1. This is plaintiff''s appeal from the judgment and decree dated 31st of August, 1988, passed by Sri K. Sreedhar, XIII Additional City Civil Judge, Bangalore, in Original Suit No. 2389 of 1985. Plaintiff as per plaint allegations, claimed a decree for a sum of Rs. 42,057/-. He further claimed interest at the rate of 20 per cent per annum from the date of the suit, till the date of realisation.
2. The Trial Court on the basis of Exhs. P. 5 and P. 7 and other material found the plaintiff to be entitled to claim decree to the extent of Rs. 26,000/-. If further held that plaintiff failed to prove that the principal amount includes compound interest at the rate of 18 per cent from the date of the suit till the date of realisation of the principal amount borrowed. It further ordered that defendant is entitled to pay decretal sum in monthly instalments of Rs. 500/- with single default clause.
3. Feeling aggrieved from the judgment and decree of the Trial Court, the plaintiff has come up in appeal. The principal contention that has been advanced by learned Counsel for the appellant is that on the amount of loan from the date of the loan transaction or in any case from the date of demand notice issued, the plaintiff has been entitled to a decree for interest from the date of notice till the date of suit. In this connection, learned Counsel for the appellant invited my attention to the provisions of Interest Act and the decisions of this Court in the case of
4. Section 3 of the Interest Act reads as under:
"3. Power of Court to allow interest.--(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say.-
(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings:
Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment;
(2).....
(3)....".
5. A reading of this section per se reveals that it confers a power upon the Court to allow interest to the person entitled to the debt or damage and to the person making such claim of interest at a rate not exceeding the current rate of interest. With reference to a debt payable on a certain date or time, under the written contract from the date from which the debt is payable to the date of institution of the suit and in cases where the debt is one of the nature in which the date of payment is not fixed one or date if not certain, then in those cases from the date when the written notice of demand is given by the person entitled and the person claiming the interest indicating and specifically mentioning in the notice to the person liable to pay, that interest will be claimed from the date of notice, at least to the date of institution of the suit or proceedings. Section 3 of the Act, is applicable in cases where there is no agreement to pay the interest. In the case of Raghuveer Singh, supra, their Lordships of the Supreme Court observed with reference to the provisions of the Interest Act, 1839, as under:
"..... Under the Interest Act, 1839, ''upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time, or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand, until the term of payments provided that interest shall be payable in all cases in which it is now payable by law....".
Their Lordships further observed.-
"..... In our view the condition prescribed by the Interest Act that such demand shall give notice to the debtor that interest shall be claimed is fulfilled if interest is claimed, notwithstanding the fact that the notice of demand explains that loss by way of interest has been suffered....".
6. In Dena Bank''s case, supra, Bombay High Court observed in paragraph 11 as under:
"11. The defendants also urged that the plaintiffs'' claim of interest @ 17.5% is not based on any contract. It is, no doubt, true that there is no agreement to pay interest. The plaintiffs have based their claim for interest on the Interest Act from the date of notice of demand. The defendants contention is therefore unsound".
7. So these cases explain where there is no agreement for payment of interest, Interest Act may apply. It is also well-settled principle of law that ordinarily as a general principle of law, where there is no agreement to pay the interest on the amount or debt, the interest is not awardable unless it is provided under the Interest Act and if a claim is based thereon and has been made by notice and in the plaint by the plaintiff, then the plaintiff may be entitled to be awarded interest u/s 3 of the Act.
8. This requires the perusal of the plaint case, whether the plaintiff had claimed the interest under the Interest Act. A perusal of the plaint reveals that plaintiff has only alleged that as on 23-12-1982, a sum of Rs. 25,023-80 appeared on the debit side and though defendant had agreed to reimburse, he did not reimburse that and neglected to reimburse it. Therefore, defendant rendered himself liable to pay overdue interest at the rate of 20 per cent per annum compounded quarterly and according to the plaintiff''s case, plaintiff issued a notice on 6-6-1984, which was served on the defendant according to the plaint case, demanding the defendant to pay the amount then outstanding. In the relief clause of the plaint, decree has been claimed for Rs. 42,057-00, the details of which have been shown as principal amount - Rs. 41,541-50 paise and interest from 1-4-1985 to 21-7-1985 at Rs. 478-75 paise. Plaintiff claimed the relief that is decree for the sum mentioned in the plaint with interest on the sum of Rs. 41,541-50 paise, described as principal sum, at the rate of 20 per cent from the date of the suit and further current interest at the rate of 20 per cent per annum on the said principal amount of Rs. 41,541-50 paise per annum from the date of decree till the date of realisation.
9. Notice dated 6-6-1984 is on record. It is Exh. P. 2. The notice no doubt reveals that as "the defendant had agreed to reimburse the amount of Rs. 25,024/- paise within one week, and in spite of repeated requests he has neglected to reimburse". It is mentioned thereafter hence rendered himself liable to pay interest at the rate of 20 per cent per annum. Now you are due to my client for a sum of Rs. 25,024/- and interest at the rate of 20 per cent per annum from 1-4-1985 up to date". Plaintiff has nowhere clearly stated in the plaint that there was any agreement to pay interest in case of default. Plaintiff has described the sum of Rs. 41,541-50 paise as the principal sum. He has nowhere stated very clearly that a sum of Rs. 25,023-80 paise was due and thereafter interest had been claimed at the rate of 20 per cent in the suit, which comes to such and such amount. Plaintiff has described the entire sum of Rs. 41,541-50, as principal sum. But, he has nowhere made a specific claim for that amount of interest accruing from the date of transaction till the date of filing of the suit. He has only made a claim for interest from 1-4-1985 to the date of suit and thereafter. In the relief clause also he treats the sum of Rs. 41,541-50 paise as the principal sum due against the plaintiff. In paragraph 8 of the plaint also he only states that in spite of overdraft loans sanctioned on 22-10-1982 and 23-12-1982, defendant has become due to plaintiff-bank for a sum of Rs. 42,057/- and then described the principal sum to be Rs. 41,541-50 paise. So it appears that the plaintiff has considered this amount and pleaded the amount of Rs. 41,541-50 paise, as if it is the principal loan given to the defendant, and he has not treated or alleged Rs. 25,024/- or Rs. 26,000/- as the principal debt and thereafter whatever remainder he had not indicated that it is towards the amount of interest and this appears to be a case of vague pleadings. In the plaint it has not been the case that there was agreement to pay interest. In cases where there is no agreement to pay the interest and the creditor has issued a notice of demand indicating the amount due and calling upon the person to pay of that amount, and asserting that in case of default the debtor will be liable to pay the interest, at the rate of certain per cent or 18 per cent, then it could be said that defendant was called to pay the debt and it was made clear that in case of default, the debtor will be liable to pay interest. In the notice in the present case claiming Rs. 25,024/-, as sum due, it has been clearly stated the default to pay, is to render defendant liable to pay interest at the rate of 20 per cent. The defendant did not comply with the demand and did not pay of the principal debt mentioned in the notice.
10. Looking to the facts and circumstances of the case, the question before me is whether the defendant should be allowed to make use of the benefit of that amount, and take the shelter under the sheer technical ground that the plaintiff has not bifurcated the amount as principal amount and the interest, in plaint, from being made liable to pay interest.
11. The money which bank allowed as overdraft to the defendant was not a gratuitous act. It was a commercial transaction as per Trial Court and defendant made use thereof in his business as such Section 70 of the Contract Act and Section 3 of Interest Act, have got application to the facts of the case. The facts of the case clearly indicate that plaintiffs claim indicate that if the loan amount is not paid, defendant will be liable to pay the interest i.e., in case of default interest shall be charged. In this view of the matter, it appears equitable to grant the necessary relief, keeping in view the principles of Section 3 of the Interest Act. The amount of Rs. 25,024/ was the principal sum due as per notice of demand dated 6-6-1984. u/s 3 of the Act, in view of the facts that as there was no agreement regarding interest, and the demand having been made, including for interest, and keeping in view the equity as well, I think it is proper in the interest of justice, to allow the appeal and award interest.
12. The appeal is allowed in part. The plaintiff-appellant is declared to be entitled to the interest on the principal sum of Rs. 25,024/-, subject-matter of notice-Exh. P. 2, in which it was mentioned that interest will also be payable at the rate of 20 per cent. On this amount of Rs. 25,024/-, or say Rs. 26,000/-, i.e., overdraft allowed, claimant has to be held to be entitled to interest from the date of demand notice dated 6-6-1984, up to the date of the suit, at the rate of 9 per cent only.
13. The Trial Court decree is modified only to this extent that u/s 3 of the Interest Act, the claimant is held entitled to decree for the principal sum of Rs. 26,000/-, with interest at the rate of 9 per cent from 6-6-1984, till the date of institution of the suit i.e., 22-7-1985. The amount of interest at the rate of 9 per cent for the period from 6-6-1984 to 22-7-1985, comes to Rs. 2,633/-. The decree which has been passed for Rs. 26,000/- will stand enhanced and the suit will be deemed to have been decreed for a sum of Rs. 28,633/- which includes interest at the rate of 9 per cent per annum on the sum of Rs. 26,000/-. for the period from 6-6-1984 to 22-7-1985. The future interest which has been awarded from the date of the suit onwards till the date of payment at the rate of 18 per cent u/s 34 of the CPC, is maintained intact and is confirmed and shall be payable as per Trial Court decree.
The appeal is thus allowed in part. Costs of the appeal made easy.
