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Judgment
Smt. R.S. Dalvi, J.
Rule, returnable forthwith. Heard by consent.
A very short point with regard to computation and calculation of interest on the principal amount adjudged and decreed is the subject matter of this writ petition. The respondents have obtained the decree. The decree is for principal amount as well as interest thereon. The operative part of the judgment upon which the decree is passed reads thus :
The suit stands partly decreed. The defendants are hereby liable and therefore are directed to pay to the plaintiffs a sum of Rs.40,000/-and interest on the same at the rate of 18 % p.a. from 1.7.81 till the date of institution of the suit. The defendants are also hereby directed to pay a further sum towards interest at the same rate on the sum of Rs.40,000/-from the date of the suit till the date of the decree and further interest at the same rate on the sum of Rs.40,000/-from the date of the decree till the date of payment, including the costs incurred in the suit.
Having regard to the various sums of money paid by the defendants after institution of the suit, the plaintiffs shall be entitled to claim the balance sum within a period of 30 days from the date of the decree.
Admittedly, the judgment debtor has paid Rs.1,40,000/-in various installments on various dates to the decree holder. The reading of the judgment shows that on the principal amount of Rs.40,000/-interest @ Rs.18 % is granted. The decree further shows that the plaintiff would be entitled to claim the "balance sum". That is the balance sum remaining unpaid. Hence, it contemplates part payment made from time to time.
The learned Judge in the impugned judgment has rightly considered that the compound interest is neither payable nor decreed as that would be in the nature of penalty. The interest which is granted is simple interest. That simple interest is @ Rs.18 % p.a. The meaning of the term "interest" in this context shown in the Oxford English Dictionary is
money paid for the use of money lent or for delaying repayment of a debt.
Hence for payment of interest a debt must exist. The money lent must also have remained unrepaid.
Interest is payable and grantable u/s 3(1) of the Interest Act,1978 for the amount claimed in the suit and u/s 34(1) of the C.P.C. on the decreetal sum adjudged from the date of the suit. Section 3(1) of the Interest Act and Section 34(1) of the C.P.C. run thus:
Section 3 of the Interest Act -Power of court to allow interest. -(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,
(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings:
Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.
Section 34 of the C.P.C. -Interest - (1) Where and in so far as 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 six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rte at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
Explanation I- In this sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act,1970 (5of 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.
Hence, the interest must be only upon the principal amount which is debt adjudged and payable u/s 3 of the Interest Act. No interest amount can be charged upon the principal amount which has been repaid because that would no longer be debt due and payable. On that fundamental principle governing the computation and calculation of interest the judgment and decree passed on 29.9.1992 shall have to be read.
The Advocate on behalf of the decree holder has contended that the judgment and decree is for interest on the principal sum of Rs.40,000/-throughout (no matter the part payments made) and has become final. The Executing Court cannot go behind the judgment and decree passed. The Executing Court, therefore, has to see that upon principal amount of Rs.40,000/-simple interest @ Rs.18 % p.a. is recovered by the decree holder. The Executing Court must also see that the amount to be recovered by the decree holder is the "balance sum." The balance sum is after taking into account and deducting from time to time the part payments made.
The decree or the judgment which cannot be read in the aforesaid terms or which is not passed in the aforesaid term is a nullity. A decree which is a nullity can be challenged at any time when it is sought to be enforced. The decree which is a nullity has not to be appealed against only.
In this case the judgment debtor has made part payments from time to time. Those part payments shall have to be considered precisely from the dates on which they were paid. Upon such part payments being made, the decreetal amount with regard to the principal sum decreed would become lessened to that extent. The interest which is calculable and computable would be on the "balance amount" remaining unpaid only. The interest being calculated throughout on Rs.40,000/-is entirely incorrect and the decree, if passed to that extent is a nullity. In fact the judgment and decree shall have to be interpreted such that it would not be construed as a nullity. The reference to the "balance sum" makes the position very clear and shows that the judgment and decree is in accordance with law. Hence, as per law for payment of interest and the judgment and decree for the principal amount and considering the "balance sum" the amount yet payable shall have to be calculated after deducting past payment made from the principal amount and calculating interest on the balance sum at the rate granted by the trial Court. The Executing Court shall, therefore, recomputed and recalculate the amounts payable and paid under the judgment and decree dated 29.9.1992.
The Executing Court shall give due credit to the precise amounts paid from the dates on which they are paid to show the principal amount having been lessened to that extent so that the plaintiff can claim the remainder of the principal amount shown as "balance sum" and simple interest @ Rs.18% p.a. on such balance sum as would remain due and payable from time to time by the judgment debtor.
The computation of the decree holder of interest amount throughout on the principal sum of Rs.40,000/-is, therefore, rejected as completely incorrect. Rule is made absolute to that extent. The writ petition is disposed of accordingly. This order is stayed for six weeks. During the period of stay no further execution shall be made.