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CASE NO.:
Special Leave Petition (civil) 2421 of 1993
PETITIONER:
CENTRAL BANK OF INDIA
RESPONDENT:
RAVINDRA AND ORS.
DATE OF JUDGMENT: 18/10/2001
BENCH:
DR. A.S. ANAND CJ & K.T. THOMAS & R.C. LAHOTI & N. SANTOSH HEGDE & S.N.
VARIAVA
JUDGMENT:
JUDGMENT
2001 ( 4 ) Suppl. SCR 323
Special Leave Petition (C) No. 2421 of 1993.
WITH
C.A. Nos. 3964, 3967/92, S.L.P. (C) No. 3954/94, S.L.P.(C) No. 9082, SLP
(C) No. 9088/95, S.L.P. (C) No. 4562/98, C.A. No. 4716/94 and C.A. No. 2496
of 1993.
The Judgment of the Court was delivered by
R.C. LAHOTI, J. What is the meaning to be assigned to the phrases "the
principal sum adjudged" and "such principal sum" as occurring in Section 34
of the Code of Civil Procedure, 1908 [as amended by the Code of Civil
Procedure (Amendment) Act (66 of 1956) w.e.f. 1.1.1957], a question of
frequent recurrence and having far reaching implications in suits for
recovery of money, specially those filed by banking institutions against
their borrowers, has been referred by a three-Judge Bench of this court to
the Constitution Bench.
It will be useful to reproduce the order of reference dated 7th May, 1996
(since reported as [1996] 5 SCC 279) so as to highlight the nature and
scope of controversy arising for decision before the Constitution Bench:
"ORDER
After hearing learned Attorney General and amicus curiae Shri A. Subba Rao.
Ranjit Kumar and K.M.K. Nair on (the interpretation of the provisions of
Section 34 CPC on "the principal sum adjudged" the matter is required to be
considered by a Constitution Bench. The learned Attorney General has drawn
our attention to the judgments of this Court in Corpn. Bank \. D.S. Gowda
and Bank of Baroda v. Jagannath Pigment & Chem., wherein he sought to draw
the deduction that the principal sum adjudged and the principal sum
mentioned later would be the same. He seeks to take support from the word
"such’ in support of his contention. Preceding Amendment Act 66 of 1956,
the words were "aggregate sum so adjudged" and after amendment, were
substituted with the words "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 on such date as the court deems reasonable on the
"principal sum")*. The distinction, therefore, was not drawn to the
attention of this Court in the aforesaid two judgments in particular the
later one. As a fact no argument in this behalf appears to have been
canvassed. Interpretation of the liability of the borrower to pay interest
on the principal sum to include interest that became merged with the
principal sum adjudged or principal sum as lent, is required to be
authoritatively laid down by a Bench of five Judges.
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The Registry is directed to place the matter before the Hon’ble the Chief
Justice for constituting the Constitution Bench.
*[Sic., should have been - with further interest at such rate not exceeding
six per cent per annum, as the Court deems reasonable on such ’principal
sum’, in our opinion]
Section 34(1) of C.P.C. and 1956 Amendment
Sub-Section (1) of Section 34 abovesaid, as it stood prior to the 1956
amendment, and as it stands amended, are reproduced in juxta position here-
under :
Prior to amendment
As amended by Act No. 66 of 1956
34. (1) Where and in so far a;; 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 as the Court deems reasonable on the
aggregate sum so adjudged.] from the date of the decree to the date of
payment, or to such earlier date as the Court thinks fit.
(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.
(2) Where such a decree is silent with respect to the payment of further
interest on such aggregate sum as aforesaid 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.
xxx xxx xxx xxx
xxx
(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.
(Underlining by us)
[Portions affected by amendment placed in bracket]
By the 1956 amendment, in Section 34, for the words "with further interest
at such rate as the Court deems reasonable op the aggregate sum so
adjudged", the words "with further interest at such rate not exceeding six
percent, per annum as the Court deems reasonable on such principal sum"
have been substituted in sub-section (1). In sub-section (2) the words "on
such aggregate sum as aforesaid " have been deleted and the words "on such
principal sum" have been substituted. The phrases "on the principal sum
adjudged" and "such principal sum", as occurring in the opening part of
