Sanju Panda, J.
1. The plaintiff is the appellant. He has challenged the order and decree dated 11-8-1983 and 28-8-1983 passed by the learned Subordinate Judge, Jeypore in Money Suit No. 116 of 1982 wherein the learned trial Court has partly decreed the suit in favour of the plaintiff without granting any interest on the principal amount. Hence, the present appeal is confined to the payment of interest part only.
2. Though notice of this appeal was issued to and personally served on the respondent, there is no appearance on behalf of the respondent.
3. Before dealing with the question raised, the facts involved in the present case leading to filing of the appeal are narrated.
The appellant-plaintiff out of friendly re-, lationshtp had given Rs. 12,000/- to the defendant on 25-4-1979 and on demand the defendant, vide two letters, Ext. 1 dated 4-6-1980 and Ext. 2 dated 28-3-1980, agreed to pay the said amount. The defendant has also issued two cheques dated 8-10-1980 and 10-1-1982 to the plaintiff. Both the cheques bounced as defendant had no money in his bank account. Thereafter, the plaintiff issued the demand notice, Ext. 5. As the defendant did not pay the amount as per the demand notice, the plaintiff was compelled to file the suit for recovery of the said amount with pendente lite and future interest.
4. The defendant was set ex parte.
5. To prove his case, plaintiff got examined himself as P.W. 1 and exhibited documentary evidence vide Exts. 1 to 5 in support of his claim. The learned Court below on considering the evidence adduced by the plaintiff and the statement on oath by the plaintiff in Court has held that on 25-4-1979 plaintiff has given the aforesaid amount to the defendant and the defendant has not returned the same. There is nothing on record to show that the defendant has agreed to pay the interest to the plaintiff on the aforesaid amount. Plaintiff is not entitled to any interest on the principal amount. On this finding it has decreed the suit in part.
6. Learned Counsel appearing for the appellant submitted that since the trial Court has accepted the plaintiffs case regarding the payment of money by the plaintiff to the defendant, the Court below should have granted interest as per Section 34 of the Civil Procedure Code. Hence, this Court should interfere with the judgment and decree passed by the Court below and a direction may be issued to the defendant to pay interest on the principal amount.
7. The core question that needs to be decided in this appeal is whether the plaintiff is entitled to interest on the principal sum adjudged
8. Considering the aforesaid submissions, Section 34 of the Civil Procedure Code is extracted herein below for better appreciation.
INTEREST
34. Interest
(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum, as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:
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.
Explanation I : In this sub-section, 'nationalized bank' means a corresponding new bank as defined in the Bank Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).
Explanation II : For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.
(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit there for shall not lie.
9. The interest that may be awarded to a plaintiff in a suit for money may be divided into three heads, according to the period for which it is allowed, namely-
(a) interest accrued prior to the institution of the suit on the principal sum adjudged (as distinguished from the principal sum claimed);
(b) additional interest on the principal sum adjudged, from the date of the suit to the date of the decree, 'at such rate as the Court deems reasonable;'
(c) further interest on the principal sum adjudged from the date of the decree to the date of the payment or to such earlier date as the Court thinks fit, at a rate not exceeding 6% per annum.
10. From the above it is clear that the award of interest can only be on the principal sum adjudged and not on the principal and interest as on the date of the decree. The Court has also no discretion to award interest beyond the rate of 6%. But the Court has still a discretion to award or not to award any interest and in awarding interest, to determine at what rate it should be awarded subject to maximum of 6%.
11. Interest upto the date of the suit is a matter of substantive law and the section does not refer to payment of interest under the first head. It applies only to the second and third heads. The right to interest prior to the suit is a substantive one whereas pendente lite, it is one of procedure within the discretion of the Court and interest antecedent to suit is not a matter of procedure. A brief note on the subject will not be out of place, the law on the subject may be considered under the following two heads;
(I) where there is a stipulation for the payment of interest at a fixed rate;
(II) where there is no stipulation at all for the payment of interest.
If there is a stipulation for the rate of interest, the Court must allow that rate upto the date of the suit, however, high it may be, subject to the two following exceptions;
(i) if the rate is penal, the Court may award interest at such rate as it deems reasonable; and
(ii) even if the rate is not penal, the Court may reduce it if the interest is excessive and the transaction was substantially unfair.,
12. For the period prior to institution of the suit, contractual rate of interest is mandatory. The Court has no discretion in the matter. If there is no express stipulation for payment of interest, the plaintiff is not entitled to interest except in the following cases where it is allowed by mercantile usage, but such usage must be pleaded and proved. Since there was no contract between the parties, plaintiff cannot be granted interest prior to the date of institution of the suit and interest is payable where a right to it or an authority for its allowance or payment is conferred by statute. In the case of sale of goods even if there is no stipulation in the contract to pay interest, the vendor is entitled to interest from the date of payment of the price till the date of the suit under Section 61(2)(a) of the Sale of Goods Act.
13. The learned Counsel appearing for the appellant cited a decision reported in the case of Pranakrushna Satpathy v. State of Orissa and Ors. reported in 1973 (1) CWR 443. But the said decision is not applicable to the facts of the present case, as in that case plaintiff had issued notice under Section 80 of the Civil Procedure Code and in his evidence on oath in Court he had stated regarding the usual practice for payment of interest.
14. In the present case, plaintiff has examined himself as P.W. 1 and he has stated that;
On 25-4-1979 the defendant took Rs. 12,000/- from me out of friendly relationship for investing in his contractory work. He had urged to repay the money within 2 months. On demand he replied as per Exts. 1 and 2. Exts. 1/a and 2/a are his signatures. On further demand on 8-10-1980 the Defendant gave a cheque vide Ext. 3. But it was dishonored as the defendant had no money in his account. Again on my further demand the Defendant gave another cheque Ext. 4 for Rs. 10,000/- on 10-1-1982. But that cheque was also dishonored as the Defendant had no money in his accounts.
15. On the face of such evidence, this Court is not in a position to find that the plaintiffs case can be covered by any of the three alternatives indicated above. There is no counter evidence on the point by the defendant also. The Court below has rightly concluded that plaintiff has given a friendly loan and there is no term and condition regarding the payment of interest. Hence, plaintiff is not entitled to the interest. Since discretion is vested with the Court to fix the pendente lite interest and future interest and the Court below has rightly adjudged that the plaintiff is not entitled to any Interest, this Court confirms the said finding of the l-Court below.
16. Accordingly, the appeal being devoid of merit is dismissed. No costs.