Sabyasachi Mukharji, J.:— This is an appeal from an order of the learned trial Judge passed on Dec. 14, 1978 on an application under Ss. 31 & 32 of the West Bengal Financial Corporation Act, 1951 for sale of charged properties in favour of the West Bengal Financial Corporation. The claim of the petitioner. West Bengal Financial Corporation was not disputed and the learned Judge held, it had been verified from the record of the Company in the possession of the Official Liquidator and after taking into account the claims in terms of the mortgage deed between the Company (in liquidation) and West Bengal Financial Corporation the total claim on account of principal amount, interest, insurance charges and consultant fees up to August, 1977 was a total sum of Rs. 15,65,000 which was declared to be due and payable by the company as secured creditor in respect of the properties mentioned in Annexure A to the mortgage deed dated 9th February, 1972. The learned Judge thereafter directed payment of the said amount by the Official Liquidator, who was in possession of the mortgaged properties of the petitioning creditor which was secured for its claim out of the sale proceeds of the secured properties. The Official Liquidator was directed by the learned Judge to pay on account of principal amount, interest, insurance charge and consultant fees up to August, 1977. The subsequent interest has not been directed to be paid. This is the bone of contention in this appeal.

2. It appears that the petition for winding up was presented in Sept., 1976 and the order for winding up was made on Sept. 6, 1977. Meanwhile West Bengal Financial Corporation which indisputably was a secured creditor under a mortgage deed made an application for examination pro interessee sue of its right in August, 1977. Thereafter in February, 1978 the present application was made by the petitioner for payment of its dues and the order was made, as mentioned hereinbefore in December, 1978.

3. The learned Judge did not as is apparent, from the order, grant any interest, subsequent to August, 1977 to the petitioning creditor in terms of the mortgage deed. The learned Judge has also not indicated any reason in the order for not granting such interest. In the premises, it was contended, as a secured creditor, until payment, the petitioner was entitled to the full interest at the rate mentioned in the mortgage deed and in not granting such interest, the learned Judge had committed an error. Secondly, it was submitted that the learned Judge had not exercised his discretion. Even if he had there is no indication in the order that he had exercised discretion on proper ground and therefore the order should be set aside. In aid of this submission reliance was placed on certain provisions of the Transfer of Property Act. Our attention was drawn to Ss. 58, 60, 67 & 68 of the Transfer of Property Act which inter alia, indicate that, the secured creditor is outside the scope of winding up proceedings and is entitled to enforce its own right and is entitled to be paid in terms of its mortgage deed. Therefore, it was submitted that the learned Judge in not granting such interest or not securing it even when the company was in liquidation had erred. Interest incidentally was due at 8½% compound. It was submitted that it was in public interest also that the interest should be granted because it was not an unreasonable interest. Indisputably it is the correct position that the petitioner is a secured creditor and does not come within the purview of the winding up proceedings. But, it was contended on behalf of the petitioner that there was no discretion exercised by the learned Judge. It is true that the provisions of the Transfer of Property Act grant the petitioner a right to be paid of its dues in full. But for the enforcement of its rights, the petitioner can sell the mortgaged property. But if it comes to Court for enforcement, of its right, it must be regulated by the procedure of the provisions of the Code. Therefore the provisions of S. 34 of the Code of Civil Procedure as well as O. 34 of the Civil P.C are applicable for enforcement of the claim in respect of the mortgage and would be attracted in this case. Section 34 of the Civil P.C with the proviso which was introduced from 1st July, 1977 reads as follows:

“Interest.

34. (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.

(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:

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 1: 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.”

Our attention was also drawn to O. 34. Rr. 2, 4 & 11. In view of the contentions which were addressed before us it is not necessary to deal with the said Rules in any detail. The question, therefore, is under S. 34 of the Civil P.C has the Court any right to exercise any discretion? This point was considered in some of the cases by different. High Courts. Our attention was drawn to a Division Bench judgment of the Calcutta High Court in the case of Nilmoni Sardar v. Baidyanath Das Manna, AIR 1957 Cal 140 where in a suit, brought by the mortgage created in his favour containing an interest clause, it was held, the Court was bound to decree pendente lite interest, it being left to the discretion of the Court at what rate interest was to be allowed. It was held, considering all the circumstances, in that case, the rate of interest from the date of the suit should be allowed at 4 per cent per annum. In this connection, the Division Bench referred to Privy Council as well as Federal Court, judgments and observed, at page 141 of the report, as follows:

“(4) Reliance was placed on behalf of the appellant on Kusum Kumari v. Debi Prosad, 63 Ind App 114: (AIR 1936 PC 63) where it has been laid down that under S. 34 of the Civil P.C the contractual relationship between the parties came to an end with the decree and the Court had power under this section to allow interest on the decretal amount until realization. Although the decision in that case was on certain provisions of the Sonthal Parganas Settlement Regulation, 1872, reference was made to the provisions of O. XXXIV of the Civil P.C and it was observed that, the mortgagee was entitled to interest pendente lite of the contract rate.

(5) On the other hand, reliance was placed on behalf of the respondent on Jaigobind v. Lachmi Narain, AIR 1940 FC 20 where with reference to certain provisions of the Bihar Money Lenders Act, the Federal Court held that use of the word ‘may’ in S. 8 of that Act indicated that the Court was not bound to exercise at least one of the powers and might well not exercise any of the powers at all the language as it stood could only mean this, that the Court had the discretion to exercise all or any or none of the specified powers. Then with reference to R. 11 of Order XXXIV of the Civil P.C it was observed by Sulaiman, J. that provision also gave a certain amount of discretion to the Court so far as interest pendente lite and subsequent interest were concerned: it was no longer absolutely obligatory on the Courts to decree interest at the contractual rate up to the date of redemption in all circumstances, if there was no question of the rate being penal, excessive or substantially unfair within the meaning of the Usurious Loans Act 1918.

(6) An attempt was made before us to indicate that there was a conflict between the decision of the Judicial Committee and that of the Federal Court and we were invited to decide which of the two decisions would be binding on this Court at this stage. In out view, there is no real or substantial conflict so far as the question of allowing interest pendente lite is concerned. According to the Judicial Committee, the mortgagee is entitled to interest pendente lite. According to the decision of he Federal Court, there is a discretion given to the Court as to the extent to which such interest would be allowed. In our view, the Court is bound to decree pendente lite interest, it being left to the discretion of the Court at what rate it is to be allowed. The circumstances of each particular case have to be taken into consideration.”

4. In this connection reliance was also placed on the decision of the Andhra Pradesh High Court in the case of K.V Lakshminarayan Sastry v. Vijya Commercial Bank Ltd. (In Liquidation), (1963) 33 Com Cas 49. But in that case Andhra Pradesh High Court had no occasion to consider the scope and ambit of S. 34 of the Civil P.C and therefore it is not necessary for us to discuss the said decision in any detail.

5. Reliance was also placed on the decision of the Supreme Court in the case of M.K Ranganathan v. 1. Government Of Madras. AIR 1955 SC 604 but the Supreme Court, in that case, did not consider the scope and ambit of S. 34 and therefore this decision will not be of much assistance to us for our present purpose. On the other hand, on behalf of the respondent, reliance was placed on a decision of the Allahabad High Court in the case of U.P Oil Mills Agency v. Saraswati Soap & Oil Mills Ltd., AIR 1954 All 129. The said decision was not in relation to a secured creditor and therefore the said decision would also be of not much assistance to us. Learned Advocate for the respondent also contended that in view of the provisions of Ss. 29, 30 & 32 of the West Bengal Financial Corporation Act of 1951, the petitioning creditor would not be entitled to any greater right which the petitioner did, not have otherwise under the law by the fact that it was a West Bengal Financial Corporation. That is quite correct. But, in this case, we are not concerned with that controversy. Here, the petitioner is not seeking any greater right. According to the petitioner, the petitioner was eligible to this right under the Transfer of Property Act Therefore this controversy also need not detain us.

6. Mr. Pratap Chatterji Ld. Advocate for Dena Bank sought to appear before us. It is doubtful whether he has any locus standi because the Bank apparently was not a party before the learned trial Judge. But in any case, in the view we have taken we need not decide this question whether under the law his submissions are to be taken as made on behalf of the respondent. He drew our attention to a decision of the Judicial Committee in the case of Sourendra Mohan Sinha v. Hari Prosad Sinha. AIR 1925 PC 280 in aid of his submission that under Section 34 the Court has absolute discretion for granting interest from any date that the Court thought it fit. The observations of the said decision were considered by the several decisions of the Privy Council, viz., in the case of Kusum Kumari v. Devi Prosad, 63 Ind App 114 a p. 121: (AIR 1936 PC 63). Later, decision of the Judicial Committee was considered by the Division Bench of this Court, which we have referred to hereinbefore. The Division Bench observed that according to the Judicial Committee, the mortgagee was entitled to interest pendente lite and according to the decision of the Federal Court the discretion was given to Court to the extent to which such interest should be allowed. The Division Bench of this Court observed that in their Lordships' view the Court was bound to decree pendente lite interest, it being left to the discretion of the Court as to what rate would be allowed and the circumstances of the particular case would have to be taken into consideration. In the light of the various (sic) (view?) of the Federal Court judgment as well as Judicial Committee decision as interested by the observations of the Division Bench decision of this Court it appears to us that there was no discretion as to pendente lite interest but the discretion was as to the rate at which it should be granted by the Court. So, there is no discretion as to granting or non-granting of interest at all. That, is also a construction which is possible on the proper reading of S. 34 of the Code and perhaps that, should be in harmony with the provisions of the Transfer of Property Act to which our attention was drawn. But in this case we have to bear in mind that the company has gone into liquidation. The other important creditor, who will be involved, is also a public institution being a nationalised Bank. The assets of the company are not sufficient to meet the full claim of the secured creditor and only a small fraction of the claim of the 2nd secured creditor which is a public institution and a nationalised Bank should be met if possible. Having regard to that view of the matter, we are of the opinion that there is no discretion about either granting or non-granting of interest but as to the rate there is the discretion of the Court.

7. Having regard to the fact that the learned Judge has already passed an order granting interest up to August, 1977 we direct that interest at half per cent per annum should be granted during the pendency of the litigation, that is to say from August, 1977 up to 14th December, 1978 and thereafter there would be no interest. The order of the learned trial Judge is modified to that extent.

8. The parties shall pay and bear their own costs but the Official Liquidator will retain his cost out of the assets in his hands.

9. As we do not find any reason to stay the order, the stay asked for is refused.

Suhas Chandra Sen, J.:— I agree.

Order accordingly.