@JUDGMENTTAG-ORDER
1. On the request of first respondent as principal debtor and respondents 2, 3 and K. Prakash Bhakta (of whom respondents 4 to 8 are the legal heirs) as co-obligant/guarantors, the petitioner-Bank sanctioned a loan of Rs. 3,50,000.00 in November, 1980 for the purpose of establishing and starting a nursing home (Bhakta''s Nursing Home) by the first respondent. Respondents I to 3 and K. Prakash Bhakta (for convenience, referred to jointly as the ''Borrowers'') agreed to secure the repayment of the loan to be advanced to the first respondent by equitable mortgage of the suit ''A'' schedule property (Sy. No. 128/37 measuring 73 cents at Shivalli village, Gundibail Ward, Udupi Taluk, situated within Udupi Municipal Limits).
2. The respondents executed a loan agreement dated 16.3.1981 containing the terms and conditions of the loan and first respondent availed the loan on 16.3.1981 and, subsequently, the Bank alleges that the borrowers agreed to repay the said loan in certain instalments between 16.10.1981 and 16.3.1986 with interest at the rate of 6.10% p.a. above the Reserve Bank of India rate, subject to a minimum of 15.10% p.a. or at such rates to be charged by the petitioner-Bank from time-to-time as per the directives of the RBI applicable for such loans; and that in the event of default, the borrowers agreed to pay an overdue interest at the rate of 17.80% per annum on the overdue amount. According to the Bank, in addition to the equitable mortgage of suit ''A'' Schedule Property, the Borrowers also hypothecated the suit ''C'' schedule movables of Bhakta''s Nursing Home consisting of medical equipment, furniture and fittings, as security.
3. The petitioner-Bank filed a suit in O.S. No. 437/1988 on the file of Civil Judge, Udupi, against the Borrowers alleging default in repayment of the loan by the Borrowers, for recovery of Rs. 10,52,457.96 from respondents 1 to 3 and Prakash Bhakta, with interest thereon from the date of suit till the date of realisation at the rate of 17% p.a. within the time to be fixed by the Court. The Bank also sought a decree for sale of the suit ''A'' schedule property and suit ''C'' schedule movables in the event of failure to pay the decretal amount within the time to be fixed by the Court.
4. On the establishment of the Debt Recovery Tribunal (DRT) for the States of Karnataka and Andhra Pradesh, under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, ''the Act''), the said suit stood transferred to the Debt Recovery Tribunal, Bangalore with effect from 30.11.1994 and was numbered as O. A. No. 501/1995. During the pendency of the proceedings before DRT, Prakash Bhakta died and respondents 4 to 8 were brought on record as his legal heirs. The DRT, Bangalore, by order dated 30.6.1997 allowed the said Original Application and declared that the petitioner Bank is entitled to recovery from the respondents 1 to 8 jointly and severally a sum of Rs. 10,52,457.96 with costs, current and future interest at 17% p.a. from the date of suit till realisation, compounded quarterly. The DRT also authorized the Bank to seize the suit ''C'' schedule movables and sell them and adjust the sale proceeds towards its dues. The DRT granted three months'' time to the respondents 1 to 8 to settle the claim of the Bank and directed that if they failed to do so, the Bank would be entitled to sell the suit ''A'' schedule property and recover the amount due to it with a further direction that the Bank shall give deduction to any amount paid by any of the respondents 1 to 8. The Tribunal ordered for issue of recovery certificate accordingly.
5. Feeling aggrieved, the respondents 1 to 3 herein filed an appeal in Appeal No. 150/ 1997 u/s 20 of the Act before the Debt Recovery Appellate Tribunal, Mumbai, impleading the petitioner-Bank alone as the sole respondent. Respondents 1 to 3 did not implead respondents 4 to 8 as parties to the said appeal.
6. The Appellate Tribunal allowed the said appeal in part by judgment dated 17.12.1997. It confirmed the order of the DRT insofar as it directed payment of Rs. 10,52,457.96 with costs. But it made the following modification in regard to interest:
"The final order passed by the Presiding Officer awarding ''future interest at 17% p.a. from the date of suit till the date of realisation compounded quarterly'' is hereby set aside. Instead the Bank is entitled to future interest at the rate of six percent per annum from the date of suit i.e. from 30.9.1988 till realisation of the amount.
The amount of Rs. 12,18,707.96 paid by the defendants and accepted by the Bank on or about 30.8.1996 shall be adjusted towards the dues.
Rest of the order is hereby confirmed. No order as to costs of this appeal."
7. Feeling aggrieved by the modification of the order of DRT in regard to interest, the Bank has filed this writ petition. According to the Bank, the Appellate Tribunal was not justified in reducing the rate of interest from 17% p.a. to 6% p.a. and was also not justified in converting the award of compound interest to simple interest from the date of suit till realisation.
8. A learned Single Judge, who heard the matter, felt that there were conflicting decisions in regard to jurisdiction of High Court to entertain a writ petition filed against the orders passed by Debt Recovery Appellate Tribunals. He also entertained a doubt as to whether the writ petition challenging the order of Appellate Authority situated in Mumbai could be filed in this Court. Therefore, he referred the matter to the Division Bench. On the contentions raised, the following two questions arise for consideration in this petition.
(a) Whether a writ petition against the order passed by Debt Recovery Appellate Tribunal situated at Mumbai (in an appeal filed against the order of DRT, Bangalore) relating to a loan transaction which took place in the State of Karnataka, could be filed in the High Court of Karnataka.
(b) Whether the Appellate Tribunal was justified in reducing the rate of interest from the date of suit till date of realisation from 17% p.a to 6% p.a.
(c) Whether the Appellate Tribunal was justified in awarding simple interest instead of compound interest with quarterly rests.
Re : Point (a) :
9. In this case, the loan was advanced in Karnataka. The mortgaged property is situated in Karnataka and the respondents (borrower and guarantors) are residents of Karnataka carrying on business in Karnataka. Therefore, the cause of action arose within the State of Karnataka. Hence, even though the order challenged in this writ petition is passed by a Tribunal outside Karnataka, it is open to challenge in this Court. We may, in this behalf, refer to the decision of this Court in St. Johns Teacher Training Institute v. Union of India ILR 2001 KAR. 5617, wherein a somewhat similar question was considered :
"Where the order passed by a Statutory Authority situated within the territorial jurisdiction of a High Court merges in the order of the Appellate Authority which is situated outside its jurisdiction, unless there is any other factor giving rise to any cause of action within its territories, such High Court will not entertain a writ petition, merely on the ground the Original Authority is located within its territorial jurisdiction... Let me take the illustration of a debt due to a Financial Institution from a company situated at Hyderabad secured by immovable and movable properties situated at Hyderabad, The Debt Recovery Tribunal, where proceedings are initiated for recovery may be situated at Bangalore. The Debt Recovery Appellate Tribunal, hearing appeals against the orders of DRT, might be situated in Bombay or Madras. But whether the Tribunal is situated at Bangalore or Bombay, the matter will have to be decided with reference to the laws in force in Andhra Pradesh subject to the binding Authority of the Andhra Pradesh High Court. The Tribunal cannot ignore or refuse to follow the decisions of the Andhra Pradesh High Court on the ground that, it is only bound by the law laid down by the Karnataka High Court as its seat is at Bangalore or Bombay High Court as its seat is at Bombay, In such cases, the Tribunal will also be subject to the writ jurisdiction of the Andhra Pradesh High Court."
We, therefore, answer the first question in the affirmative. Re. Point (b) :
10. The DRT awarded interest at the rate of 17% p.a. compounded quarterly, on the ground that the contract provided for levy of such interest. The Appellate Tribunal did not disturb the interest awarded till the date of filing of the suit (30.9.1988). It however reduced the interest from the date of suit till realisation from compound interest of 17% p.a. to simple interest of 6% p.a. on the following grounds :
(a) The loan was advanced for the purpose of establishing a Nursing Home, and therefore, the loan was not for any commercial purpose but for practice of a profession, and therefore, the principles relating to grant of interest in commercial transactions are inapplicable having regard to the decision of the Bombay High Court in Dena Bank v. Prakash Birbhan Kalariya, 1994 ISJ (Banking) 332.
(b) The first respondent has set out the several difficulties faced by her in running the Nursing Home in her affidavit and in spite of such difficulties had paid substantial amounts to clear the dues, and therefore, it is a fit case to exercise judicial discretion in awarding future interest from the date of suit, by reducing it from 17% p.a. to 6% p.a.
11. Learned Counsel for the appellant submitted that as per the loan documents executed by the borrower/sureties and the RBI directives issued u/s 21 of Banking Regulation Act, 1949 the interest payable was 17% p.a. compounded quarterly and therefore the Appellate Tribunal was not justified either in reducing the rate of interest or in altering the nature of interest from compound interest to simple interest. He relied on the decision of the Supreme Court in Corporation Bank v. D.S. Gowda II (1994) BC 614 (SC) : AIR 1994 SCW 2721, wherein it is held that directives/Circulars issued by the RBI to Banks in regard to rate of interest u/s 21 of the Banking Regulation Act, 1949, cannot be declared by Courts to be unfair or excessive, and that Courts should not question the RBI directives in regard to interest as being irrational nor could the Banks ignore RBI directives or Circulars in regard to interest.
12. On the other hand, learned Counsel for the borrowers relied on the decision N.M. Veerappa v. Canra Bank , which considered the question of award of interest in mortgage suits. The Supreme Court held that Section 34 of CPC was inapplicable to mortgage suits and that in regard to mortgage suits, payment of interest is regulated by Order XXXIV Rule 11 of Code of Civil Procedure. The Court also held that Section 21-A of the Banking Regulation Act, 1949 did not override the provisions of Order XXXIV Rule 11 of CPC. In that case, the Trial Court had awarded compound interest at 16% p.a. upto date of suit and simple interest at the rate of 6% p.a. from the date of suit till date of realisation. On an appeal by the Bank, the High Court increased the interest payable to 16.5% p.a. from date of suit till date of realisation, relying on Section 34 of CPC. The Supreme Court allowed the appeal of the borrower and restored the decision of the Trial Court granting simple interest at 6% p.a. from date of suit till date of realisation. The Supreme Court relied on the wording of Order 34 Rule 11 of CPC and held that the use of the word ''may'' in the main part of the Rules gives discretion to Court in regard to future interest. The Supreme Court held :
"(b) But after the 1929 Amendment, because of the words used in the main part of Order 34 Rule 11, namely that "the Court may order payment of interest" it is no longer obligatory on the part of the Court while passing preliminary decree to require payment at the contract rate of interest from the date of suit till the date fixed in the preliminary decree for payment of the amount. It has been so held in Jaigobind''s case by the Privy Council
(c) It is no longer obligatory to award the contractual rate after date of suit and up-to-date fixed for redemption as above stated, even though there was no question of the contractual rate being penal, excessive or substantially unfair within the meaning of the Usurious Loans Act, 1918.
(d) Even if the Court otherwise wants to award interest, the position after the 1929 and 1956 Amendments is that the Court has discretion to fix interest from date of suit under Order 34 Rule 11(a)(i) upto date fixed for payment in the preliminary decree, the same rate agreed in the contract, or, if no rate is so fixed, such rate as the Court deems reasonable on the principal amount found or declared due on the mortgagor is concerned.
(e) The Court has also power to award from date of suit under Order 34 Rule 11(a)(iii) a rate of interest on costs, charges and expenses as per the contract rate or failing such rate, at a rate not exceeding 6%. This is the position of the discretionary power of the Court, from date of suit up-to-date fixed in the preliminary decree as the date for payment.
(f) Again under Order 34 Rule 11(b) so far as the period after the date fixed for payment is concerned, the Court, even if it wants to exercise its discretion to award interest up-to-date of realisation or actual payment, on the aggregate sums specified in Clause (a) of Order 34 Rule 11, could award interest at such rate as it deemed reasonable.
13. Following the decision in Veerappa, a Division Bench of this Court in
14. Order 34 of CPC, deals with suits relating to mortgages of immovable properties. Rules 4 and 5 of Order 34 provide for making a preliminary decree and final decree in suits for sale by enforcement of mortgages.
14.1. Rule 4 provides that in a suit for sale, if the plaintiff succeeds, the Court shall pass a preliminary decree :
(a) ordering that on account be taken of what was due to the plaintiff at the date of such decree for (i) principal and interest on the mortgage, (ii) the costs of the suit, and (iii) other costs, charges and expenses properly incurred by him upto that date in respect of the mortgage security, together with interest thereon; or
(b) declaring the amount so due at the date; and
(c) directing that, if the defendant pays into Court the amount so found or declared due on or before such date as the Court may fix and thereafter pays such amount as may be adjudged due in respect of subsequent costs, charges and expenses as provided in Rule 10, together with subsequent interest on such sums respectively as provided in Rule 11, the plaintiff shall deliver up to the defendant, or to such person as the defendant appoints, all documents in his possession or power relating to the mortgaged property, and shall, if so required, re-transfer the property of the defendant at his cost free from the mortgage and shall also, if necessary, put the defendant in possession of the property and further directing that, in default of the defendant paying,as therein mentioned, the plaintiff shall be entitled to apply for final decree, directing that the mortgaged property or sufficient part thereof be sold and the proceeds of sale, after deduction of the expenses of the sale, be paid to the Court and applied in payment of what has been found or declared under or by the preliminary decree due to the plaintiff, together with such amount as may have been adjudged due in respect of subsequent costs, charges, expenses and interest and the balance, if any, be paid to the defendant or other persons entitled to receive the same.
14.2. Rule 5 provides that in a suit for sale, if the mortgagor does not pay all amounts due as stated in the pre-decree passed under Rule 4, the Court shall pass a final decree directing that the mortgaged property, or a sufficient part thereof be sold, and that the proceedings of the sale be dealt with in the manner provided in Rule 4(1).
14.3. Rule 11 of Order 34 relating to interest in mortgage suits, should be read with reference to Rules 4 and 5. Rule 11 provides that in a suit for sale, where interest is legally recoverable, the Civil Court passing the decree may order payment of interest to the mortgagee as follows :
(a) interest upto the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage (i) on the principal amount found or declared due on the mortgage at the rate payable on the principal, or where no such rate is fixed, at such rate as the Court deems reasonable; and (ii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage-security up to the date of the preliminary decree and added to the mortgage-money, at the rate agreed between the parties, or failing such rate, at such rate not exceeding six percent per annum as the Court deems reasonable; and
(b) Subsequent interest up to the date of realisation or actual payment on the aggregate of the principal sums specified in Clause (a) as calculated in accordance with that clause at such rate as the Court deems reasonable.
15. The decision of the Supreme Court in Veerappa and the decision of this Court in Chikkaswamy were in appeals arising from preliminary decrees of Civil Courts passed under Order 34 Rule 4, CPC. But, in this case, we are not concerned with a decree of the Civil Court under Order 34 Rule 4 but by an order passed by the Debt Recovery Tribunal constituted under the provisions of the Act. Section 17 of the Act provides that the DRT shall exercise jurisdiction, power and authority to entertain and decide applications from Banks and Financial Institutions for recovery of debts due to such Banks and Financial Institutions. Section 18 bars the exercise of any jurisdiction, power or authority by (Civil) Courts, on and from the appointed date, in relation to matters specified in Section 17. Chapter IV of the Act relates to the procedure of Tribunals. Section 19 provides for filing of applications of the Tribunal. Sub-section (4) thereof (before the amendment) provided that the Tribunal may, after giving the applicant and the defendant, an opportunity of being heard, pass such orders on the application as it thinks fit to meet the ends of justice. Sub-section (7) (before the amendment) provided that the Presiding Officer of the Tribunal shall issue a certificate on the basis of the order of the Tribunal to the Recovery Officer for the recovery of the amount of debt specified in the certificate. Section 22 which relates to the procedure and powers of Tribunal provides that the Tribunal shall not be bound by the procedures laid down in Code of Civil Procedure, but shall be guided the principles of natural justice and subject to other provisions of the Act and any Rules, the Tribunal shall have the power to regulate to its OWD procedure. Chapter V regulates the recovery of debt determined by Tribunals.
16. The Supreme Court while upholding the validity of the Act, has observed thus in Union of India v. Delhi High Court Bar Association, C.A. No. 4679/1995 decided on 14.3.2002.
"17. The very purpose of establishing the Tribunal being to expedite the disposal of the applications filed by the Banks and Financial Institutions for realization of money, the Tribunal and the Appellate Tribunals are required to deal with the applicants in an expeditious manner. It is precisely, for this reason that Section 22(1) stipulates that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure. Therefore, even though the Tribunal can regulate its own procedure, the Act requires that any procedure laid down by it must be guided by the principles of natural justice while, at the same time, it should not regard itself as being bound by the provisions of the Code of Civil Procedure."
"24. The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time-to-time. It is because of the enactment of the CPC that normally all disputes between the parties of a civil nature would be adjudicated upon by the Civil Courts. There is no absolute right in any one to demand that his dispute is to be adjudicated upon only by a Civil Court. The decision of the Delhi High Court proceeds on the assumption that there is such a right. As we have already observed, it is by reason of the provisions of the CPC that the Civil Courts had the right, prior to the enactment of the Debt Recovery Act, to decide the suits for recovery filed by the Banks and Financial Institutions. This Forum, namely, that of a Civil Court, now stands replaced by a Banking Tribunal in respect of the debts due to the Bank."
(Emphasis supplied)
It is thus clear that the procedure prescribed by Order 34 of CPC relating to mortgages providing for passing a preliminary decree and final decree and providing for award of interest in mortgage suits (in particular the provision for different rates of interest in regard to the period up to the date specified in pre-decree for payment and for the period beyond that date) are inapplicable to orders passed by a DRT or the certificate issued by the Presiding Officer of the Tribunal,
17. Award of Interest by DRT is a matter governed by the Act. Section 19(4) of the Act as it earlier stood provided thus :
"The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such orders on the application as it thinks fit to meet the ends of justice."
Section 19(20) of the Amended Act [corresponding to Section 19(4) before amendment by Act 1 of 2000], reads thus:
"19(20)--The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due up to the date of realization or actual payment, on the application as it thinks fit to meet the ends of justice."
As the meaning of Section 19(4) before the amendment is made clear by Section 19(20) of the amended Act, it is permissible to look into Section 19(20) (of the amended Act) in order to see what is the proper construction to be put upon Section 19(4) of the Act (before amendment). Section 19(4) of the Act before Amendment and the corresponding Section 19(20) of the Act after amendment (with effect from 17.1.2000) give a clear indication that all three periods (pre-litigation, pendente lite and post-litigation) shall be treated without any distinction by DRT, for purposes of award of interest.
18. CPC contains two provisions relating to interest. One is Section 34 dealing with the suits other than mortgage suits and Order 34 Rule 11 dealing with the mortgage suits. The provisions of Section 34 are applicable where a money decree is passed by a Civil Court and provisions of Order 34 Rule 11 are applicable where a mortgage decree is passed by a Civil Court lo which the provisions of CPC apply. As the provisions of Order 34 Rule 11 do not apply to an order passed by DRT u/s 19(4) of the Act [corresponding to Section 19(20) of the amended Act], the principle laid down in N.M. Veerappa and Chikkaswamy relied on by respondents 1 to 3 that Courts and Tribunals have discretion to award interest at a rate as it deemed fit, as provided in Order 34 Rule 11, CPC, will not apply to award of interest by DRT.
19. The distinction between pre-litigation period (period between the date of advance and date of suit/application) and pendente lite/ post litigation period (periods between date of suit and date of order and period between date of order to date of realization), for purpose of award of interest is warranted or relevant only if Section 34, CPC is applicable. Similarly, a distinction is made under Order 34 Rule 11, CPC for purpose of award of interest in mortgage suits, between two periods; the first being the period from the date of mortgage lo the date fixed in the preliminary decree for payment, of the amount found due (at contract rate); and the second being post diem, that is from the date fixed for payment upto date of realization (at such rate as the Court deems reasonable). If the said provisions of CPC are inapplicable, there is no need or justification for either the DRT or the Appellate Tribunal to make an artificial distinction between pre-litigation, pendente lite, and post-litigation periods, for awarding interest.
20. this case, the Tribunal held that the agreed rate of interest is 17% p.a. The Appellate Tribunal accepted the said finding as it confirmed the declaration that the Bank is entitled to Rs. 10,52,457.97 as on the date of suit (which includes interest at 17% p.a. compounded quarterly, upto the date of suit). In D.S. Gowda''s case, the Supreme Court held as follows :
"If, in any case, it is shown that the Bank was claiming interest in excess of that permitted by the circular/direction of the Reserve Bank, the Court could give relief to the aggrieved party notwithstanding Section 21A to the extent of interest charged in excess of the rate prescribed by the Reserve Bank. A distinction must be drawn between Court''s interference on the premise that the interest charged is excessive and Court''s interference on the premises that the interest charged is in contravention of the circulars/directions issued by the Reserve Bank..... But if the Reserve Bank has fixed the maximum rate of interest in exercise of the powers conferred by Section 21/35A of the Banking Regulation Act, Section 21A would be attracted and the transaction would not be liable to be reopened on the ground that the rate of interest fixed is excessive even though not exceeding the ceiling determined by the Reserve Bank."
The Appellate Tribunal could not have, therefore, reduced the rate of interest to 6% p.a. on the assumption that it has unbridled discretion in awarding interest from the date of suit. The fact that the first respondent had faced some problems in running the Nursing Home or the fact that she paid Rs. 12.87 lakhs on 30.8.1996 may be grounds for the Bank to show concession if the borrower approached it for settlement. But they are certainly not grounds for the Appellate Tribunal to reduce the rate of interest either for the pre-litigation period or pendente lite or for the post-litigation period.
21. Respondents 1 to 3 next relied on Section 34. CPC and the decisions of Bombay High Court in Dena Bank to contend, that current and future interest cannot exceed 6% p.a. In that case, the Bombay High Court upheld the award of interest at 6% p.a. on the ground that loan advanced for construction of a Hospital is a loan for carrying on a ''profession'' and, therefore, not a commercial transaction. Respondents 1 to 3 have relied on the following observations :
" 12. The proviso to Sub-section (1) of Section 34 provides, therefore, that where the liability in relation to the sums adjudged has arisen out of a commercial transaction, the rate of further interest may exceed 6 p.c.p.a., but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized Banks in relation lo commercial transactions. Explanation I specifies what is the meaning of ''nationalised Bank'' while Explanation II provides that for the purpose of Section 34, CPC a transaction is a commercial transaction if it is connected with the industry, trade or business of the party incurring the liability.
20. In view of this, the ''profession'' will have to be treated as different than the ''Industry'', ''trade'' and ''business''. There is a clear distinction between the profession on one hand; and industry, trade and business on the other. While dealing with the "commercial transactions" for the purposes of Section 34. Civil Procedure Code, the Legislature has not used the word ''profession'' along with the words ''industry'', ''trade'' or ''business''. The commercial transaction which are strictly connected with the industry, trade or business alone are included for the purposes of Section 34, CPC as provided in Explanation II. Though the "commercial transaction" is inclusive of "Industry, trade and business" but it is exclusive of "profession", The fact that the Legislature has not included the word ''profession'' along with the words "industry, trade and business" to specify the "commercial transaction" cannot be ignored. The proviso to Section 34, CPC will, therefore, not govern the case where the loan is advanced for the ''profession'' or for ''professional transaction''."
Respondents 1 to 3 submitted that as in the case of Dena Bank the loan was advanced to them for construction of a Hospital and for purchasing medical equipment/machinery, and therefore, the interest should be only 6% p.a. from the date of suit. The contention is liable to be rejected on two grounds.
Firstly, the provisions of Section 34, CPC relating to interest is inapplicable to applications decided by the DRT under the Act (vide Para 18 above).
Secondly we are unable to persuade ourselves to agree with the view of Bombay High Court that advancing of a loan by a Bank for setting up a Nursing Home is not a commercial transaction. The Bombay High Court has in fact referred to the definition of ''commercial'' as ''having profit as a primary aim rather than artistic, etc. value'' and ''relating to trade or business'' and definition of ''business'' as ''one''s regular occupation, profession or trade''. Business is any activity or enterprise (including employment, occupation, profession or commercial activity) carried on for gain, benefit, advantage or livelihood. The Explanation to Section 34 makes it clear that for purposes of Section 34, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability. ''Business'' as noticed above, includes carrying of any profession. Therefore, it may not be possible to hold that a liability in regard to a loan by a Bank to a professional, to carry on his profession, has not arisen out of a commercial transaction, Further, it is not the case of respondents that the ''Nursing Home'' of first respondent is a charitable hospital. While first respondent may be practising the profession of medicine, it cannot be disputed that establishing and running a Nursing Home is certainly a business venture. We, therefore, respectfully disagree with the decision of the Bombay High Court in Dena Bank''s case.
22. It is true that this Court, in its writ jurisdiction, is not sitting in appeal over the decisions of the Appellate Tribunal. But as the Appellate Tribunal has interfered with the interest awarded by the DRT on wholly irrelevant grounds, ignoring the principles laid down by the Supreme Court (in the case of D.S. Gowda) and the provisions of the Act, it is necessary to interfere with the order. We, therefore, answer the second question in the negative and hold that the Appellate Tribunal was not justified in reducing the rate of interest from the contract rate of 37% p.a. to 6% p.a.
Re: Point (C):
23. The Appellate Tribunal has awarded simple interest instead of compound interest with quarterly rests from the date of suit.
24. We find from a careful reading of the plaint that there is no prayer for award of compound interest, with quarterly rests. The prayer is for awarding of simple interest. Even in the body of the plaint, there is no averments that the Bank is entitled to compound interest from the date of suit till date of realization. As far, as the interest upto the date of suit is concerned, the fact that the amount claimed by the Bank is calculated by including interest compounded with quarterly rests, makes it clear that the Bank had claimed compound interest. Hence, it cannot be said that the award of simple interest by the Appellate Tribunal is erroneous. The DRT has not considered this fact at all. The Bank is not entitled to more than what it has claimed. We, therefore, hold that the Bank is entitled to only simple interest fat the rate of 17% p.a.) on the amount declared to be due, from the date of suit till date of realisation. We answer Point (iii) accordingly.
CONCLUSION :
25. We accordingly allow this petition in part and modify the order of the Appellate Tribunal by restoring the rate of interest as 17% p.a. instead of 6% p.a. from the date of suit till realisation. We however uphold the order of the Appellate Tribunal awarding simple interest from the date of suit instead of compound interest with quarterly rests. Parties to bear their respective costs.
