Interest
Full Text
(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 rate 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 (5 of 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 the 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 therefor shall not lie.
Plain English Summary
Section 34 regulates the award of interest in money decrees across three distinct phases: pre-suit interest (governed by contract/substantive law), pendente lite interest (discretionary from suit institution to decree), and post-decree future interest (capped at 6% p.a. for non-commercial debts, or contractual/nationalised bank lending rates for commercial transactions). Silence in the decree operates as a statutory bar against claiming future interest via a separate suit.
Key Legal Elements
- Three-Tiered Interest System: Governs pre-suit interest, pendente lite interest (suit to decree), and post-decree future interest (decree to payment).
- 6% Default Ceiling: Future interest on non-commercial money decrees is capped at a maximum of 6% per annum.
- Commercial Exception: Permits contractual or prevailing nationalised bank lending rates for business, trade, and commercial liabilities.
- Deemed Rejection Rule (Sec 34(2)): Silence in the decree regarding future interest constitutes a conclusive rejection barring any fresh suit.
Practical Note
Three-Tier Interest Architecture in Civil & Commercial Litigation: (1) Three Distinct Periods: Pre-suit interest (determined by contract, custom, or the Interest Act, 1978); Pendente lite interest (court's judicial discretion from suit institution to decree); and Post-decree future interest (decree to payment, capped at 6% p.a. for non-commercial debts). (2) Commercial Exception (Proviso): In commercial disputes (industry, trade, business), courts can award contractual rates or prevailing nationalized bank lending rates. (3) 'Principal Sum Adjudged' (Central Bank of India v. Ravindra Constitution Bench): Compound interest cannot be awarded post-suit; future interest applies strictly to the principal sum adjudged. (4) Deemed Refusal (Sec 34(2)): If the decree is silent on future interest, it is conclusively deemed refused and no fresh suit can be filed; appeal or review is the only remedy.
हिंदी पाठ
(1) जहां तक कि कोई डिक्री धन के संदाय के लिए है, वहां न्यायालय डिक्री में उस मूल राशि पर, जिसका न्यायनिर्णयन किया गया है, वाद संस्थित किए जाने की तारीख से पूर्व की किसी कालावधि के लिए न्यायनिर्णीत ब्याज के अतिरिक्त, वाद की तारीख से डिक्री की तारीख तक संदत्त किए जाने के लिए ऐसी दर से ब्याज का आदेश दे सकेगा जिसे न्यायालय युक्तियुक्त समझे, तथा ऐसी मूल राशि पर छह प्रतिशत प्रति वर्ष से अनधिक की ऐसी दर से अतिरिक्त ब्याज भी दे सकेगा जिसे न्यायालय युक्तियुक्त समझे, जो डिक्री की तारीख से संदाय की तारीख तक अथवा ऐसी पूर्ववर्ती तारीख तक देय होगा जैसी न्यायालय उचित समझे:
परन्तु जहां कि न्यायनिर्णीत राशि के संबंध में दायित्व किसी वाणिज्यिक संव्यवहार से उत्पन्न हुआ था, वहां ऐसे अतिरिक्त ब्याज की दर छह प्रतिशत प्रति वर्ष से अधिक हो सकेगी, किन्तु वह संविदागत ब्याज दर से अथवा जहां संविदागत दर नहीं है वहां उस दर से अधिक नहीं होगी जिस पर वाणिज्यिक संव्यवहारों के संबंध में राष्ट्रीयकृत बैंकों द्वारा धन उधार दिया या अग्रिम दिया जाता है।
स्पष्टीकरण I—इस उपधारा में, "राष्ट्रीयकृत बैंक" से बैंककारी कम्पनी (उपक्रमों का अर्जन और अन्तरण) अधिनियम, 1970 के अधीन यथापरिभाषित तत्स्थानी नया बैंक अभिप्रेत है।
स्पष्टीकरण II—इस धारा के प्रयोजनों के लिए कोई संव्यवहार वाणिज्यिक संव्यवहार तब है यदि वह दायित्व उपगत करने वाले पक्षकार के उद्योग, व्यापार या कारबार से संबंधित है।
(2) जहां ऐसी डिक्री, डिक्री की तारीख से संदाय की तारीख तक या अन्य पूर्ववर्ती तारीख तक ऐसी मूल राशि पर अतिरिक्त ब्याज के संदाय के संबंध में मौन है, वहां यह समझा जाएगा कि न्यायालय ने ऐसे ब्याज से इंकार कर दिया है, और उसके लिए कोई पृथक् वाद नहीं लाया जा सकेगा।