Court's discretion in awarding interest on principal amount from date of suit justified due to appellant's unlawful withholding of amount despite notice from respondent

Headnote:
Interest - Sales Tax - Court exercised discretion in awarding interest on principal amount claimed from date of suit
Fact of the Case:

Plaintiff claimed principal and interest on amount illegally realized as sales tax, Trial Court dismissed suit on limitation grounds, High Court decreed principal amount and interest at 5% per annum from date of suit
Finding of the Court:

High Court's decision on limitation and awarding of interest upheld, Appellant did not challenge liability, Appellant's contention on interest from date of suit rejected
Issues: Claim for principal and interest, Limitation, Award of interest from date of suit
Ratio Decidendi: Court upheld High Court's discretion in awarding interest on principal amount from date of suit due to appellant's unlawful withholding of amount despite notice from respondent
Final Decision: Appeal dismissed, High Court's decision upheld, Appellant to pay costs

Judgement

HEGDE, J:- This is an appeal by Certificate from the decision of the High Court of Madhya Pradesh. The defendant in the suit is the appellant herein. The plaintiff therein is the respondent. The plaintiff claimed a sum of Rs. 89,408-15-6 as being the principal and interest on the amount illegally realised from him on the ground that the amount collected by him as sales tax from his customers is payable to the Government. The principal amount claimed is Rs. 62,518-8-0.

2. The Trial Court came to the conclusion that the collection in question was illegal. But it dismissed the suit on the ground that the same was bared by limitation.

3. In appeal, the High Court disagreeing with the view taken by the Trial Court decreed the principal amount claimed by the plaintiff and interest on the same at 5 per cent per annum from the date of the suit. It came to the conclusion that the suit was within time. The defendant did not challenge the finding of the Trail Court as to its liability.

4. In this Court, the counsel for the appellant-defendant did not contest the correctness of the decision of the High Court on the question of limitation. The only contention urged by him was that the High Court erred in awarding interest on the principal amount claimed from the date of the suit. The question, whether interest should be awarded on the principal amount claimed from the date of the suit, was within the discretion of the Court. In our opinion, the High Court rightly exercised that discretion. It disallowed the interest claimed by the plaintiff-respondent up till the date of the suit. Coming to the question of interest, subsequent to the date of the institution of the suit, it was found that the appellant had unlawfully withheld the amount due to the respondent even after coming to know that the collection made was an illegal one. Before institution the suit, the respondent had issued a notice to the appellant to pay the money illegally collected from it; but despite that notice, the appellant failed to pay back the amount illegally collected from the respondent. That being so in our opinion, the High Court was justified in awarding interest on the principal amount from the date of the suit.

5. in the result, this appeal fails and the same is dismissed with costs.

Appeal dismissed.

For Citation : AIR 1972 SC 1545

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