IMPORTANT POINT
Grant of interest pendente lite is within discretion of Court and its grant is not limited only to commercial transactions.

A.S. Chandurkar, J.—This Second Appeal has been heard on the following substantial question of law:-

“Whether the Court could have awarded interest on the principal amount?”

For considering this substantial question of law, it is necessary to refer to few facts.

2. The appellants are the original defendants in a suit filed by the respondent for recovery of an amount of Rs.1,50,000-00. It is the case of the original plaintiff that he is related with the defendants and the defendants were in need of financial assistance. They told him to seek a loan from a co-operative society by mortgaging his house. The plaintiff was assured by the defendants that they would pay the monthly installments. Accordingly, a loan was borrowed by the plaintiff and about fifteen installments were paid by the defendants. As the defendants subsequently did not pay the installments, the plaintiff took various steps by lodging reports and ultimately filed a suit for recovery of amount of Rs.1,50,000-00. This included an amount of Rs. 1,44,050-00 towards the balance loan amount.

3. In the Written Statement, the defendants took the stand that hand loan of Rs.80,000/- without interest was taken from the plaintiff. It was pleaded that the defendants paid Rs.1424/- every month and after that stopped paying the amount. A set off was claimed for a sum of Rs. 52,578/-.

4. The parties led evidence before the trial Court and by judgment dated 13th February, 2014, the trial Court held that the plaintiff had proved the hand loan of Rs. 1,00,000/- and further execution of the compromise dated 23rd January, 2003 was also proved. The trial Court, therefore, decreed the suit and directed the payment of principal amount from the date of the suit till its realization. The appellate Court by its judgment dated 5th July, 2016 dismissed the appeal and maintained the decree passed by the trial Court. Being aggrieved, the present appeal has been filed.

5. Shri R. I. Agrawal, learned counsel for the appellants, submitted that in so far as the principal amount as decreed is concerned, there was no dispute that the same was duly paid to the plaintiff. He, however, submitted that both the Courts were not justified in awarding interest at the rate of six per cent per annum from the date of filing of the suit till realization. He submitted that it was a case of hand loan being advanced to the plaintiff. Both the parties were related and the transaction could not be said to be a commercial transaction. According to him, under Section 34 of the Civil Procedure Code, 1908, interest on the principal amount from the date of suit could be awarded only if the transaction is a commercial transaction. Relying upon the judgment of learned Single Judge in Manesh Rajkumar Kanhed Vs. Ramesh Bhagwansa Walale [AIR 2007 Bombay 86], it was urged that at the highest, interest could be awarded from the date of the decree and not for earlier period. According to him, in view of said decision, a different view of the matter should not be taken and for said purpose, he relied upon the decision of the Honourable Supreme Court in Dr. Vijay Laxmi Sadho Vs. Jagdish [(2001) 2 SCC 247: 2001 (1) Supreme 41.]. He also placed reliance on the decision of the Madras High Court in Central Bank of India Vs. Vet Pharm & others [2013 (4) Civil LJ 654]. He, therefore, submitted that the decree to that extent deserves to be modified.

6. Shri H. I. Kothari, learned counsel for the plaintiff, supported the impugned judgment. According to him, both the Courts had exercised a discretion while awarding interest from the date of the suit and this discretion was not liable to be interfered with. He submitted that the facts of the case were such that grant of interest was justified. According to him, the plaintiff was required to sell his house to clear the arrears of the loan. Though the parties were related, there was litigation amongst them and, therefore, merely because the parties were related, the same cann