Compensatory interest on delayed share-payment is governed by equitable discretion under Section 34 CPC, not punitive rates.

A commercial share-transfer dispute concerned the rate of interest on delayed payment after the valuation issue had become final. The Supreme Court treated interest as compensatory and applied Section 34 of the Code of Civil Procedure, 1908 in the absence of any agreement. It emphasised that the award of interest is discretionary, must rest on equitable considerations, and should not be punitive. The Court found the claimed rate of interest with monthly rests excessive and instead awarded simple interest at 6% per annum from 8 July 1975 until decree and 9% per annum from decree until realisation.

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Issues: Whether the appellants were entitled to a higher rate of interest on the enhanced valuation of shares, and if so, what rate should govern the period from the date of transfer till decree and from decree till realisation.

Analysis: The dispute concerned payment for shares transferred to the State decades earlier, and the valuation issue had already attained finality. The only surviving question was the rate of interest on the delayed payment. The Court held that the transaction was commercial in nature and that, in the absence of any agreement on interest, Section 34 of the Code of Civil Procedure, 1908 governed the award of interest. It noted that interest is compensatory and must reflect the loss of use of money, but the claim for 15% interest with monthly rests was excessive. The Court emphasised that interest under Section 34 is discretionary, must be fixed on equitable considerations, and should not become punitive.

Conclusion: The appellants succeeded in part. The Court held that reasonable compensation by way of interest was payable, but not at the higher rates claimed. It awarded simple interest at 6% per annum from 8 July 1975 till the date of decree, and 9% per annum from the date of decree till realisation.

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