Court may exercise discretion in awarding interest to compensate for money value diminution under Section 34 of CPC.

JUDGMENT

This appeal suit has been filed under Section 96 and order XLI Rule 1 of the Code of Civil Procedure, 1908 [hereinafter referred as ‘CPC’ for short] challenging the decree and judgment in O.S. No.295 of 1993 dated 29.06.1996 on the files of the Sub Court, Kattappana. The appellant herein is the plaintiff and the respondents herein are the defendants in the above suit.

2. Heard the learned counsel for appellant and the learned Government Pleader appearing for respondent 1 and 2. Though, notice issued to the 3^rd respondent has been signed, he did not appear. Perused the verdict under challenge.

3. Parties in this appeal shall be referred with reference to their status before the trial court.

4. Short facts: The plaintiff, who was a licensed contractor, executed an agreement with the 1^st defendant on 02.08.1983 for the work relating to improvements of Rajakkad- Ponmudi road. Due to some inconvenience, the work as agreed could not be executed by the plaintiff. At this juncture, alleging negligence on the part of the plaintiff in the matter of execution of the work, the 2^nd defendant terminated the contract as per Ext.B2(a) termination order dated 11.03.1988. Hence, the plaintiff sought the relief of declaring Ext.B2(a) termination order dated 11.03.1988 as illegal and also sought realization of total sum of Rs.3,53,750/- under various heads.

5. Defendants 1 and 2 jointly filed written statement and resisted the contentions raised by the plaintiff, justifying termination of agreement for valid reasons. The 3^rd defendant was set ex-parte.

6. The trial court, on appreciation of rival pleadings, raised necessary issues and tried the matter. PWs 1 and 2 were examined and Exts.A1 to A15 were marked on the side of the plaintiff. DW1 was examined and Exts.B1 to B4 were marked on the side of the defendants.

7. Finally, the trial court decreed the suit as under:

1. Ext.B2(a) termination order dated 11/3/88 is declared illegal and arbitrary and it is hereby set asided.

2. That the plaintiff is allowed to realise from the defendants 1 and 2 a sum of Rs.2,13,327/- with future interest at the rate of 12% per annum from the date of suit till realisation.

3. and that the plaintiff is entitled to his costs in the suit.

8. Now, the grievance of the plaintiff is non payment of interest from the date of termination of the agreement as on 11.03.1988 till the date of filing of the suit. According to the learned counsel for the plaintiff, since Ext.B2(a) termination order dated 11.03.1988 was declared as illegal, the plaintiff is legally entitled to reasonable interest in between the period from 11.03.1988 onwards and the trial court disallowed interest for the said period, without any justifiable reasons. Therefore, the verdict impugned requires interference.

9. Resisting this contention, the learned Government Pleader argued that, in this matter, the trial court granted decree to the tune of Rs.2,13,327/- along with interest at the rate of 12% per annum from the date of the suit till realization, on the finding that the contention raised by the plaintiff that he had paid 15% interest for the said sum borrowed from the State Bank of Travancore, Muvattupuzha Branch. The said fact could not be justified, since as per Ext.A9, the plaintiff had discharged the liability with the State Bank of Travancore, Muvattupuzha Branch, by paying Rs.1,82,864.50 towards the interest. It is also submitted by the learned Government Pleader that, on filing execution proceedings, the entire amount as per the decree granted by the trial court has been deposited by the defendants. Therefore, the verdict under challenge would not require any interference.

10. Addressing the rival argum