IMPORTANT POINT
Interest awarded u/s 34 CPC should not be excessive or unreasonable and arbitrary.

Judgment :

Dr. Mukundakam Sharma, J.

1. Leave granted.

2. This appeal arises out of the judgment and order dated 17.07.2008 passed by the Division Bench of the High Court of Judicature at Madras in Writ Petition (civil) No. 28664 of 2003 dismissing the writ petitions filed by the appellant and confirming the judgment passed by the Debt Recovery Appellate Tribunal, Chennai (hereinafter referred to as the `Appellate Tribunal).

3. The appellant is the son of late C.V. Kunjikuttan, who was carrying on business as a civil contractor. Said C.V. Kunjikuttan carried on business of contracts in his individual capacity. He died on 8th September, 1989 and on his demise, the business was taken over by his legal heirs. While C.V. Kunjikuttan was alive he had availed of certain

facilities from Dhanalakshmi Bank Ltd., Cherthala Branch, Alappuzha District Respondent herein (for short the `Bank). The respondent is a scheduled bank and has its principal place of business at Thrissur in Kerala and Branches in various other places. C.V. Kunjikuttan approached the respondent -bank in 1973 for sanction of an over draft financial facility. The Bank sanctioned him an overdraft facility of Rs. 3 lakh. The overdraft facility allowed to C.V. Kunjikuttan was secured by security of immovable property, which was collateral security. On 30.10.1980, the Bank granted an enhanced overdraft facility of Rs. 9 lakh which was secured by late C.V. Kunjikuttan and his children including the appellant herein.

4. As the said amount was not repaid the bank filed a suit being O.S. No. 176 of 1991 on the file of sub-court, Cherthala. Subsequently the proceedings were transferred to Debts Recovery Tribunal (for short "DRT") on its formation under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The relief prayed by the Bank was to realize a sum of Rs. 28,50,707.03 from the appellants, if necessary, by sale of the suit / scheduled properties. The DRT vide Judgment dated 10.08.2001 allowed the proceedings initiated by the Bank and accordingly declared that the debts due to the bank is Rs. 28,50,707.03 together with interest @ 25% per annum compounding with quarterly rests from 17.7.1991 i.e. from the date of filing of the suit till the date of the Judgment with a simple interest at the rate of 19.4% per annum from 11.08.2001 till realisation. The appeal from the said order was dismissed by the Appellate Tribunal as also by the Division Bench of the High Court of Madras.

5. The learned counsel appearing for the appellant contended before us that the grant of interest @ 25% from the date of filing of the suit till the date of judgment and at 19.4%, thereafter till its realisation is exorbitant and contrary to the provisions of Section 34 of the Code of Civil Procedure (for short the `Code). It was further submitted that as per the said section the interest has to be reasonable and at prevalent bank rate of interest.

6. The learned counsel appearing for the respondent on the other hand supported the judgments of the courts below and submitted that the courts below were justified in granting the said rate of interest as the appellants have failed to re-pay the amount which was obtained by them under the overdraft facility.

7. In order to appreciate the aforesaid contention, we are required to consider the scope and ambit of Section 34 of the Code which gets attracted in the instant case. The provisions of Section 34 of the Code are reproduced hereinbelow :

"34. Interest - (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum as the Court deems reasonable on such principal sum from th