P L D 1967 Karachi 433 (PLP)

FARUQUI, J: This letters Patent Appeal is by the Bank of Bahawalpur against the judgment of Abdur Rahim Kharal, J. dated 26‑3‑63, whereby he passed a decree in favour of the Plaintiff bank for the principal sum and interest at 8 % per annum upon the original sum but disallowed the interest which was calculable with monthly rests as provided in the promissory note. The appellant's grievance is that interest should have been allowed with monthly rests.

2. The suit was upon a promissory note and was instituted under the summary procedure provided by Order XXXVII of the Civil Procedure Code. The promissory note was in the sum of Rs. 50,OG0 and read as follows : "On demand I/We S. Muhammad Shies, Proprietor, Federal Pharmaceutical Laboratories jointly and severally promise to pay the Bank of Bahawalpur Ltd. or order the sum of Rupees fifty thousand only for value received, with interest from this date at 8 (eight) per cent. per annum with monthly rests." The defendant remained absent and the learned Judge decreed the suit ex patte by a short order which may be reproduced : "Defendants served by publication in Morning News. Services is held good. Suit is decreed with interest at 8 per cent. per annum but monthly rests are not allowed. Thus the suit is decreed only for the principal amount at 8 per cent. interest per annum up to the date of decree and at 6 per cent. per annum thereafter till realization. Proportionate costs are also allowed." The learned Judge did not give any reasons in this judgment for disallowing the interest as provided in the promissory note because he had in another judgment in a suit by the Bank of Bahawalpur v. Mst. Jeena Bai (P L D 1963 Kar. 239), passed a similar decree and had given reasons for not allowing interest with monthly rests. This judgment is reported. The reasoning of the learned Judge in this judgment appears in paragraph

9. This is what he said : "Under the clear terms of section 79 `interest shall be calculated at the rate specified, on tile amount of the principal money due thereon'. Thus interest can only, be allowed on the principal money due on the promissory note Rs. 48,000 and not: on the interest added to the principal on monthly rests. The provisions of Usurious Loans Act (Act X of 1918) are also to be borne in mind in this connection. Prior to passing of Usurious Loans Act in 1918, the Court had no power to refuse to allow interest at the rate specified' in the instrument, and the terms of section 79 of the Negotiable Instruments Act were imperative as to the rate of interest:" Though the learned Judge has referred to the Usurious Loans Act of 1918 he has not shown as to how the rate of interest with monthly rests, as' was the cast before him, came into conflict with any provisions of that Act. It was stated at the Bar both by Mr. Mansoorul Arfin for the Bank as well as by Mr. Jan Muhammad Dawood, whom we had asked to appear as amicus curiae as the Respondent was absent that no provision of the Usurious Loans Act was attracted either in the case of Jeena Bai or in the present case. The decision, therefore, of the question whether interest is to be allowed on the original sum advanced and not upon such sum as became due every month as provided in the promissory note must, therefore, be decided upon the construction of section 79 of the Negotiable Instruments Act. It may be added that the learned Judge had also principally relied upon this section. Order XXXVII, rule 2(2) a), C. P. C. provides for a decree where leave to defend has not been obtained for the principal amount due on the instrument and for interest calculated in accordance with the provisions of section 79 or section 80 as the case may be up to the date of the institution of the suit. As to the subsequent interest sub‑clause (b) provides that it may be ordered under section 34 of the Civil Procedure Code. Section 34 gives discretion to the Court to grant interest at such rate as the Court deems reasonable on the principal sum adjudged from the date of the suit to the date of the decree in addition to any interest adjudged on principal sum for any period prior to the institution of the suit and further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment.

3. Section 79 of the Negotiable Instruments Act; as it stood before the amendment introduced by President's Ordinance, XLIX of 1962 and which was interpreted by the learned Judge in the case of Jeena Bai, may be reproduced "When interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at the rate specified, on the amount of the principal money due thereon, from the date of the instrument, until tender or realisation of such amount, or until such date offer the institution of a suit to recover such amount as the Court directs." The amendment to the main section is not material for the purposes of the present case. It has, however, expressly provided that this section is subject to the provisions of any law for the time being in force relating to the relief of debtors and without prejudice to the provisions of section 34 of the C. P. C. Insofar as no provision relating to the relief of debtors has been pointed out so as to, affect the determination on the question of interest in the present case it follows that it is section 79 itself, as it stood before the amendment, which has to be construed. This section deals with the rate of interest and the time from which and up to which it is to be calculated. Kharal, J. with reference to the words "interest shall be calculated at the rate specified on the amount of the principal money due thereon" came to the conclusion that interest could only be allowed on the principal money and this term, its his opinion, referred to the original sum which had been advanced upon the promissory note. It is this interpretation, and we say this with great respect to the learned Judge, which we have not found acceptable. The term amount of the principal money', is a technical term and, in our opinion, is not equivalent necessary of the original sum which was advanced to the debtor upon the promissory note. If the note provides for payment with‑monthly rests, as was the case here, the original sum and the interest thereon at the end of the month would become the 'principal money' due on the promissory note or bill of exchange. When the section says that interest shall be calculated on the amount of the principal money due thereon the word 'amount' clearly indicates that it was the aggregate sum which became due in terms of the promissory note upon which interest was to be calculated. The dictionary meaning of the word 'amount' is 'total to which a thing amounts'. According to Law Lexicon of British India by Ram Nathan Ayyer, (page 610), 1940 Edn. 'compound interest' is interest upon interest where accrued interest is added to the principal sum and the whole treated as a new principal for the calculation of the interest for the next period. The same definition is given in Thompson's Dictionary of Banking by R. W. Jones at page 340, 10th Edn. wherein it is stated that compound interest is interest on interest with rests and the amount after such addition becomes the principal amount. Therefore, when the promissory note in the present case provides for payment of Rs. 50,000 with interest from the date of the note at 8 % per annum with monthly rests we do not think that in the absence of any contrary provisions in any law relating to the relief of debtors it is open to the Court to refuse to calculate interest in the manner provided in the instrument, to which parties had agreed. When this is done then at the end of every month when the interest of the month is added to the amount due the total of it becomes the principal money within the meaning of the term in section 79 of the Negotiable Instruments Act. The interest has then to be calculated on such principal money until the next point of rests comes and this goes on until the money is tendered or the suit is instituted whichever happens earlier. After the institution of the suit the grant of interest is in the discretion of the Court in view of the clear provisions of section 34 of the Civil Procedure Code.

5. In view of our conclusions we modify the judgment and the decree passed by the learned Single Judge and decree the Plaintiff's claim for Rs. 61,819.25 with interest at 6 % from the date of suit until the date of the decree and thereafter until the date of payment with costs. K.B.A. Appeal accepted.