JUDGMENT
V.V.S. Rao, J.
1. In this regular appeal, the plaintiff – appellant is aggrieved by Clause (3) of the Decree only so far as the same permits the respondents to pay the suit amount in instalments at the rate of Rs.6,000/- per month commencing from April 2001, in default of which liberty was reserved to the plaintiff – appellant to recover the balance amount in lumpsum. In the suit filed by them for recovery of a sum of Rs.2,30,387/-, the trial Court decreed the same as under.
1. That the suit filed by the plaintiff be and the same is hereby decreed with costs;
2. It is further ordered and decreed that the defendants 1 to 5 jointly and severally do pay to the plaintiff a sum of Rs.2,30,387/- with interest at 6% p.a. from the date of suit till realisation;
3. It is further ordered and decreed that the defendants are hereby directed and also permitted to pay the suit amount in instalments at the rate of Rs.6,000/- p.m. commencing from April 2001. They are also further directed to pay the instalment amount on or before 15th of every month. If the defendants have committed default in payment of any one of the instalments, the plaintiff is at liberty to recover the balance in lumpsum by executing the decree;
4. It is further ordered and decreed that the defendants do also further pay a sum of Rs.11,685/- towards the costs of the suit.
2. The facts are not in dispute. The parties are referred to by their status in the suit. The plaintiff is a company registered under the Companies Act engaged in chit fund business in the State of Andhra Pradesh. The first defendant is a company registered under the Companies Act. It joined as member of the chit fund scheme of the plaintiff as per its rules and regulations. It was allotted Ticket No.LT-6- TA-24. The total value of the chit being Rs.5,00,000/- to be subscribed at the rate of Rs.10,000/- per month for 50 months. The first defendant signed an agreement of chit on 27-8-1992 with the plaintiff. In the auction conducted in respect of the chit on 16-1-1994, the first defendant participated and became successful bidder having agreed to forego Rs.1,75,000/- out of Rs.5,00,000/-. As per the rules of the company, successful bidder had to furnish independent guarantors to the satisfaction of the plaintiff who can stand surety for the due payment of the entire future monthly instalments. Accordingly, defendants 2 to 5 became guarantors and executed agreements of guarantee on 9-2-1994. The plaintiff thereafter released Rs.3,17,850/- by way of cheque and Rs.7,150/- by cash. The first defendant committed default in paying the instalments from 10-10-1994 and, therefore, the plaintiff issued a legal notice dated 16-2-1995 and filed the suit for recovery of the amount due towards future subscription by the first defendant (-) the instalments paid by the first defendant. The plaintiff prayed for judgment and decree directing the defendants jointly and severally to pay Rs.2,30,387/- with interest at 12% per annum from the date of suit till the date of realization and costs.
3. Defendants 2 and 3 remained ex parte and defendants 1, 4 and 5 filed a common written statement. The case of the plaintiff was admitted, but they disputed the amount claimed on the ground that the plaintiff failed to give due credit to the amounts paid by the first defendant before and after the bid of the chit amount. The defendants also prayed the trial Court to pass a decree to the extent of admitted claim and permit the first defendant firm to pay the decretal amount in equal monthly instalments spread over for three years.
4. Based on the pleadings, following issues were framed by the trial Court.
1) Whether the plaintiff is entitled for recovery of the suit amount?
2) To what relief?
5. The plaintiff examined their Accountant as P.W.1 and marked Exs.A1 to A8 including the bye-laws of the plaintiff. Exs.A2 and A3 are the agreements of guarantee. The defendants examined the Managing Director of the first defendant as D.W.1 and no documents were marked. The trial Court after examining the documentary and oral evidence recorded a finding as follows.
Issue No.1:- The plaintiff has established that the defendants are the members of the Chit and participated in the auction, received the amount and committed default in repayment of the instalments. Issue No.1 is answered in favour of the plaintiff and against the defendants. However, the defendants are permitted to pay the suit amount in instalments.
Issue No.2:- In the result, suit is decreed for Rs.2,30,387/- with costs. The plaintiff is also entitled to interest at the rate of 6% p.a. from the date of suit till realisation.
6. The defendants are permitted to pay the suit amount in instalments at the rate of Rs.6,000/- p.m. commencing from April 2001. They have to pay the instalments amounts on or before 15th of every month. If the defendants have committed default in payment of any one of the instalment, the plaintiff is at liberty to recover the balance in lumpsum by executing the decree.
RIVAL SUBMISSIONS
7. Learned counsel for the appellants, Sri A.V. Seshasai, made the following submissions in support of the appeal. The Andhra Pradesh Chit Funds Act, 1971 (‘the Act’) is a special law and, therefore, it will prevail over the general law including the Code of Civil Procedure, 1908 (‘CPC’). As per Section 25 of the Act, when the foreman files a suit for consolidated payment of the chit amount, the Civil Court is not entitled to pass a decree allowing the defendants to pay the suit amount in instalments as per Order XX, Rule 11 CPC. Alternatively, he submits that the trial Court erred in allowing the respondents – defendants without any reasons to pay the suit amount in instalments at the rate of Rs.6,000/- per month commencing from April 2001. When the defendants asked for equal monthly instalments spread over three years, the trial Court ignored the binding principles while granting instalment decree. Lastly, he would submit that the trial Court ought to have awarded interest at 12% per annum in accordance with Section 61 of the Act and awarding interest at 6% per annum is erroneous.
8. Learned counsel for the respondents – defendants, Sri M.V. Durga Prasad, submits that under Rule 11 of Order XX CPC, the Civil Court is given overriding power to order payment of the decretal amount by instalments and, therefore, Rule 11 of Order XX CPC prevails over the contract under which the money is payable. This power is not controlled by the terms of the contract. The defendants had pleaded for the instalment decree and also deposed that they are not having the financial capacity to pay the decretal amount in one lumpsum and pleaded for instalments. The Court has exercised discretion and passed the decree directing the defendants to pay in instalments. He also submits that there is no repugnancy between Order XX, Rule 11 CPC and Sections 24 and 25 of the Act and, therefore, Section 25 does not prevail over Order XX, Rule 11 CPC. Section 25 of the Act does not, however, restrict the power of the Court to grant instalments. Section 25 of the Act does not, in any way, prohibit the Civil Court from passing a decree for instalments. The learned counsel also submits that under Section 34 CPC, the Civil Court may award reasonable interest with further interest at such rate not exceeding not exceeding six per cent per annum in the absence of any pleading that the transaction is a commercial one.
9. Criminal Procedure Code (CrPC), 1908. In the light of the pleadings and rival submissions, the following points arise for consideration.
1) Whether the power of the Civil Court under Order XX, Rule 11 of the Code of Civil Procedure to order payment of the amount decreed by instalments is curtailed or diminished by reason of the provisions of Sections 24 and 25 of the A.P. Chit Funds Act, 1971?
2) Whether the trial Court was justified in directing the defendants to pay the suit amount in instalments at the rate of Rs.6,000/- per month commencing from April 2001? and 3) Whether the trial Court was not justified in awarding interest at 6% per annum? 10. In Re Point No.1
Order XX of CPC deals with various provisions in relation to “Judgment and Decree”. The principles of law to be followed by the trial Court while passing decrees in general and while delivering judgments in specific suits like suits for payment of money, suits for recovery of movable and immovable property, suits for possession and mesne profits, dissolution of partnership, suits for accounts, suits for partition and separate possession etc. are contained in this Order. Rule 11 of Order XX CPC reads as under.
11. Decree may direct payment by instalments.- (1) Where and in so far as a decree is for the payment of money, the Court may for any sufficient reason incorporate in the decree, after hearing such of the parties who had appeared personally or by pleader at the last hearing, before judgment, an order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable.
A plain reading of Rule 11 of Order XX CPC would indicate that notwithstanding anything contained in the contract under which the money is payable, the Court may, for sufficient reasons, order that the payment of the amount decreed shall be postponed or shall be made by instalments with or without interest. As per sub-rule (2) of Rule 11, the Court which passes a decree, can order payment of the amount decreed in instalments, if an application is made by the judgment-debtor and with the consent of the decree-holder before passing of the decree. It is the absolute discretion of the Court to order payment of the amount decreed by instalments, but there should be sufficient reason for so ordering. In case after passing of the decree, exercise of discretion of the Court to pass a decree for instalments is circumscribed by two conditions precedent namely – an application by judgment-debtor and consent of the decree-holder agreeing for an order directing the judgment-debtor to pay in instalments. Be it also noted that the power of the Court under sub-rule (1) of Rule 11 of Order XX CPC, to order payment of decretal amount by instalments, by reason of non-obstante clause, overrides the contract under which the money is payable. Be it also further noted, the contract referred to in sub-rule (1) of Rule 11 is not only common law contract, but statutory contract as well.
The A.P. Chit Funds Act, 1971 is an Act to provide for the regulation of chit funds in the State of Andhra Pradesh. In pith and substance, the Act is a law which primarily deals with registration of persons who desire to start or conduct any chit; winding up of the chit fund; method and manner of conducting chit fund buniess; rights and duties of the foreman; right, method and manner of collecting subscription from defaulters of subscription. Chapter V of the Act deals with prized subscribers. A prized subscriber, as per definition clause {See Section 2(16)} means a subscriber who has received or entitled to receive the prized amount.
Section 23 of the Act requires a prized subscriber to give security before receiving the prize amount and the foreman is required to take sufficient security for due payment of the future subscriptions. The prize amount is defined in Section 2(15) as to mean difference between the chit amount and when the prize amount is payable otherwise than in cash, the value of the prize amount shall be value at the time it becomes payable. Thus, in pith and substance, as noticed, the Act is a regulating law in relation to a chit transaction by which the foreman of the chit enters into an agreement with a member or subscriber. Everyone shall subscribe a certain sum of money by instalments for a definite period and each subscriber, as determined by law or by auction or by tender thereof, entitled to a prize amount whether payable in cash, kind or any other article of value. The Act does not in any manner deal with civil judicial process. Whether Sections 24 and 25 deal with method and manner of exercising power of the Civil Court? It is necessary to extract Sections 24 and 25 of the Act, which are in pari materia with Sections 32 and 33 of the Chit Funds Act, 1982 (Central Act) read as under.
24. Prized subscriber to pay the subscription regularly:- Every prized subscriber shall pay his subscriptions regularly at the time and place and on the date mentioned in the chit agreement and on his failure to do so he shall be liable to make a consolidated payment of all the future subscriptions at once.
25. Foreman to demand future subscriptions by written note:- (1) The foreman shall not be entitled to claim consolidated payment of all the future subscriptions from a defaulting prized subscriber unless he shall have demand the same in writing.
(2) If in a suit by a foreman for consolidated payment of future subscriptions from a defaulting prized subscriber, the defendant pays into Court on or before the date to which the suit is posted for hearing the arrears of subscription till that date together with interest thereon at the rate provided for in the chit agreement or at twelve per cent per annum simple interest whichever is lower, and the costs of the suit for payment to the plaintiff, then, notwithstanding any contract to the contrary, the Court shall pass a decree directing that the defendant shall deposit in Court for payment to the plaintiff, the future subscriptions on or before the dates on which they fall due and that, in default of payment by the defendant of any future subscription on or before the due date, the plaintiff shall be at liberty to realize in execution all the future subscriptions and interest thereon less the amount if any, already deposited by the defendant.
11. A plain reading of Sections 24 and 25 (1) of the Act would reveal that every prized subscriber shall pay the subscriptions regularly at the time and place and on the date mentioned in the chit agreement. If a prized subscriber fails to pay the subscription, he shall be liable to make consolidated payment of the future subscriptions at once and it shall be open to the foreman to claim consolidated payment of all the future subscriptions after making a demand in writing. If on demand by the foreman, the prized subscriber fails to make consolidated payment, the foreman may file a suit for consolidated payment of future subscriptions. That is provided for under sub-section (2) of Section 25 of the Act. The said sub-section also provides that when a suit is filed by a foreman for consolidated payment of future subscriptions, in a situation falling under Sections 24 and 25(1), an option is given to the defendant (prized subscriber) to pay arrears of subscription till that date together with interest on or before the date to which the suit is posted for hearing. If a prized subscriber pays all the arrears of subscription till the date of hearing, notwithstanding anything in the chit agreement, the Court shall pass a decree directing the defendant to pay future subscriptions on or before the date on which they fall due duly giving liberty to the plaintiff to realize all future subscriptions by execution in case the defendant fails to pay future subscriptions on or before the due dates. That is the true purport of sub-section (2) of Section 25 of the Act. When a suit is filed by the chit fund company, may be for consolidated payment after the period of chit, sub-section (2) of Section 25 of the Act does not apply. In other words, sub-section (2) of Section 25 which enables the Court to pass a decree directing the defendant to pay future subscriptions on the due date and reserves liberty to the plaintiff to recover the entire future subscriptions (consolidated payment) in the event of default by the defendant, is applicable only when a suit is filed by a foreman of a chit fund company before the completion of chit period for consolidated payment.
12. Section 25 of the Act is a special remedy available to a chit fund organization to approach the Court after issuing a notice of demand to pay the consolidated payment for enforcing their right to recover future subscriptions from a prized subscriber who failed to pay the subscription as per the schedule on due dates. The phrase “notwithstanding any contract to the contrary” appearing in sub- section (2) of Section 25 would make it clear that even if there is any clause in the chit agreement prohibiting the chit fund organisation to claim consolidated payment before the expiry of the chit period, it is open to the Civil Court to direct payment of subscriptions by the prized subscriber on the due date and also to give liberty to the chit fund company to realize future subscriptions in one lump sum by executing the decree.
13. Section 25 of the Act does not in any way curtail the power of the Civil Court to pass a decree directing the defendant/judgment-debtor to pay the decretal amount in instalments. Order XX, Rule 11 CPC has application only to money suits. When a chit fund company files a suit against a prized subscriber after the expiry of the period, nothing prevents the Civil Court to exercise the discretion/power under Order XX, Rule 11 CPC. Sub-section (2) of Section 25 of the Act applies in a suit filed by the chit fund company against “a defaulting prized subscriber”, whereas Order XX, Rule 11 CPC applies to a suit filed by a chit fund company against “a defaulted prized subscriber” to a chit fund company which has been closed.
14. The Code of Civil Procedure is a law relating to procedure of the Court of civil judicature. The Code is applicable to all adjudications involving disputes of civil nature. As per Section 4 of the CPC, if any law or special law in force prescribes special form of procedure or confers any special jurisdiction, in the absence of any special provision, the Code does not limit that special procedure or special jurisdiction. Except the limitation contained in Section 4 CPC, there is no other limitation which operates in exercise of powers by a Court of civil judicature. It is no doubt true that A.P. Chit Funds Act is a special law, but the same does not in any manner prescribe any special form of procedure though in a suit arising under sub- section (2) of Section 25 confers special jurisdiction to a limited extent. A Civil Court by exercising power under Rule 11 of Order XX CPC, is in no manner limited to its jurisdiction by Section 25(2) of the Act.
15. The A.P. Chit Funds Act is a law referable to Entry 7 of List III of the Seventh Schedule to the Constitution of India. The said Entry deals with contracts and other special forms of contracts. In M/s. Shriram Chits & Investment (P.) Ltd. v. Union of India1, a three-Judge Bench of the Supreme court considered the constitutional validity of the Chit Funds Act, 1982 (Central Act No.40 of 1982). It was contended before the Supreme Court that the Parliament has no legislative competence to enact Chit Funds Act (Central Act). The contention was negatived. It was laid down as under.
…………………………..The pith and substance of the Act is that it provides for a special contract. The legislation provides for a special kind of contract and thus squarely falls within Entry 7 of List III of Schedule VII. If any support thereof is required, a reference may be made to the decision of this Court in Srinivasa Enterprises’ case (supra). That decision was involved with the power of the Parliament to enact the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and this Court held that the legislation fell within Entry 7 of List III of the VIIth Schedule as opposed to the claim of the petitioners therein that the legislation fell within State List Entry 34 of List II…………………..
16. In view of the decision of the Supreme Court in Shriram Chits (supra), it is settled law that the Chit Funds Act in pith and substance is a law which provides for special contracts and the same does not in any manner provide for the procedure to be followed by the Courts of civil judicature. Therefore, the submission of the learned counsel for the appellant that being a law made with reference to Entry 7 of List III of Seventh Schedule to the Constitution and having received the assent of the President on 26-3-1971, the same would prevail in Andhra Pradesh by reason of Article 254 (2) of the Constitution, is misconceived. The learned counsel has referred to various judgments of various Courts, but it is not necessary to consider these rulings as the said question precisely does not arise for consideration in this appeal. As already noticed, the A.P. Chit Funds Act and CPC, in pith and substance, are two different enactments and there is no conflict or repugnancy between them. The question of repugnancy arises only when the Central Act and the State Act are enacted with reference to an Entry in List III and there is a direct unavoidable conflict between the two enactments. A reference may be made to the judgment of the Constitution Bench of the Supreme Court in M. Karunanidhi v. Union of India2 wherein their Lordships laid down the following principles.
17. It is well settled that the presumption is always in favour of the constitutionality of a statute and the onus lies on the person assailing the Act to prove that it is unconstitutional. Prima facie, there does not appear to us to be any inconsistency between the State Act and the Central Act. Before any repugnancy can arise, the following conditions must be satisfied –
1. That there is a clear and direct inconsistency between the Central Act and the State Act.
2. That such an inconsistency is absolutely irreconcilable.
3. That the inconsistency between the provisions of the two Acts is of such a nature as to bring the two Acts into direct collision with each other and a situation is reached where it is impossible to obey the one without disobeying the other.
18. Yet again, in Kulwant Kaur v. Gurdial Singh Mann3 and State of U.P. v. Banaras Electricity Light & Power Co.4, the Supreme Court considered this aspect of the matter. In Kulwant Kaur (supra), the question for consideration before the apex Court was whether Section 41 of the Punjab Courts Act, 1918 provided a second appeal to the High Court on a decree passed by a Court subordinate to it on such grounds which are repugnant to Section 100 CPC, which provided a second appeal to the High Court only if the case involves substantial question of law. While answering the question, their Lordships, after referring to Zaveribhai Amaidas v. State of Bombay5, observed as under.
19. Undoubtedly, the doctrine of implied repeal is not to be favoured but where a particular provision cannot coexist or intended to subsist in the event of there being repugnancy between Central and State legislature in the courts cannot but declare it to be so on the ground of repeal by implication. Uniformity of law, being the basic characteristic of Indian jurisprudence cannot be termed to be at sufferance by reason of a State legislation which runs counter to the Central legislation. It is not necessary that one legislation should be on the positive side whereas the other one in the negative: such a stringent requirement is not the requirement in order to bring home the issue of repugnancy, but all the same it might result when both the legislations cover the same field.
20. As already held by me, the A.P. Chit Funds Act and the CPC, though are in relation to relevant entries in the concurrent list of Seventh Schedule to the Constitution of India, both are separate enactments and, therefore, the question of repugnancy does not arise.
21. For the above reasons, Point No.1 is held against the appellant and in favour of the respondents.
In Re Point No.2
22. In the written statement, the defendants prayed to pass a decree to the extent of admitted claim and permit them to pay the decretal amount in equal monthly instalments spread over three years. While decreeing the suit for an amount of Rs.2,30,387/-. The trial Court directed that the decretal amount be paid in instalments at the rate of Rs.6,000/- per month commencing from April 2001, that is to say, the defendants were directed to pay the decretal amount in about 38 months. The trial Court almost accepted the plea of the defendants. The learned counsel for the appellant submits that while granting a decree directing the payment in instalments, the trial Judge ignored the various guidelines to be followed while directing payment of decretal amount in instalments. He submits that discretion is given to the Civil Court in money suits to permit payment of decretal amount in instalments. The power, according to the learned counsel, cannot be exercised without any valid reason and without there being very sufficient reason to incorporate such a clause in the decree. He placed reliance on various judgments in Jagdish Chandra v. Brojendra Mohan6, Gulbarga Banking Co. v. Gulam Nabi7, Firm Suraj Narain v. Hasti Ram8, Sait Beekamchand Dhannalal Firm v. Subbaraju9, Firm of Amratlal v. Firm of P.Parshottamdas10 and Vijaya Bank v. Art. Trend Exports11, in support of his submissions.
23. Per contra, Sri M.V. Durga Prasad, learned counsel for the defendants that the first defendant company was closed and when the Managing Director undertook to pay the amount he requested for permission to pay the decretal amount in instalments. There is sufficient reason enabling the trial Court to pass decree to pay the amount in instalments.
24. Before considering the merit of these rival contentions, a brief reference may be made to the decisions cited by the learned counsel for the appellant. In Jagdish Chandra (supra), a Division Bench of the Calcutta High Court laid down that when the debtor seeks instalment decree, the Court must examine the means and circumstances of the debtor. It was held.
25. We think it desirable to state for the guidance of lower Court generally that where instalments are prayed for by the debtor, the Court should see that the fact relating to means and circumstances of the debtor as also of the creditor are brought in before the Court. If a debtor simply says that he would not be able to pay money if a certain number of instalments is not granted to him that is not sufficient. Strictly speaking, it would be its own opinion and would not be admissible in evidence.
26. A Division Bench of Hyderabad High Court in Gulbarga Banking Co. (supra) considered the question whether the fact that the defendant is involved in another suit is sufficient reason for granting instalment decree, and held as under.
27. The learned Advocate for the appellant argued that the order of the lower Court making the amount payable by instalments of Rs.100/- per month is not at all warranted by the facts of the case. No reason has been shown by the lower Court as to why the instalments should be made. We agree with that contention. Under O.20, R.11, C.P.C. (S.237, H.C.P.C.,) the Court can, while passing the decree, make an order that payment of the amount decreed shall be made by instalments for any sufficient reason. No sufficient reason has been advanced by the respondent in his written statement. The statement that he was involved in some other suit concerning his business of purchase and sale of motor cars is not a sufficient for granting the instalments. No evidence has whatsoever been produced as to why instalments should be made. The discretion given to the Court under the Rule must be exercised judiciously. It must not be exercised in such a way as to amount to a virtual denial of the decree holder rights. In this case, the loan itself was advanced on condition that defendant was to pay instalment of Rs.250/- per month. There is no reason why the agreed amount of instalments was to be reduced nor has the defendant shown any reason as to why any instalments be made at all.
28. In Firm Suraj Narain (supra), the Ajmer High Court held that the discretion to grant instalments must be exercised judiciously on proof of the debtor’s inability to pay the amount and any failure to exercise discretion in judicial manner is a valid ground for interference in revision. Where no evidence has been adduced on the question of defendant’s inability to pay, the Court is not entitled to fix instalments and that the statement of the parties recorded in the proceedings sheet made without oath cannot be treated as evidence.
29. In Sait Beekamchand (supra), a Division Bench of this Court laid down the following principles.
30. Order 20, Rule 11 (1), Civil Procedure Code, provides that the Court may, at the time of passing a money decree, order that payment of the amount decreed shall be postponed or shall be made by instalments. No authority has been placed to show that under the provision of Order 20, Rule 11 (1), Civil Procedure Code, the Court is entitled to postpone the payment of the decree amount by one of the defendant’s till the decree is executed as against the other defendants who are jointly and severally liable. Moreover, no reasons were given by the Subordinate Judge as to why he inserted such a provision in the decree.
31. In Firm of Amratlal (supra), a Division Bench of the Gujarat High Court also considered the scope of Order XX, Rule 11 CPC. The question before the Division Bench of the Gujarat High Court was whether the largeness of amount of the decree is sufficient reason for granting instalments decree. While holding that Order XX, Rule 11 CPC is applicable to summary suits filed under Order 37 CPC, explained the ambit of Rule 11(1) thus:
32. Mere largeness of the amount cannot by itself be a valid consideration for granting time to the defendant to pay the decretal amount. If the defendant wants the Court to exercise its power under Order XX, Rule 11, sub-rule (1), the defendant must bring to the notice of the Court material on the basis of which the Court can be called upon to exercise its discretion. The material may already exist on the record of the case or the defendant may produce material before the lower Court in the shape of affidavit or otherwise to satisfy the Court that there is sufficient reason why payment of the decretal amount should be postponed or should be made by instalments. But in the absence of any such material, on a mere statement by the advocate appearing on behalf of the defendant, the Court cannot make an order that payment of the decretal amount shall be postponed or shall be made by instalments. Here there was absolutely no material before the learned Judge and the learned Judge was, therefore, in error in directing that the decree shall not be executable up to 10th May 1963. That part of the decree must, therefore, be set aside.
33. In Vijaya Bank (supra), while referring to the earlier Division Bench decision of in Jagdish Chandra (supra), the Calcutta High Court held that unless reasons are given by the trial Court, it would be for the appellate Court to ascertain whether grant of instalments has “sufficient reasons”. It was observed.
34. The Court has got the power to grant instalments when a personal decree or a decree for payment of money is passed. Such instalments can be granted even if apart from the prayer for a money decree, there is also a prayer for a declaration of charge in respect of certain movable properties with prayer for sale of the same. Order 20, Rule 11 applies in that case also. However, such order for instalment may be passed “for any sufficient reason” as laid down by Order 20, Rule 11 of C.P.C. Accordingly this is also a matter of discretion to be exercised judicially in the facts and circumstances of a particular case and not as a matter of course. There must be some “reason” and it must be “sufficient reason”. Further, unless reasons are given, whether it is for any “sufficient reason” cannot be ascertained. Accordingly the Court should give reasons for grant of instalments.
35. The principles that emerge in the cases referred to hereinabove are as follows.
i) Order XX, Rule 11 CPC is applicable to all money suits including summary suits filed under Order 37 CPC.
ii) If a debtor simply says that he would not be able to pay money if a certain number of instalments are not granted that itself is not sufficient reason to grant instalments to pay the decretal amount.
iii) There is no principle of law that the Court is entitled to postpone the decretal amount by one of the defendants till the decree is executed against other defendants who are jointly and severally liable under the decree.
iv) Mere largeness of the amount (when the decree amount is substantially high) cannot by itself by a valid consideration for granting time to the defendant to pay the decretal amount in instalments.
v) If the defendant without taking a plea in the written statement or stating so in the evidence on oath, merely making statement to the Court agreeing to pay the decretal amount in instalments that itself cannot be a ground for allowing the decretal amount to be paid in instalments.
vi) The statement of the defendant that he was involved in some other suit concerning his business is not sufficient ground for granting instalments.
vii) The trial Court while directing the postponement of the payment or payment in instalments as decreed must give ascertainable reasons and without any reasons, no instalment decree can be passed.
36. The first defendant is a private limited company who joined the plaintiff chit fund company as subscriber. When the agreement was between the prized subscriber, defendants 2 to 5 became guarantors who executed agreement of guarantee (Ex.A3) on 9-2-1994. Whatever be the reasons, in his evidence as D.W.1, the fifth defendant stated that the first defendant company stopped business and it is defunct. However, he undertook to pay the decretal amount in instalments. Indeed, even in the written statement filed by him, on behalf of defendants 1, 4 and 5 (defendants 2 and 3 remained ex parte), the first defendant prayed the trial Court to pass a decree to the extent of admitted claim and permit him to pay the same in equal monthly instalments spread over three years. When the first defendant principal debtor became defunct and it was not functioning which fact is not denied, I am of the considered opinion, it was sufficient reason for exercising the discretionary power under Rule 11 of Order XX CPC. The learned trial Judge, in paragraph 19 of the impugned judgment makes a reference to this aspect of the matter. Therefore, it cannot be said that the trial Court granted the decree without sufficient reasons. The point is accordingly answered in favour of the respondents-defendants and against the appellant-plaintiff.
In Re Point No.3
37. This point relates to the question whether the trial Court was justified in awarding interest at 6% per annum from the date of the suit till realisation. The learned counsel for the appellant placed reliance on Section 61 of the Act and submits that as per law regulating chit funds, the trial Court was bound to award simple interest at 12% per annum. Sri M.V. Durga Prasad, learned counsel for the respondents, however, disputes this and contends that under Section 34 CPC, the Civil Court has got power to award reasonable interest pendente lite at such rate not exceeding 6% and, therefore, the decree of the trial Court is justified. He placed reliance on the Constitution Bench judgment of the Supreme Court in Central Bank of India v. Ravindra12.
38. Section 61 of the Act reads: No Court shall award interest on claim arising under this Act, at more than twelve per cent per annum simple interest. First of all, Section 61 of the Act is attracted only when a claim is filed under the Act. A claim under the Act only means a claim either under Section 25(2) of the Act for payment of consolidated payment, or a claim arising under Chapter VII or Chapter IX of the Act. The suit filed in the Civil Court after the period of chit for recovery of the amount from the subscriber as well as guarantor is not a claim under the Act. It is a suit in common law by reason of jurisdiction vested in the Civil Court under Section 9 CPC. Be that as it may, Section 61 of the Act does not curtail the power of the Civil Court under Section 34 CPC. Section 61 of the Act, in substance, is not a provision dealing with the power of the Court to grant interest pendente lite as in the case of Section 34 CPC. Section 61 only fixes a ceiling on the interest rate that can be awarded by the Civil Court under the Act.
39. Section 34 CPC empowers the Civil Court to award interest pendente lite. A Civil Court can grant interest at the rate of 6% on any such claim during the pendency of the suit though it is bound to award contract rate of interest from the date of cause of action till the date of realisation of suit claim. In this connection, a reference may be made to the judgment of a Five-Judge Bench of this Court in APSRTC, Hyd. and another v. B.Vijaya13.
40. In Central Bank of India (supra), a Constitution Bench of the Supreme Court laid down as under.
41. Award of interest pendente lite and post decree is discretionary with the Court as it is essentially governed by Section 34 of the C.P.C. de hors the contract between the parties. In a given case if the Court finds that in the principal sum adjudged on the date of suit the component of interest is disproportionate with the component of the principal sum actually advanced the Court may exercise its discretion in awarding interest pendente lite and post-decree interest at lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner.
42. Therefore, no exception can be taken to the decree passed by the trial Court awarding interest at 6% per annum from the date of the suit till the date of realisation. The point is answered accordingly.
43. In the result, the appeal fails and is accordingly dismissed. There shall be no order as to costs.
