Punjab-Haryana High Court
Sukhchain Singh vs Punjab And Sind Bank on 19 March, 1990
Equivalent citations: [1990]68COMPCAS491(P&H), (1990)97PLR702
JUDGMENT A.L. Bahri, J.
1. Notice of motion having been issued, this revision is being disposed at that stage. The short question involved in this appeal is about the rate of interest to be allowed to the plaintiff-bank under Section 34 of the Code of Civil Procedure in respect of the loan taken for agricultural purposes in execution of the decree.
2. The Punjab and Sind Bank filed a suit for recovery of Rs. 41,461.52, which was decreed on July 29, 1980, with 14% per annum interest from the date of institution of the suit till realisation. A sum of Rs. 20,000 was advanced as loan against execution of a pronote and a receipt. The agreed rate of interest was 14% per annum as stated above. It was in execution of the decree that objections were filed. The same were dismissed on September 26, 1989, and the judgment-debtor has come up in revision.
3. It has been argued by counsel for the petitioner that since the loan was advanced for agricultural purposes, in view of Section 34 of the Code of Civil Procedure, only 6% per annum interest could be allowed on the principal amount from the date of the institution of the suit. In support of this contention, reliance has been placed on the decision of this court in Kishan Lal v. State Bank of Patiala [ 1990] 1 PLR 132.
4. It was held in that case that objection even at the stage of execution could be taken regarding the rate of interest allowable on a loan advanced for agricultural purposes after institution of the suit. Reliance was placed on an earlier decision of this court in Siri Chand v. Central Bank of India [1988] 1 PLR 473. Learned counsel for the bank has referred to the provisions of Section 79 of the Negotiable Instruments Act and has argued that the agreed rate of interest could be allowed by the court after institution of the suit up to the date to be fixed. In support of his contention, he has placed reliance on the decision of the Karnataka High Court in Bank of India v. Karnam Ranga Rao [1988] 64 Comp Cas 477 ; AIR 1986 Kar 242. On going through the judgment, I find that the ratio of this decision is not applicable to the case in hand. It was held that the bank could not charge compound interest with monthly, quarterly or half-yearly rests on overdue agricultural loans. The matter was considered by the Division Bench of this court in Ram Singh Narain Singh v. F. Dewan Chand Nand Kishore, AIR 1960 Punj 287. It was held that if the rate of interest fixed was not exorbitant, the same could be allowed from the date of the instrument to the date to be fixed by the court and after the said date, the payment of interest would be regulated by Section 34 of the Code of Civil Procedure. The matter again came up for consideration before a Division Bench of this court in Piara Lal Khanna v. S. Herchand Singh Jaiji, AIR 1961 Punj 442. After referring to the provisions of Section 79 of the Negotiable Instruments Act, it was held that after the date of the suit, the grant Of interest was discretionary with the court.
5. Section 34 of the Code of Civil Procedure reads as under :
"34. Interest. -- (1) Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent. per annum as the court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court thinks fit:
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 or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
Explanation I. -- In this sub-section, 'nationalised bank' means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).
Explanation II. -- For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability."
6. In the present case, the loan was taken for the purposes of agriculture. Such a loan cannot be considered as a commercial loan taken in connec-
tion with some industry, trade or business. In view of Section 13 of the Code of Civil Procedure, more than six per cent. interest was not to be allowed after institution of the suit. In the decree, interest at the agreed rate was allowed till realisation. The court did not fix any date up to which the same was payable as required under Section 79 of the Negotiable Instruments Act. Thus, in a case where the court, while passing a decree, did not fix any date by which interest was payable at the agreed rate, and the court also did not resort to the provisions of Section 34 of the Code of Civil Procedure, in execution, the court could exercise such discretion under Section 34 of the Code to allow interest on the principal amount up to six per cent. from the date of institution of the suit till the date of realisation. It was so held in the case of Kishan Lal [1990] 1 PLR 132 and Siri Chand [1988] 1 PLR 473 referred to above. To that extent, the objections of the judgment-debtor filed in execution of the decree were to prevail.
7. For the reasons recorded above, this revision petition is allowed without any order as to costs. The impugned order is set aside. It is directed that the decree would bear interest at the rate of six per cent. per annum on the principal amount from the date of institution of the suit till realisation.