JAGANNATH PIGMENTS AND CHEMICALS Vs. BANK OF BARODA

JUDGEMENT

(1.) This is an appeal by the judgment-debtors from the decree passed by the Civil Judge, Senior Division, Thane, decreeing the suit of the bank in the amount of Rs. 1,66,759.29 with proportionate costs. In clause 2 of the operative order, interest has been awarded at the rate of 13 1/2 per cent. per annum on the very amount from the date of the suit till payment to, or realisation by, the plaintiff.

(2.) The appellants have, in the first place, impugned the award of interest at 13 1/2 per cent. placing reliance on the observation of a Divisions Bench of the Karnataka High Court in D. S. Gowda v. Corporation Bank [1985] 57 Comp 49 (Kar). We are not in total agreement will either the approach or the conclusion of the said Division Bench. On the other hand, we have decision of a Division Bench of the Gujarat High Court in Central Bank of India v. P. R. Garments Industrial P. Ltd. [1987] 62 Comp Cas 669, where it has been observed that in respect of commenced loans, the decree should award interest at the contractual rate or the bank rate.

(3.) Under the amended section 34 of the Code of Civil Procedure, a proviso has been added permitting the court to grant interest form the date of the suit to the decree-holder at the contractual rate in respect of commercial transactions. We do not see why in this matter the rate of interest should not be the agreed rate of 13 1/2 per cent. though we make clear that from and after the date of the suit, interest will be calculated on simple interest basis and not on the basis of rests, annual, six-monthly or quarterly.