INDIAN BANK Vs. P VENKATA SATYAVATHI

JUDGEMENT

(1.) In both these revisions filed by the decreeholder-Bank, common questions are raised. The Bank had filed suits for recovery of money which was obtained as loan by the two debtors. It had also prayed for grant of future interest. After trial, the suits were decreed and in the decree that was drafted future interest was directed to be paid on the entire suit amount. It appears that execution was levied on the basis of the said decree and the decretal amount also realised. Later on, the defendants in both the cases filed applications for amendment of the decree under Sections 151,152 and 153 C. P. C., contending that the decree was not in accordance with the judgment in as much as future interest could be granted under Section 34 of C. P. C., only on the principal amount and not on the entire suit amount. The Bank opposed the application, but the trial court by the impugned order directed that the decree be amended by substituting the principal amount in the place of the suit amount on which future interest is to be paid.

(2.) In these revisions it is contended by Sri P. L. N. Sarma, learned counsel for the Bank that the loans were granted by the Bank with an agreement that it should befepaid together with compound interest at quarterly rests. According to him, after the quarterly rests, the interest due would become part of the principal for the purposes of calculating future interest. In this view he has contended that the order granting amendment of the decree was not justified. He has relied upon two decisions of the Madras High Court reported in Sigappiachi vs. Palaniappa and Lakshmanan Chettiar vs. Karuppan Chettiar in support of his contention.

(3.) Sri T. Veerabhadrayya, learned counsel for the defendant has, however, tried to distinguish these cases on the ground that they relate to account suits and not suits for recovery of loans and also invited my attention to the Bench decision of the Madras High Court reported in Mahalinga Aiyar vs. Union Bank, Kumbakonam which directly supports his contention that future interest under Section 34 C. P.C. could be granted on the principal amount of the loan and not on anything else. The controversy therefore is about the meaning to be given to the words 'principal amount' used in Section 34 C.P.C., for the purpose of grant of future interest. The Division Bench judgment of the Madras High Court in Mahalinga Aiyar vs. Union Bank, Kumbakonam is binding on me. But the two subsequent decisions relied upon by Mr. Sarma are also of the Division Bench of the same Court, though after the formation of the Andhra Pradesh High Court. Prima facie, I am also of the view that in view of the changed circumstances that the lenders are mostly public institutions the 1943 decision of the Madras High Court requires reconsideration as it will put the debtor who is in default in an advantageous position than the debtors who are regularly paying the amount. For this purpose, I consider that the matter should be referred to a Division Bench for consideration and an authoritative pronouncement as this question will arise in several suits by banks or public financial institutions.