2007(3) ALL MR 84
IN THE HIGH COURT OF JUDICATURE AT BOMBAY(AURANGABAD BENCH)
P.V. KAKADE, J.
Manesh S/O. Rajkumar Kanhed Vs. Ramesh Bhagwansa Walale
Civil Revision Application No.143 of 2005
6th February, 2007
Petitioner Counsel: Shri. A. S. BAJAJ
Respondent Counsel: P. S. AGRAWAL
Civil P.C. (1908), S.34 - Interest - Commercial transaction - What amounts to - Taking of hand-loan for whatever purposes, including starting a business of agency - Cannot come within the four corners of definition of "commercial transaction". (Para 10)
3. This revision petition is filed against the order passed by the Additional District Judge, Hingoli dismissing the appeal and confirming the judgment and order passed by the C.J.S.D., Hingoli decreeing the suit for recovery of the amount and directing the petitioner - defendant to pay the amount of Rs.95,625/- to the plaintiff along with future interest @ 15% per annum from the date of suit till the realization of the decretal amount.
4. The learned Counsel for the petitioner, at the outset, submitted that he is challenging only the direction to pay future interest @ 15% per annum. According to him, it is contrary to the provisions of Section 34 of the Code of Civil Procedure.
5. The factual matrix involved in the dispute shows that the plaintiff and the defendant are relatives of each other. The defendant wanted to take agency and servicing center of Bajaj M-80 at Hingoli. Hence he needed the amount. Being relatives of each other, the defendant demanded hand-loan of Rs.1,75,000/- for the period of two months. Upon repeated insistence, the plaintiff has given Rs.1,75,000/- to the defendant on 29-03-1995. With the help of the said amount, the defendant started his business but, did not repay the amount as agreed. However, the defendant paid Rs.85,000/- in cash on 04-10-1995 and issued a post dated cheque for remaining amount of Rs.90,000/-, which ultimately, bounced and, therefore, the suit came to be filed.
6. The learned trial Judge, after hearing both the parties and on the basis of the evidence on record, came to the conclusion that the transaction between the parties was commercial in nature and, therefore, the future interest was granted @ 15% per annum as prayed for by the plaintiff. The learned lower appellate Court Judge, after hearing both the parties, confirmed the order passed by the trial Court and dismissed the appeal. Since second appeal is not permissible, pertaining to the claim, the present civil revision application is filed.
7. The moot question around which the dispute revolves is as to whether the transaction between the parties could be termed as commercial transaction within the meaning of Section 34 of the Code of Civil Procedure?
8. It is needless to mention that the provision of Section 34 of the Code of Civil Procedure is clear enough to show that the award of the rate of interest till date of decree is in the discretion of the court, taking into account the facts and circumstances involved. However, the award of future interest after decree is restricted to the rate of 6% per annum except for commercial transactions wherein the rate of future 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 nationalized banks in relation to commercial transactions.
9. Now, admittedly, there was no agreement entered into between the parties to pay interest in this case. The rate of interest was claimed at the rate of 15% per annum on the basis that it was a commercial transaction. Both the Courts below have held that it was an admitted position that it was the commercial transaction and on that basis, awarded rate of interest at the given rate. Now, the record shows that it is an admitted position that both the parties are relatives of each other and again admittedly, when the defendant needed amount to start his business, he demanded hand-loan of Rs.1,75,000/- for the period of two months. In my considered view, the demand for hand-loan and conceding to such demand, would not amount to commercial transaction within the meaning of Explanation II, to Section 34 of C.P.C., which reads thus:
"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."
10. Therefore, taking of hand-loan for whatever purposes, including starting a business of agency, cannot come within the four-corners of definition of "Commercial transaction" and, therefore, I hold that the finding recorded by both the Courts below that the transaction between the parties was a commercial transaction, is an error apparent from the record and especially when, it is an admitted position that it was a hand-loan between the relatives of each other.
12. The learned Counsel for the petitioner also brought to my notice that in absence of any agreement to pay interest on the said amount, the assessment of interest of Rs.5,625/- on the principal amount prior to decree also would be a nullity. As can be seen from the record, there is nothing to show that there was an agreement to pay interest on the principal amount at all in the course of the transaction and, therefore, that component of Rs.5,625/- would also be a nullity and cannot be granted in law.
13. For the reasons recorded above, therefore, Rule is made absolute. The impugned orders passed by both the Courts below are set aside to the extent of direction for payment of amount of Rs.5,625/- towards interest on the principal amount prior to the decree and rate of interest at 15% per annum towards future interest, which should be restricted to 6% per annum as contemplated under Section 34 of the C.P.C. The orders passed by the trial Court stand modified to that extent only. In the result, the petition stands disposed of with no order as to costs.