IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN MONDAY, THE 12TH JANUARY 2009 / 22ND POUSHA 1930 AS.No. 671 of 1999(C) ------------------------- OS.171/1996 of PRINCIPAL SUB COURT, PALAKKAD .................... APPELLANT(S)/PLAINTIFF: ------------------------------- THE DHANALAKSHMI BANK LTD. THROUGH ITS BIG BAZAR BRANCH, PALAKKAD. BY ADV. SRI.O.RAMACHANDRAN NAMBIAR RESPONDENT(S)/DEFENDANTS.: ----------------------------------------- 1. ARAVINDAKSHAN, S/O LATE MAJOR P.R.K. NAIR, REMA NIVAS, VENNAKKARA, PIRAYIRI AMSOM, PALAKKAD. 2. SYAMALA ARAVINDAN, AGED 36 YEARS, W/O ARAVINDAKSHAN, REMA NIVAS, VENNAKKARA, PIRAYIRI AMSOM, PALAKKAD. ADV. SRI.V.CHITAMBARESH(SR.) ADV. SRI. S. KRISHNA PRASAD. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 12/01/2009 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NOs. 671 OF 1999 = = = = = = = = = = = = = = = Dated this the 12th day of January, 2009. J U D G M E N T This is an appeal preferred against the judgment and decree in O.S.171/96 of the Subordinate Judge, Palakkad. The suit is one for realisation of an amount. It is the case of the plaintiff that the Bank sanctioned a financial accommodation of Rs.31,500/- and the contract was to pay interest at the rate of 24.75% per annum. The defendant disputed the agreement, ultimately the Court after considering the entire materials granted a decree in favour of the plaintiff for an amount of Rs.27,590/- with an interest at the rate of 24.75% per annum from the date of suit to the date of decree and thereafter at the rate of 18% per annum till realisation and proportionate costs by sale of 500 units of shares redeemable on 31.3.99 in the possession of plaintiff and personally from defendants. There is also some stipulations regarding some payment made. The appeal is filed by the A.S. NO. 671 OF 1999 -2- plaintiff Bank on dis-allowance of interest at the rate of 24.75% per annum after the decree. So the only question to be considered is whether the plaintiff is entitled to get the contract rate of interest even after the decree. Point: 2. Admittedly, the transaction is a commercial transaction. When it is a commercial transaction the proviso to S.34 of the Code of Civil Procedure will apply wherein it is stated, “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.” 3. So far as this case is concerned there is a contract to pay interest at the rate of 24.75% per annum. There is no dispute that it is a commercial transaction. In the decision reported in State of Bank of Travancore v. K. Vinayachandran (AIR 1989 Kerala 302) this Court had A.S. NO. 671 OF 1999 -3- considered the scope of S.34. This Court held that “That means the proviso is not mandatory in nature meaning thereby that it is not imperative that future interest at the contract rate must be given. There cannot be any dispute regarding this proposition. It should however, be remembered that the discretion under this proviso must be exercised on sound judicial principles. Ordinarily therefore future interest at the contractual rate is not refused except for sufficient reasons. That means refusal to award future interest at the contractual rate is only the exception and not the rule.” 4. Learned counsel for the defendants had cited a decision of the Apex Court reported in Central Bank of India v. Ravindra AIR 2001 S.C. 3095. The Apex Court in that decision held that there is a discretionary power left with the Court at the time of granting interest after the decree taking into consideration the facts and circumstances of each case. Here he plaintiff has advanced an amount and it is a schedule Bank and the defendant has enjoyed the usufructs of the loan for the purpose of their business or in other words a commercial transaction. When money is borrowed for the A.S. NO. 671 OF 1999 -4- purpose of conducting business with the intention to make profits out of the business, the argument that they are not bound to pay contract rate of interest generally appears to be unreasonable for the reason that the man who advances looses and the man who does not pay gains. That is why the discretion has to be exercised judicially. When a person has failed and is unable to pay the amount, it will be further doing injustice to him and in such cases a marginal leniency can be shown and therefore taking note of all these materials I am inclined to reduce the rate of interest of 24.75% per annum to 21% after the decree. Or in other words modify the 18% interest granted by the Court to that of 21% after the decree. In the result the appeal is partly allowed and the rate of interest after the decree is fixed as 21% instead of 18%. Parties are directed to bear their respective costs. M.N. KRISHNAN, JUDGE. ul/- A.S. NO. 671 OF 1999 -5- M.N. KRISHNAN, J. = = = = = = = = = = A.S. NO. 671 OF 1999 = = = = = = = = = = = J U D G M E N T 12th January, 2009.