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E.S. VENKATARAMIAH AND K.N. SINGH, JJ.
Civil Appeal No. 1446 of 1987, D/- 21-7-1987.
Everest Industrial Corporation and others, Appellants
Versus
Gujarat State Financial Corpn. Respondent.
State Financial Corporations Act, 1951 - Section 32, 32 (6), 31, 31(l) - Code of Civil Procedure, 1908 - Section 34 - Order 34, Rule 11, Rule 6 - Bombay Court-fees Act, 1959 - Court-Fees – Failed To Pay Amount - Opponent No. 1 to pay amount of Rs. 15,000/- fifteen thousand per month through Bank of Maharashtra to applicant towards his claim - If two instalments of Rs. 15,000/- each at a time are not paid by Opponent No. 1, then applicant shall be entitled to recover remaining amount then due, at a time - Decree to be drawn on payment of Court-fees by applicant 2/3 of Court-fee amount be refunded to applicant advocate - Costs to be borne by opponent No. 1 - Costs to be assessed after deducting amount of court-fees refundable to applicant - Because 1st Appellant failed to pay amount as ordered by Court an application was filed - Whether Sec. 34 of Code would be applicable to a proceeding - Whether court-fee was payable on an application made under Sec. 31 of Act on an ad valorem basis as if proceeding was a suit or not – Held, It was assumed on all hands that Sec. 34 of Code was applicable - Ultimately, High Court increased rate of interest to 11 per cent per annum which was contractual rate of interest treating that as a reasonable rate of interest that could be awarded under Sec. 34 of Code - Proceeding instituted under Sec. 31(l) of Act is something akin to an application for attachment of property in execution of a decree at a stage posterior to passing of decree no question of passing any order under Sec. 34 of Code would arise since Sec. 34 of Code would be applicable only at stage of passing of decree and not to any stage posterior to decree - It may also be mentioned here that even under Code the question of interest payable in mortgage suits filed in civil courts is governed by O. 34, R. 11 of Code and not by S. 34 of Code which may be applicable only to cases of personal decrees passed under O. 34, R. 6 of Code - It was lastly urged on behalf of appellants that amount due and payable to Corporation has not been properly calculated by Joint Judge - Court do not have all material before to enable us to determine actual amount due - It is also seen that subsequent to date of order passed by Joint Judge a sufficiently long time has elapsed - In circumstances court feel that Joint Judge before whom proceeding for recovery of amount by sale of properties has been instituted should be directed to redetermine amount due and payable to Corporation in this case – Court accordingly affirm judgment of High Court holding that S. 34 of Code of Civil Procedure, 1908 is not applicable to this case but remand matter to Joint Judge to redetermine actual amount due and payable to Corporation in these proceedings calculating same as per contract between parties before directing sale of properties – Court direct Joint Judge to determine amount payable by appellants within one month from date of receipt of a copy of order of this Court - Both parties are directed to file their statements of accounts before Joint Judge within one week from date of receipt of copy of this order by Joint Judge to enable him to decide case – Appeal Disposed Of.
Judgement
VENKATARAMIAH, J. :- The short question which arises for consideration in this case is whether the rate of interest chargeable on the amount payable under an order passed under S. 32 of the State Financial Corporations Act, 1951 (63 of 1951) (hereinafter referred to as the Act) from the date of the said order is governed by Sec. 34 of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code) or whether it is payable at the contractual rate.
2. The Appellant No. 1 M/s. Everest Industrial Corporation Private Limited, Baroda and its Directors had borrowed from the Gujarat State Financial Corporation (hereinafter referred to as the Corporation) a sum of Rs. 6 lakhs for the acquisition of fixed assets, namely, land, bearing original Survey No. 163 and now bearing Survey No. 949 of Baroda Measuring 1 acre and 3 gunthas and the factory building to be constructed thereupon and for purchasing plant and additional machinery under a deed of hypothecation dated April 24, 1970 hypothecating all machinery and equipment situated at the factory premises situated on Survey No. 949. They also created an equitable mortgage mortgaging the said land and factory building by depositing the original title deeds of the properties with the Corporation by signing the letter evidencing the said deposit of title deeds. Under the said transaction the loan of Rs. 6 lakhs had to be repaid within a period of 8 years by half yearly instalments, such first half yearly instalment of 1/13th of the loan being payable at the end of 24 months of the disbursement of the first instalment of the loan and subsequent half yearly instalments of 1/13th of the loan to be paid each half year and the last half yearly instalment of 1/13th of the loan to be paid on 24-4-1978. According to the said agreement the first instalment of Rs. 46,153/- was to be paid on 27-4-1972 and second instalment of Rs. 46,153/- was to be paid on 27-10-1972. The appellants were liable to pay interest at 8.5 per cent per annum and that was to be calculated and charged at the end of every half year and was payable on the 31st of March and 30th September in each year. The appellants committed default in payment of instalments And interest due to the Corporation. Hence the Corporation filed an application on 9th August, 1973 under S. 31 of the Act before the District Judge, Baroda in Civil Miscellaneous Application No. 123 of 1973 claiming that in view of the default, the entire outstanding loan, interest and commitment charges amounting to Rs. 6,73,390.42 paise had become due and payable. In the said proceedings the appellants having admitted the claim of the Corporation a compromise was arrived at under Which the 1st Appellant - M/s. Everest Industrial Corporation undertook to pay a sum of Rs. 15,000/- every month towards the claim of the Corporation and further agreed that if there was a default in payment of any two instalements at a time, then the Corporation could recover the entire outstanding amount then due forthwith. On the basis of the above compromise an order was passed on 29-4-1977 by the learned Joint Judge, Baroda before whom the case was pending at that time. The operative portion of the order read as follows :
"ORDER
Claim of the applicant is decreed. Opponent No. 1 to pay the amount of Rs. 15,000/- fifteen thousand per month through the Bank of Maharashtra to the applicant towards his claim. If two instalments of Rs. 15,000/- each at a time are not paid by Opponent No. 1, then the applicant shall be entitled to recover the remaining amount then due, at a time. Decree to be drawn on payment of Court-fees by the applicant. 2/3 of the Court-fee amount be refunded to the applicant advocate. Costs to be borne by opponent No. 1. Costs to be assessed after deducting the amount of court-fees refundable to the applicant."
3. Because the 1st Appellant failed to pay the amount as ordered by the Court an application was filed by the Corporation under S. 32(8) of t
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