Sabyasachi Mukharji, J. - (1.) This is an appeal from an order of the learned trial Judge passed on Dec. 14. 1978 on an application under Sections 31 & 32 of the West Bengal Financial Corporation Act, 1951 for sale of charged properties in favour of the West Bengal Financial Corporation. The claim of the petitioner. West Bengal Financial Corporation was not disputed and the learned Judge held, it had been verified from the record of the Company in the possession of the Official Liquidator and after taking into account the claims in terms of the mortgage deed between the Company (in liquidation) and West Bengal Financial Corporation the total claim on account of principal amount, interest. insurance charges and consultant fees up to August. 1977 was a total sum of Rs. 15,65,000 which was declared to be due and payable by the company as secured creditor in respect of the properties mentioned in Annexure A to the mortgage. deed dated 9th February. 1972. The learned Judge thereafter directed payment of the said amount by the Official Liquidator, who was in possession of the mortgaged properties of the petitioning creditor which was securer) for its claim out of the sale proceeds of the secured properties. The Official Liquidator was directed by the learned Judge to pay on account of princinal amount, interest, insurance changes and consultant fees up to August, 1977. The subsequent interest has not been directed to be paid. This is the bone of contention in this appeal.
(2.) It appears that the petition for winding up was presented in Sept., 1976 and the order for winding up was made On Sept. 6. 1977. Meanwhile West Bengal Financial Corporation which indisputably was a secured creditor under a mortgage deed made an application for examination pro interessee sue of its right in August. 1977. Thereafter in February, 1973 the present application was made by the petitioner for payment of its dues and the order was made, as mentioned hereinbefore in December, 1978.
(3.) The learned Judge did not. as is apparent from the order, grant any interest subsequent to August. 1977 to the petitioning creditor in terms of the mortgage deed. The learned Judge has also not indicated any reason in the order for not granting such interest. In the premises, it was contended, as a secured creditor, until payment, the petitioner was entitled to the full interest at the rate mentioned in the mortgage deed and in not granting such interest, the learned Judge had committed an error. Secondly, it was submitted that the learned Judge had not exercised his discretion. Even if he had there is no indication in the order that he had exercised discretion on proper ground and therefore the order should be set aside. In aid of this submission reliance was placed on certain provisions of the Transfer of Property Act. Our attention was drawn to Sections 58, 60. 67 & 68 of the Transfer of Property Act which inter alia indicate that the secured creditor is outside the scope of winding up proceedings and is entitled to enforce its own right and is entitled to be paid in terms of its mortgage deed. Therefore, it was submitted that the learned Judge in not granting such interest or not securing it even when the company was in liquidation had erred. Interest incidentally was due at 8 1/2% compound. It was submitted that it was in public interest also that the interest should be granted because it was not an unreasonable interest. Indisputably it is the correct position that the petitioner is a secured creditor and does not come within the purview of the winding up proceedings. But. it was contended on be-half of the petitioner that there was no discretion exercised by the learned Judge. It is true that the provisions of the Transfer of Property Act grant the petitioner a right to be paid of its dues in full. But for the enforcement of its rights, the petitioner can sell the mortgaged property. But if it comes to Court for enforcement of its right, it must be regulated by the procedure of the provisions of the Code, Therefore the pre-visions of Section 34 of the Code of Civil Procedure as well as Order 34 of the Civil P. C. are applicable for enforcement of the claim in respect of the mortgage and would be attracted in this case. Section 34 of the Civil P. C. with the proviso which was introduced from 1st July, 1977 reads as follows : "Interest. 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 he 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 reaped 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 : 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. Explanation 1 : In this Sub-section 'nationalised bank' means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act. 1970 (5 of 1970). Explanation II : For the purposes of this section a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability." Our attention was also drawn to Order 34. Rules 2, 4 & 11. In view of the contentions which were addressed before us it is not necessary to deal with the said Rules in any detail. The question, therefore, is under Section 34 of the Civil P. C. has the Court any right to exercise any discretion? This point was considered in some of the cases by different. High Courts. Our attention was drawn to a Division Bench judgment of the Calcutta High Court in the case of Nilmoni Sardar v. Baidyanath Das Manna. where in a suit brought by the mortgage created in his favour containing an interest clause, it was held, the Court was bound to decree pendents life interest, it being left to the discretion of the Court at what rate interest was to be allowed. It was held considering all the circumstances, in that case, the rate of interest from the date of the suit should be allowed at 4 per cent per annum. In this connection, the Division Bench referred to Privy Council as well as Federal Court, judgments and observed, at page 141 of the report, as follows : "(4) Reliance was placed on behalf of the appellant on Kusum Kumari v. Debi Prosad. 63 Ind APP 114 : (AIR 1936 PC 631 where it has been laid down that under Section 34 of the Civil P. C. the contractual relationship between the parties came to an end with the decree and the Court had Dower under this section to allow interest on the decretal amount until realization. Although the decision in that case was on certain provisions of the Sonthal Parganas Settlement Regulation. 1872, reference was made to the provisions of Order XXXIV of the Civil P. C. and it was observed that the mortgagee was entitled to interest pendente lite of the contract rate. (5) On the other hand, reliance was placed on behalf of the respondent on Jaigobind v. Lachmi Narain, AIR 1940 FC 20 where with reference to certain provisions of the Eihar Money Lenders Act, the Federal Court held that that use of the word 'may' in Section 8 of that Act indicated that the Court was not bound to exercise at least one of the powers and might well not exercise any of the powers at all: the language as it stood could only mean this, that the Court had the discretion to exercise all or any or none of the specified powers. Then with reference to Rule 11 of Order XXXIV of the Civil P. C. . it was ob-served by Sulaiman, J. that that provision also gave a certain amount of dis-cretion to the Court so far as interest pendente lite and subsequent interest were concerned; it was no longer absolutely obligatory on the Courts o decree interest at the contractual rate up to the date of redemption in all circumstances, if there was no question of the rate being penal, excessive or substantially unfair within the meaning of he Usurious Loans Act. 1918. (6) An attempt was made before us to indicate that there was a conflict between the decision of the Judicial Committee and that of the Federal Court and we were invited to decide which of the two decisions would be binding on this Court at this stage. In our view, there is no real or substantial conflict so far as the question of allowing interest pendente lite is concerned. According to the Judicial Committee, the mortgagee is entitled to interest pendente lite. According to the decision of he Federal Court, there is a discretion given to the Court as to the extent to which such interest would be allowed. In our view the Court is bound to decree pendente life interest, it being left to the discretion of the Court at what rate it is to be allowed. The circumstances of each particular case have to be taken into consideration.";