Judgment:
R. L. Anand, J.
1. This is a regular second appeal and has been directed against the judgment and decree dated May 23, 1984, passed by the Additional District Judge, Hoshiarpur, who affirmed the judgment and decree dated May 16, 1981, passed by the Court of the Sub-Judge, 1st Class, Dasuya, who passed a preliminary decree in favour of the appellant and against the respondents for the recovery of Rs. 4,23,295.35 with interest at the rate of 15 per cent. per annum from the date of the filing of the suit, i.e., February 19, 1979, till the date of decree, i.e., May 16, 1981, and thereafter at the rate of 7 per cent. per annum till realisation of the decretal amount.
2. The brief facts of the case are that Punjab and Sind Bank Ltd. (hereinafter called 'the bank') filed a money suit for Rs. 4,23,295.35 against the defendant-respondents and claimed interest at the rate of 15 per cent. per annum by the sale of hypothecated/mortgaged property and against the personal and other properties of the defendants. I need not incorporate the entire pleadings of the plaintiff bank because those are not relevant for the purpose of disposal of the present appeal but suffice it to mention that the suit of the bank was contested by the defendant-respondents on various pleas and on the conclusion of the proceedings, the trial court granted a money decree and awarded interest at the rate of 15 per cent. per annum on the claimed amount from the date of the filing of the suit till the date of decree and at the rate of 7 per cent. per annum from the date of decree till full payment by the sale of mortgaged/hypothecated properties.
3. Both the plaintiff bank as well as the defendants were not satisfied with the judgment and decree of the trial court and they filed the appeal and cross-objections which were dismissed by the first appellate court, vide the impugned judgment and decree dated May 23, 1994. The bank was still not satisfied with regard to the mode of interest awarded by the courts below ; hence the second appeal and in this manner the short and concise point involved in the present appeal is whether the bank is entitled to interest at the rate of 15 per cent. per annum from the date of suit till the payment as per terms of the mortgage or it is entitled to interest at the rate of 7 per cent. per annum from the date of decree as awarded by the courts below.
4. I have heard Shri Deepak Agnihotri, advocate, on behalf of the appellant with whose assistance I am disposing of this appeal which involves a very short point and can be disposed of in the light of the provisions of Section 34 of the Civil Procedure Code, 190'8. Before I deal with the point involved in this appeal, I may mention that the loan which was advanced to the defendants was for commercial purpose as the defendants wanted to avail of the loan in order to run a theatre. Section 34 of the Code of Civil Procedure, 1908, lays down as follows :
' 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 6 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 6 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 nationalised banks in relation to commercial transactions. Explanation I. -- In this sub-section, 'nationalised bank' means a corresponding new bank as defined in the Banking 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 therefor shall not lie.'
5. A perusal of the above provisions would show that all amounts due to the bank become the principal amount and the bank is permitted to charge the contractual rate of interest which was 15 per cent. per annum of which the bank/appellant has been deprived. In these circumstances, the courts below were not justified in awarding future interest at the rate of 7 per cent. per annum from the date of decree, i.e., May 16, 1981, up to the date of realisation.
6. In this vie. w of the matter, I accept this appeal, modify the judgments and decrees of the courts below and grant a declaration to the plaintiff-appellant that it will be entitled to charge the contractual rate of interest on the suit amount even from the date of decree up to the date of payment according to the terms of the mortgage deed. Further, it is made clear that the bank is entitled to realise that amount by sale of the hypothecated property and also from the personal properties of the defendant-respondents. Now a fresh preliminary decree be prepared in the above terms.