Report No. 55
19. Explanation of change by Minister of Legal Affairs.-
The Minister of Legal Affairs (Shri Pataskar) explained the change made by the Joint Committee, in these terms1:-
"Clause 2 of the Bill relates to an amendment of section 34 of the Code of Civil procedure. That section empowers a court to award further interest from the date of the decree upto the date of payment on the aggregate sum which comprises of the principal sum, with interest. Clause 2 was provided to limit the rate of interest which a Court can award on the decretal amount to six per cent. per annum. The Joint Committee went further and decided that interest not exceeding six per cent. should be allowed only on the principle sum and not on the aggregate sum which does include some amount of interest. This is based on the equitable principle that interest ought not to be allowed on the amount of interest itself; in other words, to prevent compound interest."
1. Lok Sabha Debates, 14th November, 1956.