Gauhati High Court
The United Commercial Bank, Silchar vs Satish Chandra Ghosh And Anr. on 1 March, 1989
Equivalent citations: AIR 1991 GAUHATI 59, (1991) 2 BANKLJ 333
JUDGMENT B.P. Saraf, J.
1. This appeal by the appellant-Bank is directed against judgment and decree dated 24-3-1981 passed by the learned Assistant District Judge, Silchar in Title Suit No. 48 of 1980.
2. A suit was filed by the appellant as plaintiff against the respondent No. 1 who was a borrower, and another who was a guarantor for recovery of a sum of Rs. 41,394.29 with interest pendente lite, future interest and costs. The appellant had advanced a sum of Rs. 75,000/- by way of loan to the respondent on hypothecation of a truck of which the aforesaid amount was outstanding being a part of a principal amount with interest up to the date of filing of the suit. An ex parte order of attachment before judgment of the hypothecated truck was also obtained by the appellant. The defendant No. 1 who was the borrower, admitted the claim and filed a petition before the Court to decree the suit on admission without pendente lite interest and cost and to accept it as decretal amount from the defendant on the same date and release the attached vehicle. The learned Assistant District Judge by order dated 24-3-1981 decreed the suit oh admission against the defendant No. 1 for Rs. 41,394.29 only without costs and interest and dismissed the suit against the defendant No. 2 who was the guarantor. The defendant No. 1 was directed to pay the decretal amount to the plaintiff-Bank within 7 days. In view of the aforesaid decree, order of attachment relating to the vehicle hypothecated with the Bank was withdrawn and the same was released in favour of the defendant No. 1.
3. The present appeal is directed against the order of the learned Assistant District Judge in so far as it relates to costs and interest. The appeal was originally also directed against that part of the order by which the suit was dismissed against the defendant/respondent No. 2, the guarantor. However, in course of hearing, Mr. B. R. Dey, learned counsel for the appellant submitted that the respondent No. 2, the guarantor, having died during the pendency of the appeal, the appellant was not interested in proceeding against him or his legal representatives.
4. Mr. Dey has two grievances. Firstly according to him, the learned Assistant District Judge was not justified in not awarding interest from the date of filing of the suit till payment of the decretal amount, that is, from 8-5-80 to 24-3-81. Secondly, the Court below acted most arbitrarily and illegally in not awarding the costs of the suit to the appellant without giving any reason for doing so.
5. I have considered both the aforesaid submissions. So far as question of interest is concerned, it appears that the trial Court did not apply its mind to the question of awarding interest in view of the fact that the defendant admitted the claim and agreed to pay the full amount thereof. This approach of the Court below does not appear to be correct. Section 34 of the Civil Procedure Code empowers the Court to award interest on the principal sum for the period inter alia from the date of the suit to the date of decree. Though the power is discretionary, it has to be exercised judicially considering the facts and circumstances of each case. In the instant case, the Court did not apply its mind at all to the question of awarding interest as provided under Section 34 of the Civil Procedure Code. This amounts to failure to exercise judicial discretion. On the facts of the case, I do not find any justification for not awarding pendente lite interest to the plaintiff. The plaintiff is a Bank which advanced loan to the defendant No. 1 for purchasing a truck. The minimum rate of interest was fixed at 13 1/2%. On failure of the defendant to pay the amount in terms of the agreement of loan, suit was filed and the hypothecated property namely the truck was attached by order of the Court. Under such circumstances, the defendant in order to get release the attached vehicle, admitted his liability and offered to pay the full amount. The defendant No. 1 was also liable to pay interest on the outstanding amount in terms of the agreement with the Bank at the rate of 13 1/2% till payment thereof. There cannot be any justification for relieving him from liability to pay interest on the outstanding amount from the date of filing of the suit till the date of payment which he was bound to pay even in terms of the agreement. This amounts to giving premium to the defaulter. Courts should apply their minds judiciously and order payment of interest unless there is justification for not doing so. Refusal to order interest affects seriously the right of a claimant. The Courts should therefore exercise their discretion to grant interest carefully and reasonably. Arbitrary refusal to order payment of interest without application of mind is neither contemplated by law nor justified.
6. The Court below, therefore, ought to have allowed interest to the plaintiff-Bank at the rate of 13 1/2% from the date of filing of the suit till the date of payment, that is, from 8-5-80 to 24-3-81. I, therefore, hold that the appellant is entitled to get interest at the rate of 13 1/2% from the date of filing of the suit till the date of payment.
7. Coming to the next question relating to the award of costs, again it is found that the Court below simply decreed the suit without costs without recording any reasons whatsoever for not awarding the same. Section 35 of the Civil Procedure Code deals with the power of the Court to award costs. Under the said section, the award of the cost is within the discretion of the Court. But the discretion must be exercised judicially on the basis of the well established legal principles. The Court cannot just refuse to award costs on its whim. The normal rule is that costs shall follow the event. Where a departure is to be made from the said rule, there must be good reasons. Sub-section (2) of Section 35 of the Civil Procedure Code specifically provides that where the Court directs that any costs shall not follow the event, it should state its reason in writing. From a conjoint reading of Sub-sections (1) and (2) of Section 35, it is clear that discretion of the Court in the matter of awarding of costs is very limited. In the normal course, as observed in T.S. Swaminatha v. Official Receiver reported in AIR 1957 SC 577, the liability to pay the costs normally follow the event. There must be reasons to deviate from this normal rule. In the instant case, the Court has not given any reason whatsoever for absolving the defendant respondents from liability to pay the costs.
8-9. In view of what is stated above, I am of the opinion that the learned Assistant District Judge was not justified in law in not awarding the costs in the present case. I therefore, hold that the appellant/plaintiff is entitled to costs of the suit.
10. In the result, both the contentions of the appellant are accepted. The appellant would be entitled to interest pendente lite and cost of the suit. The decree passed by the learned Assistant District Judge shall stand modified to the extent stated above.
11. Accordingly, the appeal is allowed.