- (1.) PANKAJ Mithal, J. List revised.
(2.) NO one appears for either of the parties. Therefore, I have perused the record myself and proceed to decide the appeal on merits. The plaintiff had purchased the property in auction sale. He deposited the entire auction money but ultimately the auction was set aside. He was not even given possession of the property so purchased The auction money deposited by him was not immediately returned and the part remained with the defendants. Therefore, he instituted a suit for the recovery of the part of the amount and for the loss by way of interest on the auction money for the period the amount remained with the defendant. The suit was decreed by the Court of first instance for the recovery of Rs. 1, 34, 386/-with interest of 5% w. e. f. 26. 4. 1993. The plaintiff was also awarded interest @ 5% on Rs. 1, 15, 551. 65 paise from 26. 4. 1993 till 1. 12. 1993 and on Rs. 28, 185/-from 26. 4. 1993 to 11. 2. 1994. In appeal however, rate of inter est awarded was increased to 10% therefore, one of the defendant has preferred this second appeal. The only substantial question of law which arises in this appeal is; whether the interest awarded @ 10% is excessive as it relates to the period prior to the institution of the suit.
(3.) SECTION 34, C. P. C. provides that where a decree is for payment of money the Court can order interest at a reasonable rate on the principal sum adjudged from the date of the suit to the date of decree of the suit this would be in addition to any interest on such principal sum for any period prior to the institution of the suit. Besides the above, it also provides that further interest not exceeding 6% per annum may be awarded from the date-of decree till its payment. SECTION 34 C. P. C. , for the sake of convenience, is quoted below: "34. Interest.- (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. 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 transac tions. Explanation I.-In this sub-section 'nationalised bank' means a corre sponding new bank as defined in the Banking Companies Acquisition and Transfer of Undertaking Act, 1970 (5 of 1970 ). Explanation II.-For the purposes of this section, a transaction is a com mercial transaction, if it is connected with the industry, trade or business of the party incurring the liability. " A plain reading of the aforesaid provision reveals that interest is payable in three parts i. e. (1) on the principal amount from the date of the suit to the date of decree; (2) for the period prior to the institution of the suit; and (3) from the date of decree to the date of payment. In the earlier two stages reasonable interest can be awarded at the discretion of the Court. However, in the third stage the exercise of discretion to pay interest cannot be more than 6% per annum provided it is not a commercial transaction wherein the Court can award even higher rate but not exceeding the contractual rate or where there is no such contractual rate not exceeding the rate of advancing loan fixed by the nationalised bank.;