Judgment:
S.C. Mohapatra, J.
1. This is an appeal by defendants against a preliminary decree in a suit based on mortgage.
2. Defendant. No. 1 took loan of Rs. 15,000/- with interest at- rate of 10 1/2 per cent per annum in the minimum from the plaintiff-bank in the year 1971 for purchase of an Ambassader car Defendant No. 2, wife of defendant No. 1, stood surety for the loan. Equitable mortgage of land and building was created in favour of the plaintiff and after purchase, the car was hypothecated to the bank. The loan amount not having been paid in full till 24-1-1983 suit was filed for balance amount of Rs. 34,498.60 paise with pendente lite and future interest at contractual rate.
3. Defendants admitted the loan and execution of documents. They claimed that suit is barred by limitation and that they have not renewed any document. Added to it, they claimed that plaintiff has taken possession of the car since 1975 and has kept the same in a garage in a damaged condition.
4. Plaintiff examined one witness and proved eight documents marked Exts. 1 to 8 in support of its case. No witness was examined on behalf of the defendants nor was any document proved to be exhibited. Trial Court passed a preliminary decree making defendants liable for Rs. 34,498.60 paise with pendente lite and future interest at contractual rate and directed that in case the decretal amount is not paid within three months, plaintiff would be entitled to put the mortgaged property to auction for realisation of the same by making the decree final.
5. Although Mr. Rahanoma, learned counsel for appellants submitted that the suit is barred by limitation and defendants have not renewed documents, I find that trial Court has carefully considered the materials on record to find against the defendants. I entirely agree with trial Court on these findings which are confirmed.
6. Mr. Rahanoma next submitted that learned trial Judge has not applied his judicial mind to the question of pendente lite and future interest and preliminary decree to pay interest at the contracted rate is not justified on the facts and in the circumstances of the case.
7. Power of Civil Court to direct payment of interest is provided in Section 34 of the Code of Civil Procedure. Special provision has been made in Order 34, Rule, 11, C.P.C. in respect of payment of interest in suits relating to mortgages of immovable property. Therefore, direction for payment of interest in this case would have to be examined with reference to Order 34, Rule 11, C.P.C. and not Section 34 thereof.
8. Taking note of insertion of Order 34. Rule 11 of the Code of Civil Procedure by Act 21 of 1929. Federal Court in the decision reported in AIR 1940 F. C. 20 (Jaigobind Singh and Ors. v. Lachmi Narain Ram and Ors. ) held:
'...It is no longer absolutely obligatory on the Courts to decree interest at the contractual rate up to the date of redemption in all circumstances, if there be no question of the rate being penal, excessive or substantially unfair within the meaning of the Usurious Loans Act. 1918.
9. In a decision reported in AIR 1969 SC 600, Soli Pestonji Majoo v. Ganga Dhar Khopka), considering the aforesaid decision of Federal Court, it was held :
'...In view of the principle laid down by the Federal Court in this decision we are of opinion that in the circumstances of the present case the respondent should be granted interest on the principal sum due at the contractual rate till the date of the suit and simple interest at 6 per cent p. a. on the principal sum adjudged from the date of the suit till the date of the preliminary decree and also at the same rate till the date of realisation.'
10. Reviewing decision of Federal Court and decisions of other High Courts, a Division Bench of this Court in the decision reported in ILR (1979) 2 Cutt. 280 (Punjab National Bank Ltd. v. Udyog Silpa Private Ltd. and Ors. ) held :
'On a plain reading of Order 34, Rule 11, Civil Procedure Code and on a review of the decisions referred to above the position of law that emerges is that Order 34, Rule 11 is not mandatory in character and that it is open to a Court to vary the rate of interest so far as the period between the date of suit and the date fixed for redemption in a preliminary decree is concerned, even in a case where interest is legally recoverable and the rate of interest is not penal or unconscionable or otherwise excessive. The decisions which seem to take a contrary view that where interest is allowed it must be allowed at the contractual rate and that the rate cannot be varied do not lay down the low correctly. As for subsequent interest, i.e. from the date of redemption fixed in the preliminary decree up to the date of payment or realisation of the mortgage money the matter rests clearly in the domain of Judgment and the grant of rate of such interest is entirety in the discretion of the Court.'
11. This question again came up for consideration by another Division Bench of this Court in the decision reported in 1984 (I) OLR 1085 58(1984) CLT 540 (State Bank of India v. Rashmi Small Industries and Anr.) wherein it as been held :
'...We fail to understand how Order 34, Rule 11, Code of Civil Procedure disentitles the plaintiff to get interest at the agreed rate. In fact, under Rule 11 of Order 34, plaintiff is entitled to interest at the rate agreed to between the parties till the period of redemption expires and the provisions of Section 34 of the Code of Civil Procedure are not applicable to cases of mortgages....'
On the facts of that ease, it was Held :
'We do not find any justifying circumstance to reduce the rate of interest agreed to between the parties nor is there any justification to refuse the plaintiff pendente lite interest. In our view, therefore, the discretion of the Subordinate Judge on the question of interest must be set aside and the plaintiff-appellant is entitled to get interest at the agreed rate which is 9 1/2% as submitted by Mr. Singh, both pendente lite and future.'
12. In 32(1990) OJD 135 (Civil) (State Bank of India, Sonepur v. Gour Charan Nayak and Ors. ), I allowed pendente lite and future interest observing ;
'Payment of interest on the loan amount is a term in the contract. Normally interest is to be decreed unless Court for reasons to be recorded is satisfied that no interest is to be awarded. Judgment of the trial Court is thus, vulnerable. There is no reason why defendants shall not pay the interest for the period till the suit was filed when trial Court directed for payment of interest pendente lite and future....'
13. In 32 (1990) O. J. D. 136 (Civil) (State Bank of India represented by its Branch Manager, Sonepur v. Sidheswar Rana and Ors. ), I observed :. ' 1984(1) OLR 1085
'...Normally, the contractual rate of interest is to be paid. However, it is seen that defendants took the loan for development of their agricultural lands. Plaintiff Bark is a creature of a Central Statute, i. e, the State Bank of India Act. It is the policy of the Central Government that agriculturists are to be rendered assistance by the statutory and other Nationalised Banks. The amount decreed in the present case includes even the postage, pleader-fee and notice expenses. In such circumstances, when policy of the Central Government is to render assistance to agriculturists for development of agricultural lands, Courts should also keep note same and grant such future interest on such amount in exercise of their judicial discretion which would be equitable. ...'
14. It is thus clear that in deserving cases Court has discretion to decree pendente lite and future interest being at variance with the contractual rate of interest. What would be the rate of interest, would depend upon conduct of parties, policy of advancement of loan and prevailing circumstances. It cannot be put in a strait-jacket formula. Since exercise of judicial discretion depends on facts and circumstances of each case, precedents whether of persuasive or binding nature would not have binding effect. Similarly, circumstances as revealed from those decisions may be guidelines for exercise of discretion keeping in mind that a decision is rendered on the given facts and circumstances and observations here and there would not be principles decided. Similarity of facts and circumstances is not the same as equal facts and circumstances.
15. In this case, loan is of the year 1971. Payment was to be made in 36 monthly instalments. When there was a breach in the terms, suit could have been filed immediately. Plaintiff which is a nationalised bank is supposed to act reasonably. Hence, an inference can be drawn in absence of materials that on account of adverse circumstances plaintiff accommodated defendants till January, 1983 for about nine years. Assertion of defendants that in 1976 plaintiff took possession of the vehicle, though denied by PW 1 when he was examined in ex parte hearing of the suit, he did not traverse the said assertion when again examined de novo when the trial was on contest. It is asserted in plaint itself that plaintiff took note of negligence of defendants since 1976 in not paying the balance due. In spite of reminders in 1976-77 suit was not filed. Defendants have admitted the transaction. They do not dispute the amounts due. Besides, there is no material that plaintiff has taken steps to make the preliminary decree final for these two years. In these circumstances, I am not inclined to decree pendente lite and future interest at the contractual rate. I am inclined to give chance to defendants to pay the decretal dues at lesser rate of interest within a period to be stipulated.
16. In view of the aforesaid discussions, plaintiff is entitled to realise Rs. 34,498.60 paise with pendente lite and future interest at the rate of 7 1/2| per cent par annum on the principal amount of Rs. 15,000/- provided that either of the defendants pay the entire decretal amcunt with interest decreed within six months from today. In case the decretal amount with pendente lite and future interest, as aforesaid, is not paid within six months, the benefit granted to defendants shall not be available and plaintiff shall be entitled to realise the balance amount with pendente lite and future interest at contractual rate by
17. I may observe that nationalised banks should take Immediate steps for realisation of loan amounts and should also take steps for making the preliminary decree final without waiting for disposal of appeals, if any.
18. In result, the appeal is allowed to the extent indicated above. There shall be no order as to costs in this appeal.