Interest and installments in money suits under Section 34 of the Code of Civil Procedure

( 1 ) THESE appeals are directed against decrees passed in favour of various banks, mostly nationalised banks, in various suits instituted by them for money decree on account of the amount lent and advanced by them and for other reliefs.

( 2 ) SOME important questions of law are raised before us in connection with these suits which also arise in various other proceedings of this nature from time to time. 'the questions Involved relate to (a) the interest for the period prior to the institution of the suit; (b) interim interest, that is, interest from the date of the institution of the suit till the date of the decree; (c) further interest i. e. interest on judgment and (d) instalments to be granted; if any, for payment of the decretal amount.

( 3 ) VARIOUS suits were instituted in this Court by different nationalised Banks for recovery of huge amounts due from their constituents on account of money lent and advanced by the Banks. In these cases money decrees were passed. The Court also directed interest to be paid under three headings as specified above. The Courts have also granted instalments. In all these cases it is the Banks who have preferred appeals, though the decrees have been passed in their favour, being aggrieved by the Court's directions regarding interest and also the instalments granted for payment of the decretal dues. All these appeals involve such common questions of law relating to the same.

( 4 ) AT the request of the learned Advocates for the parties, all these appeals were set down for hearing together and learned Advocates appearing for different parties in different appeals have very thoroughly made submissions before us on these points. It was agreed that we should first lay down the general principles applicable in respect of the aforesaid questions, after hearing the interested parties, as a form of guideline, which would be common to all these cases and thereafter we shall deal with each and every individual case depending on the facts and circumstances of each case. Accordingly these appeals were hears together for a considerable time and the judgment was reserved.

( 5 ) WE may however make one thug clear. We are dealing with general principles applicable to money suits relating to all these questions where in same cases there are also prayers for declaration of charge relating to moveables with a prayer for sale of the same. We are not, in this judgment, dealing with mortgage suits where a preliminary decree is passed or redemption suits. We are not also dealing with 'these questions in respect of other proceedings, e. g. arbitration proceedings.

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( 7 ) RELEVANT ACTS:7. 1. Before we deal with the respective submissions we shall set out the different provisions of different Act relied upon before us -7. 2. Section: 34 Code of Civil Procedure. 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, 36 (with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum), from the date of the decree to the date of payment; or to such earlier date as the Court thinks fit: (Provided that where the liability in relation to the sum 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 nationalised banks in relation to commercial transactions. Explanation I.- In this sub-section, "nationalised Bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of undertakings)