IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 98 of 1994 Date of decision: 27.07.2010 _________________________________________________________________ Asha Kumari & another .....Appellant. Versus State of H.P. and others .....Respondents. Coram The Hon'ble Mr. Justice R.B. Misra, J. The Hon'ble Mr. Justice V.K. Sharma, J. 1 Whether approved for reporting? _________________________________________________________________ For the appellant: Mr. Anand Sharma, Advocate. For the respondents: Mr. Rajinder Dogra, Additional Advocate General with Mr. Anil Jaswal, Deputy Advocate General. V.K. Sharma, J. (Oral). The present appeal arises out of the judgment and decree dated 21.07.1994, passed by a Single Judge of this Court, whereby the suit for grant of a decree for Rs. 5,65,619.40 with costs and future interest @ of Rs. 12% per annum from the date of suit, till entire amount is realised, filed by the appellants as plaintiffs against the respondents being the defendants was partly decreed for a sum of Rs. 2,28,561/- in the following terms: “ In view of the aforesaid discussion, the plaintiffs are entitled to recover remaining sale price of Rs. 2,28,561/- (Rs. Two Lacs twenty eight thousand and five hundred sixty one.) from the defendants for which a money decree for Rs. 2,28,561/- (Rs. Two Lacs twenty eight thousand and five hundred sixty one.) is passed in favour -2- of the plaintiffs and against the defendants. Suit for remaining amount preferred by the plaintiffs stands dismissed. The counter claim for Rs. 4,69,265-30 paise (Rs. Four Lacs sixty nine thousand two hundred sixty five and thirty paise) preferred by the defendants is, however, dis-allowed. The plaintiffs shall be entitled for proportionate costs from the defendants.” 2. Though, a decree in the sum of Rs. 2,28,561/- has been passed in favour of the plaintiffs, yet the same is silent about payment of any interest and to this extant the plaintiffs are aggrieved by dissatisfied the impugned judgment and decree dated 21.7.1994. 3. In order to resolve the controversy between the parties, it is necessary to notice brief facts of the case. Admittedly, the plaintiffs were the owners in possession of the property known as “Akhandchandi Palace” and “Zanana Palace” situate in the district town of Chamba, Himachal Pradesh. It is also admitted that this property was purchased by the respondent-State of H.P. (defendant No.1) from the plaintiffs, vide Registered Sale Deed Ex. P-18, executed on 30.04.1971 and registered on 07.04.1971, for the establishment of Government Degree College, Chamba, H.P. It is also not in dispute that possession of the sold property except “Zanana Palace” and “Darbar Hall” stood simultaneously delivered to the defendant-State at the time of execution/registration of sale deed. Later on, possession -3- of “Darbar Hall” was also delivered to the defendant- State. However, in so far as the “Zanana Palace” is concerned, possession thereof was with one Shri Narayan Singh and his Sister, which was subject matter of litigation between the defendant-State and the said Shri Narayan Singh and his Sister. It is in evidence that possession of “Zanana Palace” was ultimately delivered to the defendant- State on 17.09.1986. 4. Though, the case set up by the plaintiffs is that they are entitled for interest on the decretal amount of Rs. 2,28,561/- with effect from July, 1984 when the aforesaid litigation between the defendant-State and the said Shri Narayan Singh and his Sister was finally decided. In the alternative, the submission is that in any case they are entitled for interest with effect from 17.9.1986 when actual physical possession of “Zanana Palace” was delivered to the defendant-State. 5. The matter with regard to grant of interest falls within the ambit of Section 34 of the Code of Civil Procedure, 1908 which is extracted below: “(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest -4- adjudged on such principal sum for any period prior to the institution of the suit, [with further interest at such rate not exceeding six per cent per annum, as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit: [Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions. Explanation -I- In this sub-section, “nationalized bank” means a corresponding new bank as defined in the Ban king Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). Explanation – II- For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.] (2) Where such a decree is silent with respect to the payment of further interest [on such principal sum] from the date of the decree to the date of payment or other -5- earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.” 6. As noticed herein above, the dispute herein concerns payment of pendente-lite interest on the decretal amount of Rs. 2,28,561/- on and with effect from 17.09.1986 to the date of impugned judgment and decree dated 21.07.1994 and future interest thereafter, till realization of the said sum of Rs. 2,28,561/-. 7. The operative part of the impugned judgment dated 21.07.1994 which has already been noticed and extracted herein above, is silent about the pendente-lite and future interest. In such circumstances, on a plain reading of Section 34 of the Code of Civil Procedure, payment of such interest would be deemed to have been denied. However, the learned counsel for the plaintiffs contends and submits by placing reliance on a judgment rendered by a Division of this Court in RFA No. 323 of 1992 titled M/s Chemiplast Industries and another Versus Himachal Pradesh Agro- Industries Corporation Limited wherein it has been held as under vide penultimate para and operative part of the judgment:- “Normally, any defendant who denies the legitimate claim of the plaintiff has to be held liable to pay interest pendente - lite. No doubt, -6- Section 34 is couched in discretionary terms. However, the discretion must be exercised by the Court in a judicious manner. The transaction in question was a commercial transaction. However, no contractual rate of interest was specified nor the same prevailing rate has been properly proved on record. The claim of the plaintiffs has been adjudicated to be legal and valid. Therefore, we are of the considered view that the plaintiffs are entitled to recover the decretal amount alongwith interest @ 6% per annum as prescribed in Section 34 of the CPC. Keeping in view the aforesaid discussion, we partly allow the appeal of the plaintiffs and hold that the plaintiffs are entitled to interest @ 6% per annum on the decretal amount of Rs. 1,76,800/- with effect from 1.9.1983, i.e. the date of filing of the suit till payment/ deposit of the said amount.” 8. The learned counsel for the plaintiffs has further relied upon an authority of the Hon'ble Supreme Court in Thazhathe Purayil Sarabi and Others versus Union of India and Another, (2009) 7 SCC 372, wherein it has been held as under vide paras 26, 28, 33 and 38 :- “26. The courts are consistent in their view that normally when a money decree is passed, it is most essential that interest be granted for the period during which -7- the money was due, but could not be utilised by the person in whose favour an order of recovery of money was passed. 28. The only question to be decided is since when is such interest payable on such a decree. Though, there are two divergent views, one indicating that interest is payable from the date when claim for the principal sum is made, namely, the date of institution of the proceedings in the recovery of the amount, the other view is that such interest is payable only when a determination is made and order is passed for recovery of the dues. However, the more consistent view has been the former and in rare cases interrest has been awarded for periods even prior to the institution of proceedings for recovery of the dues, where the same is provided for by the terms of the agreement entered into between the parties or where the same is permissible by statute. 33. This Court in Jagdish Rai case went on to observe that the courts have taken a view that the award of interest under Section 34 of the Civil Procedure Code is a matter of procedure and ought to be granted in all cases where there is a decree for money unless there are strong reasons to decline the same. In the said case, this Court modified the decree of the Court of the Subordinate Judge by -8- including a direction for payment of interest @ 12% per annum from the date when the award was made the decree of the rt of the Subordinate Judge, till realisation. 38. As we have indicated earlier, payment of interest is basically compensation for being denied the use of the money during the period in which the same could have been made available to the claimants. In our view, both the Tribunal, as also the High Court, were wrong in not granting any interest whatsoever to the appellants, except by way of a default clause, which is contrary to the established principles relating to payment of interest on money claims.” 9. True it is that payment of interest is in the discretion of the Court. However, even if, the impugned judgment and decree dated 21.07.1996 is silent, on this aspect, this Court in exercise of the judicial discretion is well within its right to grant such interest. More so, when a part of the sale consideration in respect of the sold property to the extent of Rs. 2,28,561/- remained unpaid, even after the defendant-State entered into possession of the aforesaid part of the property sold, known as “Zanana Palace”. 10. In view of the factual matrix and the legal position on the subject, discussed herein above, we are more -9- than satisfied that it shall be expedient and in the interest of justice that the plaintiffs are awarded 6% interest on the decretal amount of Rs. 2,28,561/- with effect from 17.9.1986 up till 21.7.1994, i.e. the date of the impugned judgment and decree and thereafter up till the actual date of realization thereof, if not already paid. Ordered accordingly. 11. The Appeal stands disposed of in the above terms. In view of disposal of the main appeal, pending CMP(s), if any, shall also stand disposed of. (R.B. Misra) Judge (V.K. Sharma) Judge 27th July, 2010 (pritam)