P. Krishna Moorthy, J.
1. This is an appeal by the plaintiff. The dispute is in regard to interest payable on the mortgage amount after the institution of suit.
2. The plaintiff-bank advanced an amount of Rs. 2,40,000 on term loan and an amount of Rs. 1,70,000 under cash credit loan with interest at 15 per cent, quarterly rest in the former and at 14 per cent, quarterly rest in the latter.
3. There was an equitable mortgage of certain properties belonging to the defendants as security for the loan. The suit was instituted for realisation of an amount of Rs. 7,01,591.76 including interest due as on the date of suit.
4. Though various contentions were raised by the defendants, all of them were overruled and ultimately the trial court passed a preliminary decree for an amount of Rs. 7,01,591.76. The court further ordered that the defendants are jointly and severally liable to pay interest at 14 per cent, per annum on the principal amount on cash credit loan of Rs. 1,70,000 from the date of the suit till the full amount is realised. In so far as the medium term loan account is concerned the lower court granted interest at the rate of 15 per cent, only on the principal amount of Rs. 2,40,000. This part of the decree granting interest only on the principal amount from the date of suit is challenged by the plaintiff in this appeal.
5. It is contended by counsel for the appellant-plaintiff that the bank is entitled to interest from the date of suit on both the amounts namely principal and interest as is due on the date of suit and that the court below was not correct in restricting interest on the principal amount alone.
6. We do not find our way to agree with the contention of counsel for the appellant. The suit being on a mortgage, the relevant provision that is applicable is Order 34, Rule 11 of the Code of Civil Procedure, 1908, which provides for interest to be granted while passing a decree in a mortgage suit. It is not necessary for us to reproduce the above rule as the same is interpreted by the Division Bench of this court in Syndicate Bank v. Subhas Venkappa Savalker : ILR1992KAR633 . In that decision it was held that normally under Order 34, Rule 11, the plaintiff will be entitled to interest from the date of suit till the date fixed for the payment of amount only on the principal amount, unless under the contract of loan there is an agreement to treat the interest also as part of the principal and right is given to the creditor to levy interest on the whole amount. The relevant discussion is contained in paragraph 6.1 of the decision and it would be advantageous for us to quote the above (page 366) :
'The contention of learned counsel for the plaintiff that the words 'principal amount found due or declared due on the mortgage' include the interest accrued on the principal up to the date of the suit on the interest also would be the amount due on the mortgage if the same is not paid, therefore, the mortgagee is entitled to interest at the contractual rate on the entire amount claimed in the suit inclusive of the principal and the interest from the date of the suit till the date fixed for payment cannot be accepted. It is an undisputed legal position that no interest is recoverable unless there is an express or implied agreement to pay interest or unless it is recoverable under mercantile usage, or custom or under a statutory provision. The interest on the amount advanced on the mortgage is governed by the terms of the mortgage deed. If the mortgage deed provides that the mortgagee will be entitled to add the interest to the principal if the interest is not paid as and when it becomes due and treat it as part of the principal amount and claim interest on the entire sum at contractual rate, the mortgagee will be entitled to claim interest at the contractual rate not only on the principal sum but also on the sum due as interest which gets added on to or merged into the principal amount by reason of non-payment of the same as and when it became due. In the absence of any such recital in the mortgage deed, it would not be possible to hold that the mortgagee will be entitled to claim interest at the contractual rate not only on the principal sum but also on the amount of interest accrued on the principal sum. The words 'principal amount found due or declared due on the mortgage' occurring in Sub-clause (i) of Clause (a) of Rule 11 of Order 34 of the Civil Procedure Code, mean only the principal amount due under the mortgage without interest till the date of the suit. These words cannot be interpreted to mean and include not only the principal amount found due on the mortgage but also the interest accrued thereon up to the date of the suit. Therefore, a mortgagee will not be entitled to interest from the date of the suit to the date fixed for payment at the contractual rate on the amount accrued as interest on the principal sum up to the date of the suit, but he would be entitled to interest from the date of the suit up to the date fixed for payment at the contractual rate only on the principal amount due under the mortgage and not on the total amount due on the date of the suit. Even then, there is a discretion vested in the court, as already pointed out, in awarding interest and it is open to the court to award interest at a lesser rate from the date of the suit till the date fixed for payment in the decree.'
7. In the light of Order 34, Rule 11 and in the light of the above decision, it is clear that the plaintiff would not be entitled to claim interest on the total amount of Rs. 7 lakhs odd. The claim for interest for the above amount can be granted only if he is able to satisfy the court that under the agreement entered into between the parties there is provision for treating the interest also as part of the principal amount and in the case of default for payment of interest. Exhibits P-2 to P-8 are agreements entered into between the parties in respect of the term loan and cash credit loan. On going through the above agreements though there is provision for calculating interest at quarterly rests, we do not find any provision whereby the defendants had agreed to treat the interest also as part of the principal in case there is default in payment of interest. Such provision is completely absent in the agreement.
8. In that view of the matter, by virtue of Order 34, Rule 11 and following the decision referred to above, we are of the opinion that the plaintiff is entitled to interest only on the principal amount from the date of suit and not on the whole amount claimed in the plaint or decreed by the trial court. Accordingly, the trial court was right in restricting the interest from the date of suit on the principal amount alone and accordingly we do not find any ground to interfere with the decree passed by the trial court.
9. The appeal is accordingly dismissed but in the circumstances without any order as to costs.