Bombay High Court

Vikram S/O Somaji Dhabale And ... vs Bisan S/O. Ramaji Katgaye on 30 June, 2017

Bench: A.S. Chandurkar

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          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                    NAGPUR BENCH : NAGPUR
                        Second Appeal No. 382 of 2016


 1.      Vikram son of Somaji Dhabale,
         aged about 58 years,
         occupation - service,
         resident of Bhuraji Nagar,
         Kamptee, Distt. Nagpur.

 2.      Indubai wife of Vikram Dhabale,
         aged about 48 years,
         occupation Household,
         resident of Bhuraji Nagar,
         Kamptee, Distt. Nagpur.         .....                  Appellants.


                                   Versus


 Bisan son of Ramaji Katgaye,
 aged about 65 years,
 occupation - Retired,
 resident of Bhuraji Nagar,
 Kamptee, Distt. Nagpur.                        .....        Respondent.


                                *****
 Mr. R. I. Agrawal, Adv., for the appellants.

 Mr. H. I. Kothari, Adv., for respondent sole.


                                    *****


                                CORAM :        A.S. CHANDURKAR, J.

                                Date       :   30th June, 2017




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 ORAL JUDGMENT:

01. This Second Appeal has been heard on the following

substantial question of law:-

"Whether the Court could have awarded interest on the principal amount?"

For considering this substantial question of law, it is

necessary to refer to few facts.

02. The appellants are the original defendants in a suit filed by

the respondent for recovery of an amount of Rs.1,50,000-00. It is the

case of the original plaintiff that he is related with the defendants and

the defendants were in need of financial assistance. They told him to

seek a loan from a co-operative society by mortgaging his house. The

plaintiff was assured by the defendants that they would pay the

monthly installments. Accordingly, a loan was borrowed by the

plaintiff and about fifteen installments were paid by the defendants.

As the defendants subsequently did not pay the installments, the

plaintiff took various steps by lodging reports and ultimately filed a suit

for recovery of amount of Rs.1,50,000-00. This included an amount of

Rs. 1,44,050-00 towards the balance loan amount.

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03. In the Written Statement, the defendants took the stand that

hand loan of Rs.80,000/- without interest was taken from the plaintiff.

It was pleaded that the defendants paid Rs.1424/- every month and

after that stopped paying the amount. A set off was claimed for a

sum of Rs. 52,578/-.

04. The parties led evidence before the trial Court and by

judgment dated 13th February, 2014, the trial Court held that the

plaintiff had proved the hand loan of Rs. 1,00,000/- and further

execution of the compromise dated 23rd January, 2003 was also

proved. The trial Court, therefore, decreed the suit and directed the

payment of principal amount from the date of the suit till its

realization. The appellate Court by its judgment dated 5th July, 2016

dismissed the appeal and maintained the decree passed by the trial

Court. Being aggrieved, the present appeal has been filed.

05. Shri R. I. Agrawal, learned counsel for the appellants,

submitted that in so far as the principal amount as decreed is

concerned, there was no dispute that the same was duly paid to the

plaintiff. He, however, submitted that both the Courts were not

justified in awarding interest at the rate of six per cent per annum from

the date of filing of the suit till realization. He submitted that it was a

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case of hand loan being advanced to the plaintiff. Both the parties

were related and the transaction could not be said to be a commercial

transaction. According to him, under Section 34 of the Civil Procedure

Code, 1908, interest on the principal amount from the date of suit

could be awarded only if the transaction is a commercial transaction.

Relying upon the judgment of learned Single Judge in Manesh

Rajkumar Kanhed Vs. Ramesh Bhagwansa Walale [AIR 2007

Bombay 86], it was urged that at the highest, interest could be

awarded from the date of the decree and not for earlier period.

According to him, in view of said decision, a different view of the

matter should not be taken and for said purpose, he relied upon the

decision of the Honourable Supreme Court in Dr. Vijay Laxmi Sadho

Vs. Jagdish [(2001) 2 SCC 247]. He also placed reliance on the

decision of the Madras High Court in Central Bank of India Vs. Vet

Pharm & others [2013 (4) Civil LJ 654]. He, therefore, submitted that

the decree to that extent deserves to be modified.

06. Shri H. I. Kothari, learned counsel for the plaintiff, supported

the impugned judgment. According to him, both the Courts had

exercised a discretion while awarding interest from the date of the suit

and this discretion was not liable to be interfered with. He submitted

that the facts of the case were such that grant of interest was justified.

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According to him, the plaintiff was required to sell his house to clear

the arrears of the loan. Though the parties were related, there was

litigation amongst them and, therefore, merely because the parties

were related, the same cannot be a ground for disallowing the interest.

He then submitted that this ground regarding award of interest from

the date of the judgment was not specifically raised before the

appellate Court and, therefore, this Court should not go into said issue.

In support of his submissions, the learned counsel placed reliance upon

the judgments in Kakkarlal Vishwanathan Vs. M/s. Indian Silk

Mfg. Co. P. Ltd. [2005 (4) ALL MR 514] and Jayeshkumar Arun

Kumar Pandya Vs. Union of India & others [2010 (4) Mh. L.J. 784].

In reply, it was submitted that the question of law not

depending on facts can be raised in the Second Appeal. It was a

question of jurisdiction and, therefore, it should be permitted to be

raised. Reliance was placed on the judgment in Chittoori Subbanna

Vs. Kudappa Subbanna & others [AIR 1965 SC 1325] and the

judgment of the Division Bench in State of Maharashtra Vs. Govind

Goma Govari & others [2006 (2) AIR Bom.R 94].

07. With the assistance of learned counsel for the parties, I have

perused the records of the case and I have given due consideration to

their respective submissions.

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08. It is not in dispute that in so far as the principal amount

awarded under the decree is concerned, the same has been duly

satisfied in view of the payment made by the defendants. The only

issue that requires consideration is the grant of interest at the rate of

six per cent per annum from the date of the suit till its realization.

09. Grant of interest pendente lite is within the discretion of

the Court and its grant is not limited only to commercial transactions.

This position is clear and reference can be made to the decision in The

State of Madhya Pradesh & others Vs. M/s. Nathabhai

Desaibhai Patel [ (1972) 4 SCC 396]. Similarly, in Aditya Mass

Communications (P) Ltd. Vs. A.P. SRTC (2003) 11 SCC 17, the

Honourable Supreme Court observed in para 8 of its judgment, the

relevant portion of which is quoted below:-

"8. ........................................................................... .............The quantum of interest a Court may allow in a given case is governed by the facts of the case and not by any precedent law unless, of course, limited by a statute. If a Court comes to the conclusion on a given set of facts that a party has been wrongly denied the use of its own money, it is the duty of the Court to see that the said party is appropriately compensated. ....."

There cannot be any straitjacket formula in the manner of exercise of

discretion while granting interest pendente lite. It would depend on the

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facts of each case.

10. Since the learned counsel for the appellants has placed

heavy reliance on the judgment of learned Single Judge in Manesh

Rajkumar Kanhed [supra] to urge that pendente lite interest could not

have been granted, it would first be necessary to examine what was

held therein. In said case, suit for recovery of an amount of Rs.90,000/-

given as hand-loan was decreed with a direction to pay interest at the

rate of fifteen per cent per annum from the date of the suit till

realization. It was held that as the parties to the transaction were

relatives and the amount advanced was a hand-loan, it was not a

commercial transaction within the meaning of Explanation-II to Section

34 of the Code. The observations that giving of hand-loan would not

amount to a commercial transaction in terms of Section 34 of the Code

supports the stand of the defendants. The decision in Manesh

Rajkumar Kanhed [supra], however, does not lay down that pendente

lite interest can be granted only if the transaction is a commercial

transaction. It only holds that advancing of hand-loan cannot be a

commercial transaction. In said case, in the exercise of discretion,

interest pendente lite was not granted. In the aforesaid premise,

therefore, the reliance placed on the decision in Dr. Vijay Laxmi

Sadhao [supra] is misplaced.

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11. The Honourable Supreme Court in Dalibir Singh & others

Vs. State of Punjab [ (1979) 3 SCC 745] has observed that it is not

everything said by a Judge when giving a judgment that constitutes a

precedent. The only thing in the decision that is binding is the

principle upon which the case is decided. In para 22 of said decision, it

has been observed, thus:-

"22. .......................................................................... ..............According to the well-settled theory of precedents every decision contains three basic ingredients:

(I) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct or perceptible facts;

(ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and

(iii) judgment based on the combined effect of (I) and (ii) above.

For the purposes of the parties themselves and their privies, ingredient (iii) is the material element in the decision for it determines finally their rights and liabilities in relation to the subject-matter of the action. It is the judgment that estops the parties from reopening the dispute. However, for the purpose of the doctrine of precedents, ingredient (ii) is the vital element in the decision. This indeed is the ratio decidendi. ....."

It was also observed that even if the direct facts of earlier case appear

to be identical to those of the case before the Court, the Judge is not

bound to draw the same inference as drawn in the earlier case.

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12. Once it is clear that in the matter of grant of interest

pendente lite, the matter lies within the discretion of the Court, then

the scope for interference with such discretion is limited. The facts of

the present case indicate that the parties were related to each other

and to enable the defendants to tide over their financial distress, the

plaintiff had obtained a loan. Though the defendants initially paid

some installments, they defaulted thereafter. Ultimately, the plaintiff

was required to sell his house that was mortgaged to satisfy the dues