Payment of interest
Full Text
In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the Court may order payment of interest to the mortgagee as follows, namely:—
(a) interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage—
(i) on the principal amount found or declared due on the mortgage,—at the rate payable on the principal, or, where no such rate is fixed, at such rate as the Court deems reasonable,
* * * * * and
(iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage-security up to the date of the preliminary decree and added to the mortgage-money,—at the rate agreed between the parties or, failing such rate, at such rate not exceeding six per cent. per annum as the Court deems reasonable; and
(b) subsequent interest up to the date of realisation or actual payment on the aggregate of the principal sums specified in clause (a) as calculated in accordance with that clause at such rate as the Court deems reasonable.
Plain English Summary
Regulates the award of interest in mortgage decrees across three distinct phases: contractual interest up to the date fixed for redemption, a 6% cap on pre-decree costs, and court's reasonable discretion for post-decree interest until actual realization.
Key Legal Elements
- Three Distinct Interest Periods: (1) Pre-suit to preliminary decree, (2) Preliminary decree to date fixed for redemption (usually 6 months), (3) From redemption date up to actual realization.
- Contractual Rate Prerogative: Up to the date fixed for redemption, contractual rate applies unless penal or usurious.
- Discretionary Post-Decree Interest: Court has broad discretion under clause (b) to determine the subsequent interest rate.
- Statutory 6% Ceiling on Costs: Pre-decree costs and preservation expenses cannot carry interest exceeding 6% per annum.
- Special Provision Overriding Section 34 CPC: Order XXXIV Rule 11 is a specific code governing mortgage interest and prevails over general section 34 CPC.
Practical Note
Supreme Court Jurisprudence on Mortgage Interest: 1. N.M. Veerappa v. Canara Bank (1998) 2 SCC 317: The Supreme Court held that the word 'may' in Order XXXIV Rule 11 confers wide discretion on the court regarding the grant and rate of interest for all three periods. Section 34 CPC or the contractual rate does not fetter the court's discretion, and the court can reduce exorbitant interest rates. 2. Central Bank of India v. Ravindra (2002) 1 SCC 367 (Constitution Bench): Clarified capitalization of interest and held that subsequent interest under Rule 11(b) is payable on the aggregate principal sum adjudged, and compounding after the suit cannot be claimed unless permissible under statutory banking regulations.
हिंदी पाठ
पुरोबंध, विक्रय या मोचन के वाद में पारित किसी डिक्री में, जहां ब्याज वैध रूप से वसूलीय है, न्यायालय बंधकदार को ब्याज के संदाय का आदेश निम्न प्रकार से दे सकेगा:—
(क) उस तारीख तक या उससे पूर्व जिस तारीख को प्रारंभिक डिक्री के अधीन शोध्य रकम का संदाय बंधककर्ता या मोचन कराने वाले व्यक्ति द्वारा किया जाना है—
(i) बंधक पर शोध्य मूलधन पर—उस दर से जो मूलधन पर संदेय है, अथवा जहां ऐसी कोई दर नियत नहीं है, वहां ऐसी दर से जिसे न्यायालय युक्तियुक्त समझे,
* * * * * तथा
(iii) बंधक-प्रतिभूति के संबंध में प्रारंभिक डिक्री की तारीख तक बंधकदार द्वारा उचित रूप से उपगत और बंधक-धन में जोड़े गए खर्चों, प्रभारों और व्ययों पर—पक्षकारों के बीच करार पाई गई दर से, अथवा ऐसी दर के अभाव में, ऐसी दर से जो छह प्रतिशत (6%) प्रति वर्ष से अधिक न हो जैसी न्यायालय उचित समझे; तथा
(ख) खंड (क) में विनिर्दिष्ट मूल राशियों के योग पर वसूली या वास्तविक संदाय की तारीख तक ऐसी पश्चातवर्ती ब्याज (Subsequent interest) जैसी न्यायालय युक्तियुक्त समझे।