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Utsav Lal Gupta Vs. Firm Mohan Brothers and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 139 of 1972
Judge
Reported inAIR1975Raj236; 1975()WLN154
ActsEvidence Act, 1872 - Sections 115; Negotiable Instruments Act, 1881 - Sections 79; Code of Civil Procedure (CPC) , 1908 - Sections 34
AppellantUtsav Lal Gupta
RespondentFirm Mohan Brothers and ors.
Appellant AdvocateParty in person
Respondent Advocate R.L. Jangid, Adv.
DispositionAppeal partly allowed
Cases ReferredIn Piara Lal Khanna v. S. Herchand Singh
Excerpt:
.....the matters of pendente lite interest on such debt the provisions of the negotiable instruments act shall be attracted which do not confer like section 34, cpc, any discretion to fix any rate not exceeding 6%. in my opinion the awarding of interest pendente lite shall be governed be section 79 on the negotiable instruments act.;the interest awarded by the court below from the date of the institution of the suit till the date, when the decree was passed, at the rate of six percent per annum is erroneous. - - in my opinion the debt advanced against a negotiable instrument shall be governed by the provisions of the negotiable instruments act till its nature is changed by converting it into a decretal debt and, therefore, in the matters of pendente lite interest on such debt the..........34 of the code of civilprocedure could award pendente lite interest at the rate of rs. 6/- per cent. perannum, especially, when the loan wasadvanced by the plaintiffs on the strengthof a pronote, which undoubtedly is a negotiable instrument. it is not disputedby the learned counsel for the partiesthat the provisions of the negotiable instruments act shall govern the awardingof interest on a loan advanced against thepronotes. in this connection reliance hasbeen placed by the appellant on section79 of the negotiable instruments act,which provides that '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 pf the instrument,.....
Judgment:

V.P. Tyagi, J.

1. This is a plaintiffs' appeal against the judgment and decree passed by the Additional District Judge No. 1, Jodhpur, dated June 3, 1972, and it arises out of the following circumstances:

The plaintiffs filed a suit for Rupees 10,000/- as principal advanced on pronotes on different dates to the defendant firm Mohan Brothers. Station Road, Jodhpur, and Rs. 1,425/- as interest thereon. The pronotes were admitted by the defendants, but certain legal pleas were raised by the defendants, which I need not mention here, as the controversy in this appeal is limited only on the question of the interest awarded to the appellant for the period prior to the institution of the suit and also interest pendente lite. During the course of the arguments before the learned Judge it appears that one of the plaintiffs Shri Utsavlal. who is now the sole appellant in this Court, his father Ram Gopal having died during the pendency of the appeal, gave in writing to the learned Judge that he would agree to accept interest @ 12% per annum in place of 15% per annum as mentioned in the pronotes. The learned Judge passed a decree for Rs. 10,455/- (Rs. 10,000/- principal plus Rs. 455/- as interest) and also awarded pendente lite interest @ Rs. 6.00 per cent, per annum and future interest at the same rate till the money was realised by the appellant. It is alleged that the decretal amount has been paid by the defendant-judgment-debtors to the appellant and, therefore, the only question to be decided in the appeal is whether the interest has been properly awarded by the trial court or not.

2. An attempt was made by Mr. Utsav Lal to raise a controversy on the question whether he had actually given anything in writing to the court below showing his consent to accept interest at the rate of 12% per annum, but during the course of arguments Mr. Utsav Lal agreed that even if no writing was given by him to the trial court expressing his desire to charge the interest at the rate of Rs. 12 per cent, per annum, he is now prepared to accept this rate of interest, but his contention is that he could not by his acceptance bind his father Ramgopal, who was also a plaintiff in the suit and, therefore, he, as a successor of his father, can now claim in this appeal that in spite of his agreeing to charge 12 per cent, interest the trial court should have passed the decree awarding interest at the stipulated rate of Rs. 15/- per cent. per annum.

3. It is not disputed that Ram Gopal died during the pendency of the appeal and now Mr. Utsavlal is the sole appellant before the court. All the rights and interest of late plaintiff Ram Gopal have now devolved on the sole surviving appellant Utsavlal, who has agreed before this Court to accept the interest on the principal amount at the rate of Rs. 12 per cent. Since Mr. Utsavlal has agreed before this Court to charge interest at the rate of Rs. 12 per cent, it is not open to him to advance an argument that a different rate of interest must be allowed on that part of the principal amount that fell to the share of his late father Ramgopal. Since the court is not required to adjudicate the rights of Ramgopal and Utsavlal separately with regard to the loan it is difficult for me to award different rate of interest on the sum advanced to the defendant jointly especially when Mr. Utsavlal has agreed before me to charge 12% interest on the sum advanced against the pronote. In this view of the matter the rate of interest allowed by the trialcourt at 12 per cent. per annum, cannotnow be changed in this appeal. 4. The other controversy whichrequires decision is whether the trialcourt in the exercise of its discretionunder Section 34 of the Code of CivilProcedure could award pendente lite interest at the rate of Rs. 6/- per cent. perannum, especially, when the loan wasadvanced by the plaintiffs on the strengthof a pronote, which undoubtedly is a negotiable instrument. It is not disputedby the learned counsel for the partiesthat the provisions of the Negotiable Instruments Act shall govern the awardingof interest on a loan advanced against thepronotes. In this connection reliance hasbeen placed by the appellant on Section79 of the Negotiable Instruments Act,which provides that

'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 pf the instrument, until tender or realization of such amount, or until such date after the institution of a suit to recover such amount as the Court directs.'

According to the provision of this section it is incumbent on a court to award the interest on the principal money due on the pronote at the rate which has been specified in such a pronote and the creditor is entitled to claim the amount of interest calculated at the rate specified till the money is either actually tendered by the debtor or realised up to the date fixed by the court which must be the date after the institution of the suit. Section 34 of the Code of Civil Procedure confers a discretionary power on a court to order the payment of interest at such rate as the court deems reasonable to he paid on the principal amount adjudged from the date of the suit to the date of the decree in addition to any interest adjudged pn such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent. per annum as the Court deems reasonable on such principal sum from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit. Under this provision of law the Court has undoubtedly a jurisdiction to allow an interest pendente lite at the rate which may not exceed six per cent. per annum with further interest at such rate on the principal amount adjudged in the decree till the realisation thereof or such earlier date as may be fixed by the Court, but the question is whether a debt incurred by the debtor on the basis of a promissory note shall be governed by the discretion of the Court given under Section 34 of the Code ofCivil Procedure, so far as the interest pendente lite is concerned. After the decree is passed by the Court, the nature of the debt does not remain the same and is changed and it becomes a decretal debt, but before the decree is passed can it be said that with the filing of the suit the nature of the debt is changed and the debt advanced on the basis of negotiable instrument shall not be governed by the provisions of the Negotiable Instruments Act and shall be governed so far as the awarding of the interest is concerned by Section 34, Civil Procedure Code. In my opinion the debt advanced against a negotiable instrument shall be governed by the provisions of the Negotiable Instruments Act till its nature is changed by converting it into a decretal debt and, therefore, in the matters of pendente lite interest on such debt the provisions of the Negotiable Instruments Act shall be attracted which do not confer like Section 34, Civil Procedure Code, any discretion to fix any rate not exceeding 6%. In my opinion the awarding of interest pendente lite shall be governed by Section 79 of the Negotiable Instruments Act.

5. Section 79 of the Negotiable Instruments Act, as referred to above, contains a mandate that the Court shall allow the interest on the principal amount advanced against a promissory note at the rate specified in that note and this interest shall have to be allowed even after the filing of the suit till the money is actually tendered or realised or a date has been fixed after the institution of the suit to recover such amount. This provision is not capable of any two interpretations. The only meaning that can be given to it is that no discretion has been given to the court to allow any other rate of interest except the one specified in the instrument for realization of the interest on the principal amount either up to the date of the tender or the date of realization or up to the date fixed by the Court after the institution of the suit for the recovery of such amount (principal amount). The only rate of interest which can be allowed for the period when the suit relating to the realization thereof is pending in the Court, is the rate specified in trie instrument itself. The discretion given to the Court under Section 34 of the Code of Civil Procedure for allowing interest pendente lite at the rate not exceeding six per cent per annum, cannot be applied to the debt incurred on the basis of the pronote, which is definitely governed by the provisions of the Negotiable Instruments Act. In my opinion, the interest awarded by the Court below from the date of the institution of the suit till the date, when the decree was passed, at the rate of six per cent. per annum is erroneous. I am fortified in my views by the judgment of the Lahore High Courtin Mt. Bhagwanti v. Atma Si'ngh, AIR 1934 Lah 32. This judgment has been followed by the Punjab High Court in Ram Singh Narain Singh v. F. Dewan Chand Nand kishore, AIR I960 Punj 286. However, In Piara Lal Khanna v. S. Herchand Singh, Jaiji, AIR 1961 Punj 442, the learned Judges refused to follow the ratio of the Lahore Judgment on the ground that the headnote was misleading. But with all respects to the learned Judges I cannot agree with. them. As discussed above, I am definitely of opinion that the discretion of the Court under Section 34 of the Code of Civil Procedure is not available to the Court for awarding pendente lite interest on a loan advanced against a promissory note. Therefore, the question of allowing a different rate of interest pendente lite, on such a debt does not arise.

6. Learned counsel for the parties placed reliance on the various other rulings, which are not directly on the issue before this Court. I, therefore, hold that the court below should have allowed the Interest during the pendency of the suit at the rate of twelve per cent, per annum and not at the rate of six per cent. per annum. To this extent the decree shall stand modified.

7. It was urged by the appellant that the amount of interest that was already realised by the plaintiffs from the defendant before the suit was filed could not be reduced by calculating that amount at the rate of twelve per cent, per annum, which rate was agreed by the appellant in the Court below, I cannot accept this contention of Mr. Utsav Lal. I find that the court has expressly mentioned that Utsavlal had agreed to realise the interest at the rate of Rs. 12 per cent, per annum right from the very beginning when the loan was advanced by the plaintiffs. The debt from the date it was advanced shall bear the interest at the rate of Rs. 12 per cent. per annum.

8. It is however agreed between Utsavlal and learned counsel for the respondents that the court below has committed an error in the calculation, while determining the amount of interest and while applying the reduced rate of twelve per cent. per annum. The court has allowed the deduction of Rs. 755/- on this account, whereas according to the learned counsel for the respondents this amount, if properly calculated, comes to Rupees 727.92. Thus, an amount of Rs. 27.08 shall be added to the decree awarded by the court below. The decree shall be modified on this account also and an addition of Rs. 27.08 shall be made.

9. The appeal of the appellant is, therefore partly allowed, as observed above. The rate of interest for the period of the pendency of suit shall be calculatedat the rate of twelve per cent. per annum and Rs. 27.08 shall be added to the decree as per the agreement of the counsel for the respondents and the appellant.

10. The appellant shall get costsproportionate to his success in this appeal.


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