Secretary/General Ma... v. S. Kamalaveni Sundar..., Supreme Court Of India, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Appeal No. 14 of 2011, decided on January 4, 2011

Disposition

in part

Attorney(S)

K.V Viswanathan, Senior Advocate (Ms Mary Mitzy, G.S Chauhan and Shiv Prakash Pandey, Advocates) for the Appellants;
S. Aravindh and V. Balachandran, Advocates, for the Respondent.

Judges

Justice R. M. Lodha
Justice Aftab Alam

Acts

Section 5, Subsection 2 of the 1983 Income Tax Act
Section 34 of the Code of Civil Procedure, 1908 (CPC)

See more information ...

Smart Summary

Factual and Procedural Background

The respondent–landlady let out the ground floor of her premises at MRC Nagar, South Beach Avenue, Chennai to the second appellant–tenant in February 1990 at a monthly rent of ₹5,600 for non-residential (banking) purposes. In 1996 she instituted fair-rent proceedings; on 27-3-1998 the Small Cause Court, Chennai fixed the fair rent at ₹32,356 per month with effect from 28-10-1996.

The tenant vacated the premises in September 1998 but remained in arrears. After an unheeded demand notice, the landlady filed a money suit in December 1998 seeking ₹6,83,346 and interest at 18% p.a. The City Civil Court, Chennai returned the plaint on 20-1-2000 for removal of defects; it was re-presented only on 20-7-2005—after a delay of five years and six months. Ultimately, on 24-3-2008 the trial court decreed ₹5,71,832 with interest at 6% p.a. for two limited periods (9-9-1998 – 21-1-2000 and 21-7-2005 to realisation).

On the landlady’s appeal, a Single Judge of the Madras High Court enhanced interest to 12% p.a. from 9-9-1998 to 24-3-2008 and 6% p.a. thereafter. Challenging inclusion of the hiatus when the plaint was not on the file (20-1-2000 – 20-7-2005), the tenant obtained special leave; the Supreme Court stayed execution conditional upon depositing ₹7.5 lakh.

Legal Issues Presented

Whether the High Court was justified in directing the tenant to pay interest at 12% per annum on the arrears of rent for the entire period 9-9-1998 to 24-3-2008, specifically covering 20-1-2000 to 20-7-2005 when the plaint lay un-re-presented.
How the discretion under Section 34 of the Code of Civil Procedure, 1908 operates when a plaintiff’s own delay prolongs litigation.

Arguments of the Parties

Appellant (Tenant)

Interest for 20-1-2000 to 20-7-2005 was unwarranted because the suit was not on the file during that interval; the landlady alone was responsible for the delay in re-presenting the plaint.
Section 34 CPC does not authorise courts to compensate a party for periods lost through its own inaction.

Respondent (Landlady)

The High Court acted equitably: she had claimed 18% p.a. but was awarded only 12% p.a. for the pendente lite period, striking a fair balance.
No undue advantage accrued to her from the delay; therefore interest for the entire span of litigation should stand.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Supreme Court focused on the scope of Section 34 CPC. The provision allows courts to award:

Interest from the date of the suit to the date of the decree (pendente lite), and
Post-decretal interest until payment.

It does not empower courts to grant pre-suit interest, and even pendente lite interest is discretionary, not automatic. The bench reasoned that:

The plaint was returned on 20-1-2000 for curing defects and remained un-re-presented for over five years solely due to the landlady’s inaction.
A litigant cannot benefit from its own lack of diligence; awarding interest for that dormant period would unjustly penalise the tenant.
Whether or not the landlady actually “gained” during that period is irrelevant; the key question is the equitable exercise of discretion under Section 34.

Consequently, the court found the High Court’s inclusion of interest for 20-1-2000 – 20-7-2005 legally unsustainable.

Holding and Implications

PARTIAL ALLOWANCE OF APPEAL: The directive requiring the tenant to pay interest at 12% per annum for the period 20-1-2000 to 20-7-2005 is set aside. In all other respects, the High Court’s decree is affirmed. Each party will bear its own costs.

Implications: The ruling curtails plaintiffs from recovering pendente lite interest for intervals attributable to their own delay, underscoring that Section 34 CPC confers a discretionary—not automatic—power. The decision’s effect is confined to adjusting the monetary liability between the present parties; it establishes no new binding precedent beyond reaffirming established principles of discretion and equity.

Show full summary ...

To access the original judgment, please Sign In or Subscribe.

Secretary/General Manager, Chennai, Central Cooperative Bank Limited And Another v. S. Kamalaveni Sundaram .

R.M Lodha, J.— Leave granted. The short question for consideration in this appeal, by special leave, is whether the Single Judge of the Madras High Court was justified in directing the second appellant to pay interest at the rate of 12% per annum on the arrears of rent from 9-9-1998 to the date of decree dated 24-3-2008.

2. The brief facts leading to the present controversy are these. The respondent, S. Kamalaveni Sundaram (hereinafter referred to as “the landlady”) let out ground floor of her property situate at MRC Nagar, South Beach Avenue, Chennai to the second appellant (hereinafter referred to as “the tenant”) in the month of February 1990 on a monthly rent of Rs. 5600 payable according to the English calendar month. The tenancy was for non-residential purposes viz. for running the banking business. The landlady filed the suit for fixation of fair rent against the tenant in 1996. The Small Cause Court, Chennai vide its order dated 27-3-1998 fixed the fair rent at Rs. 32,356 per month with effect from 28-10-1996.

3. In September 1998, the tenant vacated the leased premises. However, the tenant was in arrears of rent at the time of vacation of premises. The landlady sent a notice through her lawyer and called upon the tenant to pay a sum of Rs. 5,71,832 towards difference in rent up to May 1998 and also rent for the months of June, July and August 1998 after giving adjustment of a sum of Rs. 33,600 paid by the tenant in advance. The tenant failed and neglected to comply with the notice sent by the landlady.

4. The landlady then filed a suit in the month of December 1998 against the tenant for recovery of Rs. 6,83,346 in the City Civil Court, Chennai. The landlady also claimed interest at the rate of 18% per annum on Rs. 5,71,832 (the principal amount of rent) due against the tenant.

5. The plaint filed by the landlady suffered from certain defects and the same was returned to her on 20-1-2000 for the rectification of defects. The landlady, however, re-presented the plaint after a gap of more than five years, to be precise on 20-7-2005. Initially an ex parte decree was passed against the tenant in the suit but later on the tenant was permitted to contest the suit after the ex parte decree was set aside.

6. After contest, the IIIrd Additional Judge, City Civil Court, Chennai passed a decree on 24-3-2008 in favour of the landlady and directed the tenant to pay to her the arrears of rent amounting to Rs. 5,71,832 with interest at the rate of 6% per annum from 9-9-1998 to 21-1-2000 and from 21-7-2005 to the date of payment. The tenant was given three months' time to pay the amount from the date of the decree.

7. The landlady challenged the judgment and decree dated 24-3-2008 before the High Court of Judicature at Madras. The Single Judge of the High Court after hearing the parties allowed the appeal preferred by the landlady in part and directed the tenant to pay interest at the rate of 12% per annum from the date of the filing of the suit i.e from 9-9-1998 until 24-3-2008 and at the rate of 6% per annum from 25-3-2008 till the date of realisation of the principal amount of rent.

8. On 26-7-2010, while issuing notice in the petition for special leave to appeal, the following order was passed by us:

“The counsel for the petitioners submits that there was no justification for the High Court to grant interest for the period 20-1-2000 to 20-7-2005, when the plaint had been returned to the plaintiff for removal of certain defects.

Issue notice.

The execution of the decree as per the High Court judgment shall remain stayed, provided the petitioners deposit a sum of Rs. 7.5 lakhs before the Court below, within four weeks from today.”

9. The landlady—the sole respondent—has filed counter-affidavit and justified the order of the High Court principally on the ground that on the admitted facts and circumstances of the case, the High Court has struck the balance on equity as between the parties by granting lesser interest than what was claimed by her while granting interest for the entire period of pendency of the suit.

10. We heard the learned Senior Counsel for the tenant and the learned counsel for the landlady. Having regard to the facts and circumstances of the case, we are unable to sustain the order of the High Court to the extent the interest has been awarded to the landlady for the period from 20-1-2000 to 20-7-2005.

11. As noticed above, the plaint was returned by the City Civil Court, Chennai to the landlady on 20-1-2000 for re-presenting the same after rectification of the defects. However, for the reasons best known to the landlady, the plaint was not re-presented immediately nor within reasonable time. As a matter of fact, the matter remained dormant in the hands of the landlady and the plaint was re-presented after five years and six months on 20-7-2005. Obviously, the landlady cannot derive advantage of her inaction or lack of diligence in re-presenting the plaint. Had the landlady re-presented the plaint within reasonable time, the matter would have been decided long back. As the facts reveal, the plaint was re-presented on 20-7-2005 and the suit was decreed by the trial court on 24-3-2008. In the circumstances, therefore, the award of interest for the period 20-1-2000 to 20-7-2005 does not seem to be justified.

12. We are not persuaded by the submission that by not filing the plaint immediately after it was returned or for the delay in re-presenting the plaint, the landlady did not gain anything and although she was entitled to interest at the rate of 18% per annum on the arrears of rent, the High Court only awarded interest at the rate of 12% and thereby struck a balance on equity. Whether the landlady gained anything or not by the delay in re-presenting the plaint is not material but what is material is that interest is awardable pendente lite taking into consideration the facts and circumstances of the case and not as a matter of course.

13. Section 34 of the Code of Civil Procedure, 1908 (CPC) empowers the court to award interest for the period from the date of the suit to the date of the decree and from the date of the decree to the date of payment where the decree is for payment of money. Section 34 CPC does not empower the court to award pre-suit interest. The pre-suit interest would ordinarily depend on the contract (express or implied) between the parties or some statutory provisions or the mercantile usage. Be that as it may, we do not find that on equitable considerations the landlady is entitled to interest for the period 20-1-2000 to 20-7-2005.

14. As a result of the foregoing discussion, the appeal is allowed in part and the direction given by the High Court to the tenant to pay interest at the rate of 12% per annum on the due rent for the period 20-1-2000 to 20-7-2005 is set aside. Except the above modification, the decree of the High Court stands. The parties shall bear their own costs.

Secretary/General Ma... v. S. Kamalaveni Sundar...