2003 Supreme(SC) 1105

2003(8) Supreme 208
Supreme Court of India
(From Madras High Court)
V.N. Khare, CJI., S.B. Sinha and Arun Kumar, JJ.
Sri Ramnik Vallabhdas Madhvani & Ors. —Appellants
versus
Taraben Pravinlal Madhvani —Respondent
Civil Appeal Nos. 6429-31 of 1995
With
C.A. Nos. 6432-6434/95 and 6484-6486 of 1995
All Decided on 5-11-2003
Counsel for the Parties :
For the Appearing Parties : Bhimrao Naik, K. Ramamoorthy, Vinod A Bobde, Sr. Advocates, V. Balachandran, V. Ramasubramanian, Ms. V. Mohana, Senthil Jagadeesan, S.R. Setia, Bhargava V. Desai, Sanjeev Kr. Singh, Advocates.

Important Point
An amendment of plaint relates back to the date of institution of the suit, therefore, by way of amendment of the plaint, the plaintiff cannot take advantage of the amended provisions of the Code of Civil Procedure so as to claim interest at a higher rate which in law she was not entitled to.

Headnote:(i) Civil Procedure Code, 1908—Section 2(12), Order 20 Rule 12 and Section 151—Mesne profits—Procedure for determination of quantum of—Family owned a tea estate—A partnership firm was constituted to manage the tea estate—One partner ‘P’ died—Respondent 1, widow of ‘P’ claiming to be sole executor of estate of her husband filed suit claiming decree for accounts for mesne profits—High Court appointed a Commission—High Court arrived at a finding regarding quantum of mesne profits after looking into accounts, report of commission and other relevant facts and material—No reason to differ with view of High Court—Mistake committed by High Court in calculation of interest on mesne profits—Interest had to be worked out on amounts falling due towards mesne profits on yearly bases.

       As per Arun Kumar, J. (for himself and also on behalf of V.N. Khare, CJI):

       Held : Interest is leviable on the amount of mesne profits. The High Court has in its impugned judgment awarded interest w.e.f. 5th May, 1970 till 5th August, 1986 on periodical basis at varying rate of interest. Periods have been fixed based on change in bank rate of interest. The rate of interest varies between 10 p.a. to 19 p.a.. The award of interest by the High Court is based on its earlier order dated 16th December, 1985 regarding levy of interest as per prevailing bank rate of interest on commercial transactions from time to time. This part of the judgment of the High Court in our view, is not correct. The rate at which interest is to be awarded is being separately considered under Point No. 2. That decision will govern the award of interest on mesne profits. A mistake has been committed by the High Court in calculation of interest on mesne profits. Interest has to be calculated on yearly basis because the amount of mesne profits on which interest is to be awarded has to be arrived at on year to year basis. Mesne profits for the first year would be from 5th May, 1969 to 4th May, 1970, for the second year it will be from 5th May, 1970 to 4th May, 1971 and so on. It keeps adding on from year to year. The total amount of mesne profits found due by the High Court on the basis of Commissioner’s report comes to Rs. 38,41,920/-. This amount is the total of mesne profits calculated on yearly basis. Interest cannot be allowed on the whole amount from the beginning. Interest had to be worked out on amounts falling due towards mesne profits on yearly basis i.e. on the amount of mesne profits which could be taken to be due to the plaintiff at the end of each successive year. (Paras 7 and 8)

       As per S.B. Sinha, J. (Concurring Opinion):

       Held : Mesne profit has been defined in Section 2(12) of the Code of Civil Procedure to mean as profits which the person in wrongful possession of property actually received or might with ordinary diligence would have received therefrom, together with interest on such profits. A decree for mesne profit was granted in favour of the plaintiff respondent for wrongful use of the property. The quantum of mesne profit can be arrived at by the High Court keeping in view the well-known principles of valuation for determining the same. The Court is not enjoined with any duty to accept the quantification determined only on the basis of books of account maintained by the defendants, particularly when the same had not been proved. The High Court in our opinion has rightly considered the matter from different angles. Even if any of the methods adverted to the High Court and referred to hereinbefore is adopted, the plaintiff would have been entitled to much more amount than claimed by her. We are, therefore, of the opinion that the findings of the High Court being just and proper need not be interfered with. So far as the question of rate of interest is concerned, it may be noticed that the High Court itself found that the rate of interest should have been determined at 6 . The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res-judicata is a procedural provision. The same has no application where there is inherent lack of jurisdiction. (Paras 52 to 54)

       (ii) Civil Procedure Code, 1908—Section 34—Interest rate—Suit for decree for accounts of partnership firm along with interest—High Court awarded interest on amount of mesne profits as per rate of interest charged by nationalised banks during relevant years from time to time on commercial loans in view of amended Section 34 of the Code—Appeal against—Suit was instituted prior to amendment of the Code—Decree passed was for much more than the amendment allowed—Impugned award of interest held wholly unwarranted.

       Held : The decision of the High Court in allowing interest on mesne profits at rate of interest charged by nationalised banks from time to time on commercial transactions is wholly illegal and unsustainable. As noted earlier even the High Court while passing the final decree felt that in its earlier order dated 16th December, 1985, it should not have proceeded on the basis of amended Section 34 of the Code of Civil Procedure while awarding interest at the rate charged by nationalized bank on commercial transactions from time to time. The impugned award of interest is thus wholly unwarranted all illegal and has to be set aside. Coming to the legal aspect of the amendment of plaint allowed in the present case by the High Court, it is to be noted that Section 34 of the Code of Civil Procedure deals with the question of award of interest. Section 34 C.P.C. as it stood before amendment in February 1977 deals with the question of interest in three stages. First is, interest prior to the date of institution of suit, second stage is interest from the date of institution of suit till date of decree and the third stage is from the date of decree till realisation of the decretal amount. About the first stage, Section 34 does not say anything while about the second stage it says that the interest to be awarded should be as considered reasonable by the Court. About the third stage i.e. from the date of decree till realisation, the power of the Court to award interest is circumscribed i.e. it cannot be more than 6 per annum. An amendment of plaint relates back to the date of institution of the suit. Section 97(2)(e) of the Civil Procedure Code (Amendment) Act, 1976 provides that in suits instituted before enforcement of the amended provision, interest has to be awarded as per the unamended Section 34 C.P.C. In the present suit which was instituted much before amendment of Section 34 of the Civil Procedure Code, therefore, interest had to be allowed as per the unamended Section 34 C.P.C. which means that from the date of decree till realisation interest could not be more awarded than 6 per annum. For the period prior to passing of the decree it is left to the Court to consider what would be the reasonable rate of interest. While considering a reasonable rate of interest to be awarded for the pre decree period we have to note that in the present case mesne profits are being awarded on account of retention of share of a co-owner in a property by the other co-owners. This cannot be said to be a commercial transaction. Moreover plaintiff herself claimed interest in the plaint originally instituted at the rate of 6 per annum. By way of amendment of the plaint she wanted to take advantage of the amended provisions in the Code of Civil Procedure so as to claim interest at a higher rate which in law she was not entitled to. Therefore, we consider award of interest at the rate of 6 per annum on the amount found due on account of mesne profits to be calculated on an yearly basis as indicated earlier would be fair and reasonable in the facts and circumstances of the case. (Paras 13 to 16)

       (iii) Civil Procedure Code, 1908—Order VI Rule 17—Amendment of pleadings—Procedure—Parties have to be given a chance to contest questions in controversy—A new plea cannot be allowed to be raised without giving reasonable opportunity to opposite party to file further pleadings and adduce evidence. (Para 13)

       (iv) Constitution of India—Article 136—Scope of powers of Supreme Court—Disposal of SLP against a judgment of High Court does not mean that the said judgment is affirmed by such dismissal—Order on SLP is never res judicata. (Para 19)