*1* wp.7781.09.949.sxw kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7781 OF 2009 Shahupuri Vyapari Nagari Sahakari Pat Sanstha Ltd.. ..Petitioners ­Versus­ Sunil Purandar Adake and others. ..Respondents .......... Mr.P.D.Dalvi, for the Petitioners. Mr.Datta H. Pawar, for the Respondent No.1. .......... CORAM : S.C.DHARMADHIKARI, J. Date : 05th July, 2011. P.C.: 1 This Writ Petition under Article 227 of the Constitution of India is directed against the order passed by the Maharashtra State Co­ operative Appellate Court, Mumbai camp at Kolhapur in Appeal No. 183/2005. This appeal was directed against the judgment and award of the Co­operative Court No.1, Kolhapur dated 05.03.2004. 2 By the order under challenge the Appellate Court has partially allowed the appeal and has interfered with the award of the Trial Court to the extent of rate of interest. It issued the following directions:­ “1. Appeal is partly allowed. 2. The judgment and award under challenge is modified as follows: The Respondent Society is directed to remit ancillary charges of Rs.725/­ and charge future interest @ 9% p.a. on principal amount as per award passed by the trial court and furnish fresh statement of account following above instructions to the Appellant within 15 days from the date of this order and the appellant is directed to pay balance amount within 2 months from the date of this order, either by installment or at once. 3. With these directions appeal disposed off without costs.” *2* wp.7781.09.949.sxw 3 Since this Court issued the notice on this petition with clear indication that the petition may be disposed of finally at this stage itself, the petition is heard finally. 4 Mr.Dalvi, learned counsel appearing for the Petitioner, submitted that the Appellate Court has no power to modify the rate of interest which has been agreed by the parties. The rate of interest is an agreed rate and there is contract between the parties in that behalf, then, the Appellate Court could not have modified or altered the rate of interest in absence of consent by the parties. The lower Appellate Court has ignored this position in law and has proceeded with the matter and interfered with the award of the Trial Court only on the quantum of interest. The Appellate Court was aware of the fact that the rate is including the agreed interest and penal interest and it is this rate which has been awarded by the Trial Court. The Appellate Court was also aware of the legal position, yet, it has set aside the award to the extent of payment of interest without assigning any reason and without any finding being rendered that the component of interest which has been charged on the basis of the agreement between the parties, is in any event inconsistent or disproportionate with the principal sum which has been actually advanced. Such finding has not been rendered, yet, the award has been interfered with. It is clear case where the Court below has failed to apply its mind to the settled principle that there was no challenge to the rate of interest. The original Opponent did not file any Written Statement. There was no contest inasmuch as no plea was raised nor any material was placed before the Trial Court so as to raise any issue with regard to the rate of interest. In absence of any clear pleading in this behalf, the lower Appellate Court has erred in law in allowing the appeal partly and *3* wp.7781.09.949.sxw awarding the rate of interest at 9% on the principal sum from the date of filing of the dispute till realization. Thus, the rate of interest has been interfered with, without any basis in law. For all these reasons, he submits that the petition be allowed. 5 On the other hand, Mr.Pawar, learned counsel appearing for the Respondent No.1­borrower, supported the impugned award and additionally submitted that the matter cannot be re­agitated because the Bank in pursuance of the Appellate Court’s award in execution proceedings has accepted the sum as awarded and the award has been marked satisfied. He relies upon the order passed on 27.07.2009 by the Executing Court and submits that there is suppression of material facts. Therefore, this Writ Petition should be dismissed. 6 With the assistance of the learned counsel appearing for the parties, I have perused the Appellate Court’s award. It is not possible to render any conclusion on mere production of a copy of the order passed by the Executing Court as from the same it is not clear that the amounts are accepted in full and final settlement of all claims and that the Bank, therefore, waived its right to challenge the Appellate Court’s award. That apart, as far as this Court is concerned, the Petitioner has approached this Court challenging the Appellate Court’s award. In the light of the subsequent development that has been placed before this Court, but without anything more, it will not be possible to uphold the objections of the Respondent No.1­borrower. To my mind, this aspect together with other material and vital aspects which have been raised for consideration of this Court must be decided by the lower Appellate Court again. If the Appellate Court had before it an appeal challenging the award of the Trial Court which appeal was preferred by the Respondent No.1 and the question was only with regard to the quantum of interest that is to be paid *4* wp.7781.09.949.sxw on the sum awarded and if the lower Appellate Court was of the view that the principles enshrined by Section 34 of the Code of Civil Procedure apply to the instant case, then, it was duty bound to consider the said provision and apply it to the facts of the present case. That application would have necessitated making a reference to the pleadings and documents including the agreement between the parties based upon which the loan has been sanctioned and the same has to be repaid. If the rate of interest is agreed and stipulation in that behalf is unchallenged, then, that was the matter which should have been considered by the Appellate Court. The lower Appellate Court should have been aware that whenever a decree is for payment of money, the Court may order interest at reasonable rate 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 adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding 6% p.a. from the date of the decree to the date of payment or to such earlier date as the Court thinks fit. Proviso thereto which has been inserted by the Code of Civil Procedure (Amendment) Act, 1976 together with two explanations below the same should have been also borne in mind by the Appellate Court. Further the judgment of the Hon’ble Supreme Court in case of the Central Bank of India v/s Ravindra and others (AIR 2001 SC 3095), was adverted by the Appellate Court. The Appellate Court ought to have been aware that the judgment as referred to by it considered this provision in the Code of Civil Procedure and outlined the discretion that has been conferred on the Court stage­wise. In the instant case, the Appellate Court has not rendered such findings. The learned Judge was aware that the discretion has to be exercised judiciously and not in arbitrary manner. In the present case, it is not clear as to why such discretion has not been *5* wp.7781.09.949.sxw exercised. Further the learned Judge has not perused the provisions, namely, Section 34 of the Code of Civil Procedure and has not given any finding as to whether Section 34 and the principles analogous thereto have any application to the proceedings before him. 7 In such circumstances and finding that the vital issues have been raised, but despite being so raised there is no finding thereon given by the Appellate Court; interest of justice would be served if the proceedings are remitted back to the lower Appellate Court. The Appellate Court shall also consider the impact of the proceedings before the Executing Court initiated vide Darkhast No.255/2004 and whether acceptance of the sums by the Bank pursuant thereto could be said to be accord and satisfaction and waiver of the Bank to agitate the claim of interest. Keeping open all contentions in that behalf, this Writ Petition is allowed in the following terms:­ (i) The impugned order of the Maharashtra State Co­ operative Appellate Court dated 07.10.2006 in Appeal No.183/2005 is set aside. (ii) The appeal shall be restored to the file of the Appellate Court for a decision on merits afresh and in accordance with law after hearing both sides and in terms indicated above. While deciding the appeal afresh, the Appellate Court should not be influenced by the findings rendered in the earlier decision which have been set aside. (iii) This Court has not expressed any opinion on the rival contentions, but has highlighted the controversy in its proper perspective. (S.C. Dharmadhikari, J)