Special statutory procedure and contract rate limits govern future interest; penal interest cannot be included as part of the contract rate.

Proceedings under the Co-operative Societies Act follow the Act and Rules as a special statutory code, so the general procedure in Order 34 Rule 11 CPC does not apply unless expressly incorporated. The civil court mortgage principle relied on before the Tribunal was therefore inapplicable to adjudication by the Co-operative Arbitration Court, Arbitrator or Registrar. Rule 67(10)2 permits future interest only up to the contract rate, but penal interest is an additional default levy and cannot be treated as part of that rate for future interest. The Arbitrator or Registrar may nonetheless fix future interest at the contract rate or a lower rate, having regard to the loan terms and the facts of the case.

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Issues: Whether proceedings under the Co-operative Societies Act are governed by the principles of Order 34 Rule 11 of the Code of Civil Procedure; whether penal interest can be included within the contract rate for the purpose of future interest; and the extent of the Arbitrator or Registrar's discretion in fixing future interest under Rule 67(10)2 of the Co-operative Societies Rules.

Analysis: Disputes under Section 69 of the Co-operative Societies Act are governed by the special statutory procedure under the Act and the Rules, and the general provisions of the Code of Civil Procedure do not apply as such. The principle in the mortgage suit decision relied on before the Tribunal was confined to civil court proceedings and could not control adjudication by the Co-operative Arbitration Court, Arbitrator or Registrar. Rule 67(10)2 limits future interest to the contract rate, but the contract rate does not include penal interest. Penal interest is an additional levy for default and cannot be capitalised or treated as part of the contract rate for future interest. The Arbitrator or Registrar, however, retains discretion to award future interest up to the contract rate or at a lower rate, depending on the nature of the loan, the facts of the case, and whether the contractual rate is excessive or the interest component is disproportionate to the principal sum.

Conclusion: The Tribunal's reliance on the civil court mortgage principle was inapplicable, and future interest could not lawfully include penal interest. The matters required fresh determination of future interest in accordance with the statutory limits and the indicated principles.

Final Conclusion: The impugned awards and orders on future interest were set aside and the cases were remanded for fresh consideration limited to the question of future interest.

Ratio Decidendi: Where a special statute prescribes its own procedure, general civil procedure provisions do not apply unless expressly made applicable, and penal interest cannot be treated as part of the contract rate when fixing future interest unless the governing provision expressly permits it.

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