SARASWATI ELECTRICALS BIJAPUR Vs. UNION BANK OF INDIA

JUDGEMENT

(1.) The suit was for recovery of money. The trial Court decreed the suit with costs granting six monthly instalments charring 6% interest per annum as future interest. The lower appellate Court partly allowed the appeal and decreed the suit in following terms:

(2.) The learned Counsel for the appellant, however, strenuously urged before me that when the Court exercises its jurisdiction under O. 20 Rule 11 of C. P. C. in granting instalment decree, the provisions of Section 34 would not apply. For that proposition, he relied on a Division Bench decision of this Court in the case of Karnataka Bank Ltd. v. Thriyambak Venkatesh Hebsur (1977 (2) Kant LJ 46) wherein, it is no doubt true that their Lordships have laid down relying upon an earlier decision of this Court rendered in RFA No. 16 of 1974 dated 8-12-1975 that the court is at liberty to give rate of interest in accordance with the prevailing rate of interest in the market, while an instalment decree is granted. In the decision it is stated thus:

(3.) Subsequently, however, Section 34 itself is amended in 1976 and the amended Section 34(1) reads: "Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the 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 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. Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions." Thus, it becomes clear that what was observed by this Court in R. F. A. No. 16 of 1974 by its judgment, has been subsequently incorporated in the C. P. C. itself giving directions that when the loan is a commercial loan the rate of interest should be given at the prevailing market rate not exceeding the bank rate. In this case it is seen that the bank is the plaintiff. Therefore, there is no substance in the argument advanced before me that Section 34 C. P. C. did not apply to the facts of the case and that the rate of interest could not be raised from 6 per cent to 12 1/2 per cent by the learned District in the appeal. Hence, there is no substantial question of law involved in this appeal and the same is dismissed in limine.