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2002 Supreme(AP) 398
Andhra Pradesh High Court
Gaddam Subba Reddy - Appellant
Versus
Nandyal Merchants Co-operative Housing and Shops Construction Society Limited - Respondent
Decided On : 03-14-02
Headnote:
Interest Act - Section 2 (c) and 4 - Respondent filed a suit for recovery of an amount of together with interest @ 24% from - Construction of building - Refund amount – liable to pay interest - Claim was that the respondent entrusted work of construction of building to appellant and after completion of the work, it paid an amount - However, on verification it was found that it has to pay only and accordingly asked appellant to refund the amount - Appellant acknowledged the liability to refund he did not refund the same and a notice dated was issued calling upon him to pay amount with interest at 24% - Since, appellant failed to comply demand made under notice he filed suit - Appellant herein filed a written statement admitting the factum of having been paid an amount in excess. It was his case that he expressed his readiness and willingness to refund excess amount - However, he disputed the liability to pay the interest at 24% per annum - Dispute in the suit was only as to the liability of appellant to pay interest – Held, It is not even averred that the said agreement contemplates payment of any interest on amounts paid in excess either inadvertently or otherwise - Further, having pleaded "trade custom and usage" respondent did not examine any one nor filed any documents to show that there exists any trade custom or usage for payment of 24% interest on amounts paid inadvertently that too in a contracts relating to construction of building - Application of provisions of the Interest Act, may appear to be purely legal in contradiction to the factual aspect - However, unless necessary factual foundation is laid down provisions of law cannot be applied as a matter of course - It is only when a specific, plea is taken that the amount that was paid in excess to appellant constitutes debt within meaning of Section of said Act appellant would have been in a position to lead necessary evidence to show as to whether such a plea is tenable - In absence of pleading to that effect appellant herein was handicapped from placing the necessary evidence to show as to how it does not come within the said definition - It depends on various circumstances to be taken into account, which need to be pleaded and proved - When there was no plea by respondents that he was entitled for interest under Interest Act and on other hand, when it was his specific case that interest was payable under "trade custom and usage", which he failed to establish ground and basis for grant of such interest did not exist - Thus order of the lower appellate Court cannot be sustained in law - Lower appellate Court in AS No. 64 of 1988 is set aside and second appeal is allowed.
( 1 ) IN this second appeal, the defendant in OS No. 220 of 1986 challenges the judgment and decree in AS No. 64 of 1988 on the file of the Subordinate Judge at Nandyal.
( 2 ) THE respondent filed a suit for recovery of an amount of Rs. 10,803. 00together with interest @ 24% from 25-2-1985. The basis of the claim was that the respondent entrusted the work of construction of the building to the appellant and after the completion of the work, it paid an amount of Rs. 16,320. 00 on 25-2-1985. However, on verification it was found that it has to pay only Rs. 5,517. 00 and accordingly asked appellant to refund the amount of Rs. 10,803. 00.
( 3 ) ACCORDING to respondents, though the appellant acknowledged the liability to refund, he did not refund the same and a notice dated 20-10-1985 was issued calling upon him to pay the amount with interest at 24%. Since, the appellant failed to comply the demand made under notice, he filed the suit.
( 4 ) THE appellant herein filed a written statement admitting the factum of having been paid an amount of Rs. 10,803. 00 in excess. It was his case that he expressed his readiness and willingness to refund the excess amount. However, he disputed the liability to pay the interest at 24% per annum. The dispute in the suit was only as to the liability of the appellant to pay the interest.
( 5 ) THE trial Court framed the issues and oral and documentary evidence was adduced by the parties. The trial Court by its judgment dated 19-7-1987 held that the appellant was liable to pay the principal amount of Rs. 10,803. 00. Since there was neither any contract for interest nor any denial of the liability by the appellants, it held that the respondent was not entitled for the interest. Accordingly, a decree was passed for an amount of Rs. 10,803. 00.
( 6 ) THE respondent filed AS No. 64 of 1988 in the Court of the Subordinate Judge, Nandyal challenging the decree of the trial Court. The lower appellate Court allowed the appeal holding that the interest was payable under the provisions of the Interest Act. Hence, this second appeal.
( 7 ) SRI M. Mohan Krishna learned Counsel for the appellant submits that there was absolutely no basis for the claim of interest by the respondent. According to him, there was neither agreement for payment of interest nor did the respondent claimed the interest under the provisions of the Interest Act. Since, their claim of the interest was based on the existing usage and custom, the same ought not to have been granted, unless the respondent established the existence of such a usage or custom in respect of refund of excess amount also.
( 8 ) THE arguments of the learned Counsel for the appellant were heard on 7-3-2002. Learned Counsel for appellant sought time for making his submissions. According to his request, the matter was directed to be listed today. The case is listed as item No. 1 in the weekly cause list from 11-3-2002 to 16-3-2002. There was no representation on behalf of the respondents when the case was called. Hence, the matter is decided on the basis of the material available on record.
( 9 ) IT is a settled principle of law that payment of interest is a matter of contract between the parties; or is subject to the provisions of any statute. It is not in dispute that the amount that was due from the appellant was not on account of any borrowing by him or by any such transaction. Admittedly, the amount was paid inadvertently by the respondents themselves. Thus the appellant cannot be accused of withholding the amount or neglecting to pay. The amount was paid on 25-2-1985. It was only some time in May 1985, that the respondent realised the making of excess payment. The appellant addressed letter dated 4-6-1985 which was marked as Ex. A2, accepting the factum of having been paid the amount in excess and offered to refund the same within 8 days. It has come in the evidence and pleadings that when the appellant offered to repay the amount, the respond
