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Life Insurance Corporation of India Vs. Nirmal Chand Boral and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberSuit No. 499 of 1954
Judge
Reported inAIR1974Cal339
ActsCode of Civil Procedure (CPC) , 1908 - Section 34 - Order 34, Rule 11
AppellantLife Insurance Corporation of India
RespondentNirmal Chand Boral and ors.
Advocates:Chatterjee, Adv. for Judgment- debtor and ;Mitter, Adv. for Decree-holder
DispositionApplication allowed
Cases ReferredIndian Insurance and Banking Corporation Ltd. v. Mani Paravathu
Excerpt:
- .....redeeming the mortgage- (i) on the principal amount found or declared due on the mortgage at the rate payable on the principal, or where no such rate is fixed, at such rate as the court deems reasonable, (ii) * * * * * (iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage security up to the date of the preliminary decree and added to the mortgage money at the rate agreed between the parties, or, failing such rate, (at such rate not exceeding 6 per cent per annum as the court deems reasonable) and (b) subsequent interest up to the date of realisation or actual payment on the aggregate of the principal sums specified in clause (e) as calculated in accordance with that clause at such rate as the.....
Judgment:

Ramendra Mohan Datta, J.

1. This is an application by the defendants judgments-debtors in a mortgage suit for the determination of the amount payable to the decree-holder under the preliminary and the final decrees dated September 2, 1955 and September 5. 1957 respectively. The matter is now pending in a reference proceeding under the said final decree before the Registrar of this court.

2. Under the preliminary decree it was ordered that a sum of Rs. 65,000/- as the principal and interest calculated upto the date of the institution of the suit amounting to Rs. 9026/5/3 were payable by the defendants to the plaintiffs under the mortgage. For the payment of subsequent interests the preliminary decree further provides the following viz: 'together with such subsequent interest as may be payable under Rule 11 of Order XXXTV of the First Schedule to the Code of Civil Procedure 1908.'

3. The final decree also provides for subsequent interest in similar language. It is contended that no rate is specified and as such no amount is payable by way of subsequent interest from the date of the institution of the suit. On behalf of the defendants it is further contended that both under Rule II of Order XXXIV of the Code and under Section 34 of the Code the fixation of the rate of interest is a matter which it to be in the discretion of the court and the rate under such provision must be a reasonable rate. The Court has to apply its mind to determine at what rate such subsequent interest is payable by the judgment-debtor to the decree-holder. No such judicial determination having been arrived at by the Court no such interest is to be determined at this stage. Accordingly, it should be deemed to have been refused.

4. From the series of decisions in connection with this point it appears that a distinction has been drawn in respect of cases where subsequent interest has not been provided at all and cases where although subsequent interest has been provided, no rate has been specified. In the former cases it has been decided that the Court must be deemed to have refused to allow any subsequent interest but in respect of the latter casts the rate has been mentioned by the Court at the prevailing Court rate of interest and on that basis the decree has been construed.

5. In this case on behalf of the decree-holder it is contended that the Report of the Registrar, made after the preliminary decree, was confirmed by this Court by the Final Decree dated September 5, 1957. The petitioners judgment-debtors did not at the relevant stage take any exception from the said Report and accordingly, until the said Report would be varied or modified or set aside, the same could not be reopened now. I uphold the contention of Mr. Milter on this point. Rightly or wrongly the Report stands confirmed and the final decree has been passed. At this stage the judgment-debtors are estopped from agitating the point relating to the quantum of the amount payable to the decree-holder. Under the provisions of Chapter XXVI of the Original Side Rules such a report has stood confirmed. Accordingly, the interested as calculated by the Report and as confirmed by Court is payable.

6. On the question as to whether subsequent interest on the principal sum after April 1, 1957, upto which date interest was allowed by the Registrar in his report under the preliminary decree, is payable or not Mr. Chatterjee on behalf of the judgment-debtors has relied on the provisions of Order XXXIV. Rule 11 of the Code and also on Sub-section (2) of Section 34 of the Code which provide as follows:

'Order XXXIV, Rule 11 :

In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the Court may order payment of interest to the mortgagee as follows, namely:

(a) interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage-

(i) on the principal amount found or declared due on the mortgage at the rate payable on the principal, or where no such rate is fixed, at such rate as the Court deems reasonable,

(ii) * * * * *

(iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage security up to the date of the preliminary decree and added to the mortgage money at the rate agreed between the parties, or, failing such rate, (at such rate not exceeding 6 per cent per annum as the Court deems reasonable) and

(b) subsequent interest up to the date of realisation or actual payment on the aggregate of the principal sums specified in clause (e) as calculated in accordance with that clause at such rate as the Court deems reasonable.'

'Section 34(2) :

Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie.'

7. The main argument is that the Court has to apply its mind in arriving at the reasonable rate of interest at the time of the passing of the Preliminary and the Final Decrees. Since that was not done the payment of such interest would be deemed to have been refused. Mr. Chatterjee also contends that the provisions of Section 34 of the Code of Civil Procedure are general provisions for payment of interest but as regards mortgage suits special provision regarding payment of interest has now been codified in Order XXXIV. Rule 11 of the Code of Civil Procedure. Mr. Chatterjee contends that the principle laid down in the old decisions, which were made prior to the Code of 1908, is no longer good law and the point has now to be decided with particular reference to the special language used in Order XXXTV Rule 11 of the Code. Mr. Chatterjee relied on the Supreme Court case of Soli Pestonji Majoo v. Ganga Dhar Khemka. : [1969]3SCR33 and the observation at p 604 which ran as follows:

'It was held by the Federal Court in Jaigobind Singh v. Lachmi Narain Ram, AIR 1940 FC 20 that the language of the rule gives a certain amount of discretion to the Court so far as interest pendente lite and subsequent interest is concerned and it was no Linger absolutely obligatory or the Courts to decree interest at the contractual rates upto the date of redemption in all circumstances even if there is no question of the rate being penal, excessive or substantially unfait within the meaning of the Usurious Leans Act, 1918. In view of the principle laid down by the Federal Court in this decision we are of opinion that in the circumstances of the present case the respondent should be granted interest on the principal sum due at the contractual rate till the date of the suit and simple interest it 6 per cent per annum on the principal sum adjudged from the date of the suit till the date of the preliminary decree and also at the same rate till the date of realisation.'

8. In the cast before the Supreme Court the High Court granted Interest to the respondent at the rate of 12% per annum with monthly rests even after the date of the suit and the maximum rate which should have been allowed was not more than 6 per cent per annum simple on the principal sum adjudged. Following the decision in Jagannath Prosad Singh Chowdhury v. Surajmul Jalal, reported in AIR 1927 PC 1 the Supreme Court observed:

'Till the period for redemption expired therefore the matter was considered to remain in the domain of contract and interest had to be paid at the rate and with the rests specified in the contract of mortgage but after the period for redemption had expired the matter passed from the domain of contract to that of judgment. The right of the mortgagee would henceforth depend not on the contents of his bond but on the directions of the decree.'

9. It is to be remembered that the Supreme Court reduced the rate to 6 per cent per annum while hearing the appeal from the order of the High Court which provided for 12 per cent interest per annum. In the case before me the question is whether at this stage the Court can construe the decree in such a way that the omission in the decree to specify the rate of interest can be filled up and if so, what should be such reasonable rate of interest.

10. Mr. Mitter, appearing on behalf of the decree-holder, has relied on some old decisions which were decided prior to the conactmem of the Code of Civil Procedure, 1908. In the case of Rani Lalun Mani v. Behari Lal Mookerjee. (1871) 7 Beng LR App 30 it was contended that as the decree was silent in fixing the rate of interest, no interest could be allowed at all although it was provided in the decree that from the date of decision to the date of liquidation, 'interest' should be given. The Division Bench of this Court lilied on a decision in Mst. Soobudra Bebee v. Sheo Churn Lall, (1867) 7 Suth WR 375 at p. 376 in which it was laid down that where a decree did not specify any particular rate of interest, 12% should be given. The Court also took into consideration the fact that various sums of money in part satisfaction of the decree with interest at the rate of 12% had been paid for the period subsequent to the decree. The Bench accordingly did not interfere with the order of the Subordinate Judge who granted interest at 12% and dismissed the appeal. In another case of Madhub Lal Khan v. Noyan Ghose, (1908) 6 Cal LR 231, another Bench of this Court held that where a decree was passed for certain amount with interest, the rate not being specified, the Court should allow the Court rate of interest which prevailed at the date of the decree. On that basis 12% which was prevailing as the Court rate of interest at that time, was allowed.

11. In the case of Indian Insurance and Banking Corporation Ltd. v. Mani Paravathu, : (1971)3SCC893 the Supreme Court held that interest after the date of the suit was always in the discretion of the Courts and the normal rate of Court interest was 6%.

12. Following these decisionsMr. Mitter argued that the Supreme Courtalso held that the normal rate of Court interest was 6% and accordingly the subsequentinterest which is provided by the preliminarydecree and the final decree should be-granted at the rate of 6% although the said decrees are silent about the rate of interest. Itis further contended that this is not a casewhere there is total omission to provide forsubsequent interest.

13. The decree was drawn up in accordance with Form No. 5 of Appendix 'D' to the First Schedule of the Code of Civil Procedure. The actual rate was not mentioned therein hut the intention was quite clear that the Court intended to grant subsequent interest. Accordingly following the Supreme Court case the rate of 6% simple interest should be allowed.

14. In my opinion, in the facts and circumstances of this case the Court did intend that subsequent interest was to be paid but as regards the rate of interest in the facts and circumstances of this case it must be held that the Court rate of interest which is 6 per cent per annum from the date of the final decree till actual payment is received on the principal amount due was intended to be allowed as the casonable rate. Accordingly, such subsequent interest is determined payable the rate of 6% per annum for the period as aforesaid. The prayer for instalment is refused. The decree-holder's costs of this application would be added to its claim.


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