The main legal point established in the judgment is that the principal sum for the calculation of interest on a decree for the payment of money includes the initial amount advanced plus the interest added from the date of advance, on the date of the suit.

K. C. JAGADEB ROY, J.

( 1 ) THE present appellant filed T. M. S. No. 105/79 for a mortgage decree for recovery of Rs. 24,905/- with future interest.

( 2 ) THE undisputed facts leading to the case are that the plaintiff-Bank sanctioned a sum of Rs. 15,000/- as a loan to M/s. Kamlalaya Cloth Store, Khallikot. M/s. Kamlalaya Cloth Store was represented by defendant No. 1, the sole proprietor in the suit. Defendant No. 2 was the surety for the loan granted. It was a commercial loan sanctioned to the loanee for improvement of his business. The defendants did not appear and case was set ex parte. In the ex parte judgment dated 2-5-1980, learned Subordinate Judge, Berhampur passed a preliminary decree for Rs. 24,905/- against the defendants with costs. The defendants under the decree were required to pay to the plaintiff pendente lite and future interest at the rate of 16 1/2 % per annum on the principal amount of Rs. 15,000/ -.

( 3 ) THE appellant-plaintiff has urged in this appeal the sole point that though the principal amount of loan was Rs. 15,000/- with interest, the amount outstanding against the defendant, on the date of the suit was Rs. 24,905/- which was the suit amount, the trial Court was not therefore justified in law in awarding pendente lite and future interest on Rs. 15,000/- instead of Rs. 24,905. 00. The respondents in spite of notice have not chosen to appear in Court and have not contested in the first appeal. It is not disputed that the principal amount of loan was Rs. 15,000/- but according to the agreement with the Bank, the plaintiffs, the rate of interest was to be calculated at the rate of 16 1/2 % and at periodical rest the interest that was accrued was added to the principal which ultimately came to Rs. 24,905. 00 on the date of the suit. Mr. Sharma, learned counsel appearing for the Bank urged that the principal amount found in S. 34 of the Code of Civil Procedure refers to this amount of the suit and not the principal amount of loan as has been wrongly held by the trial Court. In support of his contention Mr. Sharma refers to a case reported in 1989 Bank J 330. In this case the Hon'ble single Judge of the Delhi High Court after discussing a number of cases on the point came to hold that "the principal sum" appearing in S. 34 of the Code of Civil Procedure is the amount initially advanced including the interest added from the date of advance, on the date of the suit. I am in complete agreement with the view expressed by the Delhi High Court in the case.

( 4 ) SECTION 34 of the Code of Civil Procedure reads as follows :-"section 34 (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 future 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 so 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 of at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. "as already stated, it is a commercial loan from the Bank and Ext. 1 shows that the interest to be paid by the loanee to the Bank was at 161/2 % per annum from the date of the loan will the date of payment in full with quarterly rests and the learned Court below was obviously in error in reading the meaning of the principal amount as occurred in S. 34 of the Code of Civil Procedure and wrongly held the principal sum to