IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 25TH JUNE 2008 / 4TH ASHADHA 1930 AS.No. 51 of 1994() ------------------- AGAINST THE ORDER DATED 31/01/1992 IN IA1714/91 IN OS.211/1988 of PRINCIPAL SUB COURT,KOLLAM .................... APPELLANT: ----------- THE NEDUNGADI BANK LTD., MAIN ROAD, KOLLAM, REPRESENTED BY ITS MANAGER. BY ADV. SRI.K.P.BALASUBRAMANYAN,SALLY THOMAS RESPONDENTS: ------------- 1. M.M. HANEEFA, ANWAR TEXTILES, MAIN ROAD, KOLLAM-691001.(DIED. L.RS. IMPLEADED) 2. MEERAN MOIDEEN, DO. DO. ADDL.R3:ANWAR, AGED 38, REVATHY, SANKAR NAGAR, KOLLAM. R4: PEER MOHAMMED, AGED 36, DO. DO. R5: SMT. SAJRATH, AGED 34, DO. DO. R6: SMT. SAIRABHANU, AGED 32, DO. DO. R7: ARSHATH, AGED 30, DO. DO. (ADDL.R3 TO R7 IMPLEADED AS LRS. OF DECEASED R1 AS PER ORDER DATED 29.7.97 IN CMP NO.2664/94) BY ADV. P.G.P.PANICKER. SRI.P.GOPAL THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 25/06/2008, THE COURT ON 25/06/2008 DELIVERED THE FOLLOWING: P.R.Raman & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - A.S.No.51 of 1994 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 25th day of June, 2008. JUDGMENT Raman, J. This appeal arises out of the final judgment and decree passed by the Principal Sub Court, Kollam in O.S.No.211/1988. The suit was one for sale of the mortgaged property for the realisation of the mortgage amount. A preliminary decree was passed on 21.11.1990 in favour of the plaintiff/appellant directing the defendants to pay a sum of Rs.1,37,567.80 with interest thereon at the rate of 16.5% per annum from the date of the suit till realisation plus the plaintiff's costs of the suit within two months from the date of the preliminary decree and allowed the plaintiff to recover the same by sale of the plaint schedule property and balance, if any, from the defendants personally in the event of failure of the defendants to pay the amount as directed. True, a composite decree could have been passed, however only a prelimianry decree was passed. This necessitated passing of a final decree in terms of the preliminary decree and hence the plaintiff applied, as per I.A.No.1714/1991, to pass a final decree. 2. The court below, while passing the final decree, even reopened the AS 54/1994 -2- preliminary decree passed in the matter of interest awarded. After referring to the decision in Divisional Manager, L.I.C. of India v. Bhagavathi Amma (1991 (2) KLT 522), the court below took the view that the maximum rate of interest that is awardable is only 6% and therefore according to the court below, a mistake crept in while passing the preliminary decree which was corrected while passing the final decree and by the judgment under appeal a final decree was passed directing the defendants to pay a sum of Rs.1,37,567.80 with interest at 6% per annum from the date of suit till realisation plus cost, etc. Aggrieved thereby, this appeal is preferred. 3. We have heard both sides. 4. Order XXXIV of the C.P.C. was substituted by the Kerala Amendment with effect from 20.11.1990 which does not contain a provision similar to Rule 11(b). Hence, the only provision regarding the interest to be awarded is governed by Section 34 C.P.C. Though a learned Single Judge of this court in 1991 (2) KLT 522 (supra) held that the maximum rate of interest that is awardable by virtue of the main provision contained in Section 34 is only 6%, we find that the proviso to Section 34 was not obviously brought to the notice of the court at that time. In the subsequent AS 54/1994 -3- Division Bench decisions of this court in Rosy George v. S.B.I. (19993 (1) KLT 151) and also in Veluswamy Goundar v. S.B.I. ( ILR 2001 (3) Ker. 227) it has been held that by virtue of the proviso to Section 34, the rate of interest that is awardable in a commercial transaction could be more than 6%, upto the contract rate of interest. In other words, the bar under the main provision limiting the rate of interest to 6% is not applicable to a commercial transaction in the light of the proviso to Section 34. Therefore, the judgment and decree passed by the court below limiting the interest to 6% without exercising any discretion, is liable to be set aside and we do so. 5. There is no dispute that the transaction in question is a commercial transaction and the agreed rate of interest, according to the plaintiff is 16.5% and according to the defendant is only 15%. This dispute has not been adverted to. Though in the preliminary decree the court below has awarded interest at the rate of 16.5%, in the absence of any appeal therefrom, the plaintiff is right in contending that the court below ought not have interfered with the rate of interest already awarded as per the preliminary decree. However, we consider that even though it may be permissible to award interest at the agreed rate in a commercial transaction, it is not an invariable rule of law. The proviso confers a discretion on the court to award interest upto the agreed rate in the case of a commercial AS 54/1994 -4- transaction. So, the court should consider in each case whether the interest should be awarded between 6% to the agreed rate and if so, what is the interest to be awarded in a particular case. Having considered the entire matter, we find that the interest that could be awarded is at the rate of 12% in the present case. 6. Accordingly, we modify the decree passed by the court below and pass a final decree awarding interest at 12% per annum. In all other respects, the decree is confirmed. The appeal is allowed as above. ( P.R.Raman, Judge.) (T.R. Ramachandran Nair, Judge.) kav/ AS 54/1994 -5- P.R.Raman & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - A.S.No.51 of 1994 - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 25th June, 2008.