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Dr. B. Siva Sankara Rao, J.—This is the memorandum or review, seeking to review the decree and judgment of this 1st appellate Court dated 20-12-2012 made in A.S. No. 789 of 2002. The Additional District Judge''s Court, Khammam, in O.S. No. 1 of 1998 by decree and judgment dated 21-01-2002 (in the suit for recovery of Rs. 6,12,900/- based on equitable mortgage dated 16-12-1997 for the debt of Rs. 6,00,000/- with interest) only granted simple money decree on the principal sum adjudged of Rs. 6,12,900/- with interest @ 24% p.a. from the date of suit 22-01-1998 till date of realization and with costs in favour of two plaintiffs against the sole defendant. It is the plaintiffs-appellants having been aggrieved for not granting the equitable mortgage preliminary decree preferred the appeal attacking the trial Court''s said money decree with main contention that the trial Court even impounded the document with deficit stamp duty and penalty by order dated 04-08-2000 with observation of no registration required(for the memorandum of deposit of title deed), erred in not granting the mortgage decree and hence to pass mortgage preliminary decree by modifying the trial Court''s decree and judgment. In the appeal, during its pendency, 2nd plaintiff-2nd appellant died and his legal-heirs brought on record as appellants 3 to 5 and similarly, from sole defendant-respondent died, his legal-heirs brought on record as respondents 2 to 6 and the 7th respondent R. Venkateswara Rao was later impleaded in the appeal. This 1st appellate Court finally disposed of the appeal by its dismissal judgment dated 20-12-2012 while confirming the simple money decree granted by the trial Court, however reduced the rate of interest from 24% p.a. from date of suit till date of realization granted by the trial Court. The observation of this Court in the appeal dismissal judgment dated 20-12-2012 in reducing the rate of interest is that, 24% p.a. interest granted from date of suit till date of realization by the trial Court appears to be penal without giving any reasons and keeping in view the provisions u/s 34 C.P.C., interest is granted at 12% p.a. from date of suit till date of decree and thereafter, at 6% p.a. till date of realization.
Said observation is now subject matter of the review with the contentions in the grounds of review that it is an error apparent on the face of record, that despite no cross-objections of the defendants-respondents from the factum of the cross-objections filed belatedly with petition in A.S.M.P. 3052 of 2012 to condone the delay of 3,800 days was not condoned, this appellate Court misapplied the provisions of Section 34 C.P.C. by ignoring the factum of the money transaction in question is a commercial transaction and the reason given to reduce the interest rate from 24% p.a. as appears to be penal is contrary to the pleadings and evidence on record and law and without assigning any reasons to say penal though the trial Court held that the plaintiffs are entitled to the amount with interest at 24% p.a. and hence to review the appeal judgment and pass such other just orders.
The plaintiffs-review petitioners (appellants) in the course of hearing reiterated the above contentions by drawing the attention of this Court to the trial Court''s decree and judgment and of this Court judgment sought for review in saying how they are justified in contending the impugned appeal judgment is by misreading of Section 34 C.P.C. and also the facts and law and that it is nothing but just to review.
Whereas it is the contention of the defendants-respondents that there is no error apparent on the face of record and even the cross-objections not received by condoning the delay and the SLP impugning the same ended in dismissal without admission, when it is brought to the notice of the appellate Court, for which entire matter is at large in reducing the rate of interest within the discretionary appellate power, there are no grounds to review and the remedy if at all is to file an appeal (2nd appeal from any question of law involved) and not to seek review as there is a distinction between error apparent on the face of record and any erroneous conclusion and as such, when the observation of the appellate Court is very clear with reason and application of law in its saying "the 24% p.a. interest granted from date of suit till date of realization by the trial Court appears to be penal without giving any reasons and keeping in view the provisions u/s 34 C.P.C. interest is granted to 12% p.a. from date of suit till date of decree and thereafter, at 6% p.a. till date of realization" and thereby sought for dismissal of the memorandum of review with costs.
a) The counsel for defendants-respondents to support the said contention has given a typed hand note running two pages which reads as follows:--
To maintain the review application, the review petitioner must satisfy the three requirements of Order 47 Rule 1 of C.P.C. i.e.
i) From discovery of new and important matter or evidence which after exercise of due diligence was not within his knowledge (or) could not be produced by him at the time when the decree was passed (or) order made;
ii) There is some mistake (or) error apparent on the face of the record in the judgment under review: and
iii) Or any other sufficient reasons.
The basic principle to entertain the review under Order 47 Rule 1 C.P.C. is to correct the errors but not to substitute a view.
The judgment under review cannot be reversed (or) altered taking away the rights declared and conferred by the Court under the said judgment.
Once judgment is rendered the Court becomes functus officio and it cannot set aside its judgment or the decree.
No inherent powers of review were conferred on the Court.
The review Court cannot look into the trial court judgment; it can look into its own judgment for limited purpose to correct any error or mistake in the judgment pointed out by the review petitioner without altering or substituting its view in the judgment under review.
The review court cannot entertain the arguments touching the merits and demerits of the case and cannot take a different view disturbing the finality of the judgment.
The review cannot be treated as appeal in disguise as the object behind review is ultimately to see that there should not be miscarriage of justice and shall do justice for the sake of justice only.
Review on the ground that the judgment is erroneous cannot be sustained.
From the respective contentions, the points now arise for consideration in deciding the memorandum of review are the following;
i) Whether there is any mistake or error apparent on the face of the record or any other sufficient reason to review the appeal judgment of this Court dated 20-12-2012- in reducing from 24% p.a. from date of suit till realization, to 12% p.a. from date of suit till date of decree and thereafter, at 6% p.a. till date of realization, in the commercial transaction?
ii) If so, whether the rate of interest awarded by the trial court at 24% p.a. is just or not and if not, what rate of interest that is just to award in the commercial transaction within the discretionary power of the appellate court on pre-lite. pendent-lite and post-lite?
iii) To what result?
Point-I:
Before coming to the facts further, from the rival contentions with reference to law to answer above point No. 1 formulated, it is just to refer the principles laid down in the expressions relied and the scope of Section 114 and Order 47 Rules 1 to 8 C.P.C. for this Court to sit in review of the earlier 1st appeal judgment of this Court rendered by one of the Hon''ble judges since retired, within its appellate powers u/s 107 and Order 41 Rules 24 & 33 C.P.C.
6.A) Section 114 Review-- Subject as aforesaid, any person considering himself aggrieved--
(a) by a decree or order from which an appeal is allowed by this Code, but from which no appeal has been preferred,
(b) by a decree or order from which no appeal is allowed by this Court, or
(c) by a decision on a reference from a Court of Small Causes, may apply for a review of judgment to the Court which passed the decree or made the order, and the Court may make such order thereon as it thinks fit.
Application of Section 114 C.P.C. from clause (a) referred above to the present facts is not in dispute as it is not the case of anybody that plaintiffs-appellants (review petitioners) filed any second appeal.
6.B) Order 47 Rule 3. Form of applications for review-- The provisions as to the form of preferring appeals shall apply mutatis mutandis, to applications for review. The filing of the review petition as in the form of appeal therefrom to maintain subject to other merits is also not in dispute from the respondents.
6.C) Order 47 Rule 4.
(1) Application where rejected-- Where it appears to the Court that there is not sufficient ground for a review, it shall reject the application.
(2) Application where granted-- Where the Court is of opinion that the application for review should be granted, it shall grant the same:
Provided that--
(a) no such application shall be granted without previous notice to the opposite party, to enable him to appear and be heard in support of the decree or order, a review of which is applied for; and
(b) no such application shall be granted on the around of discovery of new matter or evidence which the applicant alleges was not within his knowledge, or could not be adduced by him when the decree or order was passed or made, without strict proof of such allegation.
This is not a case of discovery of new matter or evidence to receive and support as a ground for review, much less to reject for want of any proof in that regard; but for to consider whether there is any mistake or error apparent on the face of the record or any other sufficient reason to review the appeal judgment of this Court within the scope of Order 47 Rule 1 C.P.C.
6.D) Order 47 Rule 1. Application for review of judgment--(1) Any person considering himself aggrieved--
(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred,
(b) by a decree or order from which no appeal is allowed, or
(c) by a decision on a reference from a Court of Small Causes,
(the above clauses a to c are with almost same wording of Section 114 C.P.C.-)
(emphasis is mine)
and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order.
(2) A party who is not appealing from a decree or order may apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of such appeal is common to the applicant and the appellant, or when, being respondent, he can present to the Appellate Court the case on which he applies for the review.
[Explanation--The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a around for the review of such judgment.]
As per Order 47 Rule 8. Registry of application granted, and order for re-hearing--when an application for review is granted, a note thereof shall be made in the register and the Court may at once re-hear the case or make such order in regard to the rehearing as it thinks fit.
6.E) From the above Order 47 Rule 1, it is to be seen whether there is any mistake or error apparent on the face of the record or any other sufficient cause for sitting against the earlier first appeal judgment sought for review.
E)(a). To decide the same, it is necessary to dwell into what is meant by mistake or error apparent on the face of record and what is meant by any other sufficient cause (to mean similar to the above and not every sufficient cause-emphasis mine) for review, as the basic principle from the above wording underlying to decide is to correct if there is any error or mistake or the like by review for rendering justice and to prevent injustice by such a rectification and not to substitute any opinion; as the scope of review is entirely different and very limited when compared to the scope of appeal from the facts that for the appellate Court, the powers are inherent and wide and coexistence with that of trial Court and entire matter is at large whereas for review the powers are very limited only to correct any mistake or error etc., to interfere by referring to the judgment under review sought to find out in order to cure for sake of justice and not to substitute some other opinion by going through entire material on record and re-appreciation of evidence for not an appeal in disguise.
E)(b). In this regard, from the decisions cited by both sides, the law is well laid down in the following:--
i) In Smt. Meera Bhanja Vs. Smt. Nirmala Kumari Choudhury, , the Court declared at paragraph Nos. 8 & 9 that:
It is well settled that the review proceedings are not by way of an appeal and have to be strictly confined to the scope and ambit of Order 47, Rule 1, CPC. In connection with the limitation of the powers of the court under Order 47, Rule 1, while dealing with similar jurisdiction available to the High Court while seeking to review the orders under Article 226 of the Constitution of India, this Court, in the case of Aribam Tuleshwar Sharma Vs. Aribam Pishak Sharma and Others, , speaking through Chinnappa Reddy, J., has made the following pertinent observations (paragraph No. 3):
It is true (as observed by this Court in Shivdeo Singh v. State of Punjab), there is nothing in Article 226 of the Constitution to preclude the High Court from exercising the power of review which inheres in every Court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it. But, there are definitive limits to the exercise of the power of review. The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found: it may also be exercised on any analogous ground; But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a court of appeal. A power of review is not to be confused with appellate power which may enable an appellate court to correct all manner of errors committed by the subordinate court.
Now it is also to be kept in view that in the impugned judgment, the Division Bench of the High Court has clearly observed that they were entertaining the review petition only on the ground of error apparent on the face of the record and not on any other ground. So far as that aspect is concerned, it has to be kept in view that an error apparent on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on points where there may conceivably be two opinions. We may usefully refer to the observations of this Court in the case of Satyanarayan Laxminarayan Hegde and Others Vs. Millikarjun Bhavanappa Tirumale, wherein. K.C. Das Gupta, J. speaking for the Court has made the following observations in connection with an error apparent on the face of the record:
An error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. Where an alleged error is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments, such an error cannot be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ.
ii) In Parsion Devi and Others Vs. Sumitri Devi and Others, the Supreme Court observed at paragraph Nos. 9 & 10 that:
Under Order 47 Rule 1 CPC. a judgment may be open to review inter alia if there is a mistake or an error apparent on the face of the record. An error which is not self-evident and has to be detected by a process of reasoning can hardly be said to be an error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC. In exercise of the jurisdiction under Order 47 Rule 1 CPC it is not permissible for an erroneous decision to be "reheard and corrected". A review petition, it must be remembered has a limited purpose and cannot be allowed to be "an appeal in disguise".
Considered in the light of this settled position we find that Sharma, J. clearly overstepped the jurisdiction vested in the Court under Order 47 Rule 1 CPC. The observations of Sharma, J. that "accordingly, the order in question is reviewed and it is held that the decree in question was of composite nature wherein both mandatory and prohibitory injunctions were provided" and as such the case was covered by Article 182 and not Article 181 cannot be said to fall within the scope of Order 47 Rule 1 CPC.
There is a clear distinction between an erroneous decision and an error apparent on the face of the record. While the first can be corrected by the higher forum, the latter only can be corrected by exercise of the review jurisdiction..........
iii) In S. Bagirathi Ammal Vs. Palani Roman Catholic Mission, the Supreme Court considered in detail as to what is an error apparent on the face of the record as contemplated by Order XLVII, Rule 1 C.P.C. It was observed at para 12 that:
An error contemplated under the Rule must be such which is apparent on the face of the record and not an error which has to be fished out and searched. In other words, it must be an error of inadvertence. It should be something more than a mere error and it must be one which must be manifest on the face of the record. When does an error cease to be mere error and becomes an error apparent on the face of the record depends upon the materials placed before the court. If the error is so apparent that without further investigation or enquiry, only one conclusion can be drawn in favour of the applicant, in such circumstances, the review will lie. Under the guise of review, the parties are not entitled to rehearing of the same issue but the issue can be decided just by a perusal of the records and if it is manifest can be set right by reviewing the order. With this background, let us analyse the impugned judgment of the High Court and find out whether it satisfies any of the tests formulated above.
The Apex Court ultimately concluded that if the judgment/order under review was vitiated by an apparent error or it was palpably wrong and also if the error was self-evident, review of such an order is permissible.
iv) In the recent past, the Supreme Court in Haryana State Industrial Development Corporation Ltd. and Others Vs. Mawasi and Others etc. etc., , reiterated in paras 33 and 34 that
In Lily Thomas, Vs. Union of India and Others, , R.P. Sethi, J., who concurred with S. Saghir Ahmad, J., summarised the scope of the power of review in the following words: 56....Such powers can be exercised within the limits of the statute dealing with the exercise of power. The review cannot be treated like an appeal in disguise. The mere possibility of two views on the subject is not a ground for review. Once a review petition is dismissed no further petition of review can be entertained. The rule of law of following the practice of the binding nature of larger Benches and not taking different views by the Benches of coordinated jurisdiction of equal strength has to be followed and practiced.
In Haridas Das v. Usha Rani Banik, the Court observed: 13....The parameters are prescribed in Order 47 CPC and for the purposes of this lis, permit the defendant to press for a rehearing ''on account of some mistake or error apparent on the face of the record or for any other sufficient reason''. The former part of the rule deals with a situation attributable to the applicant, and the latter to a jural action which is manifestly incorrect or on which two conclusions are not possible. Neither of them postulates a rehearing of the dispute because a party had not highlighted all the aspects of the case or could perhaps have argued them more forcefully and/or cited binding precedents to the court and thereby enjoyed a favourable verdict.
v) In the decision relied on by the respondents in H.A. Mohan Kumar and Others Vs. P. Muralidhar and Others, on the scope of review, no new principle is laid down but for referring to the above expressions of the apex Court as well as the expression in Sow Chandra Kante and Another Vs. Sheikh Habib, observing that a review thereof must be subject to the rules and cannot be lightly entertained since it is a serious step and reluctant resort to, it is proper only where a glaring omission or a patent mistake or like grave error had crept earlier by judicial fallibility; the expression in Northern India Caterers (India) Ltd. Vs. Lt. Governor of Delhi, that it is well settled that a party is not entitled to seek a review of a judgment delivered by this Court merely for the purpose of a rehearing a fresh decision of the case. The normal principle is that a judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so as held in Sajjan Singh Vs. State of Rajasthan, . For instance, if the attention of the Court is not drawn to a material statutory provision during the original hearing, the Court will revise its judgment as held in Girdhari Lal Gupta Vs. D.H. Mehta and Another, . The Court may also reopen its judgment if a manifest wrong has been done and it is necessary to pass an order to do full and effective justice as held in O.N. Mohindroo Vs. The District Judge, Delhi and Another, . In a civil proceeding, an application for review is, entertained only on a ground mentioned in Order 47 Rule 1 C.P.C. and in a criminal proceeding on the ground of an error apparent on the face of the record. A review proceeding cannot be equated with the original hearing of the case. The concurring with majority view of Justice Krishna Iyer is that - A plea for review, unless the first judicial view is manifestly distorted, is like asking for the moon. The forensic defeat cannot be avenged by an invitation to have a second look, hopeful of discovery of flaws and reversal of result. By referring to Lilly Thomas (supra), it was observed; it cannot be denied that review is the creation of a statute. The power or review is not an inherent power. It must be conferred by law as held in Patel Narshi Thakershi and Others Vs. Shri Pradyumansinghji Arjunsinghji, . The review is also not an appeal in disguise. It cannot be denied that justice is a virtue which transcends all barriers and the rules of procedures or technicalities of law cannot stand in the way of administration of justice. Law has to bend before justice. If the Court finds that error pointed out in the review petition was under a mistake and the earlier judgment would not have been passed but for erroneous assumption which in fact did not exist and its perpetration shall result in a miscarriage of justice, nothing would preclude the Court from rectifying the error.
vi) As held in S. Nagaraj and Others Vs. State of Karnataka and Another, , basic philosophy inherent in review is the universal acceptance of human fallibility. Yet in the realm of law, the Courts and even the statutes lean strongly in favour of finality of decision legally and properly made. Exceptions both statutorily and judicially have been carved out to correct accidental mistakes or miscarriage of justice. Even when there is no statutory provision and no rules were framed by the highest Court indicating the circumstances in which it could rectify its order, the Courts culled out such power to avoid abuse of process or miscarriage of justice and for that conclusion referred Rajendar Narayan Roy v. Bijay Govind Singh 1836 (1) Moors - P.C. 117 and Raja Prutvichanlal Chowdary v. Sukhraj Raj AIR 1941 FC (1)wherein, it was observed that it would be our opinion be intolerable and most prejudicial to the public interest if cases once decided by the Court could be reopened and reheard. "There is a statutory maxim which ought to be observed by all Courts of last resort - interest reipublicae ut sit finis litium (it concerns the state that there be an end of law suits. It is in the interest of the state that there should be an end of law suits). Its strict observance may occasionally entail hardship upon individual litigants, but the mischief arising from that source must be small in comparison with the great mischief which necessarily results from doubt being thrown upon the finality of the decisions of such a tribunal as this".
E)(b). Thus, from the above propositions of law on the scope of review, coming to the facts as to the case on hand requires review of the impugned judgment from any mistake or error apparent or other sufficient cause concerned:
i) At the cost of repetition - the observation of the Court in the appeal dismissal judgment dated 20-12-2012 (subject matter of review) in reducing the rate of interest is that, "24% p.a. interest granted from date of suit till date of realization by the trial Court appears to be penal without giving any reasons and keeping in view the provisions u/s 34 C.P.C., interest is granted at 12% p.a. from date of suit till date of decree and thereafter, at 6% p.a. till date of realization".
ii) That is the only observation and only reason and cause for the Court sitting in appeal against the trial Court''s judgment impugned by the Plaintiffs as Appellants so far as non-granting of mortgage preliminary decree, but for simple money decree by trial Court, without even cross-objections and even while dismissing the plaintiffs'' appeal confirming non-granting of mortgage preliminary decree by trial Court and from no even attack on the trial Courts personal decree for the suit claim with 24% p.a. interest from date of suit till realization, on the money transaction of commercial nature. The facts from bare perusal of the trial Court''s judgment with reference to the judgment under review establishes on its face to a look that the borrower and the lender of money and the purpose of borrowal are admittedly businessmen and for business purpose and apart from so called deposit of title deeds creating equitable mortgage of immovable property covered is the house property of said businessman, without need of going into the refusal of equitable mortgage relief sought in the appeal is correct or not; as only limited aspect assailed for review to dwell in is as to within its scope or not to sit against, for reducing of rate of interest invoking Section 34 C.P.C. with observation as 24% p.a. interest granted by trial Court is penal and thereby reduced to 12% p.a. till date of decree and later 6% p.a. till realization.
iii) Now, to decide the same prone to review or not within the scope of Order 47 Rule 1 C.P.C. referred above, the observation of rate of interest penal applies if at all invoked any debt relief laws like Usurious Loans Act (Central Act) 5 of 1918 amended by Act 8 of 1937 and again by A.P. Amended Act 26 of 1961. A perusal of the provisions of the Act, itself speaks the burden is on the person to claim the rate of interest is usurious and penal and far above market available lending rate of interest of the area and it is not the observation in the appeal judgment under review of any such evidence to arrive at any such finding. Apart from it, even under Usurious Loans Act, only the charging of penal interest or compound interest for agriculturists perse be presumed usurious and not any lending other than for agricultural purposes without proof and establishment of the same to claim benefit as laid down by the A.P. High Court Division Bench in 1974 (2) APLJ 85 : 1974 (2) An. W.R. 217. Here, it is clear from the trial Court''s judgment that the agreed rate of interest was 24% p.a. for the business purpose of the borrower and his son businessmen and thereby the A.P. (Telangana Area) Agricultural Debt Relief Act, 16 of 1956 also has no application even the parties are from part of the Telangana Area of Andhra Pradesh apart from no application of the A.P. (Andhra\\Area) Agricultural Debt Relief Act, 4 of 1938 (Rajaji'' Act). Then, the only scope if at all to interfere by the appellate Court to reduce the rate of interest from 24% p.a. granted by the trial Court is u/s 34 C.P.C.
iv) Section 34 C.P.C. reads that (1) Where and in so far a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum, as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:
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 6% p.a., 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 nationalized banks in relation to commercial transactions.
Explanation I: In this sub-section, "nationalized bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
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.
(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit shall not lie.
v) Thus, when the suit transaction is a commercial transaction within the meaning of the proviso and Explanation II to Section 34(1) C.P.C. which mandates that the Court can grant interest more than 6% though not exceeding contract rate of interest (to say 24% p.a. in the case on hand) as granted by the trial Court from date of decree till realization; By reducing pendent lite to 12% p.a. & post lite to 6% p.a. from date of decree till realization in the impugned first appeal decree now sought for review is on its face contrary to the mandate of Section 34 C.P.C. mainly in reducing to 6% p.a. post lite interest; leave about no reasons assigned to reduce to 12% from the contract rate of 24% p.a. from date of suit till date of decree on the principal sum adjudged which is the suit claim and thus, the appellate court''s finding now impugned in the review reading that, "24% p.a. interest granted from date of suit till date of realization by the trial Court appears to be penal without giving any reasons and keeping in view the provisions u/s 34 C.P.C., interest is granted at 12% p.a. from date of suit till date of decree and thereafter, at 6% p.a. till date of realization" is nothing but mistaken or inadvertent and definitely a misreading outcome of Section 34 C.P.C. and also the facts and law and it is nothing but just to review from the mistake which is also an error apparent on the face of record as stated above and also a sufficient cause to the review within the four corners of Order 47 Rule 1 C.P.C.
vi) The contention of the respondents-defendants that the appellate Court got power to reduce rate of interest from entire matter is at large irrespective of any cross-objections not filed and the finding not attacked, if it feels to sub-serve the ends of justice and the said impugned finding sought for review is one such within the powers conferred u/s 107 read with Order 41 Rule 24 and 33 C.P.C. is untenable as having power is different from wrong exercise of the power by reducing without sufficient reasons and by misreading of the provisions, which is thus not a mere erroneous finding for detection after through probe from re-appreciation of evidence on facts of the lis, but error apparent on its face.
E)(c). The principle laid down in the decisions relied upon in:-
i) Mahant Dhangir and Another Vs. Madan Mohan and Others, speaks that:- If the cross-objection filed under R. 22 of O. 41 CPC was not maintainable against the co-respondent, the Court could consider it under R. 33 of O. 41 CPC. R. 22 and R. 33 are not mutually exclusive. They are closely related with each other. If objection cannot be urged under R.22 against co-respondent, R. 33 could take over and come to the rescue of the objector. The appellate court could exercise the power under R. 33 even if the appeal is only against a part of the decree of the lower court. The appellate court could exercise that power in favour of all or any of the respondents although such respondent may not have filed any appeal or objection. The sweep of the power under R. 33 is wide enough to determine any question not only between the appellant and respondent, but also between respondent and correspondents. The appellate court could pass any decree or order which ought to have been passed in the circumstances of the case. The appellate court could also pass such other decree or order as the case may require. The words "as the case may require" used in R. 33 of O. 41 have been put in wide terms to enable the appellate court to pass any order or decree to meet the ends of justice. What then should be the constraint? We do not find many. We are not giving any liberal interpretation. The rule itself is liberal enough. The only constraint that we could see, may be these: That the parties before the lower court should be there before the appellate court. The question raised must properly arise out of the judgment of the lower court. If these two requirements are there, the appellate Court could consider any objection against any part of the judgment or decree of the lower court. It may be urged by any party to the appeal. It is true that the power of the appellate court under R. 33 is discretionary. But it is a proper exercise of judicial discretion to determine all questions urged in order to render complete justice between the parties. The Court should not refuse to exercise that discretion on mere technicalities.
ii) The decision in S. Nazeer Ahmed Vs. State Bank of Mysore and Others, from paragraph No. 8 also reiterates the same principle that Order 41 Rule 33 enables the appellate Court to pass any decree that ought to have been passed by the trial Court or grant any further decree as the case may require and the power could be exercised notwithstanding that the appeal was only against a part of the decree and could even be exercised in favour of the respondents, though the respondents might not have filed any appeal or objection against what was decreed.
iii) No doubt, from the above even the powers of the appellate Court are wide and at par with trial Court to grant any just relief subject to limitation which is only by coming to the conclusion that such finding out to have been arrived by the trial Court from any factual matrix to so arrive and substantiate from the entire matter is at large. There is no such finding though required in the impugned finding under review. The appellate Court can exercise its powers provided the facts are there from the oral and documentary evidence on record as per Rule 24 and from the parties on record as per Rule 33 of Order 41 and at least, one can completely represent other non-parties under Rule 4 of Order 41 irrespective of no cross-appeal or no cross-objections or no attack on the findings; as right of the parties is different from power of the court, but for to exercise to put an end to the litigation and to prevent further litigation and to do complete justice and to give finality to the lis and mainly to rectify any manifest error and in the ends of justice, otherwise merely because some other view is possible, the appellate Court cannot interfere with the trial Court''s findings. In the present facts, there is no such scope and even so to exercise what was mentioned of reducing the rate of interest u/s 34(1) C.P.C. is by ignoring the proviso and Explanation-II of it and misreading which is not rendering justice much less complete justice, but for interfering with the finding within the discretion arrived by the trial Court by ignoring the limitations on exercise of power under Order 14 Rules 24 & 33 C.P.C.
E)(d). From the above propositions of law on the scope of review, it is also necessary to detail meaning and definition of interest and its relation to loan and debt and further, scope on grant of interest and rate of interest and interest on interest and what is meant by principal sum adjudged and on such principal sum used twice in Section 34 CPC and difference between Order 34 Rule 11 CPC and Section 34 CPC and what is meant by substantive or pre-lite interest and it scope and what is meant by non-substantive and discretionary interest of pendent-lite and post-lite and the scope and in particular from difference between agricultural and non-agricultural and business/commercial transaction and the limitations on rate of interest in that area from nature of debt.
i) INTEREST: Black''s Law Dictionary (7th Edition) defines ''interest'' inter alia as the compensation fixed by agreement or allowed by law for the used or detention of money, or for the loss of money by one who is entitled to its use; especially, the amount owed to a lender in return for the use of the borrowed money.
According to Stroud''s Judicial Dictionary of Words and Phrases (5th edition) interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money.
As per Section 2(1) of the Usurious Loans Act, interest is a return to be made, over and above what was actually lent, where the sum is charged or sought to be recovered specifically by way of interest or otherwise.
Debt is dependant upon liability to pay in present or in future an ascertainable sum of money and debt includes interest and loan together.
Interest is a premium paid for use of money Mahant Narayana Dossjee Varu Vs. The Board of Trustees, the Tirumalai Tirupati Devasthanamas, Tirupathi, . Loan is the amount that lent. Debt is the amount that is due. Thus, loan is the principal sum and debt is inclusive of interest on such principal sum K.I. Suratwala and Co. Vs. Mahmud Bidi Works Sholapur and Others, .
In Dr. Shamlal Narula Vs. Commissioner of Income Tax, Punjab, , the Apex Court held that interest is paid for the deprivation of use of the money. The words "interest" and "compensation" are sometimes used interchangeably and on other occasions they have distinct connotation. "Interest" in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owned to another. In its narrow sense, "interest" is understood to mean the amount which one has contracted to pay for use of borrowed money...:......In whenever category "interest" in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money, belonging to another, or for the delay in paying money after it has become payable.
The Constitution Bench of the Apex Court in Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, opined that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages.
The essence of interest in the opinion of Lord Wright, in Riches v. Westminister Bank Ltd. [1947] 1 All ER 469 at 472 is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or, conversely, the loss he suffered because he had not that use.
The Constitution Bench of the Apex Court in Central Bank of India Vs. Ravindra and Others, held that, the general idea is that the creditor is entitled to compensation for the deprivation; the money due to creditor was not paid, or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation whether the compensation was liquidated under an agreement or statute.
There are three divisions of interest according to the period for which interest is allowed by the Court1, viz.,
(1) Pre-lite. interest accrued due prior to the institution of the suit on the principal sum (due) adjudged. Interest for the period anterior to institution of suit is not a matter of Procedure as it is referable to substantive law and can be sub-divided into two sub-heads; (i) where there is a stipulation for the payment of interest at a fixed rate (contract rate) and (ii) where there is no such stipulation as per statutory provisions providing certain rate of interest and in its absence as per the interest Act (from date of demand (from date of service of demand notice) and at prevailing market rate and bank lending rate as guidance).
Though, the pre lite interest was awarding on grounds of equity also(from common law principle of justice, equity and good conscience) by the courts as per certain precedents including from, Bengal Nagpur Rly. Co. Ltd. v. Ruttamji Ramji of Privy Council AIR 1937 PC 67 and following it of the Apex Court in Satinder Singh and Others Vs. Amrao Singh and Others, and Hirachand Kothari (Dead) by Lrs Vs. State of Rajasthan and Another, and from the wording of old Interest Act, 1839 proviso to Section- 1 -which reads that "interest shall be payable in all cases in which it is now payable by law" and the same since repealed by the Interest Act, 1978 with no such and similar provision, no interest appears to be awarded on equitable grounds so far as pre-lite substantive interest concerned, however held that it requires a detailed examination in an appropriate case as expressed in Life Insurance Corporation of India and Another Vs. Smt. S. Sindhu, . Thus, the observations in the larger bench (five judges bench) decision of the High Court in The Andhra Pradesh State Road Transport Corporation and Another Vs. B. Vijaya and Others, may also require reconsideration to the extent of interest pre lite can be awarded on equitable grounds as a Court of equity, though as on date, it is a binding precedent
If there is a stipulation for the rate of interest, from the parties voluntarily agreed upon, the Court must allow that rate up to the date of the suit subject to three exceptions; (i) any provision of law applicable to money lending transactions, or Usurious Loans Act or any other debt relief law governing the parties and having an overriding effect on any stipulation for payment of interest voluntarily entered into between the parties; (ii) if the rate is penal (under any debt relief law or market rate), the Court must award at such rate as it deems reasonable (as per prevailing market rate); (iii) even if the rate is not penal the Court may reduce it if the interest is found excessive and the transaction was substantially unfair (subject to such observations and conditions supported by reasons).
If there is no express stipulation for payment of interest and rate of interest; the plaintiff is not entitled to interest much less at the rate claimed except on proof of mercantile or trade usage having the force of law or statutory right to interest like by Section 80 of the Negotiable Instruments Act & Section 23of the Trusts Act or Section 61 of the Sale of Goods Act or the like or an implied agreement and under the provisions of the Interest Act vide decision Vithal Das Vs. Rupchand and Others, .
(2) Pendent-lite. In addition to pre-lite interest, it is the additional interest on the principal sum adjudged or declared due from the date of the suit either at contract rate if reasonable or at such rate as the Court deems reasonable in the discretion of the Court (as per Section 34 CPC till date of decree or under Order 34 Rule 11 C.P.C. in case of mortgage debt if contract rate is unreasonable and excessive to reduce even from date of suit till expiry of the period of redemption) as not a substantive law;
(3) Post-lite. In addition to pre-lite interest on principal sum and pendent-lite interest on the principal sum adjudged or found due, it is the further interest on such principal sum (as per Section 34 CPC or under Order 34 C.P.C. as not a substantive law, from the date of the decree to the date of the payment and in mortgage decree from date of preliminary decree till expiry of period of redemption and thereafter till realization/payment as the case may be in any decree for money held due with or without charge preliminary or final or partly final decree) or to such earlier date as the Court thinks fit, in the discretion of the Court, at a rate not exceeding 6 per cent per annum except where the transaction is a business or commercial one to grant above 6 percent but does not exceed contract rate as also laid down by the larger bench of the AP High court in APSRTC v. Vijaya (supra).
"Such Principal Sum"-meaning of: While decreeing a suit if the decree be for payment of money, the Court would adjudge the principal sum on the date of the suit. The Court may also be called upon to adjudge interest due and payable by the defendant to the plaintiff for the pre-suit period which interest would, on the findings arrived at and noted hereinabove, obviously be other than such interest as has already stood capitalized and having shed its character as interest, has acquired the colour of the principal and having stood amalgamated in the principal sum would be adjudged so. The principal sum adjudged would be the sum actually loaned plus the amount of interest on periodical rests which according to the contract between the parties or the established banking parties has stood capitalized.
It is well settled that (Central Bank of India v. Ravindra supra) the use of the word ''may'' in Section 34 CPC confers a discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit. Such interest, so far as future interest is concerned may commence from the date of the decree and may be made to stop running either with payment or with such earlier date as the Court thinks fit.
The expression "on such principal sum" as occurring twice in the latter part of Section 34(1), ''the principal sum adjudged'' should continue to be assigned to "principal sum" at such other places in Section 34(1) where the expression has been used qualified by the adjective "such" that is to say, as "such principal sum. Recognition of the method of capitalization of interest so as to make it a part of the principal consistently with the contract between the parties or established banking practice does not offend the sense of reason, justice and equity. As we have noticed such a system has a long established practice and a series of judicial precedents upholding the same.. Secondly, the underlying principle as noticed in several decided cases is that when interest is debited to the account of the borrower on periodical rests, it is debited because of its having fallen due on that day. Nothing prevents the borrower from paying the amount of interest on the date it falls due. If the amount of interest is paid there will be no occasion for capitalizing the amount of interest and converting it into principal. If the interest is not paid on the date due, from that date the creditor is deprived of such use of the money which it would have made if the debtor had paid the amount of interest on the date due. The creditor needs to be compensated for deprivation. We are, therefore, of the opinion that the expression "the principal sum ad-judged" may include the amount of interest, charged on periodical rests, and capitalized with the principal sum actually advanced, so as to become an amalgam of principal in such cases where it is permissible or obligatory for the Court to hold so. Where the principal sum (on the date of suit) has been so adjudged, the same shall be treated as "principal sum" for the purpose of "such principal sum" - the expression employed later in Section 34 of C.P.C. The expression "principal sum" cannot be given different meanings at different places in the language of same section, i.e. Section 34 of C.P.C. A creditor can charge interest from his debtor on periodical rests and also capitalize the same so as to make it a part of the principal. Such a course can be justified by stipulation in a contract voluntarily entered into between the parties or by a practice or usage well established in the world to which the parties belong. Such practice is to be found already in vogue in the field of banking business. Such contract or usage or practice can stand abrogated by legislation such as Usury Laws or Debt Relief Laws and so on.
However, ''penal interest'' has to be distinguished from ''interest''. Penal interest is an extraordinary liability incurred by a debtor on account of his being a wrong-doer by having committed the wrong of not making the payment when it should have been made, in favour of the person wronged and it is neither related with nor limited to the damages suffered. Thus, while liability to pay interest is founded on the doctrine of compensation, penal interest is a penalty founded on the doctrine of penal action. Penal interest can be charged only once for one period of default and, therefore, penal interest cannot be permitted to be capitalized. Further interest i.e., interest on interest, whether simple or compound or penal cannot be claimed on the amount of penal interest.
No doubt, agricultural borrowings are to be treated on a different pedestal. Even the banks cannot charge interest for agricultural lending other than half yearly rests for seasonal crops and annual rests for other purposes even to compound only as per the RBI circular instructions and directions being guidelines. Even coming to private lending/borrowing, agriculturists cannot be charged with more than 12% p.a. as per Act 4 of 38 for the other than Telangana area of the state of Andhra Pradesh and Act 16 of 1956 in Telangana area of the state of Andhra Pradesh apart from the fact that the Usurious Loans Act always applies to the private lending in considering rate of interest is excessive or reasonable. Even the decision relied upon by the respondents-defendants in State Bank of India v. S.H. Associates 2011 (4) ALD 299 which speaks that even in commercial transactions, Court is empowered to grant interest lesser than contract rate is not in dispute but for to say what is the reasonable rate of interest applicable to consider. Even in a business transaction for charging pre-lite compound interest, there must be a clear written stipulation/contract or from any statutory provision- as held in State of Haryana and Others Vs. S.L. Arora and Company, .
So far as bank transactions concerned as per the contract rate and as per RBI Guidelines fixing interest rate from time to time with a minimum and maximum not exceeding the ceiling on rate of interest to exercise within and as per Section 21A of the Banking Regulation Act, 1949 amended by Act 1 of 1984; the debt relief laws and Usurious loans Act to apply and to scale down interest there under have no application. However the Court can under Order 34 Rule 11 and/or u/s 34 CPC reduce the pendent-lite an post-lite interest rate even from contract rate as referred above and as laid down in Corporation Bank Vs. D.S. Gowda and Another, .
The Apex Court in D.D.A. and Others Vs. Joginder S. Monga and Others, held categorically that u/s 34 CPC, so far as pendent-lite and post-lite interest concerned is no doubt at the discretion of the Court so to fix, however to exercise judiciously to fix is having regard to the principle of restitution and even the Appellate court can reduce rate of interest, subject to reasons. It was by taking note of drastic fall in bank rate of interest, the Apex Court reduced the post lite interest from 18% to 9% p.a.
The Apex Court in Mahesh Chandra Bansal v. Krishna Swaroop Singhal, (1997) 10 SCC 681 held categorically that u/s 34 CPC, so far as pendent-lite and post-lite interest concerned is no doubt at the judicial discretion of the Court and granted at 12% p.a. for the amount due by the partnership firm.
6E(e). From the above legal position, the trial Court in its judgment granted 24% p.a. for the borrowed amount of Rs. 6,00,000/- found as the sum adjudged of Rs. 6,12,900/- suit claim from date of suit 22-01-1998 till realization which from the above propositions of law appears to be excessive, more particularly from the steep fall in bank rate of interest even. However, the fact remains the order under review of this Court now the subject matter concerned, the only point formulated was whether there was valid equitable mortgage created by the defendants and in answering the same without even formulating any point for consideration regarding rate of interest excessive or not reduced the rate of interest from date of suit from 24% to 12% till date of decree and thereafter 6%.
6E(f). Having regard to the above, from the awarding of 6% p.a. interest post lite from date of decree till realization referring to Section 34 CPC by this Court in the Appeal decree and judgment sought for review is contrary to the very wording of Section 34(1) proviso and Explanation II as discussed above and without assigning reasons to reduce from what the trial Court fixed, the same is if not even strictly an error apparent on the face of the record is definitely a mistake and erroneous assumption of, it can grant 6% without reasons, despite that right and discretion do not exist and its perpetrations'' shall result in a miscarriage of justice, to rectify that mistake prone to review as held in Narshi Thakershi (supra) and thus, it is a fit case for review. Accordingly, the point 1 for consideration is answered holding that the application for review can be allowed to that extent.
Point II:
In view of the finding on point 1 for consideration, the appellate Court also got power to reduce rate of interest from what was granted by trial Court subject to reasons and discussion how the trial Court awarded rate of interest is unfair and excessive to interfere with such discretionary power exercised by trial Court.
7(a). It is from the reason that in business and commercial transactions granting of interest lesser than contract rate can ordinarily be ruled out, unless there is a finding of excessive to the market rate and bank lending rate to reduce.
8(b). From the above, now coming to decide any need of further hearing in fixing reasonable rate of interest concerned, from the matter already heard at length in the application for review and from the expression of the Apex Court in S. Bagirathi Ammal (supra), the parties are not entitled to rehearing of the same issue but the issue can be decided just by a perusal of the records and if it is manifest can set right by reviewing the impugned order; from the above though no reasons given to reduce in the finding under review as per the expressions of Apex Court discussed (supra) from steep fall in bank lending rate of interest, the reduction from 24% to 12% interest awarded by this Court from date of suit to date of decree is since just and reasonable, there is nothing to interfere.
8(c). However, insofar as post lite interest from date of decree till realization concerned, from the transaction is a commercial one within the meaning of Section 34 C.P.C. and the rate of interest can be charged above 6% p.a. and there are no special reasons given by the appellate Court even to reduce to 6% p.a. though for pendent lite fixed at 12% p.a. and from the several expressions referred, indicate the rate of interest awarded after decree at 9% to 12% is reasonable in such lending and there is no reason to reduce from 12% that is what the rate of interest awarded for pendent-lite, the same rate is just to award in the commercial transaction for post-lite also within the discretionary power of the appellate court and thus the point-11 is accordingly answered.
Point III
From the above and in the result, the Review A.S.M.P. No. 2386 of 2013 is allowed to the extent to review and reopen the post-lite rate of interest from date of decree till date of realization concerned and allowed by modifying the same by fixing the rate of interest from date of decree till date of realization at 12% p.a. instead at 6%. There is no order as to costs on this review application.
1 See also Mulla on C.P.C. commentary u/s 34 C.P.C. & or 34 Rule 11 C.P.C.