CENTRAL BANK OF INDIA Vs. RAVINDRA

JUDGEMENT

(1.) WHAT is the meaning to be assigned to the phrases ''the principal sum adjudged'' and ''such principal sum'' as occurring in Section 34 of the Code of Civil Procedure, 1908 [as amended by the Code of Civil ProcedureAmendment) Act66 of 1956) w. e. f. 1. 1. 19571, a question of frequent recurrence and having far reaching implications in suits for recovery of money, specially those filed by banking institution 1 s against their borrowers, has been referred by a three Judges Bench of this court to the Constitution Bench.

(2.) IT will be useful to reproduce the order of reference dated 7. 05. 1996 [since reported as (1996) 5 SCC 279)1) so as to highlight the nature and scope of controversy arising for decision before the Constitution Bench ''order After hearing learned Attorney General and amicus curiae S/shri A. Subba Rao Ranjit Kumar and K. M. K. Nair onthe interpretation of the provisions of Section 34 CPC on ''the principal sum adjudged'' the matter is required to be considered by a Constitution Bench. The learned Attorney General has drawn our attention to the judgments of this Court in Corpn. Bank vs. D. S. Gowda and Bank of Baroda vs. Jagannath Pigment and Chem. wherein lie sought to draw the deduction that the principal sum adjudged and the principal sum mentioned later would be the same. He seeks to take support from the word 'such' in support of his contention. Preceding Amendment Act 66 of 1956, the words were ''aggregate sum so adjudged'' and after amendment, were substituted with the words ''the principal sum adjudged'', from the date of tie suit to the date of the decree, in addition to any interest adjudged on such ''principal sum'' for any period prior to the institution of the suitwith further interest on such date as the court deems reasonable on the ''principal sum'')*. The distinction, therefore, was not drawn to the attention of this Court in the aforesaid two judgments in particular the later one. As a fact no argument in this behalf appears to have been canvassed. Interpretation of the liability of the borrower to pay interest on the principal sum to include interest that became merged with the principal sum adjudged or principal sum as lent, is required to be authoritatively laid down by a Bench of five Judges. The Registry is directed to place the matter before the Hon'ble the Chief Justice for constituting the Constitution Bench, *[sic. , should have been - with further interest at such rate not exceeding six per cent per annum, as the Court deems reasonable on such 'principal sum', in our opinion]. Section 34 (1) of C. P. C. and 1956 Amendment3. Sub-section1) of Section 34 above said, as it stood prior to the 1956 amendment, and as it stands amended, are reproduced in juxta position hereunder: Prior to amendment

(3.) 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 therefore shall not lie. [portions affected by amendment placed in bracket)4. By the 1956 amendment, in Section 34, for the words ''with further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged'', the words ''with further interest at such rate not exceeding six percent, per annum as the Court deems reasonable on such principal sum'' have been substituted in subsection1. In subsection2) the words ''on such aggregate sum as aforesaid'' have been deleted and the words ''on such principal sum'' have been substituted. The phrases ''on the principal sum adjudged'' and ''such principal sum'', as occurring in the opening part of subsection1) of Section 34, have not been touched by the amendment.