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Issues: (i) Whether pendente lite interest in a mortgage suit is governed by Section 34 of the Code of Civil Procedure, 1908 or by Order 34, Rule 11 of the Code of Civil Procedure, 1908. (ii) Whether Section 21-A of the Banking Regulation Act, 1949 overrides the discretion conferred by Order 34, Rule 11 of the Code of Civil Procedure, 1908 in relation to future interest.
Issue (i): Whether pendente lite interest in a mortgage suit is governed by Section 34 of the Code of Civil Procedure, 1908 or by Order 34, Rule 11 of the Code of Civil Procedure, 1908.
Analysis: Section 34 applies to simple money decrees, whereas mortgage suits are governed by the special scheme of Order 34. The word "may" in Order 34, Rule 11, introduced by amendment, confers discretion on the Court both for interest up to the date fixed in the preliminary decree and for subsequent interest. The earlier decisions relied upon established that contractual interest is not mandatory after the suit in every mortgage case, and the trial court's exercise of discretion to restrict future interest to 6% was within the rule.
Conclusion: The applicable provision is Order 34, Rule 11 of the Code of Civil Procedure, 1908, and not Section 34 of the Code of Civil Procedure, 1908; the trial court's reduction of interest was legally permissible.
Issue (ii): Whether Section 21-A of the Banking Regulation Act, 1949 overrides the discretion conferred by Order 34, Rule 11 of the Code of Civil Procedure, 1908 in relation to future interest.
Analysis: Section 21-A bars reopening of banking transactions on the ground that the rate of interest is excessive, but its non-obstante clause does not extend to overriding the Code of Civil Procedure, 1908. The provision addresses the Usurious Loans Act, 1918 and State laws relating to indebtedness, not the special mortgage procedure under Order 34. The discretion under Order 34, Rule 11 is independent and remains available despite banking legislation.
Conclusion: Section 21-A of the Banking Regulation Act, 1949 does not override Order 34, Rule 11 of the Code of Civil Procedure, 1908.
Final Conclusion: The High Court's restoration of the contractual rate of future interest was set aside, and the trial court's award of future interest at 6% per annum was restored.
Ratio Decidendi: In a mortgage suit, pendente lite and subsequent interest are controlled by Order 34, Rule 11 of the Code of Civil Procedure, 1908, which confers judicial discretion, and that discretion is not displaced by Section 21-A of the Banking Regulation Act, 1949.
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