Gujarat High Court
Casil Health Products Ltd vs Delta Rubber & Plastic Products on 24 July, 2000
Author: H.K.Rathod
Bench: D.C.Srivastava, H.K.Rathod
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL No 5589 of 1998
--------------------------------------------------------------
CASIL HEALTH PRODUCTS LTD.
Versus
DELTA RUBBER & PLASTIC PRODUCTS
-------------------------------------------------------------- Appearance:
MR ARUN H MEHTA for Petitioner MR RAMESH K SHAH for Respondent No. 1
--------------------------------------------------------------
CORAM : MR.JUSTICE D.C.SRIVASTAVA and MR.JUSTICE H.K.RATHOD Date of Order: 24/07/2000 CAV ORDER [Per D.C. Srivastava,J.] We have heard Shri Arun H. Mehta, learned counsel for the appellant and Shri M.J.Thakore, learned counsel for the respondent on admission of this appeal.
At the admission stage, we need not enter in detail the facts of the case out of which the present appeal has arisen. Briefly stated the facts are that the dispute having arisen between the parties, a complaint was filed before the State Consumer Dispute Redressal Commission. Ultimately, the Commission rejected the complaint observing that it had no jurisdiction in the matter. Thereafter, two summary civil suits no. 2564 of 1991 by the appellant and 6048 of 1991 by the respondent were filed. During the pendency of the suits, the Court made reference to the arbitrator. The arbitrator was appointed on 8.9.1993. The award was rendered by the arbitrator on 28th August, 1996 in which decree was passed against the appellant to pay to the respondent a sum of Rs. 7,21,000/- together with interest at the rate of 20 % per annum from 1st January, 1990 till the date of realization.
The appellant filed objections against this award and prayed for setting aside the award on various grounds namely that the arbitrator had misconducted with the proceedings in arriving at decision by ignoring material documents and secondly that the award is perverse and thirdly that the arbitrator had no jurisdiction to award 20% interest per annum and lastly that the Court below while modifying the award had also no jurisdiction to award pendente lite interest at the rate of 12% per annum provided the amount is paid within sixty days else interest will be charged at the rate of 15% per annum.
The Court below partly modified the award and decreed the civil suit no. 2564 of 1991 to the extent of Rs.50,000/- and the civil suit no. 6048 of 1991 was decreed to the extent of Rs.7,71,000/-.
In this appeal, it is this order of the court below which is challenged so also the award. The Court below has directed the appellant to pay a sum of Rs. 7,71,000/- to the respondent with 12% per annum interest from 1st January, 1990 till the date of payment within sixty days from the date of the order namely 23rd July, 1998 failing which the appellant shall pay interest at the rate of 15% per annum.
In addition to the points advanced by the learned counsel Mr. Mehta, the point of interest requires adjudication. Presuming that section 34 of the Code of Civil Procedure applies, it is yet to be examined whether the arbitrator got jurisdiction to award 20% interest per annum while acting under section 34 of the Code of Civil Procedure. It is yet to be examined whether the court below acting under section 34 of the Code of Civil Procedure could have granted interest pendente lite at the rate of 12% per annum provided the entire amount is paid within sixty days of the order else at the rate of 15% per annum.
Section 34 (1) of the Code of Civil Procedure provides 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 nationalized banks in relation to commercial transactions.
Obviously, the transaction under consideration can be said to be the commercial transaction. As such, 6% per annum interest provided under section 34 (1) of the Code of Civil Procedure will not apply and taking aid from the proviso to section 34(1) of the Code of Civil Procedure, interest exceeding 6% per annum could be granted by the court below so also by the arbitrator. Shri Mehta, however, contended that since there is no contractual rate of interest, the interest could not exceed 12% per annum. However, in view of the above proviso, if there is no contractual rate of interest, interest has to be awarded at the rate at which moneys are lent or advanced by the nationalized banks in relation to the commercial transactions. Shri Mehta has placed reliance upon the pronouncement of the Bombay High Court in State of Maharashtra versus Saifuddin Mujjaffarali Saifi AIR 1994 Bombay 48 where some observation has been made in paragraph 46 that if the plaintiff can establish that this is the commercial transaction, then, he can certainly agitate that question and can certainly say that he is entitled to interest at the rate of 18% per annum which is the normal lending rate by the banks. This casual observation of the Bombay High Court has to be examined in light of the proviso to section 34(1) of the Code of Civil Procedure which prescribes rate at which the moneys are lent or advanced by the nationalized banks in relation to commercial transaction.
It has yet to be examined what was the rate at which moneys were lent and advanced by the nationalized banks on the date when the order under appeal was passed by the Court below.
The appeal is, therefore, admitted.
24.7.2000. (D.C.Srivastava,J.) (H.K.Rathod,J.) Vyas