Karnail Singh vs State of Punjab

H.S. Bedi, J.

By this judgment, I propose to dispose of Civil Writ Petition Nos. 4685 and 5040 of 1991. The facts of the case have been taken from the former one.

The petitioner, who had been working as a salesman in the Tugal Co operative Agricultural Service Society Limited, Tugal (hereinafter called the ''Society'') left the service of the Society in the year 1982, when certain sums of money were shown as outstanding against him. An arbitration case under Section 55 of the Punjab Cooperative Societies Act, 1961 (hereinafter called the ''Act'') was initiated against the petitioner and the matter was referred for the decision to the Arbitrator, who found that a sum of Rs. 14,408.95 was due from the petitioner with future interest at the rate of 171/2 per cent per annum upto the date of payment of the principal amount. A copy of the award dated 25th July, 1983 has been appended as Annexure P1 to the petition. The petitioner thereafter filed an appeal under Section 68 of the Act before the Assistant Registrar, Cooperative Societies, Jagraon, who vide his order dated 25th February, 1985, Annexure P2 to the petition, reduced the principal amount recoverable from the petitioner to Rs. 9,933.75. The petitioner still dissatisfied by the order against him, filed a revision petition under Section 69 of the Act before the State Government and the same was dismissed vide order dated 18th January, 1990, Annexure P3 with the petition. Aggrieved by the orders, Annexures P1 to P3, the petitioner has filed the present writ petition in which various points were sought to be raised by him. However the motion Bench vide its order dated 18th September, 1991 recorded as under :

"Admitted on the point of interest only for 11.11.1991. The recovery of the interest amount beyond 6% is stayed. The previous order dated 27.3.1991 stands modified to that extent."

In view of the order of the Division Bench reproduced above, the only point which now survives for decision is as to whether the interest at the rate of 171/2 per cent per annum could be legally imposed on the petitioner. Mr. Saggu, learned counsel for the petitioner has urged on the strength of a Division Bench decision of this Court reported as Amar Kumar v. The State of Punjab, 1975 PLJ 6 : 1984 R.R.R. 397 that the Arbitrator was, in fact, not entitled to charge any future interest whatsoever. He has also urged, relying on a decision of this Court reported as Mathra Dass v. The State of Punjab and others, 1975 PLJ 42 : 1984 R.R.R. 409 that ordering payment of future interest beyond 6 per cent could not be made in the absence of an agreed rate of interest.

Mr. Ramesh Goel, learned counsel for respondent No. 3 Society, has, however, brought to my notice a Full Bench decision of this Court reported as State of Punjab v. Ajit Singh and others, 1986 Punjab Legal Reports and Statutes 64 in which Amar Kumar''s case (supra) has been overruled and it has been held that although Section 34 of the Code of Civil Procedure may not be strictly applicable to arbitration proceedings under the Act, the principles thereof are and as such, the Arbitrator was expressly warranted and authorised to grant future interest on the amount awarded upto the date of its realization. In view of the decision of the Full Bench, the first argument made by Mr. Saggu has no force.

The second point urged by Mr. Saggu, as already referred to above, is as to whether the interest beyond the rate of 6 per cent per annum could have been levied by the Arbitrator. For this, reliance has been placed by Mr. Saggu on Mathra Dass''s case (supra). Undoubtedly, this judgment does support the case of the petitioner, but it is to be noted that it as rendered prior to the amendment of the Code of Civil Procedure in the year 1976, whereby a proviso has been added which is reproduced below :

"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."

It is pertinent that in the case of embezzlement, the question of taking into account the contractual rate or the commercial rate of interest, infact, should not arise, but nevertheless the point that emerges is that even in commercial transactions, (which by no stretch of imagination can be compared to an embezzlement by an employee), the law itself now recognizes that interest at a rate beyond six per cent is leviable. It was perhaps, keeping in view this provision, that this Court in The Mallian Gill Manj Cooperative Joint Farming Society Ltd v. The Gurdaspur Central Cooperative Bank Ltd" Giraj Singh and others v. Rattan Singh exManager and others, Gurcharan Singh and others v. Deputy Secretary Cooperative Societies, Punjab and Chhajju Singh and others v. State of Punjab and others, 1986 Punjab Legal Reports and Statutes Pages 74, 565, 566 and 570 respectively, have held that the Arbitrator can grant future interest which in these cases was between 12 to 16 per cent per annum. In Giraj Singh''s case (supra), it has been observed by a Division Bench as under :

"Now the question is as to what rate of interest can be awarded. In case of this nature, the liability of the petitioner would not be lesser than that of a member having taken loan and not paid the same by the due date. In the circumstance, the interest charged from the petitioner, whose duty was to take loan from the Bank and then disburse it, having embezzled the amount instead of disbursing it to the members as loan, cannot be considered excessive.''

It is, thus, dear that the decisions of this Court, referred to above, are to the effect that interest at a rate beyond six per cent per annum can be levied.

For the reasons recorded above, the present writ petitions are devoid of merit and are dismissed but with no order as to costs.