Case Note & Summary
The matter before the Supreme Court comprised Special Leave Petition (C) Nos. 3954/94, 9082 and 9088/1995 and Civil Appeal Nos. 3964, 3967 of 1992, involving Central Bank of India as petitioner and Ravindra & Ors. as respondents. The core dispute revolved around the interpretation of Section 34 of the Code of Civil Procedure, 1908, particularly the meaning of the expression "the principal sum adjudged" and the extent of a borrower's liability to pay interest on that sum. A Bench of three judges, consisting of K. Ramaswamy, Faizan Uddin, and G.B. Pattanaik, heard the learned Attorney General and amicus curiae S/Shri A. Subba Rao, Ranjit Kumar, and K.M.K. Nair on 7 May 1995. The legal issue identified by the Court was whether the liability of the borrower to pay interest on the principal sum included interest that had become merged with the principal sum adjudged, or whether it referred only to the principal sum as originally lent. The Court also considered whether the phrase "principal sum adjudged" appearing in Section 34 CPC had the same meaning throughout the provision. The learned Attorney General relied on two earlier decisions of the Supreme Court: Corporation Bank vs. D.S. Gouda & Ors., (1994) SCC 213, and Bank of Baroda vs. Jagannath, Civil Appeal No. 2785/87 decided on September 21, 1994, contending that those judgments indicated that the principal sum adjudged and the principal sum mentioned later in the section were the same, relying particularly on the word "such" in the provision. However, the Court noted a crucial legislative history: before the Amendment Act 66 of 1956, the words in Section 34 were "aggregate sum so adjudged"; after the amendment, they were substituted with "the principal sum adjudged". The provision further permitted interest on such "principal sum" for any period prior to the institution of the suit, with further interest on such date as the court deems reasonable on the "principal sum". The Court observed that this distinction between the pre-amendment and post-amendment language had not been brought to the attention of the Court in the two earlier judgments, particularly the later one, and that no argument in that behalf appeared to have been canvassed in those cases. Given this, the Court concluded that the interpretation of the borrower's liability to pay interest on the principal sum, to include interest that became merged with the principal sum adjudged or the principal sum as lent, required an authoritative determination. Therefore, the Bench directed the Registry to place the matter before the Hon'ble Chief Justice for constituting a Constitution Bench of five judges. The order did not decide the substantive question but referred it for a larger bench to settle the law, acknowledging the need for an authoritative pronouncement on the scope of "principal sum adjudged" under Section 34 CPC. The order is purely procedural and leaves the substantive question open.
Headnote
A) Civil Procedure - Interest on Decrees - Interpretation of 'Principal Sum Adjudged' - Code of Civil Procedure, 1908, Section 34 - The Court considered whether the expression 'principal sum adjudged' in Section 34 CPC includes interest that became merged with the principal sum adjudged or refers only to the principal sum as lent, and whether the principal sum adjudged and the principal sum mentioned later in the provision are the same. The Court noted that before Amendment Act 66 of 1956 the phrase was 'aggregate sum so adjudged', and after amendment it became 'the principal sum adjudged', and that earlier decisions in Corporation Bank v. D.S. Gouda and Bank of Baroda v. Jagannath did not consider this distinction. Held that the matter required authoritative determination by a Constitution Bench of five Judges and directed the Registry to place the matter before the Chief Justice for constituting such Bench (Para 1).
Issue of Consideration
Whether the expression 'principal sum adjudged' in Section 34 CPC includes interest that became merged with the principal sum adjudged or refers only to the principal sum as originally lent, and whether the principal sum adjudged and the principal sum mentioned later in Section 34 are the same
Final Decision
The Supreme Court directed that the matter be placed before the Hon'ble Chief Justice for constituting a Constitution Bench of five Judges to authoritatively determine the interpretation of Section 34 CPC regarding 'principal sum adjudged'.
Law Points
- Interpretation of Section 34 of Code of Civil Procedure
- 1908
- meaning of 'principal sum adjudged'
- distinction between 'aggregate sum so adjudged' and 'principal sum adjudged' after Amendment Act 66 of 1956
- liability of borrower for interest merged with principal
- reference to Constitution Bench
