ORDER
Bimal Chandra Basak,J.
1.These appeals are directed against decrees passed in favour of various banks, mostly nationalised banks, in various suits instituted by them for money decree on account of the amount lent and advanced by them and for other reliefs.
2. Some important questions of law are raised before us in connection with these suits which also arise in various other proceedings of this nature from time to time. The questions involved relate to (a) the interest for the period prior to the institution of the suit; (b) interim interest, that is, interest from the date of the institution of the suit till the date of the decree; (c) further interest i.e. interest on judgment and (d) instalments to be granted, if any, for payment of the decretal amount.
3. Various suits were instituted in this Court by different nationalised Banks for recovery of huge amounts due from their constituents on account of moneys lent and advanced by the Banks. In these cases money decrees were passed. The Court also directed interest to be paid under three headings as specified above. The Courts have also granted instalments. In all these cases it is the Banks who have preferred appeals, though the decrees have been passed in their favour, being aggrieved by the Court's directions regarding interest and also the instalments granted for payment of the decretal dues. All these appeals involve such common questions of law relating to the same.
4. At the request of the learned Advocates for the parties, all these appeals were set down for hearing together and learned Advocates appearing for different parties in different appeals have very thoroughly made submissions before us on these points. It was agreed that we should first lay down the general principles applicable in respect of the aforesaid questions, after hearing the interestedparties as a form of guideline, which would be common to all these cases and thereafter we shall deal with each and every individual case depending on the facts and cirucmstances of each case. Accordingly these appeals were heard together for a considerable time and the judgment was reserved.
5. We may however make one thing clear. We are dealing with general principles applicable to money suits relating to all these questions wherein some cases there are also prayers for declaration of charge relating to moveables with a prayer for sale of the same. We are not, in this judgment, dealing with mortgage suits where a preliminary decree is passed on redemption suits. We are not also dealing with these questions in respect of other proceedings, e.g. arbitration proceedings.
6. Arguments:
6.1. The main submission on behalf of the appellant Banks was made by the learned Advocate, Mr. Pratap Chatterjee. His submission was to the following effect. He has submitted at first that so far as interest for the period prior to the suit is concerned, it must be directed to be paid at the agreed rate and the Court has no option or discretion in the matter. So far as the interim interest is concerned our attention has been drawn to the relevant provisions of S. 34 of the Civil Procedure Code (hereinafter referred to as the Code), Usury Laws Repeal Act, 1855 (hereinafter referred to as 1855 Act) and S. 21A of the Banking Regulation Act, 1948. At the first instance it was submitted by Mr. Chatterjee that the Court must grant interim interest at the agreed rate in view of the provision of 1855 Act. It was submitted that S. 34 of the Civil Procedure Code applies only when there is no rate of interest agreed upon. He has admitted that the proviso to Section 34 applies only in respect of interest on judgment and that it is not attracted in the case of interim interest. He has submitted that if there is any agreement regarding interest, the 1855 Act would apply and not S. 34 but if there is no such agreement, S. 34 of the Code would apply. It was conceded that S. 3 of 1855 Act is in conflict with S. 34 of the Civil Procedure Act. We may point out that at a later stageMr. Chatterjee has, very fairly, expresed that he was not relying upon the provisions of 1855 Act on the question of interim interest in view of a Full Bench decision of this Court in Mangirim Marwari v. Dhowtal Roy (1890) ILR 12 Cal 569 but he did not expressly give up this point. He has submitted that in any event though it may be said that interim interest is a matter of discretion, the Court should award such interest at the agreed rate if there is any agreed rate. He has made similar submission regarding interest on judgment. He has further submitted that so far as the instalment is concerned, it can be so granted provided the same can be justified but not as a matter of course. In support of his contentions Mr. Chatterjee has relied on the following State Bank of India v. B. Gupta (Tea) Pvt. Ltd., : AIR1987Cal64 ; S. K. Engineering Works Bartala v. New Bank of India, ; Central Bank of India v. P. R. Garments Industries, : AIR1986Guj113 ; Jagannath Pigments & Chemicals v. Bank of Baroda (1989) 65 Com Cas 393 (Bom): K. Appa Rao v. V. L. Varadaraj AIR 1981 Madras 94; United Bank of India v. New Glance Tea Co. Ltd., : AIR1987Cal143 , United Bank of India v. Rashyam Udyog, reported : AIR1990Cal146 ; Jagadish Chandra Chakra-borty v. Brojendra Mohan Moitra AIR 1949 Cal 427 and Bandara Swami Naidu v. Atchayamma, ILR (1881) 3 Mad 125.
6.2. Mr. Bimal Chatterjee, learned Advocate appearing for Dena Bank has referred to the arguments of Mr. Pratap Chatterjee relating to the Usury Laws Repeal Act. He has however submitted that S. 2 of 1855 Act relates to interest before the suit. So far as S. 3 is concerned, the first part relates to interim interest. In this context he has also referred to Mulla's Civil Procedure Code Vol. I, 14th Edn. page 253. Regarding the decision in United Bank of India v. New Glance Tea Co. Ltd. : AIR1987Cal143 (supra) he has submited that the decision is erroneous. Order 20, R. 11 does not apply to mortgage suit. He has further submitted that the reasons given for the decision is not in conformity with the decision itself. He has drawnour attention to paragraph 6 thereof and submitted that the learned Judge has followed the Bombay decision and not the Calcutta decision. He has submitted that the learned Judge even observed that O.20, R. 11 would apply. In support of his contentions he has relied upon Bindhu Sekhar Bandopadhya v. Sudhury Mahatabuddin (1911) 15 Cal WN 1083 and submitted that the same was not considered. He has further draw our attention to O.20, R. 11. Referring to the expression 'in so far as' therein, he has submitted that this was not limited only to a money decree. He has submitted that the question of interest is a matter of discretion -- whether it is interim interest or interest on judgment. He has also relied upon the decision in Dena Bank v. Victory Engineering Works (1984) 2 Cal HN 271 (Paras 64, 71, 94 and 95).
6.3. Mr. Jayanta Mitra, learned Advocate, who spearheaded the case of the constituents, admitted that so far as the pre-suit interest is concerned, the Court has no discretion. Regarding interim interest, with reference to 1855 Act, he has submitted that S. 2 of the said Act relates to the pre-suit interest. Interest 'recoverable' means when the interest is recoverable as a matter of right and not under Court's discretionary power. He has submitted that it cannot be said that S. 2 applies in the case of interim interest. -He has submitted that in any event it has been repealed by necessary implication by S. 34 of the Civil Procedure Code. In this connection he has also drawn our attention to S. 21A of the Banking Regulation Act, 1949. He has submitted that the interim interest and interest on judgment are matters of discretion and not governed by the agreed rate of interest. He has submitted that this is now well settled particularly having regard to the following decisions Mahabir Prasad Rungta v. Durga AIR 1961 SC 99, State of M. P. v. Nathabhai Desaibhai Patel, : AIR1972SC1545 . In this connection he has relied upon the decisions reported in West Bengal Financial Corporation v. Bertram Scott (I) Ltd., : AIR1983Cal381 ; State of Bank of India v. B. Gupta (Tea) Pvt. Ltd., : AIR1987Cal64 ; : AIR1988Cal311 ; United Bank of India v. Rashyam Udyog : AIR1990Cal146 . He has submitted that there is an implied repeal of 1855 Act by 1908 Act. He has also drawn our attention to United Bank of India v. Hind Hossiery Mill (1988) 1 Cal LJ 69.
6.4. Mr. P. K. Mullick appearing on behalf of one of the constituents has referred to 0. 20, R. 11 of C.P.C. regarding instalments. He has submitted that it is not confined to simple money decree. He has submitted further that the Appeal Court should not interfere with the rate of interest granted by the trial Court in its discretion.
7.RELEVANT ACTS:
7.1. Before we deal with the respective submissions we shall set out the different provisions of different Act relied upon before us.
7.2. Section 34 Code of Civil Procedure.
Interest.-- (I) 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 adition to any interest adjudged on such principal sum for any period prior to the institution of the suit, 36 (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 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 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 11.-- 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 36 (on such principal sum) from the date of 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.
7.3. Order 20, Rule 11 :
Decree may direct payment by instalments.- (1) Where and in so far as a decree is for the payment of money, the Court may for any sufficient reason incorporate in the decree, after hearing such of the parties who had appeared personally or by pleader at the last hearing, before judgment, an order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable.
(2) Order, after decree, for payment by instalments.-- After the passing of any such decree the Court may, on the application of the judgment-debtor and with the consent of the decree-holder, order that payment of the amount decreed shall be postponed or shall be made by instalments on such terms as to the payment of interest, the attachment 'of the property of the judgment-debtor or the taking of security from him, or otherwise, as it thinks fit.
7.4. Section 21-A of the Banking Regulation Act, 1949:
Rates of interest charged by banking companies not to be subject to scrutiny by Courts.-- Notwithstanding anything contained in the Usurious Loans Act, 1918 (10 of 1918), or any other law relating to indebtedness in force in any State, a transaction between a banking company and its debtor shall not be reopened by any Court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive).
DECISION:
8.Interest for the period prior to the suit.
8.1. We shall first take up the question of interest for the period prior to the institution of the suit. We shall first refer to the relevant decisions on this point. In the case of B. N. Railway v. Ratanji Ramji, reported in AIR 1938 PC 67 the Judicial Committee held as follows:
'Interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usuage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest as for instance the Court may award interest at the rate of 6 per cent per annum, when no rate of interest is specified in a promissory note or bill of exchange under S. 80, Negotiable Instruments Act.' In the case it was held as follows:
'The proviso to S. 1 applies to a case in which the Court of equity exercises jurisdiction to allow interst. But in order to invoke a rule of equity, it is necessary in the first instance to establish the existence of a state of circumstance which attracts the equitable jurisdiction.'
8.2. In the case of Mahabir Prasad Rungta v. Durga Dutta, : [1961]3SCR639 , the Supreme Court held as follows (at p. 993 of AIR):
'There remains the question of interest. Interest for a period prior to the commencement of suit is claimable either under an agreement, or usage of trade or under a statutory provision or under the Interest Act, for a sum certain where notice is given. Interest is also awarded in some cases by Courts of Equity. Bengal Nagpur Rly. Co. Ltd. v. Ruttanji Ramji . In the present case was it implied. The notice which was given did not specify the sum which was demanded, and, therefore, the Interest Act does not apply. The present case also does not fall within those cases in which Courts of equity grant interest. Learned counsel for Durga Dutt claimed interestas damages: but it is well settled that interest as damages cannot be awarded. Interest up-to-date of suit, therefore, was not claimable, and a deduction shall be made of such interest from the amount decreed. As regards interest pendente lite until the date of realisation, such interest was within the discretion of the Court. The rate fixed is 6 per cent, which, in the circumstances and according to which practice of Courts, appears, high. Interest shall be calculated at 4% per annum instead at 6%, and the decree shall be modified accordingly.'
8.3. In the case of Executive Engineer, Irrigation, Galimala v. Abanduta Jena, : [1988]1SCR253 , special leave application was granted on the question of award of interest for the period prior to reference and during the pendency of the arbitration proceedings. Special leave was not granted in regard to the award of interest subsequent to the date of the arbitrator's award. The Supreme Court proceeded on the basis that in the notice of demand made by the contractors before the disputes were referred to arbitrator, interest was claimed. The Supreme Court referred to the provisions of Interest Act, 1839 and Interest Act, 1978 which repealed the 1839 Act. After referring to statement of objects and reasons Supreme Court pointed out the main features of 1978 Act. It was pointed out that the 1978 Act had introduced some important changes. The expression 'Court' includes Tribunal. In this context it was observed as follows (at pp. 1522-23 of AIR):
'The new Act has made some important changes. One of the important changes is that the expression 'Court' is defined to include a Tribunal and an arbitrator. Debt is defined as meaning any liability for an ascertained sum of money including a debt payable in kind, but not including a judgment-debtor. S. 3(1) enables the Court, if it so thinks fit, to award interest, in any proceeding for the recovery of any debt or damages or in any proceeding in which a claim for interest in respect of any debt or damages already paid is made, to the person making such claim, for the whole or part of the following period; (a) if the proceeding relates to a debt payable byvirtue of a written instrument at a certain time, then, for the date when the debt is payable to the date of institution of the proceedings; (b) if the proceeding does not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceeding. S. 3(3) provides that nothing in the section shall apply in relation to (i) any debt or damages upon which interest is payable as of right, by virtue of any agreement; or (ii) any debt or damages upon which payment of interest is barred by virtue of an express agreement. S. 3(3)(c) provides that nothing in the section shall empower the Court to award interest upon interest. S. 4(1) provides, 'notwithstanding anything contained in S. 3 interest shall be payable in all cases in which it is payable, by virtue of any enactment or other rule of law or usage having the force of law'. S. 4(2) further provides, notwithstanding anything as aforesaid the Court shall allow interest in the class of cases sepcified in S. 4(2) from the dates stipulated to the dates stipulated in the provision. S. 5 provides that nothing in the Act shall affect the provisions of S. 34 of the C.P.C. 1908. (Para 5).
'It is important to notice at this stage that both the Interest Act of 1839 and the Interest Act of 1978 provide for the award of interest up to the date of the institution of the proceedings. Neither the Interest Act of 1839 nor the Interest Act of 1978 provides for the award of pendente lite interest. We must look elsewhere for the law relating to the award of interest pendente lite. This, we find, provide for in S. 34 of the C.P.C. in the case of Courts. S. 34, however applies to arbitrations in suits for the simple reason that where a matter is referred to arbitration in a suit, the arbitrator will have all the powers of the Court in deciding the dispute, S. 34, does not otherwise apply to arbitrations as arbitrators are not Courts within the meaning of S. 34, Civil Procedure Code. Again, we must look elsewhere to discover the right of the arbitrator to award interest before the institution of the proceedings, in cases where the proceedingshad concluded before the commencement of the Interest Act of 1978. While under the Interest Act of 1978 the expression 'Court' was defined to include an arbitrator, under the Interest Act of 1839 it was not so defined. The result is that while in cases arising after the commencement of the Interest Act of 1978 an arbitrator has the same power as the Court to award interest up to the date of institution of the proceedings, in cases which arose prior to the commencement of the 1978 Act, the arbitrator had no such power under the Interest Act of 1839. It is therefore necessary as we said, to look elsewhere for the power of the arbitrator to award interest up to the date of institution of the proceedings. Since the arbitrator is required to conduct himself ana make the award in accordance with law we must look to the substantive law for the power of the arbitrator to award interest before the commencement of the proceedings. If the agreement between the parties entitled the arbitrator to award interest no further question arises and the arbitrator may award interest. Similarly if there is a usage of trade having the force of law the arbitrator may award interest. Again if there are any other provisions of the substantive law enabling the award of interest the arbitrator may award interest. By way of an illustration we may mention S. 80 of the Negotiable Instruments Act as a provision of the substantive law under which the Court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange. We may also refer S. 61(2) of the Sale of Goods Act which provides for the award of interest to the seller or the buyer as the case may be under certain circumstances in suits filed by them. We may further cite the instance of the non-performance of a contract of which equity could give specific performance and to award interest. We may also cite a case where one of the parties is forced to pay interest to a third party, say on an overdraft, consequent on the failure of the other party to the contract or not fulfilling the obligation of paying the amount due to them. In such a case also equity may compel the payment of interest. Loss of interest in the place of the right to remain in possession may be right-fully claimed in equity by the owner of a property who has been dispossessed from it.'
(Para 6)
8.4. In the case of Dinesh Chandra Shaha v. Safer Ali Mondal AIR 1920 Cal 881 a Division Bench of this Court held that a mere finding that the rate of interest in a mortgage bond is excessive, is not sufficient reason for refusing the plaintiff interest at the rate embodied in the contract. The Division Bench took Into consideration the two Privy Council decisions in Aziz Khan v. Duni Chand AIR 1918 PC 48 and Lala Balla Mal v. Ahad Shah in AIR 1918 PC 249 and also the judgment of the Calcutta High Court in Bejoy Kumar Adhya v. Satish Chandra Chose AIR 1920 Cal 529 in this connection and did not follow the earlier decision in Krishna Chandra Barman v. Sanat Kumar Das (1917) ILR 44 Cal 162 : (AIR 1917 Cal 502).
8.5. In the case of State Bank of India v. B. Gupta (Tea) Pvt. Ltd., reported in : AIR1987Cal64 , a Division Bench of this Court considered the question of discretion regarding grant of interest. In that case, the learned Judge did not award interest in respect of a short period prior to the institution of the suit. It was submitted in the appeal on behalf of the Bank that the learned Judge erred in law in awarding interest at a rate lower than the agreed rate for the period prior to the institution of the suit. It was submitted that the appellant was entitled to interest at the agreed rate for the period prior to the institution of the suit. It was submitted that the appellant was entitled to interest at the agreed rate for that period and that the Court had no discretion in the matter. The Appeal Court held that if there is a stipulation for the payment of interest at a fixed rate in awarding interest antecedent to suit, the Court has no discretion to award interest, at any rate other than the contractual rate. It was held that S. 34 had no application in respect of interest prior to the date of the suit. It was further held that the interest accrued due prior to the institution of the suit on the principal sum adjudged is not a matter of procedure but of substantive law. The Court modified the decree accordingly.
8.6. In our opinion, the question ofpayment of interest, in respect of the period prior to the institution of the suit, does not require much deliberation inasmuch as the law regarding the same is now well settled. If there is any agreement to that effect, such interest is to be governed by such agreement. Where there is no such agreement, it is to be paid according to the statutory provision governing the same, if any. Both the Interest Act of 1839 and 1978 provide for the award of interest in cases referred to therein up to the date of the institution of the proceedings. Interest Act, 1978 applies in respect of proceedings commenced after the said Act came into force, whereas Interest Act, 1839 applies for the period prior thereto. S. 3(3) of the Interest Act, 1978 provides that nothing in S. 3 shall apply in relation to any debt or damages upon which interest is payable as of right by virtue of any agreement. Apart from that, interest is also payable under various other Acts, e.g. Negotiable Instruments Act, Sale of Goods Act etc. S. 4(1) of Interest Act makes it clear that interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usuage having the force of law. The Court has also power to grant interest on the basis of implied agreement or on equitable grounds. If there is any agreed rate of interest, that is a part of the claim of the plaintiff. The plaintiff is entitled to the same under the substantive law. The question of exercise of any discretion by the Court cannot and does not arise in such a case. The Court has no power to deviate from the agreement by totally disallowing interest or allowing interest at a lower rate or at a rate other than the agreed rate.
8.7. There is another aspect of the matter. So far as Banking Companies are concerned, in view of Section 21A of Banking Regulation Act, 1949, which we have quoted herein-above, a transaction between a Banking Company and its debtor cannot be reopened by any Court on the ground that the rate of interest charged by the Company in respect of such transaction is excessive. Therefore, it follows that in the case of a Banking Company, a fortiori, its claim to interest at the agreed rate for the period prior to the suit cannot be ignored and the Court is bound to grant interest at the rate. The Courthas no discretion in the matter.
9.Interim Interest:
9.1 The next point to be considered is the question of interim interest i.e. the interest from the date of institution of the suit till the date of the decree. The following questions are involved in respect of grant of such interest:
a) Whether the provisions of 1855 Act would apply in respect of interim interest:
b) If not, which provision of law wouldgovern the grant of such interest:
c) Whether the Court has a discretion regarding grant of such interest. If so, whether such discretion of the Court extends not only to the question of the rate or amount of interest but also to the question as to whether any interest is to be granted at all.
d) If the grant of interest is a matter of discretion of the court, how such discretion is to be exercised by the Court; what matters are to be taken into consideration by the Court while granting such interest;
e) When there is an agreed rate of interest, whether the decree-holder is entitled to claim such interest at the agreed rate;
f) Is the Court required to give reasons regarding grant of such interest?
9.2 Before dealing with such questions, we shall first deal with the decisions relevant to this point. We may point out that the question of interim interest and interest on judgment have been argued and considered together and not separately in most of these decisions. However, it may be pointed out that there is at least one distinction between interim interest and interest on judgment (which is described as 'further interest') as would be clear from the proviso to S. 34 of the Code itself.
9.3 We shall first consider the Privy Council and Supreme Court decisions on this point.
9.4 In the case of Pannalal v. Nihari Chand AIR 1922 PC 46 a contention was raised before Their Lordships regarding the rate of interest from the date of the proceeding until judgment. In this context Their Lordships observed that there is a discretion in the Judges under the Code and both theCourts have said that interest should be at 8 per cent and Their Lordships have adhered to the same view.
9.5 In the case of Jatindra Nath Chowdhury v. Uday Kumar Das on the question of interest, their Lordships held that the amount to be allowed was very largely a matter of judicial discretion and Their Lordships did not see any reason for interference with the discretion exercised by the Subordinate Judge.
9.6 In the case of Lala Hakim Rai v. Lala Ganga Ram AIR 1942 PC 61, Privy Council observed that the rate of interest to be allowed after the institution of the suit is entirely a matter within the discretion of the court.
9.7 In the case of Thawardas Pherumal v. Union of India, : [1955]2SCR48 it was held that but for S. 34 of the Code even a Court would not have the power to give interest after the Suit.
9.8 In the case of Mahabir Prosad Rungta v. Durga Dutt, reported in : [1961]3SCR639 the Supreme Court observed as follows (at p. 993 of AIR):
'As regards interest pendente lite until the date of realisation, such interest was within the discretion of the court.'
9.9 In the case of Soli Pestonji Majoo v. Ganga Dhar Khemka, : [1969]3SCR33 one of the contentions raised on behalf of the appellants was that even if the respondent is entitled to institute a second mortgage suit the High Court ought not to have granted interest to the respondent at the rate of 12 per cent per annum with monthly rests even after the date of the suit and the maximum interest which should have been allowed was not more than 6 per cent per annum simple on the principal sum adjudged. The High Court observed that this argument was well-founded and there was no justification for the High Court to allow interest at the contractual rate from the date of the suit on the amount adjudged. In this context the Supreme Court held as follows (at pp. 603-1 of AIR):
'Prior to 1929 the legal position was that under S. 34 of the Civil Procedure Code ingranting a decree for payment of money the Court had full discretion to order interest at such rate as it deemed reasonable to be paid on the principal sum adjudged from the date of the suit onwards. But Order 34, Rules 2 and 4 which applied to a mortgage suit, enjoined the Court to order an account to be taken of what was due to the plaintiff at the date of such decree for principal and 'interest on the mortgage'. The special provision in Order 34 and therefore to be applied in preference to the general provision in S. 34. Till the period for redemption expired therefore the matter was considered to remain in the domain of contract and interest had to be paid at the rate and with the rests specified in the contract of mortgage but after the period for redemption had expired the matter passed from the domain of contract to that of judgment. The right of the mortgage would henceforth depend not on the contents of his bond but on the directions of the decree.-- (See the decision in Jagannath Prosad Singh Chow-dhury v. Surajmal Jalal .'
9.10 Thereafter the Supreme Court observed that by Act 21 of 1929, Order 34 of Civil Procedure Code was amended and a new Rule 11 was inserted which specifically deals with the interest. After quoting the said Rule the Supreme Court observed as follows : [1969]3SCR33 :
'This rule was further amended by the Code of Civil Procedure Amendment Act, 1956 but we are not concerned with this further amendment in the present case. It is apparent that the new Rule 11 as inserted by the Amending Act 21 of 1929 provides that the Court 'may' order payment of interest to the mortgagee up to the date fixed for payment at the rate payable on the principal. It was held by the Federal Court in Jaigobind Singh v. Lachmi Narain Ram , that the language of the rule gives a certain amount of discretion to the Court so far as interest pendente lite and subsequent interest is concerned and it was no longer absolutely obligatory on the Courts to decree interest at the contractual rates up to the date of redemption in all circumstances even if there is no question of the rate being penal.excessive or substantially unfair within the meaning of the Usurious Loans Act, 1918. In view of the principle laid down by the Federal Court in this decision we are of the 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.'
9.11 In the case of State of Madhya Pradesh v. Nathabhai Desaibhai Patel, : AIR1972SC1545 , while dealing with the contention of the appellant-defendant, it was held as follows (para 4):
'.....The only contention urged byhim was that the High Court erred in awarding interest on the principal amount claimed from the date of the suit. The question, whether interest should be awarded on the principal amount claimed from the date of the suit, was within the discretion of the Court. In our opinion, the High Court rightly exercised that discretion. It disallowed the interest claimed by the plaintiff-respondent up till the date of the suit. Coming to the question of interest, subsequent to the date of the institution of the suit, it was found that the appellant had unlawfully withheld' the amount due to the respondent even after coming to know that the collection made was an illegal one. Before instituting the suit, the respondent had issued a notice to the appellant, calling upon the appellant to pay the money illegally collected from it; but despite that notice, the appellant failed to pay back the amount illegally collected from the respondent. That being so, in our opinion, the High Court was justified in awarding interest on the principal amount from the date of the suit.'
9.12 In the case of State of Rajasthan v. Raghubir Singh, : [1979]3SCR6 , while awarding interest pendente lite the trial Court gave no reason for doing so. The High Court considered the matter in some details and having regard to various continuous default committed by the defendant and its officers,the High Court enhanced the rate of interest to 6 per cent. The Supreme Court held that High Court was justified in doing so and found no reason to interfere with the discretion exercised by the High Court.
9.13 In the case of Everest Financial Corporation v. Gujarat State Financial Corporation, : [1987]3SCR607 , the question involved was whether the rate of interest chargeable on the amounts payable under an order passed under S. 32 of the State Financial Corporation Act 1951 from the date of the said order is governed by S. 34 of the Code or whether it is payable at the contractual rate. The Supreme Court referred to the decision in the case of Gujarat State Financial Corporation v. M/s. Natson Mfg. Co. (P) Ltd., : [1979]1SCR372 . It was pointed out that it was held in that case that an application for any of the reliefs that can be granted under the said Act was not certainly a plaint in a suit for recovery of a mortgage loan and that was even not akin to a suit by a mortgagee to recover the mortgage money by sale of the mortgage property, it was further pointed out that in the said decision that the appellant in such a case could not pray for a preliminary decree for the payment of the money nor it could seek to enforce any personal liability even if such a liability had been incurred under the contract of mortgage as the law stood then. It was further pointed out that in that case, the form of the relief to be granted under the Act did not attract the provision which required payment of court-fees on ad-valorem basis on any plaint or application in the nature of a plaint instituted for recovery of mortgaged amount. In this context it was observed as follows: : [1987]3SCR607 :
'It may also be mentioned here that was held that even under the Code the question of interest payable in mortgage suits filed in civil courts is governed by Order 34, Rule 11 of the Code and not by S. 34 of the Code which may be applicable only to cases of personal decrees passed under O. 34, R. 6 of the Code. The High Court has right in holding that the interest would be payable on the principal amount due in accordance with the terms ofthe agreement between the parties till the entire amount due was paid as per the order passed under S. 32 of the Act. We hold that the decision of the High Court, which has applied S. 34 of the Code to a proceeding instituted under S. 31(l) of the Act was not correctly decided.'.
9.14 In the case of Executive Engineer, Irrigation Galimala v. Abnaduta Jana : [1988]1SCR253 (supra) which we have discussed above the Supreme Court held that the law relating to the award of interest pendente lite is provided for in Section 34 of the Code in the case of Courts.
9.15 In Maganlal v. Jiswal Industries, : [1989]3SCR696 , the Supreme Court reiterated the law laid down in Gujarat Financial Corporation v. Natron . : [1979]1SCR372 (supra) and Everest Financial Corporation v. Gujarat State Financial Corporation : [1987]3SCR607 (supra).
9.16 We shall now consider the Calcutta decisions. In a Full Bench decision of this High Court in the case of Magniram Marwari v. Dhowtal Roy, reported in (1890) ILR 12 Cal 569, with reference to S. 209 of the Civil Procedure Code of 1982 it was held that interest after date of suit is in the discretion of the court notwithstanding that a fixed rate of interest is mentioned as payable up to realisation in the bond sued upon.
9.17 In the case of J.W. Crewddon v. Ganesh Das Hari Bux AIR 1920 Cal 737, while considering the question of allowing interest during the pendency of the suit, a Division Bench of this Court observed as follows:--
'The only statutory provision which authorises the Court to allow interest, in its discretion, in such a case, is that contained inS. 34, Civil P. C. 1908'.
9.18 In the case of Shivaprasad Singh v. Pravagkumari Debee : AIR1925Cal29 a Division Bench of this Court held as follows:
'One important principle, under which running of interest may be suspended, is where the delay in the payment of theprincipal debt is caused by some improper act or omission of the creditor. So if a creditor, by his own act, puts it beyond the power of the debtor to make payment, no interest should be recoverable for the period during which the creditor was thus prevented. But the appointment of a receiver to relieve the executor from execution, or an ad interim injunction, obtained by the beneficiary restraining the executor from transferring any part of the properties in the suit, is no ground for cessation of interest.'
'The allowing of interest up to date of decree and compounding it with the principal on the date of the decree and allowing of interest thereon at the court rate, is justified by S. 34. The matter is purely one or discretion. In the case of a mere detention of a debt, where there is no contract, express or implied, to pay interest or no statute or mercantile usage allowing it, interest if it can not be awarded as interest may be awarded by way of damages. A creditor cannot claim, as of right, interest at the contract rate, pendente lite or after decree although the courts generally adhere to that rate unless it is inequitable to do so. Where there is no contract, express or implied, to pay interest, and interest has been allowed, ante lite and pendente lite, at such rate as the court considered fair, there is no point in compounding the principal and the interest to run on the aggregate sum at the same rate. S. 34 or its principle was never intended to be used as a means for providing for compound interest but to relieve the debtor of a harder rate of interest.'
9.19 In the case of State of W.B. v. Ajit Kumar Mukherjee, : AIR1977Cal273 , the trial Court awarded interest pendente lite at 3 per cent. This was challenged before the Appeal Court. The Division Bench held that the learned Subordinate Judge in exercise of his judicial discretion under S. 34 of the C.P. Code was right in holding that award of interest at 3 per cent on the principal amount adjudged payable to the plaintiff was reasonable and the Division Bench did not find any reason either to differ from him in his estimation or to hold that such estimation was not reasonable or fair.
9.20 In the case of West Bengal Financial Corporation v. Bertram Scott (I) Ltd., reported in : AIR1983Cal381 , with reference to S. 34 of the Civil Procedure Code a Division Bench of this Court held that the Court had no discretion as to whether pendente lite interest should be granted or not. The Court is bound to grant such interest. The Court has discretion only as to the rate of interest.
9.21 In the case of The State Bank of India v. B. Gupta (Tea) Pvt. Ltd., reported in : AIR1987Cal64 , it was a decision of the Division Bench of this Court, In that case it was submitted on behalf of the Bank that the plaintiff Bank was entitled to interest from the date of the suit to the date of the decree as well as from the date of the decree to the date of the payment at the agreed rate. It was submitted that in the event the Court refused to grant interest at the agreed rate, the Court should give reasons therefor. It was further submitted that even assuming that the Court has discretion regarding the award of interest at any particular rate, for the period from the date of the suit to the date of the decree and from the date of the decree to the date of payment, such discretion had not been properly and judicially exercised. On the other hand on behalf of the respondents it was submitted that the rate of interest was solely at the discretion of the court. It was. further submitted that it was not necessary for the court to give reasons why interest was allowed at a particular rate. In any event, it was submitted that in the facts and circumstances of the case, the learned Trial Judge had duly considered the relevant facts in awarding interest. Upon consideration of the same the Court held as follows : AIR1987Cal64 :
'The rate of interest from the date of the suit to the date of the decree is solely in the discretion of the Court and this discretion is not taken away even if there is agreement for payment of interest at a fixed rate up to the date of realisation. The contention of Dr. Banerjee that the Court in the exercise of discretion should award interest at the agreed rate cannot be accepted. If the Court has to award interest at the agreed rate in that eventno discretion remains with the Court. It has been held by the Division Bench of this Court in West Bengal Financial Corporation v. Bertram Scott (I) Ltd., reported in : AIR1983Cal381 that the court has no discretion as to whether pendente lite interest should be granted or not. The Court has discretion only as to the rate of interest. There the Appeal Court directed to pay interest at 1/2% per annum having regard to the facts that the assets of the company were not sufficient to meet the full claim of the secured creditors and only a small fraction of the claim of another secured creditors a nationalised bank should be met. We are, therefore, unable to accept the contention of Dr. Banerjee that the pendente lite interest should be awarded at the contractual rate. Only question that may be considered is whether the discretion has been exercised on sound principles or not.'
9.22 In the case of United Bank of India v. The New Glance Tea Co. Ltd., reported in : AIR1987Cal143 , a Division Bench of this Court was hearing an appeal preferred by the plaintiff, United Bank of India, against the judgment and decree passed by the Trial Court arising out of a suit filed in the Original Side of this Court. That decree had been passed partly in favour of the plaintiff, but the plaintiff had felt aggrieved by the reduced interest-both interim and on judgment and by the instalments granted by the learned Judge in decreeing the plaintiff's claim. In that case the plaintiff appellant had lent and advanced various amounts to the defendant No. 1 on hypothecation of moveables including the plants, machinery, stores, raw materials etc. In 1983 the plaintiff instituted the suit against the defendants for a decree for Rupees 58,41,677.25, interim interest and interest on judgment at the rate of Rs. 18 per cent, for a declaration that the moveables specified in the schedule stand charged and/ or mortgaged in favour of the plaintiff and decree for sale thereof.
9.23 When the suit came up for hearing before the learned Trial Judge, it was found that pending the suit a sum of -- Rupees 26,28,647.60 has been paid by the defendant No. 1 leaving a balance, of Rs. 32,13,029.65.Accordingly, the learned Trial Judge decreed the suit against the defendant No. 1 for sum of Rs. 32,I4,000/- together with a sum of Rs. 5,50,000/- towards interim interest and interest on judgment at the rate of 7 1/2 per cent. He further directed payment of the decretal amount on instalments extending over 7 years and only on default of payment of three consecutive instalments there would be a decree for sale. The plaintiff Bank had felt aggrieved by the fact that while the contractual rate of interest was 18 per cent the interim interest and interest on judgments had been decreed at a rate not exceeding 7 1/2 per cent and further by the fact that the decree providing for payment on instalments had deferred sale of the moveables indefinitely beyond seven years.
9.24 Regarding the grant of interim interest and interest on judgment it was held as follows : AIR1987Cal143 :
'In our opinion S, 34 of the Code leaves it to the discretion of the Court as to what interest is to be decreed by way of interim interest and so far as interest on judgment is concerned that too is also left entirely to the discretion of the Court but subject to a limit of 6 per cent. The added proviso only removed the limit imposed by the main provisions to the interest on judgment in a case arising out of a commercial transaction. But the proviso does not take away the discretion left with the court nor does it limit the scope of exercise of such discretion.
Indeed in our opinion like all discretions, discretion in this regard must depend upon consideration of all the attending facts and circumstances including the circumstances that the amount decreed was in respect of a liability arising out of a commercial transaction, Exercise of such discretion must necessarily be judicial and hence reasonable.'
9.25 In the case of United Bank of India v. Hind Hossiery Mill (P) Ltd., (1988) 1 Cal LJ 69, a single Judge of this Court followed the decision in State Bank of India v. B. Gupta (Tea) Pvt. Ltd. : AIR1987Cal64 (supra) on this point while holding that the Court had no discretion in so far as the interest antecedent the suit is concerned and that it must be at thecontractual rate, on the question as to the rate of interim interest and interest on judgment, the learned Judge observed as follows:
'There cannot be any strait-jacket formula for determining the rate of interest. In a suit like this the object of awarding interim interest and interest on judgment at a reasonable rate is to encourage the constituent of the bank to pay off the decretal dues. The court has to strike a balance between the competiting needs. The Bank has already charged interest at quarterly rest up to the date of the suit. The recalling of the loss by the bank puts the constituent into hardship. The ultimate remedy of the bank is to sell the hypothecated assets and to realise the dues, if the constituent fails to pay. But it is a common knowledge that the bank does not realise even 5 to 10% of the total claim by the sale of the assets. If the constituent pays off the decretal dues by instalments, the bank realises its money and at the same time constituent gets breathing time to survive so also the workmen employed by the constituent. The Court has to approach this problemfrom a practical and realistic point of view. A rigid or unflexible view based on misconception or ignorance of the nature of commercial transactions will neither solve the problem of the bank nor the constituent.'
9.26 In the case of Life Insurance Corporation of India v. Kumar Purnendu Nath Tagore, reported in : AIR1988Cal311 , a Division Bench of this Court was considering the scope of S. 34 of the Civil Procedure Code regarding grant of interim interest, Following the Division Bench Judgments of this court in the case of West Bengal Financial Corporation v. Bertram Scott (In Liquidation) : AIR1983Cal381 (supra) and State Bank of India v. B. Gupta (Tea) Private Ltd. : AIR1987Cal64 (supra), it was held that so far as the interim interest is concerned, the learned Judge should have allowed such interest and there was no question of any discretion in the matter. On the question as to what rate of interest should be allowed, it was held that the Court was not bound by the contractual rate of interest.
9.27 In the case of United Bank of India v.Rashyam Udyog, reported in : AIR1990Cal146 there were two appeals the subject-matter of which were two suits instituted by the Bank wherein the trial Court passed decrees but did not allow interest either pendente lite or post decree. The Bank preferred appeals and the only question involved was whether the Trial Court was wrong in not granting the pendente lite and post decree interest. The Division Bench held that such interest was in the nature of compensation or damages which the court may award to the plaintiff for being kept out of the money due to him. In the context it was observed that whether the general provisions of S. 34 of the Code of Civil Procedure or to those of Rule 11 of O.34 which is specially applicable to mortgage suits are looked into the relevant provisions are patently governed and controlled by the expression 'may' and accordingly the award of such interest was not obligatory but only discretionary and the Court may or may not award such interest. Reference was also made to a number of Division Bench decisions of this Court holding that the expression 'may' in S. 34 as well as O. 34, R. 11 of the Code of Civil Procedure does not vest the court with any discretion at all to grant or not to grant interest and the grant of interest, notwithstanding the expression 'may'is a 'must' while only the rate or the amount of interest to be awarded is left to the discretion of the Court. The Division Bench observed that this catena of Division Bench decisions would have been otherwise binding on the Division Bench concerned but the Court expressed doubts as to whether in view of the decision of the Supreme Court in Soli Pestonij.v. Ganga Dhar reported in : [1969]3SCR33 , Mahabir Prosad v. Durga Dutt, : [1961]3SCR639 and State of Madhya Pradesh v. Mathubhai Deshubhai, : AIR1972SC1545 certain other earlier and later decisions of the Supreme Court, the aforesaid Division Bench decisions could still bind the Court to hold that the award of interest is a 'must'. In this context the Division Bench held as follows : AIR1990Cal146 :
'We do not, as we need not, go to that length as to hold in this case that the Division Bench decision of this Court, noted herein-before, have been wrongly decided in view of the Supreme Court decisions in Mahabir Prosad, (Supra) : [1961]3SCR639 , and in Soli Pestonij : [1969]3SCR33 and in Nathabhai Desaibhai (Supra) : AIR1972SC1545 . For our present purpose it would be sufficient to note that the view that the award of pendente lite or post-decree interest is merely discretionary and never obligatory is also, to say the least, a reasonable view even if not the only view that would bind us. And that would be good enough for our present purpose.'
9.28 In the case of United Bank of India v. Eshani Rubber Indistries, (1990) 1 Cal LJ 8. The plaintiff-appellant instituted a said Title Suit for sale of the mortgaged properties for non payment of the dues of the appellant. The learned trial Judge decreed the claim of the plaintiff appellant and also gave certain directions for payment of the decretal amount by instalment and also deferred the payment of interest. Although the suit was decreed but being dissatisfied and aggrieved by the aforesaid about instalment and for deferring the payment of interest, the intsant appeal was preferred by the plaintiff-appellant. In this context the Division Bench observed as follows:
'So far as the disputes as to the rate of interest to be allowed in favour of the plaintiff bank is concerned, it also appears to us that till the period of redemption, the rate of interest as specified in the contract of the mortgage should be allowed. In any event, the contractual rate of 13% has not been found by the learned Trial Judge as unjustified and excessive and there is also no finding that the conduct of the plaintiff bank was such as may disentitle the Bank to claim the contractual rate. Accordingly, even if it is assumed that such contractual rate could be varied, there was no occasion to vary the contractual rate in the facts and circumstances of the case. The mere submission by the defendants that the concern of the defendant is a small one and they will suffer hardship will not be sufficient to disallow the contractual rate and to grant rate of interest at the rate of 6% per annum.
In our view, there is no material sufficient to warrant that such rate of interest was veryhigh or excessive and above the prevalent market rate. Accordingly, the claim cf the plaintiff appellant for allowing interest at the rate of 13% and not at the rate of 6% should be allowed.'
9.29 We shall now consider several decisions of other High Courts.
9.30 In the case of Bandaru Swami Naidu v. Atchayamn Reported in (1881) ILR 3 Mad 125, it was held that contractual rate of interest must be allowed up to the date of the decree in accordance with XXVIII of 1865, S. 2.
9.31 In the case of Thakur Umed Singh v. Amolakchand, a leaded single Judge of the Rajasthan High Court was dealing with a second appeal in a suit for recovery of prices for goods sold by the plaintiff to the defendant, the question before the High Court in appeal was whether the courts below have properly exercised their judicial discretion in disallowing pendente lite and future interest to the plaintiff in all the circumstances of the case. The trial Court did not give any reason whatsoever for disallowing the interest claimed apart from saying that it did not consider it necessary to award any such interest. When the matter was before the first Appellate Court, it did recognise that the trial Court had not given any reason for the conclusion to which it came. In this context it was held as follows (at p. 95 of AIR):
'All the same that court repeated the error into which the court of first instance had fallen when it merely observed that the first court had exercised its discretion and it would not be proper to interfere with it. This, in my opinion, was not a satisfactory way of dealing with the case. It was held in Cheesalal v. Meolia, , that a creditor would be entitled to pendente lite and future interest unless there were reasons why he should be deprived of it. I should further like to point out that where the Courts below disallow such interest, they must indicate the reasons for the conclusion to which they have come so that this court may be assured that the discretion which undoubtedly vests in the courts below in thisregard has been exercised judicially and on correct principles. This has not been done in the present case.'
9.32 In the case of K. Appa Rao v. V. I. Varadaraj, reported in AIR 1981 Madras 94 a Division Bench of Madras High Court considered, amongst others, the question of award of interest pendente lite. In considering the cross-object ion preferred by the respondents in the appeal, who were the plaintiffs brought on record in the suit on the demise of the original plaintiff, the Court was of the opinion that the learned Trial Judge was not right in denying interest to the plaintiffs at the contract rate from the date of suit till the date of decree. It was observed that no reason had been given by the trial Court for awarding interest for the said period at a rate lower than the contractual rate of interest. It was observed that it was not as if the appellant had put forth any factor or circumstances justi-fying such a denial. In this context, it was observed that the general rule is that the rate of interest pendente lite should be at the contract rate unless there are circumstances which would disentitle the plaintiff to have the same. The burden was on the appellants to show such circumstances. It was further observed that nothing has been spelled out before the Appeal Court so as to decline the award of interest at the contract rate from the date of suit till the date of decree. Accordingly the Appeal Court directed the decree to be modified.
9.33 In the case of Central Bank of India v. Messrs P.R. Garments Industries Pvt. Ltd., reported in : AIR1986Guj113 (corresponding to 62 Com Cas 669) a Division Bench of the Gujarat High Court was considering the appeal preferred by the Central Bank of India against the judgment and decree. In so far as the trial Court had refused to decree the interest at the contractual rate of 16% (per cent) per annum and also against the quarterly instalment of Rs. 5000/-. On the question of interest, it was pointed out that there was no dispute that the contractual rate or interest is 1614 per cent per annum. But the same was not allowed because according to the trial court the plaintiff bank did not pay its costs.
The Division Bench went into this question on merits and held that the reasons given by the learned Trial Judge for not awarding the contractual rate of interest was erroneous and without any basis, it was observed that the reasons have been stretched to give unduly low rate of 6 per cent interest only as aginst the contractual rate of 16 1/2 per cent interest.
9.34 In the case of Jagannath Pigments and Chemicals v. Bank of Baroda, reported in (1989) 65 Com Cas 393 (Bom) it was an appeal by the judgment-debtors from the decree passed by the trial court whereby interest was awarded at the rate of 13 1/2 per cent per annum on the decretal amount from the date of the suit till payment to, or realisation by, the plaintiff. The Appeal Court made a reference to the amended S. 34 of the Code of Civil Procedure. The Court observed that there was no reason why the rate of interest should not be at the agreed rate of 13 1/2 per cent, though it was made clear that from and after the date of the suit, interest would be calculated on simple interest basis and not on the basis of rests, annual, six monthly or quarterly. The next question was whether the decree-holder was entitled to interest on the full amount decreed. The question was what was the principal sum. Referring to the question of quarterly rests it was observed that the agreement may provide in appropriate cases for capitalisation of the interest. The Court considered whether' such an agreement which may be in accordance with the banking practice both in the United Kingdom and in India still merge this interest into the principal sum. Accordingly the court granted interest at the lower rate.
9.35 In our opinion on the first question, that is, on the question of applicability of 1855 Act we are of the opinion that the same has no application so far as the grant of interim interest is concerned. In our opinion, the expression 'at a rate (if any) agreed upon by the parties' in S. 2 of 1855 Act applied, even when it was applicable, only in respect of the interest for the period prior to the institution of the suit and not the period after the institution of the suit. In our opinion BandaruSwami Naidu v. Atchayamma (1881 ILR 3 Mad 125) (supra) was not corretly decided. In any event, so far as interim interest is concerned, only provision applicable at present is S. 34 of the Code. We may make it clear however that in the present appeals we are not dealing with mortgage suits. All these appeals are against money decrees and not preliminary mortgage decrees. In the case of a mortgae suit, Order 34 of the Code would apply and not S. 34 (Soli Pestonjii Majoo v. Ganga Dhar Khemka : [1969]3SCR33 (spura); Gujarat State Financial Corporation v. M/s. Natron Mfg. Co. (P) Ltd. : [1979]1SCR372 (supra); Everest Financial Corporation v. Gujarat State Financial Corporation : [1987]3SCR607 (supra) and Maganlal v. Jaiswal Industries, : [1989]3SCR696 ).
9.36 We are of the opinion that under S. 34 of the Code, the question of interim interest is entirely a matter of discretion of the Court. Further as the question of interest is a matter of discretion of the Court, such discretion is not and cannot be limited to the question of rate or amount of interest only, but it applies also to the question as to whether any interest is at all to be granted. It cannot be said that as far as the rate or the amount of interest is concerned, it is a matter of discretion whereas on the question whether interest is to be granted at all, the court has no discretion but it must grant some interest.
9.36A. This view is supported by the Privy Council, Supreme Court and also the Full Bench decision of this Court referred to above. This is also followed in the later decisions of this Court excepting in West Bengal Financial Corporation v. Bertram Scott (I) Ltd. : AIR1983Cal381 (supra) wherein it was held that some interest must be granted and that the Court has no discretion in the matter. In our opinion, the views expressed in the said decision to that effect is not correct. This judgment did not take into consideration and goes contrary to the aforesaid decisions of the Privy Council, Supreme Court, the Full Bench and the other and earlier Division Bench decisions of this Court. Life Insurance Corporation v. KumarPurnendu Nath Tagore : AIR1988Cal311 (supra) merely followed the aforesaid Division Bench judgment in West Gengal Financial Corporation v. Bertram Scott (1) Ltd. : AIR1983Cal381 (supra). In this context reference may be made to the Division Bench judgment of this Court in United Bank of India v. Rashyam Udyog : AIR1990Cal146 (supra).
9.37 The next question is what matters are to be taken into consideration by the Court in exercise of its discretion regarding grant of interim interest. The question of such interest may, no doubt, be a matter of discretion, but the discretion in question, like all other discretions of the court, must be exercised judicially. The discretion must be exercised on sound principles. It must be reasonable and fair. The matters to be taken into consideration in exercise of such discretion cannot be of universal application. It will depend on the facts and circumstances of each case including the conduct of the parties before and after the suit. It all depends as to what is considered to be reasonable in the facts of each case. Certain matters have been taken into consideration by the Courts in individual cases in the exercise of such discretion but the same must be treated merely as illustrative. Such considerations cannot be applied automatically in each and every case. As and by way of illustration it may be pointed out that in the case of State of Madhya Pradesh v. M/s. Nathabhai Desai-bhai Patel : AIR1972SC1545 (supra) such interest was awarded when the applicant had unlawfully withheld the amount due to the respondent even after coming to know that the collection made was an illegal one.
9.38 The next questio