Section 34 CPC interest proviso in commercial transactions referred to a larger Bench for harmonised interpretation.

The interpretation of the proviso to Section 34(1) CPC, particularly for commercial transactions and the contractual rate of interest, was considered to require examination by a larger Bench. The Court noted the need to reconcile the award of interest under the recovery legislation with the earlier Constitution Bench view on pendente lite and post-decree interest, so that the proviso could be construed consistently without conflicting with existing precedent. The matter was accordingly referred to a larger Bench for consideration.

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Issues: Whether the interpretation of the proviso to Section 34(1) of the Code of Civil Procedure, 1908, in relation to commercial transactions and the contractual rate of interest required consideration by a larger Bench.

Analysis: The question arose because the award of interest under the recovery legislation and the applicability of Section 34 of the Code of Civil Procedure, 1908, including its proviso for commercial transactions, needed to be reconciled with the earlier Constitution Bench view on pendente lite and post-decree interest. The matter was considered appropriate for examination by a larger Bench so that the proviso to Section 34(1) could be interpreted without creating any conflict with the earlier decision.

Conclusion: The issue was referred to a larger Bench for consideration.

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