AI Structured Summary
Not yet generated for this judgment
Judgment
The present application is filed under Section 114 read with Order XLVII Rule 1 and 2 of the Code of Civil Procedure seeking review of the judgment dated 24/04/2025 passed in Second Appeal No.539 of 2019, with a further prayer that the judgment and decree of the learned First Appellate Court awarding interest at the rate of 18% per annum be interpreted as a decree awarding interest at the rate of 18% per annum with monthly rests.
The applicant had filed Summary Civil Suit No.763 of 2003 against the non-applicant. The said suit was subsequently renumbered as Special Civil Suit No.152 of 2010. The suit was filed for recovery of an amount of Rs.20,65,275.63. The applicant/plaintiff claimed interest under the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as ‘SSI Act’ for the sake of brevity). The suit was dismissed by the learned Trial Court holding that, after repeal of the said Act of 1993, it did not have jurisdiction to entertain the suit. The applicant/plaintiff preferred an appeal, which came to be registered as Regular Civil Appeal No.282 of 2016 and was allowed vide judgment and decree dated 23/08/2019. The learned First Appellate Court held that the applicant/plaintiff had proved its claim and was accordingly entitled to receive interest at the rate of 18% per annum from 01/10/1997.
Aggrieved by the aforesaid decree passed by the learned First Appellate Court, the defendant/non-applicant preferred Second Appeal No.539 of 2019 before this Court. An order was passed in the Second Appeal directing the present non-applicant to deposit 75% of the decretal amount for entertaining the appeal. The non-applicant deposited an amount of Rs.57 lakhs, calculating the decretal amount with 18% simple interest. The appeal was heard finally and decided vide judgment dated 24/04/2025. The appeal filed by the respondent was dismissed on merits. However, while dealing with the objection with respect to maintainability of the appeal on account of failure to deposit 75% of the decretal amount, this Court held that the learned First Appellate Court had not directed payment of interest at the rate of 18% per annum by compounding the same with monthly rests. Although it was held on merits that the applicant/plaintiff was entitled to compound interest at the rate of 18% per annum with monthly rests, while interpreting the decree passed by the learned First Appellate Court, this Court recorded that the decree was for payment of simple interest at the rate of 18% per annum. It was further held that, in the absence of any substantive appeal or cross-objection, the contention of the applicant/plaintiff regarding payment of compound interest could not be entertained.
The applicant/plaintiff has filed the present application seeking review of the aforesaid observations with respect to the interpretation of the decree passed by the learned First Appellate Court.
It is the contention of Mr. Shridhar Purohit, learned Advocate for the applicant, that the learned First Appellate Court had framed points for determination while deciding the appeal on merits, one of which was with respect to the entitlement of the applicant to claim interest under the provisions of the SSI Act, 1993, and the said point was answered in favour of the applicant/plaintiff. Mr. Shridhar Purohit contends that it is a well-settled legal proposition that a decree must follow the judgment and should be interpreted in the light of the reasons recorded in the judgment. The learned Advocate argues that, although the words “compound interest” are not used in the operative order or the decree, the same is required to be interpreted in the light of the findings recorded by the learned First Appellate Court holding that the applicant/plaintiff was entitled to receive interest as per the provisions of the SSI Act, which provide for payment of compound interest with monthly rests. The learned Advocate argues that this is an error apparent on the face of the record in the judgment passed by this Court in the Second Appeal. Strong reliance is placed on the judgments of the Hon’ble Supreme Court in the cases of Commissioner of Customs vs. Canon India Private Limited, reported in 2025 (4) SCC 509, Board of Control for Cricket, India & Anr. vs. Netaji Cricket Club & Ors., reported in 2005 (4) SCC 741, and Deo Narain Singh v. Daddan Singh, reported in 1986 Supp SCC 530.
Per contra, Mr. Atul Pathak, learned Advocate for the non-applicant/defendant, argues that the application is in the nature of an appeal in the guise of a review. The learned Advocate argues that the contents of the application do not fall within the narrow compass of Section 114 read with Order XLVII Rule 1 of the CPC. It is contended that, in the absence of any direction for payment of compound interest in the decree passed by the learned First Appellate Court, this Court could not have interpreted the decree as one for payment of compound interest, particularly when the applicant had not challenged the decree passed by the learned First Appellate Court either by filing a substantive appeal or by lodging cross-objection. The learned Advocate relies upon the judgments of the Hon’ble Supreme Court in the case of Murali Sundaram v. Jothibai Kannan, reported in 2023 (13) SCC 515, and another judgment of the Madhya Pradesh High Court in the case of State of Madhya Pradesh and Others vs. Dimmaji Rao Kadam, 2025 MPHC-GWL 7173.
Section 17 of the SSI Act provides that an appeal at the behest of the buyer will not be maintainable unless 75% of the amount decreed is deposited by the buyer with the Appellate Court. As mentioned in paragraph No.3 above, the non-applicant had deposited 75% of the amount by calculating simple interest at the rate of 18% per annum. The applicant filed an application for dismissal of the appeal, being Civil Application (CAS)No.1061 of 2022, on the ground that the amount deposited was less than 75%, as it was calculated by applying simple interest at the rate of 18% per annum, rather than 18% per annum compound interest with monthly rests. The question of maintainability was kept open to be decided at the stage of final hearing of the appeal. It was, therefore, necessary to decide the question as to whether the learned First Appellate Court had directed payment of simple interest or compound interest. It is in this context that the interpretation of the decree passed by the learned First Appellate Court fell for consideration in the Second Appeal.
This Court, while dealing with the contention with respect to payment of interest, has observed that, in view of Section 4 of the SSI Act, the applicant was entitled to receive interest at the rate of 1.5 times the prime lending rate of the State Bank of India, and that the interest was required to be compounded with monthly rests in view of Section 5 of the said Act. Having held so, this Court referred to the operative clause in the judgment and decree passed by the learned First Appellate Court and noticed that the learned Appellate Court had not passed a decree for payment of compound interest.
The learned First Appellate Court has dealt with the issue of payment of interest in paragraph No.26 of the judgment. Perusal of paragraph No.26 will indicate that reference is made to Section 4 of the SSI Act. Accordingly, it is held that the applicant is entitled to interest @ 18% per annum. However, reference is not made to Section 5 of the SSI Act, which provides for compounding of interest with monthly rests. It is, therefore, that while deciding the Second Appeal, this Court has expressed that, although the learned First Appellate Court had held that the applicant/plaintiff was entitled to interest as per the provisions of the SSI Act, it had not stated that the interest was required to be compounded. In fact, the learned First Appellate Court has not discussed Section 5 of the SSI Act and, therefore, the decree does not contemplate compounding of interest with monthly rests.
This Court was not dealing with the correctness or otherwise of the judgment and decree at the behest of the applicant/plaintiff, since the applicant/plaintiff had not filed an appeal or cross-objection. The reasons recorded in the Judgment and the operative clause in the judgment and the decree also do not state that compound interest is payable. Since the applicant/plaintiff had not preferred an appeal or cross-objection, this Court was only required to interpret the decree and not to evaluate its correctness.
The submission of Mr. Shridhar Purohit that the decree must be interpreted in the light of the judgment is legally sound and is also recognized by Order XX Rule 6 of the CPC, which states that a decree must agree with the judgment. However, in the present case, the judgment by the learned First Appellate Court itself does not hold that the applicant is entitled to receive compound interest. Therefore, the decree by the learned First Appellate Court cannot be interpreted as a decree for payment of compound interest.
There can be no dispute with respect to the legal principles enumerated in the authorities relied upon by both sides. However, in the light of the reasons recorded above, in the considered opinion of this Court, the contention raised in the application cannot be entertained under Section 114 read with Order XLVII of the CPC.
The application for review is, therefore, rejected.