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2010 Supreme(MP) 381
IN THE HIGH COURT OF MADHYA PRADESH (GWALIOR BENCH)
Piyush Mathur, J.
Appellants: UCO Bank (Nationalized Bank)
Vs.
Respondent: Shankar Enterprises through V.M .Gaur (Dead) through Legal Representative, Smt. Achal Gaur Widow of Late V.M. Gaur, Rajendra Kumar Jetli S/o Banwarilal Purohit, Vishwamitra Gaur (Dead) through Legal Representative (Smt. Achal Gaur widow of Late Vishwamitra Gaur and Ors.) and Jagdish Prasad Sharma, Deputy Accounts Officer, J.C. Mills
Decided On: 29.04.2010
Headnote:
Interest - Civil Court's Power to Grant Interest - Section 34, Order 34 Rule 11 of CPC - Summary of Acts and Sections: Section 34 and Order 34 Rule 11 of the Code of Civil Procedure (CPC) - The court discussed the provisions of Section 34 and Order 34 Rule 11 of CPC, which empower the court to order payment of interest at a reasonable rate, especially in the absence of a specified contractual rate of interest. The court also referred to the provisions of the Interest Act and the Usurious Loans Act, analyzing the scope of these provisions in relation to the discretion of the court to award interest pendente lite. The court's decision was influenced by the interpretation of these provisions, allowing the court to exercise its discretion in awarding interest at a rate found reasonable.
Fact of the Case:
The United Commercial Bank filed a suit for the recovery of dues. The main issue was the award of pendente lite interest at a contractual rate instead of 5%. The suit amount was deposited during the pendency of the suit, and the court focused on the issue of interest and costs.
Finding of the Court:
The court found that in the absence of evidence of a mutually agreed rate of interest, the Trial Court was justified in awarding 5% pendente lite interest, considering the peculiar facts and circumstances of the case.
Issues: The main issue was whether the Civil Court possesses the power and discretion to grant interest as per the rate mutually agreed between the parties or at a lower rate for the period during which the suit remained pending with the Court (pendente lite interest only).
Ratio Decidendi: The court's decision was based on the interpretation of the provisions of Section 34 and Order 34 Rule 11 of CPC, as well as the relevant case law, allowing the court to exercise its discretion in awarding interest at a rate found reasonable in the absence of a specified contractual rate of interest.
Final Decision: The Appeal preferred on behalf of the Bank was dismissed, as the court found it bereft of any merits, and accordingly, the Appeal was dismissed with no order as to Costs.
Piyush Mathur, J.
1. The United Commercial Bank (UCO Bank) has preferred this First Appeal against the Judgment and decree passed by the Vth Additional District Judge, Gwalior, in Civil Original Suit No. 6-B/1986, where in the suit preferred by the Bank, for the recovery of dues of Rs. 1,68,593.91 Paise (which stood paid-up during pendency of Suit) pendente lite interest @ 5% has been awarded and the Appellant-Bank claims herein that instead of 5%, the Court should have awarded contractual rate of interest. This Appeal relates only to this solitary issue as to whether a Civil Court possess the power and discretion to grant interest as per the rate mutually agreed between the parties or at a lower rate for the period during which the suit remained pending with the Court (pendente lite interest only).
2. The facts of the case reveal that Shankar Enterprises being a Partnership Firm had obtained financial assistance from the Appellant-Bank and a Term Loan of Rs. 65,000/- and a Cash Credit Facility of Rs. 60,000/- was sanctioned in favour of the Firm, for which the Respondents No. 4 and 5 stood Guarantors and the Respondents No. 2 and 3 being Partners of the Firm were equally made responsible for the return of the Loan amount.
3. When the Partnership Firm, its Partners and Guarantors could not deposit the Loan amount including interest, a suit was filed on Date 12.09.1983 by the Bank for the recovery of Rs. 1,68,593.91 Paise but during the pendency of the Suit, Defendant No. 3 had deposited the entire Suit amount of Rs. 1,68,593.91 Paise on Date 03.02.1988 vide Cheque No. 101595 (including Principal and Interest Amounts) and upon its presentation before the Trial Court, the Counsel for the Bank had received the Cheque, although the same was not immediately encashed by the Bank, due to undisclosed reasons, but the fact remains that the entire due amount was deposited by the Respondents during the pendency of the Suit.
4. While the Suit was pending with the Trial Court, Defendant No. 5-Govind Narayan Shah expired and his name was deleted from the array of Defendants, whereafter the Bank filed an Application for attachment and another Application was filed by Defendant No. 4 seeking issuance of Interim Orders for attachment before the Judgment, against the amount of Leave Salary and Gratuity, payable to Defendant No. 3 by his Employer J.C. Mills, Gwalior, for realization of due amount and the Trial Court allowed the Application of Defendant No. 4 by an Order Dated 05.08.1988 and issued an Attachment Order for the amounts payable to the Defendant No. 3.
5. Mr. Vishwamitra Gaur-Respondent No. 3 preferred a Miscellaneous Appeal against the Order of Attachment before the High Court, where this Court, while disposing of Miscellaneous Appeal No. 106/88 (V.M. Gaur v. United Commercial Bank) observed in its Order Dated 06.03.1991 as follows;
It is undisputed fact of the case that the amount claimed in the suit as principal and interest has been duly deposited. The question which remains only to be decided is that of interest pendente lite and that of costs. In regard to those two questions there can be no scope for any evidence of any party to be taken and it is a question of discretion merely of the trial Court to be exercised in deciding the claim of the plaintiff for interest and costs.
6. A perusal of the Order passed by this Court reveal that the Trial Court was directed to decide the claim of the Bank in relation to the interest and costs only, in view of deposit of the entire Suit amount, therefore, the Trial Court focused only on the issue of interest and costs (as none of the parties challenged High Court's Order further) and the impugned Judgment came to be passed by the Vth Additional District Judge on Date 12.04.1991, only in relation to the issue of pendente lite interest and costs, where the Court instead of awarding contractual interest, has awarded 5% interest for the period commencing from Date 12.09.1983 till 03.02.1988, o
