Punjab-Haryana High Court
Mehar Chand vs Tulsi Ram on 12 March, 1996
Equivalent citations: AIR1996P&H195, (1996)113PLR398, AIR 1996 PUNJAB AND HARYANA 195, 1996 (2) REVLR 55, 1996 REVLR 2 55, (1996) 113 PUN LR 398, (1996) 2 RRR 336, (1996) 1 BANKLJ 40, (1996) 2 LJR 466, (1996) 3 CIVLJ 320, (1997) 1 CURLJ(CCR) 612, (1996) 2 BANKCAS 464, (1996) 3 ICC 412
Author: Sarojnei Saksena
Bench: Sarojnei Saksena
ORDER
1. Brief resume of the facts is that the defendant-judgment-debtor took a loan of Rs.2,000/- from the plaintiff-decree-holder. Plaintiff-decree-holder obtaining an ex parte decree for an amount of Rs. 3400/-. It was also ordered in the decree that the plaintiff-decree-holder will be entitled to 6 per cent interest per annum' on the decretal amount from the date of filing of the suit till realisation.
2. Judgment-debtor deposited Rs, 4280/-on May 20, 1990, alleging to be payment in full and final satisfaction of the decree. This amount is withdrawn by the respondent-decree-holder Judgment-debtor-petitioner has calculated interest at the rate of 6 per cent per annum as ordered in the decree on the Principal amount of Rs. 2,000/- from the date of filing of the suit till payment. Petitioner's contention is that by the impugned order the executing Court erred in law in holding that the decree-holder is entitled to interest at the rate of 6 per cent per annum pendente lite on the adjudged interest as well, which, according to the petitioner, is against the statutory provisions of Section 34 of the Code of the Civil Procedure (in short, the Code) and also against the principles of natural justice.
3. Respondent decree holder's learned counsel contended that the executing Court cannot go behind the decree. In the decree interest at the rate of 6 per cent per annum is allowed to the decree-holder on the awarded amount of Rs. 3,400/-. Hence the judgment-debtor is not entitled to calculate interest only on the principal amount of Rs. 2,000/-. He further submitted that while executing the decree, the executing Court cannot go behind the decree and hold that interest has been wrongly awarded therein in view of the provisions of Section 34 of the Code. In support of this contention, he has relied on M/s. Foremost Industries India Ltd. v. Ram Swamp Khattar, 1992 ISJ (Banking) 399 and M/s. Sanjeev Construction Co. v. Punjab & Sind Bank, 1993 ISJ (Banking) 452.
4. Petitioner's learned counsel, relying on State of Punjab v. Krishan Dayal Sharma, AIR 1990 SC 2177; Devinder Kumar v. Syndicate Bank, 1994 (1) 106 Pun LR 1; Krishan Lal v. State Bank of Patiala, (1990) 97 Pun LR 132; Jagdish Chander v. Punjab National Bank, 1994 (1) 106 Pun LR 211 : (AIR 1994 Punj and Har 98) and Mhada-gonda Ramgonda Patil v. ShripaJ Balwant Raindade, AIR 1988 SC 1200, contended that if the decree is against the provisions of Section 34 of the Code, the executing Court is entitled to consider the point of legality of the decree and to execute only that part which is legal and in accordance with Section 34 of the Code.
5. In Krishan Dayal Sharma's case (AIR 1990 SC 2177) (supra) interest was not claimed in the suit and no direction was issued by the Court in that regard while granting the decree. The executing Court granted interest. The Apex Court held that the executing Court cannot grant interest, which was not awarded in the decree and the order was held illegal.
6. In Mhadagonda Ramgonda Patil's case (AIR 1988 SC 1200) (supra) the Apex Court has held that the equitable rule of Damdupat is applicable to the transaction of mortgage as well.
7. In M/s. Foremost Industries India Ltd.'s case (supra) a Division Bench of Delhi High Court has held that if in decree interest on interest, due up to the date of filing of the suit, is allowed, the decree is a nullity, but the executing Court cannot entertain such objection and cannot go behind the decree.
8. In M/s. Sanjeev Construction Co.'s case (1993 ISJ (Banking) 452) (supra) this Court has held that the executing Court is bound by the terms of the decree and it cannot add or alter the decree on its notion of fairness or justice. The right of the decree-holder to obtain the relief is determined in accordance with the terms of the decree. In that case also objection was raised under Section 34 of the Code on the count that granting of interest is not correct.
9. In Krishan Lal's case (1990 (97) Pun LR 132) (supra) a single Bench of this Court has held that when the loan was taken for purchasing a mechanised cart by an agriculturist, which cannot be considered to be a commercial transaction connected with industry, trade or business, while decreeing the suit the Court could not grant more than 6 per cent future interest. It is further observed that objection can be taken at the time of execution.
10. Respondent-decree-holder's learned counsel has also relied on Bank of Baroda v. M/s. Jagannath Pigment & Chem., (1996) 1 Pun LR 193, The facts of that case were that the Bank filed a suit for Rs. 1,66,759.20 and also claimed interest from the date of the suit till payment/realisation. In the first appeal, one of the contentions raised was that the bank was not entitled to claim compound interest and convert the principal sum claimed inclusive of interest and that the Court was not justified in granting future interest on the said principal sum adjudged. The High Court accepted the contention and modified the decree and held that future interest should be calculated on the sum borrowed vis-a-vis Rs. 1,20,675.59 and not on the principal sum adjudged, i.e., Rs. 1,66,759.20. The Apex Court held that this judgment of the High Court runs counter to the Apex Court decision in Corporation Bank v. D. S. Govda, 1994 ISJ (Banking) 594: (1994 AIR SCW 2721) and on that count the decision of the High Court was reversed. In D. S. Govda's case (supra) the Apex Court considered various circulars issued by the Reserve Bank of India and Bank Regulation Act, 1949, and held that on commercial loans the bank is entitled to claim compound interest. Bank may charge interest with quarterly or longer rests. In that case the trial Court passed a preliminary decree granting future interest under Section 34 of the Code at 16.5 per cent on the sum decreed, i.e., Rs. 7-,56,934.17. This order of the trial Court was confirmed by the Apex Court. Both these judgments of the Apex Court are with regard to the claims filed by the banks against their borrowers, wherein loan was taken for commercial transaction, which stands on a different footing altogether.
11. In Jagdish Chander's case (AIR 1994 Punj & Har 98) (supra) a Division Bench of this Court has held that the executing Court can examine if the decree was passed by the Court in conformity with the first proviso to Section 34 of the Code. It is also observed that the Court has to come to a finding that the loan was advanced for which purpose, whether for commercial transaction or for any other purpose. In that case loan was advanced to an agriculturist for purchase of mechanising cart. The Court held that it cannot be said that the loan was connected with commercial transaction and thus it was held that future interest could be awarded only under the provisions of Section 34 of the Code. The case was remitted to the trial Court to decide the objections accordingly.
12. In Devinder Kumar's case (1994 (I) 106 Pun LR 1) (supra) a Division Bench of this Court has held :
"... that the expression principal sum adjudged in Section 34 of the Code means the original amount lent, without addition thereto of any interest whatsoever. This will be the position notwithstanding any agreement between the parties or any prevailing banking or trade practice to the contrary.
Interest pendente lite is payable on the principal sum adjudged, but no interest is payable on the amount of interest adjudged on such principal sum."
It is further held that under O.34, R. 2, sub-rule (1), clauses (a) and (b) -- "principal" and "interest" have to be ascertained separately and declared to be due as such. It does not contemplate merger of interest in the principal and determination of the aggregate amount due on account of both of them,
13. In this case, admittedly loan of Rs. 2,000/- was advanced by the decree-holder to the judgment-debtor. Interest is awarded at the rate of 6 per cent per annum in the ex parte decree dated May 26, 1983. The execution petition was filed in September 1983. On May 20, 1990, petitioner judgment-. debtor deposited Rs.4,280/- calculating interest on the principal sum of Rs. 2,000/-. According to him, thus nothing remains to be recovered from him. Decree-holder respondent's contention is that Rs. 1,600/- are still due.
14. In Jagdish Chander's case (AIR 1994 Punj & Har 98) (supra) a Division Bench of this Court, relying en Krishan Lal's and Devinder Kumar's cases (supra) has held that executing Court can examine if the decree was passed by the Court in conformity with the first proviso to Section 34 of the Code.
15. Decree-holder-respondent's learned counsel has not disputed that if interest at the rate of 6 per cent per annum is calculated on the principal amount of Rs. 2,000/ - from date of filing of the suit till date of payment, it comes to Rs.4,280/- only inclusive of principal sum adjudged and the interest awarded. Hence the revision is allowed, the impugned order is set aside. The executing Court should have examined that legal aspect and should have decided, whether interest paid by the judgment-debtor petitioner is in accordance with the provisions of Section 34 of the Code. In view of the above facts and circumstances of the case, the execution is disposed of in full and final satisfaction of the decree. No costs.
16. Order accordingly.