Nallapaneni Pattabhi Seetharamaiah vs State Bank of India

A. Seetharam Reddy, J.—The question raised in this revision petition is whether u/s 152 CPC, it is open to the court to modify the interest awarded earlier at the rate of 12-1/2 per cent in respect of mortgage loan obtained from a nationalized Bank, which is the respondent herein decreeing the suit from the date of suit to the date of decree as well as from the date-of decree to the date of realization.

Few facts in brief are that the petitioner herein, admittedly an agriculturalist, obtained a loan from the respondent, State Bank of India. On filing a suit it was decreed, awarding interest at the rate of 12-1/2% p.a. from the date of suit to the date of decree as well as from the date of decree to the date of realization. Later, an application was filed u/s 152 CPC by the petitioner herein for substituting the following by deleting para one, of preliminary decree dated 9.2.1978.

It is hereby declared that the amount due to the plaintiff on the mortgage mentioned in the plaint calculated upon the 9th day of May, 1978 is the sum of Rs. 3885-14 ps. the principal and interest till the date of suit, Rs. 56.09 paise the interest as calculated at 6% per annum from 2.11.1977 the date of suit to 9.5.1978 the date of redemption on the principal of Rs. 1,800/- and the sum of Rs. 944.70 for the costs of the suit awarded to the plaintiff making in all the sum of Rs. 4885.93 paise (time for redemption three months.

The following was sought to be substituted as para 2(i) of preliminary decree dated 9.2.1978:

That the defendant to pay into court on or before 9th day of May, 1978 or any later date upto which time for payment may be extended by the court the said sum of Rs. 4885.93 paise with simple interest on Rs. 1,800/- at the rate of 6% p.a. from 10.5.1978 till date of payment.

The lower court dismissed the said petition holding that there was no patent error apparent on the face of the record and therefore the amendment sought for cannot be allowed.

The Learned Counsel for the petitioner argued that interest which has been awarded was not in accordance with law and therefore the Court below ought to have rectified the same. Admittedly against the preliminary decree no appeal has been preferred and what all is now sought to be done is to initiate proceedings within the meaning of Section 152 CPC which speaks of rectification of an apparent error on record. In so far as the first amendment sought for is concerned, this Court cannot accede to the submission made by the Learned Counsel for the petitioner. That could have been agitated by way of an appeal and therefore it cannot be stated that under the provisions of Section 152 CPC it warrants any rectification. In the circumstances, in so far as the interest awarded upto the date of preliminary decree is concerned, the relief sought for cannot be allowed and therefore the contention in that behalf is rejected.

In so far as the interest from the date of the decree till the date of realization is concerned, the Learned Counsel for the petitioner while relying on the provision enacted u/s 34 CPC wherein it is laid down as follows:

34.(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 percent per annum as the court deems reasonable on such principal sum, from the date of the decree to the date of the payment, or to such earlier date as the court thinks fit.

Provided that where the liability in relation to the sum of so adjusted and arisen out of a commercial transaction, the rate of such further interest may 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.

Explanation-1:- In this Sub-section ''nationalised bank'' means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

Explanation II:- For the purposes 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.

(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the .court shall be deemed to have refused such interest and a separate suit there for shall not lie-

Contended that admittedly the loan being agricultural loan and not a commercial loan, the same can be rectified within the meaning of Section 152 CPC. In this behalf he placed reliance on the decision of this Court (to which I was a party) in N. Radhakrishnaiah v. Union Bank of India 1982 (1) APLJ 66, wherein it held as follows:

An error arising out of or occurring from an accidental slip or omission within the meaning of Section 152 CPC is an error due to careless mistake or omission unintentionally made by the Presiding Officer. This error shall be apparent on the face of the record, that is to say, it is not an error which depends for its discovery on elaborate arguments on question of fact of law. The court which passed the judgment and the decree committed an error by omitting to exercise its discretion in the matter of awarding future interest which error is quite apparent on the face of the record, and therefore, the same can be rectified by amending the judgment and decree within the meaning of Section 152 CPC.

In the decision cited above the facts are analogous to the facts in the case on hand. In that case when a bank filed a suit for recovery of mortgage money, a preliminary decree was passed wherein future interest was awarded from the date of decree till the date of redemption at 4-1/2% p.a. and from the date of redemption till the date of realization at 14-1/2% p.a. It was open to the defendant therein to file an application stating that the plaintiff is entitled to claim interest subsequent to the suit only at 6% p.a. as per the provisions of Section 34 CPC, but the court awarded subsequent interest also at 14-1/2% p.a. The said error was due to oversight and not intentional. Therefore the error was sought to be corrected by amending the same. On this set of facts it was held as follows:

In the case before me the application of the mind by the judicial officer in the exercise of discretion in the matter of awarding future interest, in my undoubted judgment, is conspicuous by its absence. The works "future interest on the decretal amount from the date of the decree till the date of redemption shall be at 14% p.a. and from the date of redemption till realization at 14-1/2% p.a. simple interest" are merely mechanical. It is very hard, almost impossible to read in between that they are the product of discretion being exercised, for the simple reason that no ''reason'', good or bad, has been assigned as to why future interest also should be at 14-1/2% p.a. which is the contractual '' rate itself. I have, therefore, no hesitation in concluding that the Court below has failed to exercise its discretion in awarding future interest as contemplated under Order 34 Rule 11 CPC.

Hence in view of the said decision and for the same reasons I reiterate and hold that in so far as future interest is concerned, the application of law by the lower court in the matter of exercise of discretion and awarding future interest is conspicuously erroneous. Hence it must be held that the court below has filed to exercise its discretion properly in awarding future interest as contemplated under Order 34 Rule 11 CPC which reads as follows:

In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the court may order payment of interest to the mortgagee as follows, namely;

(a) interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage-

(i) on the principal amount found or declared due on the mortgage, at the rate payable on the principal, or where no such rate is fixed at such rate as the court deems reasonable.

* * * * AND

(ii) on the amount adjudged due to the mortgagee for costs, charges and expenses property incurred by the mortgagee in respect of the mortgage-security up to the date of the preliminary decree and added to the mortgage money at the rate agreed between the parties, or, failing such rate, at such rate not exceeding six per cent per annum as the court deems reasonable; and

(b) subsequent interest upto the date of realization or actual payment on the aggregate of the principal sums specified in Clause (a) as calculated in accordance with that clause at such rate as the Court deems reasonable.

Rule 11(b) appears to be in conflict with Section 34 CPC. In so far as subsequent interest upto the date of realization is concerned Section 34 CPC lays down specifically that interest to be awarded should in no case exceed 6% from the date of decree to the date of payment. However, this liability does not arise out of a commercial transaction. A proviso is now added by amendment brought about in the year 1976 to Civil Procedure Code. What could be deduced from a true construction of the provision is that there is an explicit embargo placed upon the said provision more so by the amendment made in the year 1976. In so far as interest aspect is concerned, it should not exceed 6% p.a. where the liability to the sum arises out of a transaction other than a commercial transaction. In this case, admittedly the liability arise out of agricultural loans. Hence, the interest to be awarded should not exceed 6%. Therefore, in so far as the 2nd contention is concerned, while allowing the revision I remand the matter to the lower court for rectifying the same within the meaning of Section 152 CPC, in so far as the award of future interest, namely, from the date of decree to the date of actual payment is concerned, so that the interest may be fixed by the lower court not exceeding 6% p.a.

Revision Petition is accordingly allowed in part and the matter is remanded to the extent indicated above. No costs.