PUNJAB NATIONAL BANK Vs. RAJBIR SINGH AND ORS.

JUDGEMENT

(1.) THE Punjab National Bank challenges preliminary decree dated 17.10.1994, passed by the Sub Judge, 1st Class, Jhajjar and judgment and decree dated 30.10.1995, passed by the Additional District Judge, Rohtak, on the question of award of interest. Counsel for the appellant submits that while decreeing the suit, the trial Court awarded interest @ 12% per annum on the principal amount from the date of loan till the date of decree and future interest @ 6% per annum. The first appellate Court awarded a flat rate of 11% per annum from the date of institution of the suit till payment of the decretal amount. The Courts below were unmindful of the fact that the loan was a commercial transaction and, therefore, a decree was required to be passed in terms of the mortgage deed i.e. interest @ 12% per annum with half yearly rests and in case of default additional penal interest @ 2% per annum. The impugned judgments and decrees may, therefore, be modified.

(2.) COUNSEL for the respondents submits that the impugned judgments and decrees are legal and valid as in a mortgage suit interest has to be calculated under Order 34 Rule 11 of the C.P.C. and not as per Section 34 of the C.P.C. The first appellate Court has, therefore, rightly decreed the suit with future interest @ 11%.

(3.) THE substantial question of law that arises for adjudication is the, rate of future interest to be awarded in a mortgage suit.