Punjab National Bank vs Darshan Singh

T.H.B. Chalapathi, J.—The plaintiff is the appellant.

The plaintiff-Bank filed the suit for recovery of Rs. 1,24,009/- from the defendant. The trial Court decreed the suit for Rs. 1,24,009/- with interest @ 12 p.a. from the date of filing of the suit till realisation of the decretal amount. The appellant filed an appeal before the Additional District Judge, Ferozepur in Civil Appeal No. 8 of 1994 claiming future interest @ 15 p.a. with half yearly rests. The lower Appellate Court dismissed the appeal. The Bank filed the second appeal against the award of future interest @ 12 per p.a. on the principal amount. According to the plaintiff-Bank, it is entitled to interest @ 15% p.a. towards future interest on the amount decreed. Thus the controversy in this appeal is regarding the rate of future interest payable by the defendants on the amount decreed. According to the learned counsel for the appellant, the defendants agreed to pay penal interest at the rate of 2% p.a. over and above the normal rate for the period of default on the defaulted amount and the rate of interest stipulated by the Reserve Bank of India is 12% p.a. Therefore, the plaintiff is entitled to future interest @ 15% p.a. Further according to the learned Counsel for the appellant, the letter of request which is marked as Annexure P-7, contains a clause stipulating that the defendants shall be liable to pay additional interest at the rate of 3% p.a. over and above the normal rate.

On interpretation of the documents namely, Mortgage Deed exhibit P-4 and Demand Promissory Note exhibit P-5, the trial Court held that the agreed rate of interest was 2% p.a. above the RBI rate with a minimum of 12% p.a. with half yearly rests. Therefore, there cannot be any dispute that the future interest pendente lite subsequent to the filing of the suit is governed by Section 34 of the Code of Civil Procedure. The future interest is generally granted by the Court according to the agreement of the parties, but the Court has got full discretion in the matter of granting or refusing to grant the contractual rate of interest. The relevant clause in Section 34 reads as follows:-

"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. When there is no contractual rate at which "moneys are lent or advanced by nationalised banks in relation to commercial transactions."

It is, thus, clear that Section 34 of the CPC provides the minimum rate of interest pendente lite can be awarded at 6% and the maximum is the rate of interest agreed upon by the parties. It is not as though the Court is bound to grant future interest at the rate agreed upon. Awarding of interest of pendente lite is within the discretion of the Court and no party can insist for the grant of interest at the contractual rate as held by this court in Piara Lal v. Harchand Singh, AIR 1961 PC 442. When both the Courts below awarded future interest @ 12% p.a. it is for the appellant-bank to show that this discretion has been wrongly exercised. On the facts and circumstances of this case, I do not find that the Courts below wrongly exercised the discretion.

In view of what has been stated above, I do not find any ground warranting interference with the judgments and decrees passed by the Courts below.

The appeal, therefore, fails and is, accordingly, dismissed.