The main legal point established in the judgment is the need for a consistent interpretation of the proviso to Section 34(1) CPC in awarding interest in commercial transactions.

ORDER

1. One of the contentions which arises for consideration is whether thecontractual rate of interest should have been awarded in the instant case. Mr K.N. Raval contends that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 has an overriding effect and according to Section 19(20) discretion is given to the Tribunal to award interest and the Tribunal is in no way bound to comply with or apply the provisions of Section 34 of the Code of Civil Procedure. He further states, in the alternative, that if Section34 applies, then by virtue of the proviso to Section 34( 1) CPC, this being a commercial transaction, the rate of interest can exceed 6 per cent per annum but shall not exceed the contractual rate of interest.

2. Our attention has been invited to a Constitution Bench decision in Central Bank of India v. Ravindra. The Court in that case was concerned with Section 34 CPC. At SCC p. 396 (in para 41), it, inter alia, observed thatthe "interest pendente lite and future interest (i.e. interest post -decree not exceeding 6 per cent per annum) shall be awarded on such principal sum". This SCCms to indicate that interest pendente lite and post-decree cannot be awarded in excess of 6 per cent per annum and furthermore in paragraph 55(8) (at SCC p. 404) there is also an observation that the

"award of interest pendente lite and post-decree is discretionary with the court as it is essentially governed by Section 34 CPC dehors the contract between the parties". (emphasis added)

Mr Raval draws our attention to the fact that at p. 378 of SCC where Section 34 CPC is extracted, perhaps by oversight the proviso to Section 34( 1) was omitted. The said proviso reads as follows:

"Provided that where the liability in relation to the sum so adjudged had f 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."

3. A reading of the decision in Central Bank easel shows that no reference has been made to the proviso which specifically deals with the awarding of interest arising out of a commercial transaction.

4. Under the circumstances, we think it appropriate that this case is heard by a larger Bench, inasmuch as the interpretation of the proviso to Section 34(1) CPC is clearly involved and there should be no observations made in this case which are in conflict with the decision in Central Bank of India v. Ravindral

5. Papers be placed before the Honble the Chief Justice of India for

appropriate orders.

Court Masters