- (1.) One of the contentions which arises for consideration is whether the contractual rate of interest should have been awarded in the instant case. Mr k. N. Raval contends that the Recovery of Debts Due to Banks and Financial institutions Act, 1993 has an overriding effect and according to S. 19 (20) discretion is given to the Tribunal to award interest and the Tribunal is in no way bound to comply with or apply the provisions of S. 34 of the code of Civil Procedure. He further states, in the alternative, that if S. 34 applies, then by virtue of the proviso to S. 34 (1) CODE OF CRIMINAL PROCEDORE, this being a commercial transaction, the rate of interest can exceed 6 per cent per annum but shall not exceed the contractual rate of interest.
(2.) Our attention has been invited to a Constitution Bench decision in central Bank of India v. Ravindra1. The Court in that case was concerned with S. 34 CODE OF CRIMINAL PROCEDORE, it, inter alia, observed that the "interest pendente lite and future interest (i. e. interest post-decree not exceeding 6 per cent per annum) shall be awarded on such principal sum". This seems to indicate that interest pendente lite and post-decree cannot be awarded in excess of 6 per cent per annum and furthermore in paragraph 55 (8) (SCC page 404) there is also an observation that the "award of interest pendente lite and post-decree is discretionary with the court as it is essentially governed by S. 34 CODE OF CRIMINAL PROCEDORE dehors the contract between the parties". (emphasis added) mr Raval draws our attention to the fact that at p. 378 of SCC where S. 34 CODE OF CRIMINAL PROCEDORE is extracted, perhaps by oversight the proviso to S. 34 (1) was omitted. The said proviso reads as follows: "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 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. "
(3.) A reading of the decision in Central Bank case shows that no reference has been made to the proviso which specifically deals with the awarding of interest arising out of a commercial transaction.;