- (1.) What is the meaning to be assigned to the phrases "the principal sum adjudged" and "such principal sum" as occurring in S. 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-Judges Bench of this Court to the Constitution Bench.
(2.) 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 S/Shri A. Subba Rao, Ranjit Kumar and K.M.K. Nair on (the interpretation of the provisions of S. 34, C.P.C. 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 v. D. S. Gowda and Bank of Baroda v. Jagannath Pigment and 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. The Registry is directed to place the matter before the Hon'ble the Chief Justice for constituting the Constitution Bench. Section 34(1) of C.P.C. and 1956 Amendment
(3.) Sub-section (1) of S. 34 abovesaid, as it stood prior to the 1956 Amendment, and as it stands amended, are reproduced in juxta position hereunder : Prior to amendment As amended by Act No. 66 of 1956 34.(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 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. 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 percent. 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. xxx xxx xxx xxx xxx xxx xxx (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 therefore shall not lie. (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 therefore shall not lie. (Portions affected by amendment placed in bracket);