Friday, 31 August 2018

Notes on S 34 of CPC- Payment of interest

S 34 of CPC makes provision for payment of interest in cases where the decree is for payment of money.
In any suit for money,the interest which may be awarded to a plaintiff may be divided into following three heads:
a). Interest prior to institution of suit: This is actually a matter of substantive law and not procedural.If parties have stipulated the rate of such interest,the court will normally allow that rate.If that rate is excessive,it will be scaled down by court under money lender'sAct or usurious loans Act or S 74 of Indian contract Act.

If however, there is no such stipulation between the parties,plaintiff will not be entitled to any interest for this period,unless he can prove a mercantile usage or an implied agreement to that effect or unless he has a statutory right to interest as for instance,under negotiable instrument Act or interest Act.
b) Interest from the date of suit till date of decree:- Rate of interest from date of suit till date of decree is in discretion of court.In the exercise of this discretion,court normally award interest at the rate agreed between the parties unless it is inequitable to do so.
c) Interest from date of decree till date of payment:
Court has a discretion as regards the rate of interest from date of decree till date of payment,and it may award such interest at such rate as it deems reasonable not exceeding six percent interest per annum,except in case of commercial transactions.
For the purposes of this section, a transaction is a commercial transaction,if it is connected with industry,Trade or business of the party incurring the liability.
Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction,rate of such further interest may exceed six percent per annum,but shall not exceed 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.
2) Where such a decree is silent with respect to payment of further interest on such principal sum from the date of 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.

Read important judgment on interest:
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