1994 JTR(SC) 352
1994 AIR(SCW) 2472 ; 1995 BankJ 198 ; 1995 BankJ 472 ; 1995 1 BC 23 ; 1995 1 BC 577 ; 1994 2 CivCC 134 ; 1994 2 CurCC(SC) 10 ; 1994 2 CurLJ 289 ; 1994 ISJ(Banking) 462 ; 1994 2 MLJ 116 ; 1994 3 RRR 456 ; 1994 2 Scale 738 ; 1994 4 SCC 368 ; 1994 3 SCR 160
SUPREME COURT OF INDIA
(BEFORE K. RAMASWAMY AND N. VENKATACHALA, JJ.)
B. SHIVANANDA v. ANDHRA BANK LTD. AND ANOTHER
Civil Appeal No. 3695 of 1994, decided on March 18, 1994
Advocates who appeared in this case :
A. Subba Rao and A.D.N. Rao, Advocates, for the Appellant;
V.R. Reddy, Additional Solicitor General (P.P. Singh, Advocate, with him) for the Respondent 1.
Act Referred :CIVIL PROCEDURE CODE : S.152, S.34
(A) The Civil Procedure Code Sections 152 and 34 are directly engaged in this case concerning the correction of decrees and the award of interest. Section 152 CPC empowers the court to correct clerical or arithmetical mistakes, or errors arising from accidental slip or omission, in a judgment or decree at any time, either on its own motion or upon application by a party, thereby providing a supplementary remedy that does not necessarily require an appeal or review for rectification. Section 34 CPC grants the court discretion to award interest where the amount is liquidated but not expressly provided for in the decree, particularly in commercial transactions, allowing the court to tailor the interest terms based on justice and the facts of the case. These provisions operate in tandem where a decree has been passed ex parte, a party seeks enhancement of interest not originally decreed, and the court must balance the need for finality with the correction of oversights and the substantive rights of the parties.
(B) The core legal principles are that a decree can be corrected under Section 152 CPC for errors or omissions without necessarily resorting to an appeal, and that under Section 34 CPC, the court has discretion to award interest in commercial contracts even when the decree is silent on future interest, provided such an award is just and proper in the facts and circumstances of the case.
Facts of the case:
The respondent-Bank obtained an ex parte decree for a principal sum with future interest at a contracted rate of 16 1/2%. The appellant contended that no interest could be granted post-decree as the decree was silent on future interest, leading to a dispute over the entitlement to interest and the correctness of the decree. The High Court allowed the Banks revision, and the appellant filed this special leave appeal.
Findings of Court:
The court held that while the Bank was entitled to claim the contracted interest from the date of lending, the trial court had incorrectly dismissed the Banks claim for future interest after the decree. It observed that in view of the loan being for a commercial transaction, it was just and proper to award simple interest at the contracted rate from the date of the decree until realization, subject to a six-month payment period for the outstanding balance.
Issues:
Whether the trial court was correct in not granting interest after the decree when the decree was silent on future interest, and whether the High Court was justified in allowing the revision and directing payment of interest at the contracted rate.
Ratio Decidendi:
Section 152 CPC provides a supplementary remedy to correct decrees, but Section 34 CPC empowers the court to award interest in commercial transactions where it is just and proper, and the court can apply the contracted rate of interest from the decree date when the decree is silent on future interest, ensuring fairness in commercial loan disputes.
Result:
The appeal is allowed to the extent of directing the appellant to pay simple interest at 16 1/2% per annum from the date of the decree until realization, confined to this case on its peculiar facts, without costs.
(A) The Civil Procedure Code Sections 152 and 34 are directly engaged in this case concerning the correction of decrees and the award of interest. Section 152 CPC empowers the court to correct clerical or arithmetical mistakes, or errors arising from accidental slip or omission, in a judgment or decree at any time, either on its own motion or upon application by a party, thereby providing a supplementary remedy that does not necessarily require an appeal or review for rectification. Section 34 CPC grants the court discretion to award interest where the amount is liquidated but not expressly provided for in the decree, particularly in commercial transactions, allowing the court to tailor the interest terms based on justice and the facts of the case. These provisions operate in tandem where a decree has been passed ex parte, a party seeks enhancement of interest not originally decreed, and the court must balance the need for finality with the correction of oversights and the substantive rights of the parties.
(B) The core legal principles are that a decree can be corrected under Section 152 CPC for errors or omissions without necessarily resorting to an appeal, and that under Section 34 CPC, the court has discretion to award interest in commercial contracts even when the decree is silent on future interest, provided such an award is just and proper in the facts and circumstances of the case.
Facts of the case:
The respondent-Bank obtained an ex parte decree for a principal sum with future interest at a contracted rate of 16 1/2%. The appellant contended that no interest could be granted post-decree as the decree was silent on future interest, leading to a dispute over the entitlement to interest and the correctness of the decree. The High Court allowed the Banks revision, and the appellant filed this special leave appeal.
Findings of Court:
The court held that while the Bank was entitled to claim the contracted interest from the date of lending, the trial court had incorrectly dismissed the Banks claim for future interest after the decree. It observed that in view of the loan being for a commercial transaction, it was just and proper to award simple interest at the contracted rate from the date of the decree until realization, subject to a six-month payment period for the outstanding balance.
Issues:
Whether the trial court was correct in not granting interest after the decree when the decree was silent on future interest, and whether the High Court was justified in allowing the revision and directing payment of interest at the contracted rate.
Ratio Decidendi:
Section 152 CPC provides a supplementary remedy to correct decrees, but Section 34 CPC empowers the court to award interest in commercial transactions where it is just and proper, and the court can apply the contracted rate of interest from the decree date when the decree is silent on future interest, ensuring fairness in commercial loan disputes.
Result:
The appeal is allowed to the extent of directing the appellant to pay simple interest at 16 1/2% per annum from the date of the decree until realization, confined to this case on its peculiar facts, without costs.
A.D.N.Rao, A.SUBBA RAO, P.P.SINGH, V.R.REDDY
ORDER
1. Leave granted.
2. We have heard both counsel.
3. The respondent filed OS No. 74 of 1979 on the file of the Additional Subordinate Judge, Ananthpur, Andhra Pradesh on 11 -6-1979 seeking a preliminary decree for sale of properties covered by two simple mortgages, dated 3-7-1976 and 13-12-1976 and a charge on the hypothecated moveables and immovables, moveables have been mentioned in Schedule B and a personal decree against appellant and others was sought for the decretal amount with future interest and costs. The suit was decreed ex parte on 13-3-1986. Thereafter, two applications were filed - one by the respondent-Bank claiming interest at the rate of 16 1/2% on the decretal amount and another by the appellant. The appellant contended that no interest can be granted since the judgment did not specify the liability relating to payment of future interest. The trial court allowed the application of the appellant and dismissed the application of the respondent-Bank. On revision filed by the Bank, the High Court, by its order dated 23-9-1989 allowed the revision of the Bank and dismissed the application of the appellant. Thus, this appeal by special leave.
4. We need not go, in depth, into the controversy, raised in the case but suffice to state that Bank sought a relief in the plaint for payment of an amount specified and interest on the principal amount of Rs 5,25,000. With interest accrued thereon till date of suit, the amount came to Rs 6,89,917.79 P. Section 152 CPC, clearly gives power to the court to amend clerical or arithmetical mistakes in the judgment and decree or order or any errors arising therein from any accidental slip or omission. The same may, at any time, be corrected by the court either of its own motion or on the application of any of the parties to the suit. Therefore, it is not necessary that the aggrieved party should necessarily file an appeal or review for effecting correction of the judgment or decree or order. But in this case, as seen, that the claim for future interest at 16 1/2% was made in the suit itself which admittedly, is the contracted rate of interest. Therefore, the Bank is entitled to claim interest in terms of the contract at 16 1/2% from the date of lending till the date of filing of the suit. However, the court has discretion under Section 34 CPC to award interest. Admittedly, the loan was taken for construction of theatre. In other words, the loan was for a commercial transaction. In the facts and circumstances of this case, we consider it just and proper that the appellant should pay simple interest at the rate of 16 1/2% per annum on the principal amount claimed in this suit from the date of the decree till the date of realisation. This should be confined to this case only, on the peculiar facts of this case. It is stated in the appellants written arguments that as on date, a sum of Rs 2,53,000 had already been paid and the appellant shall pay the balance amount along with future interest within six months from today. We permit him to make payment accordingly. In the event any default is committed by the appellant, the benefit of this judgment will not be available to the appellant. The appeal isaccordingly allowed to the above extent but in the circumstances, without costs.
For Citation : (1994) 4 SCC 368