Section 34 of CPC – Interest deals with the award of interest in civil suits. The provision empowers the court to award interest on the principal sum adjudged from the date of the suit to the date of the decree, and from the date of the decree to the date of payment.
Section 34 of CPC – Discretion of the Court
The power to award interest under Section 34 of CPC is a discretionary power. This means that the court is not required to award interest in every case. The court must consider the specific circumstances of each case before awarding interest.
Section 34 of CPC – Factors Considered by the Court
When deciding whether or not to award interest, the court will consider a number of factors, including:
- The nature of the suit.
- The conduct of the parties.
- The delay in the disposal of the suit.
- The prevailing commercial rate of interest.
Types of Interest
The court can award two types of interest under Section 34 of CPC:
- Pre-decree interest: This is interest that is awarded on the principal sum adjudged from the date of the suit to the date of the decree.
- Post-decree interest: This is interest that is awarded on the principal sum adjudged from the date of the decree to the date of payment.
Rate of Interest – Section 34 of CPC
The court has the discretion to award interest at any rate it deems reasonable. However, the rate of interest cannot 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.
Execution of Decree
If the judgment debtor fails to pay the decree, the judgment creditor can apply to the court for an execution order. The execution order will authorize the judgment creditor to enforce the decree against the property and person of the judgment debtor. The judgment creditor can also recover interest on the decree amount from the date of the decree to the date of payment.
Section 34 of CPC is an important provision that empowers the court to award interest in civil suits. This provision is designed to compensate the judgment creditor for the loss that they have suffered due to the delay in the payment of the decree amount.
Case Laws
Vijayalakshmi vs. Srinivasan (2003) 9 SCC 27
In this case, the Supreme Court held that the power to award interest under Section 34 of the CPC is a discretionary power that must be exercised judicially. The court also held that the power should not be used to harass or embarrass the judgment debtor.
The facts of the case were as follows: The plaintiff filed a suit against the defendant, claiming damages for defamation. The plaintiff did not specifically claim interest in their plaint. The defendant failed to appear in court and the plaintiff was awarded a decree ex parte. The plaintiff then applied to the court for interest on the decree amount.
The court held that it had the power to award interest on the decree amount even though the plaintiff had not specifically claimed interest in their plaint. The court also held that it was not necessary for the plaintiff to prove that they had actually suffered any loss due to the delay in the payment of the decree amount.
The court further held that the rate of interest to be awarded was a matter of discretion. The court awarded interest at the rate of 6% per annum from the date of the suit to the date of the decree.
Union of India vs. M/s. Birla Brothers Ltd. (1991) 2 SCC 646
In this case, the Supreme Court held that the court can award interest at a rate different from the contractual rate of interest, if it deems it necessary to do so.
The facts of the case were as follows: The Government of India filed a suit against Birla Brothers Ltd., claiming damages for breach of contract. The contract between the parties did not specify the rate of interest that would be payable on the decree amount in the event of a breach of contract.
The court held that it was not bound to award interest at the contractual rate of interest. The court stated that the purpose of awarding interest is to compensate the judgment creditor for the loss that they have suffered due to the delay in the payment of the decree amount. The court held that the court can award interest at a rate different from the contractual rate of interest, if it deems it necessary to do so to compensate the judgment creditor for their loss.
The court awarded interest at the rate of 12% per annum from the date of the suit to the date of the decree.
These are just two examples of case laws on Section 34 of the CPC. There are many other cases that have dealt with different aspects of this provision. It is important to note that the law in this area is constantly evolving, and it is always advisable to consult with a lawyer if you have any questions about the award of interest in your case.