IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 51 of 1994()
1. THE NEDUNGADI BANK LTD
... Petitioner
Vs
1. M.M.HANEEFA
... Respondent
For Petitioner :SRI.K.P.BALASUBRAMANYAN,SALLY THOMAS
For Respondent :P.G.P.PANICKER.
The Hon'ble MR. Justice P.R.RAMAN
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR
Dated :25/06/2008
O R D E R
P.R.Raman &
T.R. Ramachandran Nair, JJ.
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A.S.No.51 of 1994
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Dated this the 25th day of June, 2008.
JUDGMENT
Raman, J.
This appeal arises out of the final judgment and decree passed by the
Principal Sub Court, Kollam in O.S.No.211/1988. The suit was one for sale
of the mortgaged property for the realisation of the mortgage amount. A
preliminary decree was passed on 21.11.1990 in favour of the
plaintiff/appellant directing the defendants to pay a sum of Rs.1,37,567.80
with interest thereon at the rate of 16.5% per annum from the date of the suit
till realisation plus the plaintiff’s costs of the suit within two months from
the date of the preliminary decree and allowed the plaintiff to recover the
same by sale of the plaint schedule property and balance, if any, from the
defendants personally in the event of failure of the defendants to pay the
amount as directed. True, a composite decree could have been passed,
however only a prelimianry decree was passed. This necessitated passing of
a final decree in terms of the preliminary decree and hence the plaintiff
applied, as per I.A.No.1714/1991, to pass a final decree.
2. The court below, while passing the final decree, even reopened the
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preliminary decree passed in the matter of interest awarded. After referring
to the decision in Divisional Manager, L.I.C. of India v. Bhagavathi
Amma (1991 (2) KLT 522), the court below took the view that the
maximum rate of interest that is awardable is only 6% and therefore
according to the court below, a mistake crept in while passing the
preliminary decree which was corrected while passing the final decree and
by the judgment under appeal a final decree was passed directing the
defendants to pay a sum of Rs.1,37,567.80 with interest at 6% per annum
from the date of suit till realisation plus cost, etc. Aggrieved thereby, this
appeal is preferred.
3. We have heard both sides.
4. Order XXXIV of the C.P.C. was substituted by the Kerala
Amendment with effect from 20.11.1990 which does not contain a provision
similar to Rule 11(b). Hence, the only provision regarding the interest to be
awarded is governed by Section 34 C.P.C. Though a learned Single Judge
of this court in 1991 (2) KLT 522 (supra) held that the maximum rate of
interest that is awardable by virtue of the main provision contained in
Section 34 is only 6%, we find that the proviso to Section 34 was not
obviously brought to the notice of the court at that time. In the subsequent
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Division Bench decisions of this court in Rosy George v. S.B.I. (19993 (1)
KLT 151) and also in Veluswamy Goundar v. S.B.I. ( ILR 2001 (3) Ker.
227) it has been held that by virtue of the proviso to Section 34, the rate of
interest that is awardable in a commercial transaction could be more than
6%, upto the contract rate of interest. In other words, the bar under the main
provision limiting the rate of interest to 6% is not applicable to a
commercial transaction in the light of the proviso to Section 34. Therefore,
the judgment and decree passed by the court below limiting the interest to
6% without exercising any discretion, is liable to be set aside and we do so.
5. There is no dispute that the transaction in question is a commercial
transaction and the agreed rate of interest, according to the plaintiff is
16.5% and according to the defendant is only 15%. This dispute has not
been adverted to. Though in the preliminary decree the court below has
awarded interest at the rate of 16.5%, in the absence of any appeal
therefrom, the plaintiff is right in contending that the court below ought not
have interfered with the rate of interest already awarded as per the
preliminary decree. However, we consider that even though it may be
permissible to award interest at the agreed rate in a commercial transaction,
it is not an invariable rule of law. The proviso confers a discretion on the
court to award interest upto the agreed rate in the case of a commercial
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transaction. So, the court should consider in each case whether the interest
should be awarded between 6% to the agreed rate and if so, what is the
interest to be awarded in a particular case. Having considered the entire
matter, we find that the interest that could be awarded is at the rate of 12%
in the present case.
6. Accordingly, we modify the decree passed by the court below and
pass a final decree awarding interest at 12% per annum. In all other
respects, the decree is confirmed.
The appeal is allowed as above.
( P.R.Raman, Judge.)
(T.R. Ramachandran Nair, Judge.)
kav/
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P.R.Raman &
T.R. Ramachandran Nair, JJ.
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A.S.No.51 of 1994
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JUDGMENT
25th June, 2008.