1997(2) ALL MR 606
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

R.G. VAIDHYANATHA, J.

Union Bank Of India Vs. M/S.Noor Dairy Fram & Ors.

Suit No.717 of 1981

24th December, 1996

Petitioner Counsel: MR.Z.KAMDIN i/b M/S.TYABJI DAYABHAI & CO.
Respondent Counsel: MR.M.K.BHATT

(A) Civil P.C. (1908), O.6, R1 - Admission - It is best piece of evidence, unless withdrawn on valid grounds - Absence of particular plea in written statement - No amount of evidence can be of any avail.

It is also well settled that an admission is best piece of evidence, unless of course, the admission is withdrawn on some valid ground like admission being made by mistake or due to fraud etc. Where the defendant in his reply to the notice by the plaintiff Bank admitted the plaintiff's allegations that the defendant executed promissory notes and a deed of hypothecation etc., no weight can be given to the argument of the defendant questioning the correctness of the entries in extract of account of the plaintiff-Bank in view of the unqualified and unconditional admission made by the defendant. [Para 6]

Moreover, in view of the unequivocal admission by the defendant, new version given in the written statement as to execution of promissory notes is of no effect. It is well-settled that any amount of evidence without foundation in the pleadings cannot be looked into. In the face of admission in reply to notice defendants cannot now be permitted to deny the execution of the promissory note or to say that they signed blank forms. [Para 7]

(B) Negotiable Instruments Act (1881) S.118 - Promissory note - Execution proved or admitted - Presumption of consideration having passed arises - It is rebuttable - In instant case no evidence to rebut presumption was led. (Para 8)

(C) Bankers' Books Evidence Act (1891), S.4 - Certified extract of Bank's account - It is prima facie evidence of fact that amount mentioned therein is due - No further evidence is necessary to pass decree. (Para 11)

(D) Civil P.C. (1908), S.34 - Agricultural loan - Compound interest cannot be charged - Charging interest at quarterly or half yearly rests is not permissible - Bank charging simple interest and compounding it annually - valid. (Para 11)

(E) Civil P.C. (1908), S.34 - Agricultural loan - Decree passed - Plaintiff-Bank is entitled to interest on suit claim of principal plus interest. (Para 16)

(F) Civil P.C. (1908), S.34 - Loan given to Dairy Farm - It is agricultural loan and not commercial loan - Covered by Explain.II to S.34 - Bank not entitled to current interest at contract rate - Current interest allowed at 10%p.a. (Para 20)

Cases Cited:
AIR 1974 CAL 151 [Para 11]
(1994) 5 SCC 213 [Para 11,16]
AIR 1992 Bom 482(FB) [Para 16]
CA 2785/87 (SC) [Para 16]
AIR 1990 Karn 145 [Para 19]


JUDGMENT

JUDGMENT :- This is a suit filed by Union Bank of India against the defendants for recovery of money. The defendants have filed Written Statement. Issues have been framed. One witness was examined on behalf of the plaintiff and plaintiff's case was closed. One witness was examined on behalf of the defendants. I have heard the learned Counsel appearing for both sides.

2. The plaintiff's case is as follows :-

The is Union Bank of India, which is a nationalised bank. The first defendant is a partnership firm. Defendants Nos. 2 and 3 who are father and son are the partners of the first defendant firm. It is stated that the defendants had obtained term loan facility since 1975 to the extent of Rs.65,000/-. The defendants have executed a promissory note dated 10th April, 1978 and Hypothecation Agreement of the same date. The defendants have availed that facility. The amount lent to the defendants on different dates have been debited to their accounts. It is further stated that at the same time in April, 1978 the defendants availed Cash Credit (Hypothecation) Facility upto a limit of Rs.20,000/- and executed a promissory note dated 10th April, 1978 and agreement of hypothecation of the same date. Hence, the suit is filed for the recovery of Rs.78,962.80ps in respect of the term loan account and Rs.31,530.62ps in respect of Cash Credit Facility.

The defence is as follows :-

It is stated that the suit is not maintainable. The suit is bad for misjoinder of causes of action and misjoinder of parties. The execution of the suit documents is denied. Signatures of Defendants Nos.2 & 3 were taken on blank forms and the columns have been subsequently filled up. Correct accounts are not disclosed in the plaint. The amount claimed in the plaint is not admitted. That the demand notice issued by the plaintiff-bank has been duly replied. The Hypothecation deed is not enforceable. That defendants deny their liability to pay the amount claimed in the suit. That defendants have given two Insurance Policies to the plaintiff. The plaintiff has to give credit to the amount realised from the LIC Policies. The defendants have also filed additional Written Statement stating that signature of stranger appears on the promissory note dated 10-4-1978, that the blanks have been filled up subsequently. Defendants Nos. 2 & 3 have signed on blank forms. The suit is barred by limitation. The personal account of the second defendant cannot be transferred to the account of the firm. The entries in the account extract are incorrect. Account Books are not properly written. The stamp of the firm is forged on the agreement. The plaintiff has suppressed the previous account. Hence, it is prayed that the suit be dismissed with costs.

3. On the above pleadings, the following issues are framed.

ISSUES

1. Whether the plaintiff proves that the Defendants or any one of them were granted a Term Loan Facility in 1975 which was continued in 1978 whereunder the Defendants were lent various amounts by the Plaintiff as mentioned in paragraphs 3 & 4 of the plaint?

2. Whether the Plaintiff proves that the Defendants or any one of them were granted a Cash Credit Facility in 1975 which was continued in 1978 whereunder the Defendants were lent various amounts by the Plaintiff as mentioned in paragraphs 3, 7 and 8 of the plaint?

3. Whether the Plaintiff proves that there is due and payable by the Defendants to the Plaintiff the sum of Rs.78,962.80ps with further interest thereon at the rate of 15% per annum with half yearly rests from the date of the filing of the suit till payment and/or realisation together with costs charges and expenses for the said period under the Term Loan Facility as stated in paragraph 6 of the Plaint and as prayed for in prayer (a) of the Plaint.

4. Whether the plaintiff proves that there is due and payable by the Defendants to the Plaintiff the sum of Rs.31,530.92ps with further interest thereon at the rate of 17% p.a. with half yearly rests from the date of the filing of the suit till payment and/or realisation together with costs charges and expenses for the said period under the Cash Credit Facility as stated in paragraph 10 of the Plaint and as prayed for in prayer (b) of the Plaint.

5. Whether the Plaintiff proves that the Defendants have as and by way of security and charge validly hypothecated in favour of the Plaintiff all their buffaloes present and future and all their products, goods and moveable properties standing in the name of Defendant No.1 and situate at Aarey Milk Colony for the due repayment of all the Defendants' dues under the Term Loan Facility and the Cash Credit Facility as stated in paragraphs 3 and 7 of the Plaint?

6. Whether the Defendants prove that Defendant No.3 was not a partner of Defendant No.1 during 1975 to 1978 as alleged in paragraph 4 of the Written Statement?

7. Whether the Defendants prove that the Defendant No.1 did not request transfer of the Term Loan Facility and Cash Credit Facility to its name in the capacity of the newly constituted partnership firm from the sole proprietary concern of Defendant No.2 as alleged in paragraphs 5 and 6 of the Written Statement?

8. Whether the Defendants prove that the Demand Promissory Note dated 10-4-1978 is a camouflage and without any lawful consideration as alleged in paragraph 2 of the Additional Written Statement?

9. Whether suit is barred by limitation?

10. Whether defendants' signatures were taken on blank documents/forms as alleged?

11. What relief?

ISSUES NOS.1 to 4, 7 & 8

4. All these issues are interconnected and hence they are taken up together for consideration.

The plaintiff's case is that the Proprietory concern of the second defendant had some earlier transactions. Subsequently in 1976, the first defendant came into existence with defendants Nos. 2 & 3 as partners and they continued the loan facility which had been extended to the original Proprietory concern of the second defendant. Then, it is also the plaintiff's case that in 1978, in particular on 10th April, 1978 the defendants availed two loan facilities and executed fresh documents.

According to defence as made out in the Written Statement, the documents of 1978 were not executed by the defendants except that the signatures were taken on blank forms and the documents are not supported by consideration.

The learned Counsel for the Defendants contended that the plaintiff has not adduced sufficient evidence to prove the execution of the documents and payment of consideration. He also attacked the correctness of account extracts produced in this case and contended that the entries in the account extracts are not duly proved. On the other hand the learned Counsel for the plaintiff contended that apart from the evidence adduced by the plaintiff, the defendants are bound by the admission made by them in the previous reply notice and in the face of that admission, the defendants cannot now be permitted to deny the transaction. He also relied on the presumption in favour of the entires in the Books of Account maintained by the Bank in the regular course of banking practice.

5. On behalf of the plaintiff, we have the evidence of P.W.1 Mr.Michael Gilbert Abreo, who is an officer of the Plaintiff Bank since about 9 months. He has given evidence on the basis of the documents available. He has told the Court that the original Proprietory concern of second defendant was taken over by the partnership firm namely the first defendant, which was firm of defendants Nos. 2 & 3. It may also be noted that the second defendant is father of the third defendant. That means original Proprietory Concern of the father has now become a partnership firm of the father and son. The father is very much present in both the concerns. Earlier, he was a sole proprietor of the Proprietory concern and now he is managing partner of the firm.

The evidence of P.W.1 shows that the partnership firm has taken over assets and liabilities of the old proprietory concern. That defendants Nos.2 & 3 executed the necessary documents in favour of the plaintiff-bank. In particular he has produced the documents which are Exh.A to Exh.F. Then, we have the plaintiff's legal notice Exh.H, and defendants' reply Exh.I. Then Exh.K and Exh.L are the two accounts extracts.

In cross-examination witness admitted that he has no personal knowledge of the suit transaction except on the basis of documents. At one stage it was elicited from him that the amount due by the proprietory concern on that date it became partnership firm regarding term loan was Rs.49,200/-. The learned Counsel for the defendants wanted to show that this statement is incorrect. However, in re-examination it has been elicited that by mistake witness made that statement due to error of calculation and then, he made the calculation properly and gave the amount as Rs.47,200/-. The witness also admitted that the old documents pertaining to the proprietory concern are not available. It is elicited that the defendants had given one LIC policy towards security of the suit loan and the LIC Policy was encashed and the amount was adjusted towards the suit transaction in 1990, which is during the pendency of the suit. Then he has been cross-examined with reference to the entries in the account extract.

As against this, second defendant is examined as D.W.1. He admits having taken loan from the plaintiff bank when he was doing business as a proprietory concern. According to him he borrowed about Rs.50,000/- to Rs.60,000/- at that time. Then he says that his signature is taken to blank printed form. He admits his signature at Exh.A, but says it was blank when he signed it. He admits that the partnership firm came into existence in 1975. He admits that all the documents bear his signatures and also the signatures of his son. He says that all the documents Exh.A to Exh.G were blank when he signed. That nobody was present except the Manager when he signed the blank forms. That his son's signature has been taken to these blank forms subsequently. He admits in cross-examination that he did not protest or object for signing on blank forms. He has not complained to the Higher Officer of the Bank that his signatures were obtained by the bank officer on blank forms. He further says that he will not sign any document in blank. He has not told the Court as to under what circumstances he signed these papers when they were blank. Then he was confronted to his reply notice Exh.J and he admitted having sent that reply. He has denied suggestions in cross-examination.

6. In the very nature of things, the evidence of both P.W.1 on the one side and D.W.1 on the other is interested. We have to be guided by the documentary evidence and broad probabilities to find out as to which version is correct.

The lengthy argument addressed on behalf of the defendants questioning the correctness of the entries in the account extract, about the execution of the documents, position of signatures on the two promissory notes Exh.D and Exh.E etc. need not be given any weight in view of unqualified and unconditional admission made by the defendants in the reply notice Exh.J. It is well settled that an admitted fact need not be proved. It is also well settled that an admission is best piece of evidence, unless, of course, the admission is withdrawn on some valid ground like admission being made by mistake or due to fraud etc.

7. The plaintiff issued demand notice through its lawyer as per Exh.H. In paras 1 to 5, there are allegations about transaction between the plaintiff bank and the proprietory concern.

In the reply notice Exh.J dated 3rd April, 1980 the defendants have admitted the allegations in paras 1 to 5 of Exh.H as true except questioning the correctness of the total amount claimed. Then, there is a definite allegation in the notice Exh.H in para 6 stating that on the request of the new firm the amounts due by the Proprietory Concern were transferred to the account of the partnership firm and then, the firm and the partners executed two promissory notes dated 10th April, 1978 as mentioned in paras 7 and 8 of the notice. Now let us see as to what is the stand of the defendants regarding this allegation.

In Exh.J, para 2, it is clearly admitted that the defendants executed promissory note for Rs.65,000/- and a deed of hypothecation. Then in para 3 they admitted of executing the promissory note for Rs.20,000/- but only stated that it was taken as a penalty for non-payment and for interest at higher rate.

Any how the execution of the two promissory notes on 10-4-1970 has been unequivocally admitted in the reply notice Exh.J. But in Written Statement new version is given. In the evidence, D.W.1 comes out with a theory of signing blank forms etc. It is well-settled that any amount of evidence without foundation in the pleadings cannot be looked into. In the face of admission in Exh.J, defendants cannot now be permitted to deny the execution of the promissory note or to say that they signed blank forms.

8. Once the execution of the promissory notes has been either proved or admitted, then the statutory presumption about consideration arises under Section 118 of the Negotiable Instruments Act. Of course, it is a rebuttal presumption and it is open to the defendants to adduce evidence to show that there was no consideration. Except a self serving denial and self serving statement made by defendant No.1, we do not have any evidence to show that the documents are not supported by consideration. Hence, without going through the correctness of the account and other evidence on record, in view of the admission in Exh.J, I hold that the defendants have executed the suit promissory notes for consideration. They have not adduced any evidence to rebut the legal presumption available to the plaintiff in law.

9. Then the learned Counsel for the defendants pointed out some descripancies in the account extracts Exh.K and Exh.L. But after going through the same, I do not find any merit in the objection. If we read all the three columns mentioned therein, we do not find any descripency. It may be that the column of withdrawal in Exh.K and Exh.L may not be appropriate column, but it should be a column meant to show debit entries. But only descripency that is highlighted was that In Exh.K, the second entry in withdrawal column is shown as Rs.33,700/-, but in the copy of the extract, it is shown as Rs.23,700/-. The learned Counsel for the defendants highlighted this descripency in a sum of Rs.10,000/-. As rightly pointed out by the learned Counsel for the Plaintiff, even though there is some mistake in showing this amount, there is no other mistake, particularly in total. Obviously, it is clerical or typing mistake and need not be given much importance particularly, when there is no change in the total amount.

As far as LIC policy is concerned, admittedly, the policy has been matured and adjusted during the pendency of the suit and this is given credit in Exh.1 by showing that Rs.11,402.50ps is given credit out of proceeds of LIC Policy.

However, defendants say that there were two policies. This is not admitted by the plaintiff. The defendants have not furnished the number of the other policy or any other particulars except stating that he had one more policy. Even in the Written Statement, he has furnished the number of only one policy and simply stated that he had given other policy. He has not produced any acknowledgment obtained from the bank for giving one more policy to the plaintiff as security. Hence, the theory of giving second policy to the plaintiff is rejected for want of evidence.

10. A comment was made that on Exh.B promissory note, the signature of third person appears above the names of defendants Nos. 2 & 3. The signature which appears above the signatures of the second defendant is that of one of Bachchansing. This has been spoken to by P.W.1. Since, P.W.1 had no personal knowledge about the signature or about his inability to read the script on his own, at the time of hearing of arguments, one of the advocates who belongs to Sikh community and who is familiar with Gurumukhi script (Mr.Mohanbir Singh, Advocate) read out this particular signature as that of Bachchansing, written in Gurumukhi and it is in Punjabi language. There is some explanation on behalf of the plaintiff bank in the evidence of P.W.1 and also in the legal notice Exh.H that this Bachchansing was the guarantor for the loan and it was he should who introduced the defendant to the plaintiff/bank. In Exh.K we find the signature of some Bachchansing as introducer when second defendant had opened an account in the bank. Strictly speaking we are not concerned about the Bachchansing in this case, since he is not a party. It was argued that no action was taken against Bachchansing. According to P.W.1, Mr.Bachchansing was the guarantor. Even if no action is taken against the guarantor, the principal debtor cannot escape his liability. Therefore, the defendants cannot get any advantage on this score.

Argument that the earlier documents by bank with a proprietory concern are not produced has also no merit, since the suit is filed against the new firm and the new firm has admitted the execution of the documents in Exh.J. Then, it is argued that no consideration of Rs.65,000/- was paid on 10-4-1978. It was pointed out on behalf of the plaintiff that the promissory note was taken for the outer limit of the sanctioned facility and not for the amount actually advanced on that date.

Then some comment was made about mistake in mentioning the unit number in the Hypothecation Deed. According to D.W.1, he was running dairy firm in Unit No.15, but in the Hypothecation Deed Exh.F, Unit No.18 is mentioned. Except his version, he has not produced any document to show his right either regarding unit No.18 or unit No.15.

The bank has put whatever unit number was given by second defendant. Even granting for a moment that wrong unit number is shown, then the consequence is that the bank cannot proceed against the moveable property in unit No.18. Further, all this discussion is only academic, since admittedly the defendants have closed their business, whether it is unit No.15 or unit No.18 and therefore, there is no question of the bank proceedings against the hypothecated moveable.

11. In addition to the admission of the defendants in Exh.J, the plaintiff is also entitled to benefit of presumption under Section 4 of the Bankers' Books Evidence Act, 1891. In AIR 1974 Calcutta 151 (V 61 C 28) (United Industrial Bank Ltd. v/s. G.C.Dev). It is pointed out that the certified extract of account must be admitted as prima facie evidence of the fact that the amount mentioned therein must be due and no further evidence was necessary to pass decree.

The learned Counsel for the defendants contended that the plaintiff cannot claim compound interest, since, the loan is an agricultural loan. It is admitted by P.W.1 that the suit loan is an agricultural, even documents bear it out. The Supreme Court has observed in the recent decision in the case of Corporation Bank v/s. D.S.Gowda and another reported in (1994) 5 S.C.C.213 that in the case of agricultural loan the bank cannot charge compound interest at 3 months or half yearly rests. It is pointed out that the bank can claim interest on yearly rests. The learned Counsel for the plaintiff while not disputing this proposition of law submitted that actually the bank in this case has not calculated interest on half yearly rests basis though there was an agreement to that effect. It is true that as per the contract namely promissory note the plaintiff is entitled to interest at half yearly rests. But in view of the decision of the Apex Court, this is not permissible in case of agricultural loan. As rightly pointed out by the learned Counsel for the Plaintiff, a perusal of Exh.K shows that interest as and when became due has been taken from the current account and credited to the loan account. Hence, there is no scope for claiming compound interest at all with periodically rest, since the interest has been taken from the current account as and when it became due. I hold that the plaintiff is entitled to only simple interest, but to be compounded annually as pointed out by the Apex Court in the above case. But since, in this case the plaintiff has claimed only simple interest and the interest has been credited from current account as and when it became due, there is no question of plaintiff claiming interest at half yearly rest.

In the light of the above discussion and particularly on the admission of the defendants in Exh.J, I hold that the plaintiff has proved issues Nos.1 to 4. Consequently, issues Nos. 7 & 8 are answered in the negative. The evidence on record taken alongwith the account extract is sufficient to prove the suit claim.

ISSUE NO.5

12. In hypothecation deeds, which are marked as Exh.E & Exh.G the only dispute is about the unit number. I have already commented this aspect. As already stated the question is purely academic, since the Plaintiff cannot enforce hypothecation deed, since the defendants have closed their business and the dairy firm is no longer there, whether it is in unit No.15 or 18.

ISSUES NO.6

13. There is absolutely no dispute on this point. In fact in para 6 of the deposition, the second defendant has admitted that the partnership firm came into existence in 1975. We have already seen that the defendant No.1-firm gave an application for opening an account in the name of the firm as per Exh.G in 1976. Then suit documents were exeucted in 1978 by the firm and its partners. Hence, we can safely hold that during 1975-76 the firm was very much in existence. Issue no.6 is answered accordingly.

ISSUE NO.9

14. There is absolutely no merit in the plea of limitation. The suit is filed not only on the basis of account, but also on the basis of the two promissory notes Exh.B & Exh.F, which are dated 10-4-1978. The suit was filed on 1st April, 1981 well within 3 years from the date of two promissory notes. Hence, the suit is well within time. Accordingly issue No.9 is answered in the negative.

ISSUE NO.10

15. I have already pointed out that defendant's plea and evidence regarding taking signature to blank documents has no merit and is liable to be rejected, in view of admission about execution of documents, in Exh.J, which I have already referred to. Hence, issue No.10 is answered in the negative.

ISSUE NO.11

16. In view of my findings on the several issues the plaintiff is entitled to a decree for the amount claimed in the plaint. Now, only question is about grant of current interest from the date of suit. According to the learned Counsel for the Plaintiff, the plaintiff is entitled to contract rate of current interest even from the date of suit till the date of realisation. On the other hand, the learned Counsel for the defendant submitted that the plaintiff is entitled to current interest at 6% and that too only on the principal amount originally lent and placed reliance on a Full Bench decision of this Court in AIR 1992 Bombay 482 (Full Bench) Union Bank of India v/s. Dalpat Gaurishankar Upadayay, where the Full Bench of this Court has held that in a suit of this type under Section 34 of CPC the Plaintiff is entitled to interest only on the original principal amount and not on the total amount claimed in the plaint.

It was submitted at the bar that the decision of the Full Bench is pending in Appeal before the Apex Court and the matter has been referred to the Constitutional Bench. I have already referred to the recent decision of the Apex Court in 1994(5) S.C.C.213 Corporation Bank v/s.D.S.Gowda and another on another point. In that decision, (In Gowda's case) the suit had been filed by the Bank against Mr.Gowda for recovery of Rs.7,50,000/-, which included the principal amount of Rs.5,00,000/- and the balance of Rs.2,00,000/- and odd being interest. The learned Trial Court granted a decree for the entire amount and future interest was allowed under Section 34 of CPC at 16.5% on the entire decreed amount of Rs.7,56,934.17, which admittedly included the principal of Rs.5,00,000/- and balance being interest.

The matter was carried in Appeal before the Karnataka High Court. The High Court did not agree with the finding of the trial court on the question of interest and gave some directions and set aside the judgment of the trial court and remanded the suit to the trial court with certain directions. The Bank carried the matter in Appeal before the Apex Court. The Apex Court referred to a passage in Halsbury's Laws of England (4th Edn.) Vol.3 at page 118, para 160 as could be seen from para 14 of the reported judgment and one particular portion relevant for our case is about the practice of bankers to debit the accrued interest to the borrower's current account at regular periods and to add the interest to the principal, in which case it loses its quality of interest and becomes capital. In other words, when the accrued interest is added to the principal, the interest merges with the principal and becomes the principal only. This passage in (Halsbury's Laws of England (4th Edn.) Vol.3 at page 118, para 160) has been approved by the Apex Court. Ultimately, the Apex Court allowed the appeal filed by Corporation Bank and set aside the judgment of the High Court and restored the judgment of the trial court. We have already seen that the trial Court had granted decree for the entire amount with future interest under Section 34 of CPC at the contract rate. Since, the Supreme Court has confirmed the decision of the trial court, the Supreme Court has approved the principle of law that the plaintiff can get current interest on the full suit claim, where interest is merged with the principal.

The learned Counsel for the plaintiff also brought to my notice another unreported judgment of the Apex Court in the case of Bank of Baroda v/s.M/s.Jagannath Pigment and Chem. and Ors., in Civil Appeal No.2785/87. In fact the Full Bench has relied upon this case of M/s.Jagannath Pigment & Chemicals and others. The Apex Court reversed the view taken by the Bombay High Court in M/s.Jagannath Pigment & Chemicals & Others' case and allowed the appeal holding that in view of earlier decision in Gowda's case, the bank is entitled to current interest on the full amount claimed in the plaint, which included principal and interest which is merged in the principal.

17. Next point for consideration is at what rate the bank is entitled to current interest.

The learned Counsel for the plaintiff invited my attention to Section 79 of the Negotiable Instruments Act and contended that the plaintiff can claim current interest at the contract rate. He also invited my attention to the Book "Law of Negotiable Instruments Act" by P.W.Rege,1994 Edn., pages 642 to 644. He also argued that when there is conflict between the special law and general law, then the general law yields to the special law. It was therefore argued that the plaintiff is entitled to current interest as provided in Section 79 of the Negotiable Instruments Act, where the plaintiff can get contract rate. In my view this argument cannot be accepted for the simple reason that Section 79 gives a discretion to the Court to fix time for which the contract rate of interest can be allowed. Section 34 of CPC also gives discretion to the Court to grant current interest after the date of suit. By a harmonious reading of Section 34 CPC and Section 79 of the Negotiable Instruments Act, I hold that still the Court has discretion to fix the period till which the plaintiff is entitled to contract rate and then the Court has discretion to award current interest as provided in Section 34 of CPC.

18. Under Section 34 of CPC, we have to adjudge current interest first from the date of suit till the date of decree. Here the Court is given a discretion to grant current interest upto the date of decree. Then from the date of decree the Court can grant current interest not exceeding 6% p.a. till the date of payment. However, there is an exception to this rule, which is engrafted in the proviso to Section 34 of CPC. The proviso provides that in cases of commercial transactions, the current interest may exceed 6% p.a., but it shall not exceed the contractual rate of interest or if there is no such contractual rate, then the rate on which moneys are lent or advanced by nationalised banks in relation to commercial transactions. Even granting for a moment that the suit transaction is a commercial transaction, the Court has been given discretion to grant current interest not exceeding contractual rate. Therefore, even in such a case the Court has discretion to fix the rate of current interest.

Then in Explanation II, it is stated that a transaction is a commercial transaction, if it is connected with the industry, trade or business.

Question is whether transaction in the present suit comes within the meaning of industry, trade or business?

19. It is admitted by P.W.1 that the suit loan was given for agricultural purpose. Further in the account extract Exh.K, there is a caption at the top, loan to Agriculture. Similar entry may be found in Exh.L also. Therefore, it is an admitted case of giving loan for agricultural purpose. Admittedly, the defendant was doing dairy firm and for that purpose the defendants had taken loan.

The learned Counsel for the plaintiff contended that even dairy firm is a business and it will come within the meaning of the business or trade mentioned in Section 34 of CPC. In my view, one cannot stretch a definition so far. Commercial transaction has a special meaning, and it cannot be extended to agricultural operation, though even an agriculturist will sell his goods and get money. The learned Counsel for the Defendant also invited my attention to the decision reported in AIR 1990 Karnataka, 145 in the case of Canara Bank v/s. K.S.Kushalappa and others, where a loan was granted for development of coffee estate and the question was whether it was an agricultural loan or a commercial loan. The Karnataka High Court held that it is an agricultural loan and in that case the current interest was allowed at 6% p.a.

Hence, in the facts and circumstances of this case, I hold that the transaction in this suit is an agricultural loan transanction and does not come within the meaning of Explanation II to Section 34 of CPC. In view of this finding I hold that the plaintiff is not entitled to the current interest at the contract rate.

20. It is evident that the defendant no.1 has closed its business and now the second defendant is working elsewhere. The firm is closed. The third defendant had left India and gone abroad to earn his livelihood. In the circumstances I feel that some relief should be given to the defendants by exercising discretion under Section 34 of CPC. Having regard to the circumstances of the case, I feel the current interest may be allowed at 10% p.a. on the decree amount from the date of suit till the date of payment.

21. In the result the suit is decreed with costs in terms of prayer clauses (a), (b) and (h) except regarding current interest. The plaintiff is entitled to current interest on the entire amount claimed in the plaint at 10%p.a. from the date of suit till the date of realisation.

Advocate's fees to be quantified as per rules.

Certified Copy to be expedited.

Order Accordingly.