UNION BANK OF INDIA Vs. P KRISHNAIAH

JUDGEMENT

(1.) The appellant-Bank lent to the respondents a sum of Rs. 35,000/- on the foot of a promissory note, Ex. A-1 dated September 18, 1975, a letter of guarantee Ex. A.2 of the even date executed by the 2nd defendant and an equitable mortgage executed by the 1st defendant by depositing of title deeds Exs. A-4 and A-5 dated July 19, 1967 and July 14, 1973 respectively. The trial Court granted a money decree against both the defendants for Rs. 35,000/- with 12% simple interest thereon per annum from the date of the suit till date of realisation. The contracted rate is 161/2 %. The appellant is aggrieved against the rate of interest scaled down by the trial Court from the contractual rate. Sri. Harnath, learned counsel for the appellant, has realised on S.79 of the Negotiable Instruments Act, 26 of 1881 (for short the Act) which postulates thus :

(2.) It is next contended that S.79 applies to the negotiable instruments and the rate of interest shall be charged till the rate of interest shall be charged till the date of realisation or until such date after the institution of the suit as fixed by the Court. Therefore the Court ought to grant interest at the contractual rate. I express my inability to accept the contention of the learned counsel. It is undoubtedly true that S.79 operates in respect of rate of interest on the principal sum due under negotiable instruments and it empowers interest when rate is specified from the date of the institution until the amount is tendered or realised or until such date so fixed after the institution of the suit to recover the amount, the subject-matter of the suit; S.34 of the Code equally gives power to the Court in respect of all money claimes. It was already held that money claims include claims based on negotiable instruments. In those circumstances S.79 of the Act and S.34(1) of the Code are to be harmoniously construed. What is the meaning of the clause 'until such date of the institution of a suit,? Any date from the date of the institution of a suit is the intendment of S.79. If they are so harmoniously construed, it may be construed to be the date of the suit and the rate of interest charged on a negotiable instrument shall be from the date of the institution of the suit pendente lite. The reason is that both S.79 and S.34(1) gives discretion to Court to award such rate from a date and such rate as is reasonable depending upon the facts and circumstances obtainable in a given case. Otherwise, the Legislature would have expressly made an express proviso in S.34(1) itself in regard to the rate of interest pertaining to the claims based on negotiable instruments. The Legislature having left the discretion to the Civil Court, it cannot be construed that the power is by implication taken away as contended by Mr. Harnath.

(3.) It is no doubt true that in Utsav Lal v. Mohan Bros., AIR 1975 Raj 236 the learned Judge has held that S.79 of the Act prevails over S.34 of the Code, but with all due respect to the learned Judge I express my inability to agree with the ratio. If S.79 of the Act is strictly construed and applied, then to that extent it amounts to judicial legislation of cutting down the operation of S.34 relating to claims on negotiable instruments which are advised not engrafted. In Piara Lal v. S. Herchand, AIR 1961 P&H 442, the bench has held that S.34 of the Code applies for fixation of rate of interest pendente lite. With due respect, I agree with the ratio in the above case. Though the ratio in Lehru Narain v. Kanhaiyalal, AIR 1973 Raj 316 was relied upon by Sri Harinath with regard to the power of the Court to grant rate of interest even higher than the contractual rate of interest, with great respect, I express my inability to accede to the ratio laid in the above case. The Court cannot grant higher rate of interest than what was contracted between the parties even pendente lite. The area is covered by contract or statute. Section 34(1), C.P.C. regulates the gray area. By implication it is either contractual rate or less, but not in excess thereof. Accordingly I hold that the grant of rate of interest at 12% from the date of institution till the date of realisation is in consonance with S.34 of the Code. In fact the rate of interest at 12% from date of decree till date of realisation is contrary to S.34(1) of the Code. But no appeal or cross-objections were filed by the respondent. Therefore it does not warrant interference.