mata Din vs Jeek Ram and others

The petitioner/judgment-debtor has challenged the order of the executing Court dismissing his objections u/s 47 of the CPC 1976 (for short, the Code).

The facts:--

Decree for recovery of Rs. 6,800/- with interest at the rate of 12 per cent per annum till realisation was passed against the Vishav Karma Furniture Production Co-operaiive Industries Society Ltd., Charkhi Dadri (Proprietor Ghisha Ram) and Ghisa Ram, respondents, and Mata Din, Petitioner/judgment-debtor (hereinafter the judgment-debtor) on August 16, 1985 by Shri S.Z. Siddiqui, Munsif, Khiri (UP) that the said decree was transferred to Subordinate Judge 1st Class, Charkhi Dadri, for execution; that in execution of the decree land owned by the judgment-debtor was attached; that auction was held on July 19, 1989; that objections against the auction were dismissed by the executing Court by order dated August 28, 1990; that the auction was confirmed on September 11, 1990 that orders dated August 28, 1990 and September 11, 1990 dismissing the objections against the auction and confirming the sale respectively were challenged in Civil Appeal No. 38-14 of 1990, which was dismissed by the District Judge, Bhiwani, by order dated February 14, 1991; that objections were filed by the judgement-debtor u/s 47 of the Code on the ground that the decree under execution was inexecut-able for the reason that the trial Judge while decreeing the suit allowed interest at the rate of 12 per cent per annum on the principal amount till realisation which is impermissible, and that the executing Court dismissed the objections of the judgment-debtor principally on the ground that the future interest awarded by the Court decreeing the suit was in conformity with the provisions of Section 34 of the Code.

The executing Court in paragraph 6 observed, thus:--

"The J. D. has not mentioned as to what was the agreed future rate of interest and how the future rate of interest was at a higher rate. It is not the case of the J. D. that the money was not advanced for some commercial transaction. By virtue of the provisions attached to Section 34 C.P.C., a Civil Court can award future interest exceeding 6 per cent per annum, if the liability arises out of commercial transaction, but in that case, future interest should not exceed the contractual rate of interest."

These observations indisputably suggest that the liability adjudged in the suit arises out of commercial transactions and that the judgment-debtor did not adduce evidence in support of his plea that the contractual rate of interest was different than the one awarded by the Munsif. Interest awardable u/s 34 of the Code may be divided into three heads, namely,

(1) interest accrued due prior to the institution of the suit on the principal sum adjudged (as distinguished on the principal sum claimed).

(2) additional interest on the principal sum adjudged, from the date of the suit to the date of the decree, "at such rate as the Court deems reasonable";

(3) further interest on the principal sum adjudged from the date of the decree to the date of the payment or to such earlier date as the Court thinks fit, at the rate not exceeding 6 per cent. per annum.

Interest up to the date of the suit is a matter of substantive law and the section does not refer to payment of interest under the first head. It applies only to the second and third heads. Interest pendente lite is one of procedure within the discretion of the Court. Interest on the principal amount adjudged from the date of the decree to the date of payment cannot be allowed at a rate higher than 6 per cent. per annum. Under the first proviso to Section 34 of the Code, future interest exceeding 6 per cent. per annum can be granted if the liability adjudged has arisen out of a commercial transaction and, in no event, it shall exceed the contractual rate of interest, and if the contractual rate of interest is not established, the Court can grant interest at a rate allowed by the nationalized bank in relation to commercial transactions. Since it was not disputed that the money was advanced under a commercial transaction, the case will be squarely covered under the first proviso to Section 34 of the Code and no fault can be found with the discretion exercised by the Munsif passing the decree.

The learned counsel for the petitioner relied upon Siri Chand v. Central Bank of India 1988 PLJ 351, in support of his submission that further interest beyond 6 per cent, per annum could not he awarded. This judgment does not indicate that the attention of the learned Judge was drawn to the first proviso to Section 34 of the Code. It also does not indicate as to what was the nature of the transaction on which the liability was adjudged. After referring to the case law that objections u/s 47 of the Code at the instance of the judgment-debtors were maintainable, the revision petition was disposed of with the following observations :--

"The Executing Court, therefore, wholly went wrong in rejecting the objections of the judgment-debtors by relying on the above noted two decisions of the Supreme Court, and thereby illegally refused to exercise jurisdiction vested in it.

On merits, the learned counsel for the respondent could not urge any argument against the objections raised that the Court could neither grant interest at the rate of more than 6% on the principal amount nor could it allow compound interest. The petition is, consequently, allowed and the two decisions noticed above are sustained. The case is remanded to the Executing Court for determining the amount due to the decree-holder in accordance with the rule laid down above and to pass appropriate orders. No costs."

The original record of the reported judgment in Siri Chand case 1988 PLJ 351 (supra) was sent for and on perusal thereof it transpired that Civil Revision No. 488 of 1987 had arisen out of the order of the Executing Court dated October 8, 1986. Paragraph 12 of the order of the Executing Court reveals that the civil suit bearing No. 415 of 1979 was instituted on January 22, 1972 and was decreed on December 5, 1980. The learned Judge while deciding the revision petition interpreted the unamended provisions of Section 34 of the Code of Civil Procedure, 1908 and the interpretation placed on the unamended provisions of Section 34 is unexceptional. However, the instant revision petition has to be decided in the light of the amended provision of Section 34 of the Code. First proviso to Section 34 was inserted by Section 13 of the CPC (Amendment) Act (Act No. 104 of 1976). By notification No. G.S.R. 416(E) dated June 27, 1977 published in the Gazette of India, Extraordinary, Part II, the Central Government appointed 1st day of July, 1977 as the date on which Section 13 of the said Act was to come into force. To be more explicit, the first proviso to Section 34 of the Code came into force with effect from July 1, 1977. The decree giving rise to the objections u/s 47 of the Code in the instant case was passed on August 16, 1985 and the trial Judge awarded further interest in the light of the first proviso to Section 34 of the Code. On the date when the trial Judge passed the decree, the first proviso to Section 34 of the Code had come into force. The decision in Siri Chand''s case 1988 PLJ 351 (supra) was rendered keeping in view the unamended provisions of Section 34 of the Code of Civil Procedure, 1908 and it has no bearing to the facts of the instant case.

For the reasons stated above, the revision petition fails and is accordingly dismissed, but with no order as to costs.

Petition dismissed.