(1) This second appeal arises out of a suit for recovery of Rs. 4844/10/6, principal and interest, on the basis of two hundis executed on 9-9-1946, and the 20th of September, 1946, for a sum of Rs. 2400/- and Rs. 1600/- respectively by Dewan Chand on behalf of the joint Hindu family firm Dewan Chand Nand Kishore, and a pronote executed by Dewan Chand's son Nand Kishore for a sun of Rs. 500/- on behalf of the firm carrying interest at the rate of 71/2 per cent per annum. The aforesaid hundis and the pronote were executed in favour of Ram Singh. On the 28th of December, 1946 an acknowledgment was executed relating to the first two hundis both by Diwan Chand and his son Nand Kishore. After the death of Diwan Chand the present suit was filed on 21-2-1948, for recovery of Rs. 4844/10/6 with interest against the debtors, Nand Kishore major and Ranbir Kumar minor, sons of diwan Chand, and their mother Chand Rani. The defence set up to this suit was that there was no consideration for the hundis and the pronote. The trial Court on 26-2-1949 passed a decree in the following terms:
'I grant plaintiff a decree for Rs. 484410/6 and costs against defendants to the extent of the property of Diwan Chand deceased in their hands. Nand Kishore defendant is personally responsible for the payment of Rs. 543/- due on the writing Exhibit P. 3 (Pronote).'
(2) Against this decision, no appeal was preferred by the judgment-debtors but an appeal was taken to the District Judge by the plaintiff-decree-holder. He claimed that a personal decree should be passed against Nand Kishore for the entire amount in dispute and future interest should have been allowed to the plaintiff. The learned District Judge came to the conclusion that Nand Kishore had taken full liability for the entire amount and it was established that the hundis, Exhibits P. 1 and P. 2 and the pronote Exhibit P. 3, were for consideration. The claim of future interest was disallowed. In the operative part of his judgment, it is stated as under:
'the appeal is partially accepted, the judgment of the lower Court is modified to the extent that the decretal amount will be realisable from the firm Diwan Chand Nand Kishore as a personal debt due from the said firm. So far as the personal liability of Ranbir Kumar minor and Shrimati Chand Rani widow of diwan Chand was concerned they will not be personally liable except to the extent of the firm's property in their hands. The appellant's claim for future interest is rejected.'
(3) Dissatisfied with this decision, the plaintiff has come up in second appeal to this Court. The contentions of Mr. Bahri, learned counsel for the appellant, are: (a) that the plaintiff's claim to future interest could not be rejected in view of the imperative provisions of S. 79 of the Negotiable Instruments Act of 1881; and (b) that a personal decree should have been passed against Nand Kishore.
(4) As regards the claim to future interest, reliance is placed on S. 79 of the Negotiable Instruments Act. The Section is in these terms:
'79. When interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at the rate specified on the amount of the principal money due thereon, from the date of the instrument, until tender or realisation of such amount, or until such date after the institution of a suit to recover such amount as the Court directs.'
It will be clear from the language of S. 79 that in a suit field on the basis of Negotiable Instruments Act, no option is left with the Court to cut down the contractual rate of interest unless the Court comes to the conclusion that the rate of interest is [penal or exorbitant. (See Bishan Das v. Gurdasmal, AIR 1930 Lah 148). If the rate is proper, the Court has to allow the contractual rate from the date of the instrument to the date to be fixed by it. In the present case, no date was fixed by the Court. It is not disputed by Mr. Bahri that we can fix a date but he contends that we cannot fix a date anterior to the date of hearing of this second appeal. This contention loses sight of the well known rule of law that an appeal in its very nature is a rehearing of the suit, vide Surinder Kumar v. Gian Chand, 1958 S. C. A. 412: (AIR 1957 SC 875). It will also be useful to refer to S. 107 and Order 41, rule 33 of the Code of Civil Procedure, which are in these terms:
'Section 107(1): Subject to conditions and limitations as may be prescribed, an appellate Court shall have power-
(a) to determine a case finally;
(b) to remand a case;
(c) to frame issues and refer them for trial;
(d) to take additional evidence or to require such evidence to be take.
(2) Subject as aforesaid, the appellate Court shall have the same posers and shall perform as nearly as may be the same duties as are conferred and imposed by this Code on Courts of original jurisdiction in respect of suits instituted therein.'
'O. 41, R. 33: The Appellate Court shall have power to pass nay decree and make any order which ought to have been passed o made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed an appeal or objection: Provided that the Appellate Court shall not make any order under S. 35A in pursuance of any objection on which the Court from whose decree the appeal is preferred has omitted or refused to make such order.'
In view of these provisions and the fact that the appeal is a rehearing of the suit, it is open to us to fix any date after the suit up to which the interest at the contractual rate is to be allowed in a suit on the basis of a negotiable instrument. We fix 22-2-48, as the date up to which the plaintiff will be entitled to interest according to the contractual rate. Thereafter no interest will be payable at all. It is not disputed that under. 34 of the Code of Civil Procedure interest after this date is totally within the discretion of the Court and cannot be claimed as of right. The Courts below did not allow future interest and we do not consider it proper in this case to interfere in appeal with the exercise of their discretion. Mr. Bahri relies on Mst. Bhagwanti v. Atma Singh, AIR 1934 Lah 32 for the proposition that there is no option left with the Court so far as grant of future interest on negotiable instruments is concerned. This is only partially true. In the cases of a suit based on a negotiable instrument, the Court has to allow the contractual rate of interest from the date of the instrument to a date to be fixed by it after the suit. But after that date the grant of interest is regulated by. 34 of the Code of Civil Procedure and not by S. 79 of the Negotiable Instruments Act. In Bhagwanti's case, AIR 1934 Lah 32 the date fixed was the date of the decree and interest under S. 79 was allowed up to that date and after that date a lower rate of interest as future interest was allowed and presumably it was allowed under section 34 of the Code of Civil Procedure. This negatives Mr. Bahri's contention based on Bhagwanti's case, AIR 1934 Lah 32 because if future interest had been allowed under. 79 of the Negotiable Instruments Act, the rate throughout would have been reduced to six per cent after the date of the decree.
(5) The second contention of Mr. Bahri seems to be correct to a certain extent. There seems to be a considerable confusion in the decision of the learned District Judge so far this part of the case is concerned. The District Judge has in one part of the judgment held that Nand Kishore is personally liable while in the operative part of the judgment, the decree is only granted against the firm as if a personal debt was due from the firm. The correct position is that the decree should have been against the firm as well as personally against Nand Kishore. It would be recoverable from the other judgment-debtors to the extent of the property of the firm or the property of Dewan Chand in their hands. We, therefore, order that the decree of this Court be drawn up keeping in view the observations made above.
(6) For the reasons given above, this appeal fails and is dismissed but there will be no order as to costs.
(7) I agree.
(8) Appeal dismissed.