Civil Revision No.7330 of 2010(O&M) [ 1 ] IN THE HIGH COURT FOR THE STATES OF PUNJAB & HARYANA AT CHANDIGARH ... Civil Revision No.7330 of 2010(O&M) Decided on : February 21, 2011 M/s Gupta Rice & General Mills and another ... Petitioners VERSUS M/s Bhim Sain and sons ... Respondent CORAM : HON'BLE MR.JUSTICE A.N.JINDAL Present: Mr.P.L.Singla, Advocate for the petitioners. Mr.V.R.Jhanji, Advocate for the respondent. A.N.JINDAL, J.- This petition assails the order dated 21.10.2010 passed by Additional Civil Judge (Sr.Divn.), Jagraon dismissing the objection petition filed by the judgment debtor – petitioner firm (herein referred as `the petitioner firm') against the recovery of excessive amount than what was actually payable. The factual background of the case is that the plaintiff – respondent firm (herein referred as `the respondent firm') filed a suit for recovery of the following amount:- Principal amount : Rs.7,17,672-00 (rounded off) Interest @ 2.10% PM : Rs.4,02,328-00 Civil Revision No.7330 of 2010(O&M) [ 2 ] (from 23.7.1997 to date of filing of the suit i.e. 5.10.1999) Total : Rs.11,20,000-00 The respondent firm had also sought pendente lite and future interest @ 2.10% per month from the date of the suit till realisation of the decretal amount. The respondent firm had claimed the amount of Rs.7,17,672/- along with interest (amounting to Rs.40,84,000/- as on 7.10.1999) through suit filed on 7.10.1999, however, the Court while adding the interest amount in the principal, wrongly passed the decree to the tune of Rs.11,20,000/- on account of principal plus pendente lite interest @ 2.10% per month upto the date of decree i.e. 29.7.2008. It has been averred that the decree was without jurisdiction and void as the interest could be awarded only on the principal sum, so adjudged and no compound interest could be ordered, therefore, the decree to that extent could not be executed; the decree-holder has claimed interest to the tune of Rs.24,97,000/- from 7.10.1999 to 29.7.2008 and future interest @ 6% per annum from 29.7.2008 to 22.12.2008, which is not correct; the petitioner firm is only a compendious name of its partners, Jiwan Lal Jhanji is a Hindu by religion and so is Sushil Gupta, proprietor of the firm; under Hindu law, the rule of Damdupat is applicable, therefore, the respondent firm could not receive the amount more than Rs.22,40,000/-; since the respondent firm is claiming more than double the amount, therefore, its case is squarely covered by the said principle of Damdupat and the decree passed in contravention of the principles of Damdupat is without jurisdiction. In the end, the petitioner Civil Revision No.7330 of 2010(O&M) [ 3 ] firm prayed that he is ready to pay the amount of Rs.22,40,000/- being the full and final satisfaction of the decree. The reply to the objection petition was filed, wherein, the respondent firm has not denied about the decree having been passed for a sum of Rs.11,20,000/-. However, it has been submitted that the interest as claimed by it has rightly been calculated and the principle of Damdupat does not apply. He has also admitted that the principal amount payable by the petitioner firm was about Rs.7,17,672/- in the year 1997 and the interest calculated for 3 years came to be Rs.4,02,328/- and the trial court rightly passed the decree for recovery of Rs.11,20,000/- along with interest. The other objection raised is that one objection petition earlier with regard to claiming higher interest was dismissed on 9.8.2010, therefore, the fresh objection petition was not maintainable. The petitioner firm filed the rejoinder stating that no such objection petition was filed by it earlier. However, Sushil Gupta had filed reply on 6.9.2002 to the application seeking attachment of the property by the decree holder. Later on, Sushil Gupta was dropped by decree holder by moving an application dated 31.5.2007 from the array of judgment debtors, therefore, it would be preposterous to say that the objection petition of the similar nature about the higher interest was dismissed by the Court. It further submitted that no objection petition under Section 47 of the Code of Civil Procedure, 1908 has ever been decided by the Court. The petitioner firm further submitted that though it had made a statement for selling the property in order to satisfy the decree, yet the petitioner never accepted if the amount as claimed by the respondent was correct. The petitioner firm Civil Revision No.7330 of 2010(O&M) [ 4 ] denied its liability to pay Rs.40 lacs to the decree-holder. On scrutiny, the trial court after considering the arguments refused to go beyond the decree and dismissed the objection petition. The prime question to be determined in the case is, “whether the decree dated 29.7.2008 passed by the Trial Court was without jurisdiction, inasmuch as it has been passed against the claim set up by the respondent firm and also without application of mind?” There is no denying a fact that the respondent firm had filed a suit for recovery of Rs.7,17,672/- on account of principal and Rs.4,02,328/- on account of interest and also pendente lite and future interest @ 2.10% per month. No doubt, the court cannot go beyond the decree. However, if on fair interpretation of the judgment and decree passed by the court, it is found that the same was not correctly passed and the decree is in direct conflict with the judgment, so as to indict it as without jurisdiction by the Executing Court. Similar observations were made by the Apex Court in case Haryana Vidyut Parsaran Nigam Limited vs. Gulshan Lal, 2009 (0) AIJEL-SC 44071, wherein, it was observed as under:- “14. Concededly, the decree passed by the civil court has attained finality. The only question which arises for consideration is as to whether having regard to the nature of the decree passed, it is executable. A decree, as is well-known, should ordinarily be confined to the prayer made in the plaint. We have noticed hereinbefore, that the respondents herein not only prayed for a declaration in regard to their entitlement to receive a higher scale of pay but also for a decree of mandatory Civil Revision No.7330 of 2010(O&M) [ 5 ] injunction in their favour directing them to release/pay the said higher scales of pay. They had prayed for grant of interest on the aforementioned amount.” Further in para 20 of the judgment, the court observed as under:- “20. As indicated hereinbefore, for the purpose of allowing an objection filed on behalf of a judgment debtor under Section 47 of the Code of Civil Procedure, it was incumbent on him to show that the decree was ex facie nullity. For the said purpose, the court is precluded from making an in depth scrutiny as regards the entitlement of the plaintiff with reference to not only his claim made in the plaint but also the defence set up by the judgment – debtor. As the judgment of the Trial Court could not have been reopened, the correctness thereof could not have been put to question. It is also well-known that an Executing Court cannot go behind the decree. If on a fair interpretation of the judgment, order and decree passed by a court having appropriate jurisdiction in that behalf, the reliefs sought for by the plaintiff appear to have been granted, there is no reason as to why the Executing Court shall deprive him from obtaining the fruits of the decree. The crux of the cited judgment is that if on fair interpretation of the judgment and the decree, it could apparently be noticed that the same was not correctly passed, then it could be determined as invalid. It has also been settled in case Avtar Singh vs. State Bank of Patiala, (1993) 1 Civil Revision No.7330 of 2010(O&M) [ 6 ] Cur LJ (CCR) 195 (197) : (1993) 1 Bank LJ 235 (P&H) that a decree or judgment which has been passed in contravention of the provisions of Section 34 CPC would be without jurisdiction and it would be open to challenge even in execution proceedings being a nullity and a void decree. Notwithstanding the fact that the trial court in its judgment awarded interest @ 2.10% per month from the date of the suit and also pendente lite interest as agreed between the parties, yet this Court, though it is vested with all powers to interfere the same having been awarded by the Court in its discretion, does not want to disturb such findings regarding awarding of interest pendente lite. However, the Trial Court was certainly without its jurisdiction while awarding interest over the amount other than the principal sum, so adjudged. From the tenor of the judgment, the principal sum adjudged could be considered as Rs.7,17,672/- but the mistake was committed when the decree was passed while adding the interest of Rs.4,02,328/- in the principal sum and awarding interest on the principal sum, so adjudged as well as interest claimed by the respondent firm prior to the filing of the suit. Unlike the bank transactions where there is a recognised method of capitalisation of interest so as to make it a part of the principal consistently with the contract between the parties or established banking practice, the amount of interest if not paid by the debtor could be added to the principal. But, this principle is an exception to simple money transactions, where in the absence of any contract to the contrary, the principal sum, so adjudged, could be only that principal sum, which was actually due against the debtor. In the instant case, the judgment and the decree nowhere state if Civil Revision No.7330 of 2010(O&M) [ 7 ] there was any contract between the parties with regard to payment of compound interest. In the absence of such contract, the interest could only be awarded on the principal sum, so adjudged and not on the amount decreed. The similar observations were made in Anup Singh and another vs. M/s Jaspal Singh and Brothers & others, 1996(2) Civil Court Cases 5 (P&H), wherein, in the similar circumstances of the case, the court observed as under:- “5. Again, as already noticed, it is not much in dispute that the amount due as worked out by the decree holder has been worked out by adding interest on the entire decretal amount namely Rs.8,79,168.30 P. Section 34 of the Civil Procedure Code allows the Court to order payment of interest on the principal sum adjudged. This interest can be awarded by the Court from the date of the suit to the date of the decree and from the date of decree till realisation on the principal sum adjudged or to such earlier date as it may think fit. The language of Section 34 is quite clear and admits of no ambiguity. Under this section interest can only be awarded on the principal sum adjudged and not on the amount decreed. In this case, the principal sum claimed in the suit was Rs.6,47,406/- only and Rs.2,31,762/- was claimed as interest on this amount from the date the amount became due till the date of the suit. Though, the suit was decreed for Rs.8,79,168.30 P, but it will have to be read in the decree that the interest was awarded on the principal sum adjudged i.e. Rs.6,47,406.30 P. Civil Revision No.7330 of 2010(O&M) [ 8 ] Even otherwise, a reading of the operative part of the judgment and decree of the Court shows that the suit was decreed for Rs.8,47,168.30 P, and the interest was granted till realisation of the suit amount. It never granted interest on the total decretal amount and use of the word suit amount is significant. It refers to the principal amount or the principal sum adjudged i.e. Rs.6,47,406.30 paise.” In the case in hand, the principal amount was Rs.7,17,672/- and this amount was never adjudged as principal sum by the court in the judgment, therefore, the interest of Rs.4,02,328/- could not be added to this principal sum to claim interest @ 25.2% per annum. As such, it is noticed that the Executing Court acted illegally and committed material irregularity in calculating the interest on the decretal amount, yet while declining to grant interest on the amount of interest, the Division Bench of this High Court in Devinder Kumar and another vs. Syndicate Bank & others, 1994(2) Civil Court Cases 1 (P&H) observed as under:- “22. For the reasons stated above, we hold the the plaintiff bank will be entitled to recover interest pendente lite and future interest to be determined as under:- (i)Interest pendente lite is payable on the principal sum adjudged but no interest is payable on the amount of interest adjudged on such principal sum. (ii)Future interest will be awarded on the contractual rate of interest and if the contractual rate of interest is not Civil Revision No.7330 of 2010(O&M) [ 9 ] established, at the rate at which the monies are lent or advanced by the nationalised bank in relation to commercial transactions. In the present case, the loan was advanced by the bank and as such it is commercial transaction.” As discussed above, though it is not within the domain of the Executing Court to go beyond the decree, but at the same time, it is also settled by now that if on fair interpretation of the judgment and decree, the decree is found nullity and without jurisdiction, then the same could be ignored. It has also been observed in case of Gulshan Lal (supra) that if compound interest is awarded or the interest is awarded against the provisions of Section 34 of the Code, then the decree being without jurisdiction could be ignored to that extent. A similar question arose before this court in case Siri Chand and another vs. Central Bank of India, Yamunanagar, District Ambala and another, 1988(1) PLR 473, wherein, it was observed as under:- “4. The provisions of Section 34 of the Code are not procedural in nature and in fact confer a jurisdiction on the Court, which but for that provision would not be there. So was held by the Supreme Court in Thawardas Pherumal and another v. Union of India, AIR 1955 SC 468, and by a Division Bench of this Court in State of Punjab v. Surinder Nath Goel, AIR 1960 Punj.623. It is, therefore, obvious that the court has the jurisdiction to grant interest after the filing of Civil Revision No.7330 of 2010(O&M) [ 10 ] the suit only in accordance with the provisions of Section 34 of the Code and any order made in contravention thereof would be without jurisdiction. Once, it is held that any judgment or decree passed in contravention of Section 34 of the Code would be without jurisdiction, it would be open to challenge even in execution proceedings, being a nullity and void decree. A similar view expressed by a Division Bench of Orissa High Court in V.Radreenarayan Murty Raju v. Epari Venugopalam, I.L.R. 1979(1) Cuttak 577. and P.D.Desai, C.J., in M/s Laxmi Furniture and Saw Mills, Simla v. Himachal Pradesh Financial Corporation, Simla, AIR 1985 Him.Pra.108” In the instant case as well, the court passing the judgment and decree dated 29.7.2008 never adjudged the sum of Rs.11,20,000/- being the principal sum, but it categorically mentioned in the decree that the amount of Rs.7,17,672/- was on account of principal and Rs.4,02,328/- was on account of interest. However, in the operative part of the judgment, it decreed the suit for Rs.11,20,000/- along with interest @ 2.10% per month, which apparently on the face of it would not have been passed in the absence of adjudging the principal sum. In any case, though the respondent has claimed interest prior to the filing of the suit as also the pendente lite interest @ 25.2% per annum, yet it is not as per mercantile usage or the rate as fixed by the Reserve Bank of India. However, since the case is now at Civil Revision No.7330 of 2010(O&M) [ 11 ] the stage of execution, this court does not want to go into the controversy, if the decree holder was entitled to such exorbitant interest for the period, the suit remained pending. It has also been brought to my notice by the judgment debtor that he has already paid a sum of Rs.28 lacs approximately against the principal sum of Rs.7,17,672/- and if the interest is calculated on the principal sum as per the judgment and the decree, then he is ready to pay and satisfy the decree. It is true that the justice must be done at all costs, but at the same time, it must be seen that the justice should be tampered with mercy. Asking a party to pay five times of the amount due against him, in my considered opinion, would be exorbitant, excessive and unjustifiable. Similar observations were made by the Apex Court in case Ashutosh vs. State of Rajasthan and others, AIR 2005 Supreme Court 3434. It has also been observed in case State Bank of India, Bhubaneswar vs. Ganjam District Tractor Owners' Association and others, (1994)5 SCC 238 that where agreement between the bank and the borrower did not provide for compound interest and the interest at periodical intervals, in that situation, the bank could not have charged the same. However, since this court is sitting over the objection petition preferred in execution of a decree, therefore, this Court does not deem it appropriate to disturb the awarding of pendente lite interest at a higher rate, yet this Court considers that the decree passed by the Trial Court dated 29.7.2008, whereby, the interest was awarded over interest of Rs.4,02,328/- Civil Revision No.7330 of 2010(O&M) [ 12 ] being without jurisdiction, is liable to be ignored. No other grounds, as mentioned in the objection petition were pressed. For the aforesaid reasons, I accept the revision petition, set aside the impugned order and direct that the petitioner firm would be liable to pay interest @ 2.10% per month only on the principal sum of Rs.7,17,672/- w.e.f. 7.10.1999 till 29.7.2008 and also the future interest @ 6% per annum on this principal amount and not on the amount of Rs.4,02,328/- awarded by the Trial Court as interest on the principal sum prior to the filing of the suit. As regards the costs, the decree sheet dated 29.7.2008 prepared by the court reveals that it is silent qua the payment of costs. Nothing has been mentioned if the suit is decreed with costs or the parties would bear their own costs. The relief, if not specifically granted would impliedly be treated as declined, therefore, the petitioner firm would also not be liable to pay the costs of the suit. February 21, 2011 ( A.N.JINDAL ) `gian' JUDGE