Skip to content


Gordhandas Madhavji and ors. Vs. Valmji Khetsi - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtGujarat High Court
Decided On
Case NumberFirst Appeal No. 531 of 1965
Judge
Reported inAIR1967Guj276; (1967)0GLR307
ActsCode of Civil Procedure (CPC), 1908 - Sections 34 - Order 20, Rule 11
AppellantGordhandas Madhavji and ors.
RespondentValmji Khetsi
Appellant Advocate K.M. Chhaya, Adv.
Respondent Advocate J.R. Nanavati, Adv.
Excerpt:
.....in error in awarding interest to the plaintiffs at the rate of nine per cent per annum from the date of the decree till payment. the reason why the bank draft was handed over to vithaldas dhanjibhai on behalf of jamnads madhavi was that, as appears clearly from the sale deed itself, the amount of the purchase price was to be applied in discharge of two debts incurred by the defendants, one being a debt of rs. 2 clearly shows that there was an entry in the books of account in regard to this amount and defendant no. we are, therefore, not at all satisfied that the sale of sham kunj effected under the sale deed exhibit 109 was sham and bogus and we must proceed on the basis that there was a genuine sale of this property by defendant no. 1 who has clearly stated that this commission..........have been awarded at a rate exceeding six per cent per annum from the date of the decree to the date of payment. the plaintiff s filed the present suit against the defendants to recover a sum of rs.34,627.11 ps together with interest at the rate of nine per cent per annum being the amount due under a khata executed by the defendants in favour of the plaintiffs. the plaintiffs' claim was resisted by the defendants on various technical grounds but they were all negatived by the learned trial judge and there is no controversy about them in the present appeal. on the merits the defendants did not dispute the plaintiffs' claim but their contention was that having regard to their financial condition they should be granted instalments for payment of the amount of the plaintiffs' claim and.....
Judgment:

Bhagwati, J.

(1) The defendants in this appeal complain against a decree passed by the Civil Judge, Senior Division, Jamnagar, making the decretal amount payable by instalments of Rs. 5,000/- per year and awarding interest on the decretal amount at the rate of nine per cent per annum from the date of the decree till payment. The complaint of the defendants is that the instalments should have been for a smaller amount and that the interest should not have been awarded at a rate exceeding six per cent per annum from the date of the decree to the date of payment. The plaintiff s filed the present suit against the defendants to recover a sum of Rs.34,627.11 Ps together with interest at the rate of nine per cent per annum being the amount due under a Khata executed by the defendants in favour of the plaintiffs. The plaintiffs' claim was resisted by the defendants on various technical grounds but they were all negatived by the learned Trial judge and there is no controversy about them in the present appeal. On the merits the defendants did not dispute the plaintiffs' claim but their contention was that having regard to their financial condition they should be granted instalments for payment of the amount of the plaintiffs' claim and the question as to whether the defendants should be granted any instalments and, if so, in what amount, therefore, formed the main subject matter of controversy between the parties in the suit. Considerable evidence was led on behalf of the defendants to show that they were financially in a bad way and were not in a position to pay up the amount of the plaintiffs' claim at a time and this evidence was seriously challenged on behalf of the plaintiffs, the learned trial Judge on a consideration of the evidence came to the conclusion that that the defendants' financial position was far from satisfactory and having regard to all the facts and circumstances of the case, the amount of the plaintiffs' claim should be made payable in instalments of Rs. 5,000/- per year. The learned trial Judge accordingly passed a decree in favour of the plaintiffs for Rs.34,627.11 Ps. together with interest on Rs.34612.11 Ps at the rate of 9 per cent per annum from the date of suit till realisation and costs of the suit and directed that the decretal amount shall be payable by the defendants to the plaintiff in yearly instalments of Rs.5,000/- each commencing from 1st May 1965 each subsequent instalment being payable on the 1st May of each succeeding year and that in default of payment of any two successive instalments, the plaintiff shall be entitled to recover the whole of the decretal amount or the balance thereof then remaining due, forthwith from the defendants. The defendants were dissatisfied with the decree in so far as it made the decretal amount payable by instalments of Rs.5,000/- each for they wanted instalments of a smaller amount and they, therefore, preferred the present appeal in this Court. The plaintiffs also preferred cross objections since their contention was that no instalments at all should have been granted to the defendants.

(2) The first contention urged by Mr. Chhaya, learned advocate appearing on behalf of the defendants, was that whatever might be the instalments granted by the learned trial Judge, he was clearly in error in awarding interest to the plaintiffs at the rate of nine per cent per annum from the date of the decree till payment. Mr. Chhaya urged that under Section 34 of the Code of Civil Procedure, there was a limitation imposed on the power of the Court to award interest from the date of the decree to the date of payment and that limitation was that interest should not in any event exceed six per cent per annum. This limitation was that interest should not in any event exceed six per cent per annum from the date of the decree till realisation and the decree should, therefore, in any event be modified by awarding interest at the rate of six per cent annum form the date of the decree up to the date of payment. Now there is no doubt that Section 34 does impose a ceiling on the rate at which interest can be awarded by the Court from the date of the decree to the date of payment while making provision in the decree for such interest, but the present case, we think, is not governed by Section 34. Section 34 is a general provision dealing with the question f interest in a decree for the payment of money and it provides that where and in so far as the decree is for the payment of money, the Court can in the decree, order interest at such rate as the Court thinks reasonable, on the principle sum adjudged, from the date of the suit till the date of the decree and further interest on such principal sum, from the date of the decree to the date of payment, at such rate not exceeding six per cent per annum as the Court deems reasonable. Where therefore the Court passes a decree without anything more, the rate at which the Court can award interest on the principal sum from the date of the decree to the date of the payment cannot exceed six per cent per annum. But where the Court passes a decree and postpones payment of the decretal amount or makes the decretal amount payable by installments in exercise of its power under Order, 20, rule 11, the provision made in order 20, Rule 11 would govern the question of interest and not the provision made in section 34. Order 20, R. 11 sub-rule (1) - that is the sub-rule with which we are concerned in the present case - provides that where an in so far as the decree is for the payment of money, the Court may for any sufficient reason at the time of passing the decree, order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable. This sub-rule confers power on the Court at the time of passing the decree to postpone payment of the amount decreed or to make it payable by installments. But for this provision it would appear that the Court would have no such power and the judgment - creditor would be entitled to execute the decree immediately against the judgment - debtor.. Where the judgment-creditor is entitled to execute the decree immediately against the judgment debtor, the judgment-creditor has the security of the decree which he can execute forthwith if he so chosen and therefore, the Legislature provided for a reduced interest from the date of the decree to the date of payment in Section 34 by imposing the ceiling f six per cent per annum. But where the Court postpones payment of the decretal amount or makes the decretal amount payable by instalments so that the judgment-creditor is not entitled to execute the decree forthwith against the judgment debtor, the reason for the limitation of the rate of interest would not apply and the Legislature, therefore, left the power of the Court in regard to interest unfettered under Order 20 Rule 11 by using the words 'with or without interest' without any limitation as to the rate of interest. Order 20, Rule 11 is a self-contained provision dealing with the power of the Court to make an order postponing payment of the decretal amount of making it payable by instalments. Sub-rule (1) confers power on the Court to make such an order at the time of the passing of the decree if there is sufficient reason to do so. But the amount decreed would not include future interest from the date of the decree. What then is to happen in regard to such interest/ sub-rule (1) makes provision in this behalf also and says that the Court may order that payment of the amount decreed shall be postponed or shall be made payable by installments, 'with or without interest'. The provision in regard to interest from the date of the decree in a case where payment of the decretal amount is postponed or the decretal amount is made, payable by instalment is thus made in sub-rule (1) itself and that sub-rule confers discretionary power on the court either to refuse interest altogether or to award interest without any limitation as to rate of interest. So also is the case in sub rule (2) Sub-rule (2) confers power on the Court to make an order postponing payment of the decretal amount or making the decretal amount payable by instalments after the passing of the decree.. Such an order can be made by the Court on the application of the judgment -debtor only if the decree-holder consents and in such a case the Court can lay down such terms as to payment of interest as it thinks fit. Here again we find that provision in regard to interest from the date of the order is made in sub-rule (2) itself and full and absolute discretion is conferred on the Court in the matter of award of interest. It will thus be seen that each of the two sub-rules of Order 20 Rules 11 enacts a self-contained provision conferring power on the Court to postpone payment is concerned and the limitation as to rate of interest specified in Section 34 cannot be invoked where the Court is acting under Order 20 Rule 11 sub-rule (1) or (2). We must therefore reject the contention of Mr. Chhaya that in view of Section 34 the learned trial Judge was not entitled to award interest from the date of the decree upto the date of payment at the rate of nine per cent per annum. The learned trial Judge had ample discretion under Order 20 Rule 11 sub-rule (10 to award interest at such rate as he thought fit and we do not see any reason why we should interfere with the exercise of the discretion by the learned trial Judge in awarding interest at the rate of nine per cent per annum. The decretal amount was Rs. 34,627-11 Ps. And the learned trial Judge granted yearly instalments in the sum of Rs. 5,000/- each for payment of this decretal amount. According to these instalments the full payment of the decretal amount would take about seven to eight years and if the plaintiff were to be kept out of their moneys for such a long period, it is not at all unreasonable that they should be awarded interest at the rate of nine per cent per annum which is three per cent less than the maximum rate of interest permitted to be recovered even under the Bombay Money Lenders Act. 1946.

(3) Mr. Chhaya next contended that the annual instalments of Rs. 5,000/- each fixed by the learned trial Judge were too heavy having regard to the financial condition of the defendants and that the instalments should have been for a lessor amount and he suggested the figure of Rs. 3,000/- per year. Mr. J.R. Nanavati, on behalf of the plaintiffs on the other hand urged that the defendants were in a position to pay up the full decretal amount and no instalments at all should, therefore, have been granted to them. Now we may point out at the outset that the question as to whether on the facts and circumstances of the case the decretal amount should be made payable by installments or not is essentially a question in the discretion of the trial court and unless we find that the discretion has not been exercises by the learned trial Judge on judicial principles we would be loath to interfere with the order granting instalments passed by him. In the present case we are unable to say that the discretion has not been judicially exercised by the learned trial Judge . One of the main questions which was debated before the learned trial Judge and also raised before us was whether defendant No. 1 had really sold his immovable property known as ' Sham Kuni' for the price of Rs. 60,000/- to Virendrakumar Raja on 15th June 1961 under the sale deed exhibit 109. The argument of Mr. J.R. Nanavati on behalf of the plaintiffs was that the sale purported to have been effected under this sale deed was bogus and sham and that Sham Zkuni still continued to be the property of defendant No. 1 and that the defendants were, therefore, in a position to pay the full decretal amount out of this property. We do not think hat on the evidence on record we can accept this contention urged on behalf of the plaintiffs. In the first place no suggestion that the sale was sham and bogus was made to defendants Nos. 1 and 2 whilst they were in the witness box. They were the first two witnesses to be examined on behalf of the defendants and it was not suggested to either of them that the sale was sham and bogus. Then again it be noted that a solemn registered sale deed on stamp paper of the denomination of over Rs. 2,600/- was executed by defendant No. 1 in favor of Virendrakumar and a rent note was also taken from the first defendant in respect of the first floor of the property which was allowed to continue in the possession of first defendant as tenant of Virendrakumar. It is also a matter of significance that no allegation was made on behalf of the plaintiff that the sale was at an under-value. If the sale was intended to be sham and bogus, the parties need not have provided for consideration representing the full value f the property so as to attract a high stamp duty but they could have put any small valuation with a view to create pretense of a sale. It is no doubt true that Virendrakumar's father Dr. Raja and defendant No. 2 are brother - in -law in that the wife of one is the sister of wife of the other, but that by itself cannot be regarded as a circumstance throwing doubt on the genuineness of the transaction. Some reliance was also placed on behalf of the plaintiffs of the fact that Virendrakumar was a minor at the date of the sale, but that again is a circumstance which is quite neutral for it not unknown in this country that purchases of immovable properties are often effected by parents n the names of minor children. It is in the evidence of Dr. Raja that the sum of Rs. 60,000/- which was paid for the purchases of this property was provided by Jethalal, the father-in-law of Dr. Raja and he had sent a Bank Draft for the said amount in payment of the purchase price. Dr. Raja stated that this amount was provided by Jethalal for the benefit of his daughter Shanta, the mother of Virendrakumar, and wife of Dr. Raja. It is no doubt that Dr. Raja did not actually see the Bank Draft, but there is no doubt that the Bank Draft was sent by Jethalala to the defendants for defendant No. 2 says in his evidence that the Bank Draft was handed over Vithaldas Dhanjibhai on behalf of the Jamnadas Madav. The reason why the Bank Draft was handed over to Vithaldas Dhanjibhai on behalf of Jamnads Madhavi was that, as appears clearly from the sale deed itself, the amount of the purchase price was to be applied in discharge of two debts incurred by the defendants, one being a debt of Rs. 42,400/- in favour of Jamnadas Madhavji an the other being a debt of Rs. 17,600/- in favour of Jarijivandas Vithaldas. There is therefore no doubt that the consideration of Rs. 60,000/- for the purchase of this property was paid to the defendants by means of a Bank Draft sent by Jethalal to the defendants. Mr. J.R. Nanavati, on behalf of the plaintiffs, however, relied very strongly on the admission made by the defendants No. 1 in his cross-examination that there was no entry in the books of account in regard to the consideration of Rs.60,000/- received by the defendants. But this admission appears to have been made under some misapprehension for the evidence of defendant No.2 clearly shows that there was an entry in the books of account in regard to this amount and defendant No. 2 actually produced that entry and some questions were asked to him in regard to the contents of that entry. It is no doubt true that according to defendant No. 1, the rent of the ground floor of the property was being recovered by defendant No. 2 even after the sale of the property but that is not a circumstance which must necessarily lead to the conclusion that the sale was sham and bogus. It must be remembered that defendant no. 2 was the brother in law of Dr. Raja and since defendant No. 2 was staying on the first floor, it is not at all unnatural that he might be recovering the rent of the ground floor on behalf of Dr. Raja or his wife. We are, therefore, not at all satisfied that the sale of Sham Kunj effected under the sale deed Exhibit 109 was sham and bogus and we must proceed on the basis that there was a genuine sale of this property by defendant No. 1 to Virendrakumar on 15th June, 1961 under the sale deed Exhibit 109.

(4) Now apart from Sham Kunj, defendants Nos. 1 and 2 had admittedly no other immovable property save and except one ship and two godowns which were taken on rent by defendant No. 1 for the purpose of carrying on the grain business of the firm in which defendants Nos. 1 and 2 were partners. Defendant No. 1 also held cards of the Chamber of Commerce and Grain and Seeds Merchants Association and on his own admission he carried on commission agency business in groundnut cakes and groundnut seeds. Of course, defendant No. 2 stated in his evidence that this commission agency business was most being carried on by the defendants at the time when he gave evidence but on this point we would prefer to accept the evidence of defendant No.1 who has clearly stated that this commission agency business was carried on by them. The defendants also held a quote for import of dates and it is clear from the account, Exhibit 132, that in Samvat Year 2020, the profit which they derived from the date business was in the neighbourhood of Rs.20,000. But so far as the date business is concerned, we must take into account the fact that the defendants had to borrow moneys from Messrs. Sharatchandra Jethalal for the purpose of carrying on this business and out of the profit of about Rs.20,000 which they earned from this business, they had to pay a sum of Rs.12,000 to Messrs. Sharatchandra Jethalal. The net income of the defendants from the date business was therefore, about Rs.8000/-. Defendant No. 1 was also serving in a concern called Ram Salt Chemical Works at Vadinar and he was getting about Rs.700/- per month which would amount to about Rs.8,400/- per year. The net income of the defendants, therefore, came to about Rs.16,000/- plus whatever profit might be made by them in the grain and commission agency business. The learned trial judge was, therefore, right when he observed that the income of the defendants could be reasonably placed at the figure of about Rs.20,000/- per year.

(5) Now as against this income it must be noted that the first defendant ad five sons and a daughter to maintain. Defendant No. 2 was admittedly not having any independent income a from what he earned as a partner of his father, the first defendant. The defendants had large debts which were proved by the production of Exhibit 67 to 106 from the books of account of the defendants. Messrs. Halar Salt Works had actually obtained a decree for Rs.25,000/- against the first defendant on 11th April 1963, and a summons was served on the first defendant to answer a claim for Rs.25,620-91 Ps made by Messrs. Gokaldas Liladhar and Sons against the first defendant in the Court of the Civil Judge, Senior Division, Jamnagar. The account of Messrs. Sharatchandra Jethalal in the books of account of the defendants, Exhibit 77, as also the account of the defendants in the books of Messrs. Sharatchandra Jethalal, Exhibit 126, clearly showed that a sum of Rs.35,000/- was due and payable by the defendants to Messrs. Sharatchandra Jethalal at the end of Samvat Year 2020. These were the debts of the defendants which were clearly established by the evidence on record.

(6) Having regard to the aforesaid facts, the learned trial Judge thought that this was a fit case in which instalments should be granted to the defendants and that annual instalments of Rs.5,000/- each would be quite reasonable in this circumstances of the case. We cannot regard this exercise of discretion by the learned trial judge as in any manner unreasonable or perverse. The defendants had an income of about Rs.20,000/- per year out of which they would certainly require some income for the maintenance of themselves and their family and the surplus could be utilised for payment of the several debts of the defendants of which the debt in favour of the plaintiffs was one. The instalments of Rs.5,000/- per annum were, therefore, quite reasonable though the result of granting such instalments would be that the plaintiffs would have to wait for a period of about seven years for receipt of the full decretal amount. But the plaintiffs cannot have any grievance on that score for they are money lenders and they would be getting interest in the meantime at the rate of nine per cent per annum until the full decretal amount is paid. It was also urged on behalf of the plaintiffs that the default clause should relate to non payment of any one instalment and should not depend on non payment of any two successive instalments. But this provision also is a matter of exercise of discretion by this learned trial Judge and we do not see any cogent reason why we should interfere with it save for deleting the word 'successive'. This provision of default clause for non-payment of any two instalments cannot be regarded as unreasonable or perverse so as to merit interference.

(7) We, therefore, dismiss the appeal as well as the cross-objections and confirm the decree passed by the trial Court with this modification that the default clause shall come into operation on non-payment of any two instalments, instead of any two successive instalments. We may make it clear that interest at the rate of nine per cent per annum shall run from the date of the decree till realisation on the amount which might from time to time be due and owing under the decree so that if any amount is paid by the defendants to the plaintiffs under the decree it shall be first appropriated in payment of interest due upto that date and thereafter towards part payment of the principal and the interest shall run only on the balance of the principal amount remaining unpaid from time to time. The defendants will pay the costs of the appeal to the plaintiffs while the plaintiffs will pay the costs of the cross-objections to the defendants.

(8) Appeal and cross-objections dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //