Pendente lite interest is interest on the principal sum adjudged, awarded under Section 34 of the Code of Civil Procedure for the period from the date of the suit to the date of the decree, at a rate the court considers reasonable. Section 34 also allows further interest from the decree to payment at up to 6% a year, except that where the liability arose from a commercial transaction the post-decree rate may exceed 6% but not the contractual rate (or, absent a contract, the rate at which banks lend for commercial transactions).
How pendente lite interest works in India
The plaint claims interest for all three periods. The court, when decreeing the principal, fixes the rate for the pre-suit period (contract or Interest Act), awards pendente lite interest at a rate it finds reasonable, and awards future interest until payment. Because most supplier claims are commercial transactions, the court may award future interest above 6%, often at the contractual rate. Interest is simple unless the contract provides for compounding. In Commercial Courts, pleadings must state the interest claimed and its basis precisely.
| Period | Basis | Typical outcome |
|---|---|---|
| Before suit | Contract rate, Interest Act or MSMED Act | Contract rate if proved; otherwise 6% to 12% |
| Pendente lite | Section 34(1) CPC, discretion | 6% to 12% simple |
| After decree | Section 34(1) CPC | Up to 6%, or contract/bank rate for commercial transactions |
Why it matters for getting paid
A suit that takes three years without pendente lite interest would reward delay. The interest claim also strengthens the supplier's hand in settlement, because the buyer knows the decree will carry interest for the entire period. Suppliers with an agreed rate in their PO or contract fare better, so a clear interest clause is worth adding. See the Interest Act and civil recovery suit.
How FundRaksha uses it
FundRaksha's advocates plead all three periods of interest in every suit and arbitration, with the contractual rate where one exists, and include accrued interest in settlement discussions. Interest recovered forms part of the amount on which FundRaksha's 30% fee is charged, so no interest is left unclaimed. The company has handled ₹50 Cr+ of invoices for 1,000+ businesses.
Worked example (hypothetical)
A Visakhapatnam steel fabricator sues a shipbuilder for ₹20,00,000 due on 1 January 2024, suit filed 1 January 2025, decree on 1 January 2027, payment on 1 July 2027. The contract states 15% interest. The court awards pre-suit interest at 15% for 12 months (₹3,00,000), pendente lite interest at 12% for 24 months (₹4,80,000) and future interest at 15% (commercial transaction) for 6 months (₹1,50,000). Total interest ₹9,30,000 on the ₹20,00,000 principal, all simple. Without a contractual rate, the court might have used 9% throughout, giving about ₹6,30,000.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.