CPC Section 34 — Interest
Civil
Summary
When a court orders someone to pay money as part of a judgment, the court can also decide to add interest on that amount. The court may set a reasonable interest rate for the period from when the lawsuit was filed until the judgment is given, and can also add interest for any time before the lawsuit was filed. After the judgment, the court can order further interest at a rate it considers reasonable, but this rate cannot be more than six percent per year, unless the debt came from a business deal, in which case the rate can be higher but not more than what was agreed in the contract or, if there is no contract, the rate charged by nationalised banks for business loans. If the judgment does not mention any further interest after the judgment date, the court is treated as having refused that interest, and no separate lawsuit can be filed to claim it.
Official Text
(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, 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 :
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 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.