IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 528 of 1996()
1. FEDERAL BANK LTD.
... Petitioner
Vs
1. KOSHY VARGHESE
... Respondent
For Petitioner :SRI.K.ANAND (A.201)
For Respondent : No Appearance
The Hon'ble MR. Justice PIUS C.KURIAKOSE
Dated :09/12/2008
O R D E R
PIUS.C.KURIAKOSE, J.
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A.S.No.528 OF 1996
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Dated this the 9th day of December , 2008
JUDGMENT
The plaintiff – Federal Bank being aggrieved by the rates of
interest pendente lite and future awarded by the trial court in a suit for
money has preferred this appeal. Going by the averments in the plaint
and the various documents relating to the transaction between the bank
and the defendants, the liability of the defendants to the bank arose out
of a commercial transaction. The interest both pendente lite and future
was claimed @ 24.75 % per annum with quarterly rest on the basis of
contract between the parties which is evident from the documents
marked on the side of the appellant bank. The respondent defendants
remained ex parte in the suit and the learned Subordinate Judge
proceeded to decree the suit on the basis of a claim affidavit which was
submitted on behalf of the appellant bank by the bank’s branch
Manager. The plaint claim consisted of the principal amount of
Rs. 2,17,541/- ( the amount due to the bank as per the account
maintained by the bank in the name of the defendants in respect of the
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suit transaction) together with interest at the rates mentioned above.
The learned Sub Judge granted a decree for principal amount claimed
in the suit. But without assigning any reason the court reduced the rate
of interest both pendent elite and future to 12% per annum.
2. Referring to Section 34 of the Code of Civil Procedure and
particularly to the proviso therein, Sri.K.Anand, learned counsel for the
appellant would urge that the court was bound to grant interest at a
reasonable rate pendent elite on the principal amount claimed in the
suit, which was adjudged by the court as correctly due to the bank, as
on the date of the suit. Sri.Anand further submitted that as regards the
future interest to be granted the normal rule is that the same shall not
exceed 6% per annum. The proviso shall apply in this case and there
was justification for granting further interest at the contractual rates
which in this case 24.75% per annum.
3. Even though the respondents were served with notice, they
have not entered appearance before this court and naturally the
submissions of Sri.Anand were not resisted by anybody.
4. Having considered the averments in the plaint and the
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evidence adduced on the side of the appellant plaintiff in the light of
Section 34 of CPC and the judicial precedents pertaining to the
application of Section 34, I am of the view that the submissions of
Sri.Anand are meritorious. Under Section 34, the pendente lite interest
is to be granted at a rate deemed by the court to be reasonable. In the
instant case where the defendant did not contend that the contractual
rate of interest is not reasonable, there was every justification for
granting pendente lite interest at the contractual rate itself. As for the
appellants’ claim for future interest the pleadings will show that the
liability has arisen out of a commercial transaction. That being the
position, even future interest could have been anything between 6% per
annum and the contractual rate of interest. Having considered th
totality of the circumstances attending on this case, I feel that the
appellant bank should have been granted pendente lite interest @ 20%
per annum and future interest @ 18% per annum.
5. The result is that the appeal will stand allowed to the
following extent:
The judgment and decree under appeal are modified to the extent
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they relate to interest granted pendente lite and future. The
pendente lite interest ( from the date of suit till the date of decree) will
stand modified as 20% simple interest per annum and future interest
( interest from the date of decree till date of realisation) will stand
modified as 18% per annum. The decree of the court below will stand
confirmed in all other respects. The appellant will be entitled for
proportionate costs in this appeal also.
PIUS.C.KURIAKOSE
JUDGE
sv.
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