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PETITIONER:

N.M.VEERAPPA

Vs.

RESPONDENT:

CANARA BANK

DATE OF JUDGMENT: 27/01/1998

BENCH:

S. SAGHIR AHMAD, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:

THE 29TH DAY OF JANUARY, 1998

Present:

Hon’ble Mr. Justice S.Saghir Ahmad

Hon’ble Mr. Justice M.Jagannadha Rao

Ms. Lalita Kaushik, Advocate for the appellant.

Mr. Pradeep Dewan, Ms. Amita Kapur and Mr. P.B.Aggarwala,

Advocates for the respondents.

J U D G M E N T

The following Judgment of the Court was delivered:

M. JAGANNADHA RAO. J.

Leave granted,

The appellant (Managing Partner) is the 2nd defendant

in the suit. The 1st respondent-Bank filed a suit O.S.

101/1980 based on mortgage for recovery of Rs. 7,82,881.78

against M/s. Shiva Rice Industries (a partnership firm) (1st

defendant), the appellant (defendant 2) and defendants 3 to

10 (partners) on the file of the Principal Civil Judge.

Shimoga. These defendants has taken a loan of Rs. 5 lakhs on

7.4.1976 agreeing to repay in 52 monthly instalments each of

Rs. 8000/- from 7.4.1977 with interest at the end of each

quarter. The plaint schedule properties were offered as

security and an equitable mortgage was created as per Ex. P.

4 by deposit of title deeds. The defendants paid Rs.

75.000/- on 6.11.1984, Rs, 40.000/- on 21.12.1984, Rs.

15,000/- on 22.1.1985, Rs.20,000/- on 8.7.1985 and Rs.

10.000/- on 14.11.1985, in all Rs. 1.60,000\-. The trial

court passed a preliminary mortgage decree on 4.7.1982 with

porportionate costs but the decree-holder Bank was directed

to file a fresh memo of calculation calculating the interest

on the balance of principal amount due at 16.5% per annum

from the date of the equitable mortagage at yearly rests

till date of suit. The amounts paid after suit by the

defendants were to be deducted as on the respective dated of

payment and interest was to be paid as per judgment and

these figures were directd to be computed. It was further

directed, so far as future interest from dated of suit was

concerned, as followes:-

"The plaintiff is entitled to

future interest from the date of

suit at 6% per annum on the

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principal amount due from the

defendants till date of recovery of

full amount".

In other words, future interest from date of suit was

to be only 6% per annum and not at the contractual rate of

16.5%.

The plaintiff Bank filed an appeal in the High Court as

Regular First Aappal No. 1 of 1988 and a learned Single

Judge of the High Court allowed the appeal and held that the

plaintiff was entitled to future interest also at the

contractual rate of interest of 16.5% from date of suit till

date of realisation with costs because of Section 34 CPC.

However, the defendants could, if they so desired, move the

Circle office of the Bank for reduction of this rate of

interest and it would then be for the Bank to consider it

favourably but in accordance with law.

Against the above said judgment of the High Court, this

appeal has been preferred by the Managing Partner, the 2nd

defendant contending that the High Court erred in

interfering wiith the discretion exercised by the trial

Court in so far as pendente lite interest was concerned.

It is argued for the appellant that the suit being one

based on mortagage, the provision applicable so far as

pendente lite interest was concerned, was Order 34 Rule 11

CPC and not Section 34 CPC, as wrongly held by the High

Court. It is ponted out that under Order 34 Rule 11 the

Court could exercise discretion, if there were good reasons

for doing so, to award a rater of interest which was not

necessarily the contractual rate out something less.

We have hear