Bombay High Court
SHRI. HARAKCHAND GULABCHAND DHOKAversusSHRI. KASHINATH NARSINH MARATHE
- Decided
- Disposal
- Disposed Off
Holding
Interest on the refund is to be awarded at 6% per annum as per Section 34 CPC.
Summary
The appellant sought a refund of an amount paid under an alleged oral agreement for sale and contended that interest on the refund should be at 10% per annum. The respondents computed interest at 6% per annum, relying on Section 34 of the Code of Civil Procedure and the decision in Abhinav s/o Gopal Agrawal v. Pradeep s/o Parasram Thakre, which limits pre‑suit interest to 6% absent a commercial rate or agreement. The appellant argued for a higher rate, citing the Supreme Court’s ruling in K. S. Satyanarayana v. V. R. Narayana Rao which awarded 10% interest. The Court examined the lack of any agreed interest rate or commercial nature of the transaction and held that the 6% rate was appropriate. Consequently, the Court ordered the respondents to refund the amount with interest at 6% per annum within twelve weeks and disposed of the appeal.
Issues considered
- Whether interest on a refund claim in a suit for specific performance can exceed 6% per annum under Section 34 CPC.
- Whether the Supreme Court decision in K. S. Satyanarayana v. V. R. Narayana Rao mandating 10% interest is applicable to the present case.
Legislation cited
- Code of Civil Procedure — s. 34
Subjects
- interest rate
- pre‑suit interest
- Section 34 CPC
- specific performance
- refund of earnest money
- commercial rate of interest
Judgment
26-FA-36-2011 (C).DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 36 OF 2011
Digitally
signed by
Shri. Harakchand Gulabchand Dhoka ...Appellant
BASAVRAJ
BASAVRAJ GURAPPA
GURAPPA PATIL Versus
PATIL Date:
2026.09.03
14:38:17 Sou. Pushpa Kashinath Marathe & Ors. ...Respondents
+0530
__
Mr. Janay Jain a/w. Rishabh Jadhav i/b. Parinam Law
Associates for the Appellant
Mr. Tejesh Dande a/w. Mr. Sarvesh Deshpande,
Mr. Bharat Gadhvi, Mr. Aniket Shitole, Mr. Pratik Sabrad
and Ms. Tanishka Chavan for the Respondent.
__
CORAM : ARIF S. DOCTOR, J.
DATE : 1st SEPTEMBER 2026
P.C.
1. On the previous occasion the Court noted as follows, viz.
“1. Today, Mr. Dande has taken a very fair stand by not contesting
the claim for refund. He has only requested the Court to place the
matter next week to enable him to compute the relevant figure and
submit the same.
2. At his request, stand over to 24th August 2026 (HOB).”
2. Mr. Dande, learned counsel appearing on behalf of
Respondent Nos. 1(B) and 1(C), has, today, tendered a
computation of the amount which, according to him, would have
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26-FA-36-2011 (C).DOC
to be refunded to the Appellant. He submit ted that interest has
been computed at the rate of 6% per annum. In support of why
interest at the rate of 6% per annum has been computed,
Mr. Dande has placed reliance upon the decision of this Court in
Abhinav s/o. Gopal Agrawal Vs. Pradeep s/o. Parasram
Thakre1 which he points out, in paragraph 11 thereof, noted as
follows:
““11. The law, discussed above, would settle the position. It is clear
that under section 34 of Code of Civil Procedure, the Court has no
discretion to grant interest at the rate exceeding 6% per annum and
from any date prior to the date of filing of suit, unless the transaction
between the parties to the suit is commercial in nature, or there is
express or implied agreement between the parties or there is some
statutory provision or there is a mercantile usage duly proved
justifying pre-suit interest and at higher rate.””
3. Mr. Dande submitted that, in the facts of the present case,
the Suit was founded upon an alleged oral agreement for sale, of
which specific performance was sought. He pointed out that
there was neither any agreed rate of interest between the
parties nor any evidence on record to establish a commercial
rate of interest exceeding 6% per annum. He, therefore, submits
that the computation tendered by him, calculating interest at the
rate of 6% per annum, is correct.
1
2013 SCC OnLine Bom 1532
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26-FA-36-2011 (C).DOC
4. Mr. Dande also then invited my attention to the findings of
the Trial Court viz.
“58) Here in the present suit, plaintiff failed to prove that amount of
Rs. 19,51,000/- is paid towards the consideration of agreement in
between him and defendant. It has been held in Balasaheb Dnyandeo
Naik. (Dead) through Lrs. & Ors. Vs. Appasaheb Dattatraya Pawar,
AIR 2008 Supreme Court 1205) that:
“As rightly painted (sic. pointed) out, the claim for refund of
earnest money is only their alternative claim. It is not in
dispute that in all suits for specific performance, the plaintiff is
entitled to seek alternative relief in the event the decree for
specific performance can not be granted for any reason, hence
there is no infirmity in the alternative plea of refund".
Hence, the fact remained that there must be contract and
decree of specific performance must be refused by the Court. The
facts in the above ruling are different. Here in the present suit, there
is no contract. Hence, the same is not applicable to the present suit.
59) Considering that there is no agreement in between the parties
and ratio in Bengal Coal Company Ltd. Vs. Prosanna Kumar
Bhattacharjee and others, AIR 1932 Calcutta 39, I find that said
amount neither consideration amount nor earnest money. Hence,
plaintiff is not entitled to get refund of the said amount. Accordingly. I
answer this issue in the negative.”
Basis the above, he submitted that there was no question
of granting interest at a rate higher than 6% per annum.
5. Mr. Jain, learned counsel appearing on behalf of the
Appellant, has, however, pressed for interest at the rate of 10%
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26-FA-36-2011 (C).DOC
per annum. In support of his contention, he places reliance upon
the decision of the Hon’ble Supreme Court in K. S.
Satyanarayana Vs. V. R. Narayana Rao 2, and, in particular,
paragraph 12 thereof, which reads as under:-
“12. We allow the appeal, set aside the judgments of the trial court
as well as of the High Court and decree the suit of the plaintiff for
Rs.1,36,167 against the 1st defendant with costs throughout. The
plaintiff shall also be entitled to interest at the rate of 10% per annum
on the principal amount of rupees one lakh from the date of institution
of the suit till realisation.”
6. After having heard learned counsel and having perused the
impugned order, in particular the findings noted above, I have
no hesitation in holding that the figure as computed by Mr.Dande
is correct. Though Mr. Jain has strenuously argued that interest
should be awarded at 10% based on the decision of the Hon’ble
Supreme Court in K. S. Satyanarayana (supra) , I find that the
said decision would have no application in the facts of the
present case.
7. In view of the aforesaid findings, and particularly having
regard to the absence of any agreed rate of interest or material
warranting the award of a higher rate, I am of the view that the
amount liable to be refunded has been correctly computed by
2
(1999) 6 SCC 104
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26-FA-36-2011 (C).DOC
applying interest at the rate of 6% per annum. The amount so
computed shall be refunded to the Appellant within a period of
twelve weeks from today.
8. The First Appeal is, accordingly, disposed of.
[ARIF S. DOCTOR, J.]
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