Section 34 of The Code of Civil Procedure, 1908
Interest.
- (1)Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, 1 [with further interest at such rate not exceeding six per cent. per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit : 2[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent. per annum, 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 nationalised banks in relation to commercial transactions. Explanation I.--In this Sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). Explanation II.-- For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.]
- (2)Where such a decree is silent with respect to the payment of further interest 3[on such principal sum] from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie.
Summary
- This section gives courts the power to add interest to money-related judgments.
- Interest can be charged from the start of the lawsuit until the final judgment.
- If the judgment does not mention interest after the decree, it is legally considered refused.
Practical examples
FAQ
1. What is the maximum interest rate for a standard money decree under Section 34 of The Code of Civil Procedure, 1908?
For standard money decrees under Section 34 of The Code of Civil Procedure, 1908, the further interest rate must not exceed six percent per year.
2. Can the interest rate exceed six percent for business cases under the 1908 Code?
Yes, Section 34 of the 1908 Code allows the interest rate to exceed six percent if the debt arose from a commercial transaction.
3. What is a commercial transaction under Section 34 of the Civil Procedure Act?
Under Section 34 of the Civil Procedure Act, a transaction is commercial if it is connected with the industry, trade, or business of the person who owes the money.
4. What if the judge forgets to write the interest rate in the final order under Section 34?
According to Section 34 of the 1908 Code, if the decree is silent about further interest, the court is deemed to have refused it.
Test yourself
1.Under Section 34 of The Code of Civil Procedure, 1908, what is the default maximum interest rate from the date of the decree?
2.According to Section 34 of The Code of Civil Procedure, 1908, what happens if a decree is silent regarding interest after the decree date?
3.Under Section 34 of The Code of Civil Procedure, 1908, a transaction is "commercial" if it is connected to which of the following?
4.Under Section 34 of The Code of Civil Procedure, 1908, can the court award interest for the period before the lawsuit was even filed?