IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN WEDNESDAY, THE 30TH JUNE 2010 / 9TH ASHADHA 1932 AS.No. 677 of 1994(B) --------------------- OS.796/1991 of I ADDL.SUB COURT,TRIVANDRUM .................... APPELLANT(S)/PLAINTIFF: -------------- STATE BANK OF INDIA, BRANCH AT M.G.ROAD, THIRUVANANTHAPURAM (MAIN BRANCH), REPRESENTED BY ITS MANAGER. BY ADV. SRI.S.S.KALKURA, R.S.KALKURA SRI.MOHAN JACOB GEORGE RESPONDENT(S)/DEFENDANT: --------------- 1.M/S.RACK MARKETING AGENTS, OFFICE AT T.C.NO.36/920, PLANCHERRY NORTH, PERUMTHANNI, THIRUVANANTHAPURAM. REP. BY ITS MANAGING PARTNER PREMAN RITCHIE, SON OF R.S.MIRANDA, AGED ABOUT 39, RESIDING AT 'RICO', MURUKKUMPUZHA, THIRUVANANTHAPURAM. 2.PREMAN RITCHIE,SON OF R.S.MIRANDA,AGED ABOUT 39, RESIDING AT 'RICO', MURUKKUMPUZHA, THIRUVANANTHAPURAM. PARTNER, M/S.RACK MARKETING AGENTS, DO. DO. 3.M.THAJUDEEN,SON OF MOHAMMED MUSTAFA, AGED ABOUT 38, RESIDING AT ANCHUPARAYIL, PERINGAMMALA P.O., PALODE, THIRUVANANTHAPURAM, PARTNER,M/S.RACK MARKETING AGENTS, T.C.36/920, PLANCHERRY NORTH, PLANCHERRY LANE, PERUMTHANNI, THIRUVANANTHAPURAM. 4.MOHAMMED BASHEER,SON OF MOHAMMED, AGED ABOUT 38, RESIDING AT PUTHEN BUNGLOW, PAPPANAMCODE, PALODE, THIRUVANANTHAPURAM. 5.M.H.SHEEBU,SON OF MOHAMMED HANEEFA, AGED ABOUT 38, RESIDING AT ANCHUPARAYIL, PERINGAMMALA P.O., (VIA) PALODE, THIRUVANANTHAPURAM. ADV. SRI.P.B.SAHASRANAMAN SRI.K.JAGADEESH THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 30/06/2010 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: THOTTATHIL B.RADHAKRISHNAN & S.S.SATHEESACHANDRAN, JJ. --------------------------------------- A.S.No.677 of 1994 --------------------------------------- Dated this the 30th day of June, 2010 JUDGMENT THOTTATHIL B.RADHAKRISHNAN, J. This appeal is by plaintiff, a statutory bank. 2. The first defendant is a partnership firm. Defendants 2 onwards are its partners. The last two among the defendants offered certain properties as security to support the facility of bank guarantee provided by the plaintiff for the business purposes of the 1st defendant. The guarantee was executed in favour of the Cement Corporation of India. That guarantee was invoked. Resultantly, the plaintiff was entitled to be paid the amount covered by the counter guarantee, Ext.A2. On refusal, notice was issued to the defendants including a claim for interest at 17.5% plus A.S.No.677 of 1994 :: 2 :: 1% penal interest. That demand was neither responded to nor satisfied. The plaintiff sued. The defendants remained ex parte. The court below passed a decree for recovery of money, however, granting post-suit interest only at 6% per annum. 3. In this appeal by the plaintiff bank, the fundamental plea raised is that the court below acted illegally in refusing to grant post-suit interest at the pleaded rate i.e. 17.5% plus 1% penal interest. 4. The documents evidencing the transaction between the parties do not disclose any particular rate of interest. Notwithstanding that, the pleadings in the plaint show that the transaction is a commercial one. That is not refuted by the defendants. We also find that the court below did not state any reason restricting the rate of post-suit interest to be at 6%. Being a matter of A.S.No.677 of 1994 :: 3 :: discretion, the court below ought to have reasoned its decision as to the rate of post-suit interest. The bank guarantee was obtained for a commercial purpose and in connection with the commercial transaction of the first defendant firm. That having been invoked, the bank was entitled to treat counter guarantee as generating sufficient ground to make a claim for interest at commercial rate. Totality of the facts and circumstances have to be taken into account while exercising judicial discretion as regards the rate of interest to be awarded pending suit under Section 34 of the Code of Civil Procedure. We are supported in this view by the decision of the Division Bench of this Court in Catholic Syrian Bank Limited v. N.V.Varkey and others {1987(2) ILR Kerala 331}. Taking the nature of the transaction into consideration and having regard to A.S.No.677 of 1994 :: 4 :: the absence of contest to the suit, we are of the view that post suit interest at the rate of 12% per annum will do complete justice between the parties. In the result, the appeal is allowed in part, modifying the decree of the court below and awarding interest at the rate of 12% per annum, instead of 6%, from the date of suit, till date of realisation, with proportionate costs. Sd/- (THOTTATHIL B.RADHAKRISHNAN) JUDGE Sd/- (S.S.SATHEESACHANDRAN) JUDGE sk/ //true copy// P.S. to Judge.