1. ' The plaintiff filed this suit under Order XXXIV, C. P. C. For sale of the mortgaged property mentioned in the plaint for realization of a sum of Rs, 2,69,725.72 due from the defendants on the date of filing of the suit with interest which was not specified in the plaint and costs. The plaintiffs in the alternative prayed for personal decree for the aforesaid amount with interest which was again not specified and costs. After the word interest at both the places in the prayer clause some space was left blank. It appears that intention was to fill in the rate of interest later on. Nonetheless, the suit was filed leaving space for specifying, the rate of interest blank. A preliminary decree was passed as prayed under Order XXXIV, C. P. C. By the judgment dated 4-10-1974 passed by a learned Judge of this Court.
2. ' Accordingly the office prepared a preliminary decree without specifying therein the rate of interest. This omission was noticed by the learned Advocate for the plaintiff even before the preliminary decree was signed. This led to the filing of an application under Order VI, rule 6, C. P. C.
3. Read with section 151, C. P. C. On 3-12-1974, for amendment of the plaint. This application was opposed. Nevertheless, my learned brother Fakhruddin G. Ebrahim, J., by the order dated 4-9-1977 granted this application and allowed the plaintiff to amend the plaint and specify the rate of interest at the place left blank therein. Accordingly, the plaintiff has claimed interest at the rate of 10 3/4 per cent. Per annum. Thereafter, the plaintiffs led evidence of Mr. Aleemuddin, the Manager of Legal Department of the plaintiff to prove the rate of interest on various dates, as, according to the terms of the contract, the loan was advanced at the rate of 2 3/4 per cent. Per annum over and above the State Bank of Pakistan rate of interest.
4. ' Now, the question that requires consideration is what is the rate of interest which should be allowed for the words used by the learned Judge in the judgment dated 4-10-1974 by which the preliminary decree was passed are :- "The result is that the suit is decreed as prayed for and preliminary decree will follow in terms of Order XXXIV, C. P. C."
5. But before I consider this question, I should mention the contentions raised by Mr. Fazle Ghani Khan, Advocate for the defendants and deal with them. The contentions are:-
(i) that no interest could be allowed where it was not specifically asked for,
(ii) that it should be deemed to have been refused where it is not specifically allowed in view of the provisions of subsection (2) of Order XXXIV, C. P. C.,
(iii) that there is no application for amendment of the decree for specifying the rate of interest, which was formally drawn up on 30-6-1975,
(iv) that the plaintiff has claimed a sum of Rs, 2,69,725.72 which amount includes principal amount as well as the amount of interest upto the date of filing of the suit which could not have been done for the plaintiff should have mentioned both separately.
6. ' Now, I take up the first contention.
7. It is not correct that the plaintiff had not specifically asked for award of interest after the date of the suit. The plaintiff had but without specifying the rate. Further, I have already observed that the preliminary decree was passed with interest without specifying the rate of interest and even if the plaintiff would not have claimed any interest for the period subsequent to the filing of the suit, it is well settled that the Court has powers under section 34, C. P. C. And in suits on mortgage under.
8. Order XXXIV, C. P. C., to award interest whether it is specifically claimed or not in the plaint. If an precedent is needed reference may be had to Chaturbhui Tulsiram Marwadi v. Ambarsing Harji wherein Beaumont, C. J., sitting in Division Bench with Murphy, J. At page 549 of the report observed:- "If the learned Judge meant to say by his original judgment that he had
(I) AIR. 1931 Bom. 549 ' no jurisdiction to grant interest after suit because it was not asked for in the plaint, I think he was wrong because it seems to me that, having regard to the terms of S. 34, Civil P. C., the Court has power to give interest after suit whether claimed specifically in the plaint or not."
9. ' I may also refer to a decision by a Division Bench of Lahore High Court namely, Rup Ram v. Harphul
(1) wherein Broadway, J. At page 126 of the report held:- "Mr. Fakir Chand contended that the discretion given by section 34 is only exercisable when interest is actually asked for in the plaint. He, however, has not brought any authority to our notice in support of his contention and we know of none. In our opinion the question of awarding interest has been made discretionary by the Legislature, though, no doubt, that discretion has to be exercised judicially. Mr. Manohar Lal for the respondent contended that this discretion has been correctly exercised having regard to the provisions of Order VII, rule 7, Civil Procedure Code, which lays down that it shall not be necessary to ask for general or other relief which may always be given as the Court may think just to the same extent as if it had been asked for. This, of course, is subject to the limitation that this other relief is not inconsistent with relief claimed in the plaint. The granting of interest not specifically asked for in a suit for money, can scarcely be regarded as an inconsistent relief and therefore, it would seem that the District Judge in this case had discretion to award interest subsequent to the institution of the suit.
10. ' The question remains whether this discretion has been judicially exercised and after hearing, and giving full weight to, Mr. Fakir Chand's arguments we are unable to hold that the exercise of this discretion in the present case was not judicial."1 ' Therefore, the first contention of Mr. Fazle Ghani Khan, for the reasons mentioncd above is overruled.
11. ' The second contention that where interest is not specifically allowed it should be deemed to have been refused, to say the least is based on misapprehension of the facts. The judgment by which the preliminary decree was passed states that the suit is decreed as prayed. The prayer clause in the plaint contains a claim for interest, without mentioning the rate of interest. Therefore, it clearly follows that interest was not only not refused but was specifically allowed. The only omission was that rate of interest was not mentioned for the reasons noticed earlier. Therefore, this contention is also without any substance.
12. ' Now, I would take up the third contention. There is no doubt that the plaintiff has not made any application for amendment of the preliminary decree but the decree was passed as prayed in the plaint i,e, with interest, and since the plaintiff had applied for amendment of the plaint to specify the rate of interest which prayer was granted, it, therefore, follows that after determination of the rate of interest at which plaintiff is entitled to it under the law the decree will have to be amended for the decree follows the judgment as provided under Order XX, rule 6 (1), C. P. C. Which reads as follows:- "(1) The decree shall agree with the judgment; it shall contain the number of the suit, the names and descriptions of the parties, and particulars of the claim, and shall specify clearly the relief granted or other determination of the suit."
13. ' Dealing with the fourth contention, the learned counsel for the plaintiff submitted that the plaintiff has claimed a sum of Rs, 2,69,725.72 which amount includes the principal amount as well as the amount of the interest upto the date of filing of the suit and this it could not have done for under the law the two amounts were required to be determined separately or the plaintiff should have mentioned principal amount and the amount of interest separately. There is no doubt that under the provisions of sub-clause (1) of clause (2), rule 11, Order XXXIV, C. P.C. The plaintiff should have mentioned the principal amount in order to claim interest thereon at the agreed rate. However, the argument of Mr. Chundrigar is that the interest was payable with quarterly rests and therefore when the suit was filed the amount of interest was added from time to time according to the agreement and therefore the whole amount became the principal amount and accordingly the amount of Rs, 2,69,725.72 for which the suit was filed was the principal amount. But I am not aware of any of principal or authority nor has any been stated or cited before me which lays down that the amount of interest when added to principal whether it is added on quarterly basis or yearly basis becomes the principal amount. In my opinion, the amount claimed or charged as interest on the principal amount, does not lose its character as such. When the interest of a sum of money is added to the principal, and then bears interest it becomes known as 'compound interest'.
14. ' In any case since the suit was decreed as prayed I cannot go into this question at this stage as it would amount to reviewing judgment for which there is neither any application nor any ground for the preliminary decree was passed as prayed because the defendants raised no objection to the same then.
15. ' Now, remains the main question that at what rate future interest should be allowed. The interest has to be adjudged according to the provisions of rule 11 of Order XXXIV, C. P. C. According to the agreement of loan, the interest was to be charged at 2 per cent per annum over and above the State Bank of Pakistan rate of interest. The plaintiff has examined Mr. Muhammad Aleemuddin, Manager, Legal Department of the plaintiff on. 3u-4-1978. It will be useful to reproduce his evidence in verbatim for it gives various rates of interest fixed by the State Bank of Pakistan on various dates : "The State Bank of Pakistan rate of interest on 15th January, 1959 was increased from 3 to 4 per cent. It was again increased from 4 to 5 per cent. From 15th June, 1965. It was further increased to 6 per cent. With effect from 12th May, 1972. From 16th August, 1973 it was increased to 8 per cent. And again to 9 percent with effect from 3rd September, 1974. I produce the copies of the circular showing the above rates marked as Exhs. 4/13 to 4/18,"
16. ' According to this evidence the State Bank of Pakistan rate of interest on 27-2-74 when the suit was filed was 8 per cent. Per annum. Therefore, according to the agreement the plaintiff is entitled to 10 per cent. Per annum. However, it is contended by,Mr. Fazale Ghani Khan, Advocate that awarding of furture interest is discretionary both under section 34 of the C. P. C. As well as under Order XXXIV, rule 11, C. P. C. And it is open to the Court to award or not to award any interest and also the rate at which it should be awarded. In any case he submitted it should be reasonable. He pointed out that the loan was advanced on preliminary security of the promissory note and the mortgage was taken as secondary security.
17. ' On the other hand Mr. A. I. Chundrigar, Advocate contended that the Court is bound to award future interest on the mortgage money for the period subsequent to the filing of the suit till the realisation of the amount at the rate agreed between the parties in accordance with the provisions of sub-clause (iii), of clause (a), rule 11, Order XXXIV, C. P. C. This contention of Mr. Chundrigar is not correct for the simple reason that the agreed rate mentioned in sub-clause (iii) relates to award of interest on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by him in respect of the mortgaged security upto the date of the preliminary decree and added to the mortgage money. Mr. Chundrigar then referred to the provisions of sub-clause (i), clause (a), rule II, Order XXXIV, C.P.C. But the said provisions also in my opinion, do not fully help Mr. Chundrigar for the reason that the said provisions cover the period upto the date on or before which payment of the amount found or declared due is, under the preliminary decree to be made and not beyond that. In the present case by the Judgment dated 4-10.1974 a preliminary decree was passed as prayed which means the amount claimed in the suit was declared to be the amount due under the preliminary decree but no time within which payment was to be made was fixed. Therefore, in accordance with the aforesaid provisions, the plaintiff will be entitled to interest at the agreed rate upto the date of passing of the preliminary decree on the amount found or declared due under the preliminary decree. However, for the subsequent period, in accordance with the provisions of clause (b) of rule 11 or Order XXXIV, C. P. C., the plaintiff is entitled to reasonable rate of interest. It may be convenient to reproduce the provisions of clause (b), which reads as follows:- "(b) Subsequent interest upto the date of realization or actual payment at such rate as the Court deems reasonable.
(i) on the aggregate of the principal sums specified in clause (a) and of the interest thereon as calculated in accordance with that clause; and
(ii) on the amount adjudged due to the mortgage in respect of such further costs, charges, and expenses as may be payable under rule 10."
18. ' It is also contended by Mr. Chundrigar that even under clause (b) interest on the amount found due under the preliminary decree should be calculated as provided in sub-clause (i), clause (a) rule II of Order XXXIV, C. P. C. Mr. Chundrigar in support of this contention, relied upon the provisions of sub-clause (i) of clause (b), rule 11, C. P. C. Which have been reproduced above.
19. ' However, this contention is also not correct for the provisions of sub-clause (i) of clause (b) ibid are controlled by the opening provisions of clause (b) which provide that subsequent interest upto the date of realization or actual payment on the aggregate of the principal sums specified in clause (a) and of the interest thereon as calculated in accordance with that clause has to be at such rate as the Court deems reasonable.
20. ' Now, I have to consider what would be the reasonable rate in the circumstances of this case.
21. ' Mr. Chundrigar states that the Banks are giving interest at 0, per cent. Per annum on the amount deposited with them in savings accounts and they pay higher rate of interest on the amounts deposited for fixed period. Sin it was a commercial loan but duly secured by mortgage of immovable property, I think, it would be reasonable if I award interest at 71 per cent. Per annum from the date of the preliminary decree till payment, more so when it was the rate which the Bank charged from the borrowers upto 11-5-1972.
22. ' Accordingly, the defendants shall pay interest upto the date of the preliminary decree at the agreed rate of 101 per cent. Per annum and after the preliminary decree at the rate of 71 per cent.
23. Per annum. The preliminary decree will be amended accordingly to bring in conformity with this order passed in open. Court today. A I E. 1921 Lah. 125