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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
T. MALLIKARJUNA RAO, J.
Alla Venkata Reddy S/o Laxma Reddy – Petitioner
Versus
Bonthu Pitchi Reddy S/o Sudha Reddy (Died) – Respondent
First Appeal No. 38 of 2014
Decided On : 16-06-2023
Interest - Refund of Advance Money - Code of Civil Procedure - Section 96 - 34 - 9% p.a., 12% p.a., 6% p.a. - The court discussed the plaintiff's claim for refund of advance money and the entitlement to interest. It referred to legal provisions under the Code of Civil Procedure, Section 34, and relevant case laws to establish the principles of awarding interest in the absence of a stipulation in the agreement. The court held that interest can be awarded at a reasonable rate, and set aside the trial court's decision to not award interest from the date of the agreement until the date of the notice, and directed the defendant to pay interest at 9% per annum on the advance amount.
Fact of the Case:
The plaintiff filed a suit seeking the refund of advance money along with interest from the defendant, who agreed to sell a property but failed to fulfill the contract. The defendant remained exparte and did not contest the suit.
Finding of the Court:
The court found that the plaintiff was entitled to a decree for the refund of the advance amount, but the trial court's decision to not award interest from the date of the agreement until the date of the notice was set aside, and the plaintiff was awarded interest at 9% per annum on the advance amount.
Issues: The issues involved whether the plaintiff was entitled to interest on the advance amount and if the trial court's judgment needed interference.
Ratio Decidendi: The court held that interest can be awarded in the absence of a stipulation in the agreement, and referred to legal provisions and case laws to establish the principles of awarding interest as compensation for deprivation of the use of money.
Final Decision: The appeal was partly allowed, and the plaintiff was entitled to interest at 9% per annum from the date of the agreement until the date of issuing notice on the advance amount of Rs.24,00,000, but not at 12% per annum as claimed in the appeal. Both parties were directed to bear their own costs.
JUDGMENT :
T. MALLIKARJUNA RAO, J.
1. The Appeal, under Section 96 of the Code of the Civil Procedure, is filed by the appellant/plaintiff challenging the decree and Judgment dated 16.11.2010 in O.S.No. 127 of 2010 passed by the learned II Additional District Judge, Guntur (for short, ‘the trial court’). The appellant is the plaintiff, who filed the suit in O.S.No. 127 of 2010 seeking the refund of advance money of Rs.24,00,000/- along with interest at 12% p.a., from 06.06.2007 to 04.06.2010 which is an amount of Rs.8,64,000/- totaling to Rs.32,64,000/- and for costs of the suit.
2. The parties will hereinafter be referred to as arrayed before the trial Court.
3. The plaintiff's claims in the plaint are summarized as follows:
4. The defendant remained exparte and he did not contest the suit.
5. Based on the above pleadings, the trial Court framed the following issue:
6. During the course of trial, on behalf of the plaintiff, P.W.1was examined and Exs.A1 to A.3 were marked.
7. After completion of trial and considering the arguments, the trial Court has partly decreed the suit with costs and ordered the defendant to pay the plaintiff Rs.24,00,000/- along with interest at 12% p.a., from 01.06.2010 and till the date of decree and thereafter the interest at 6% p.a., till the date of realization on Rs.24,00,000/-. Aggrieved by the said judgment and decree, the appellant/plaintiff filed the present appeal.
8. Learned counsel for the appellant/plaintiff contends that the trial Court ought to have granted an additional amount of Rs.8,64,000/- as interest at 12% p.a., from 06.06.2007 to 04.06.2010 on the principal amount of Rs.24,00,000/-. The observation of the trial Court that there is no agreement between the parties, in the event of refund of advance amount, the respondent will pay the interest on the advance money is not correct.
9. Per contra, the learned counsel appearing for the respondent/ defendant would contend that the trial Court correctly analyzed the facts of the case and reached an appropriate conclusion. The reasons given by the trial Court do not want any modification.
10. Having regard to the pleadings in the suit, the findings recorded by the Trial Court and in light of the rival contentions and submissions made on either side before this Court, the following points would arise for determination:
(2) Whether the Judgment passed by the trial Court needs any interference?
POINT NOS. 1 & 2:
11. As seen from the record, the defendant has not conteste
Interest can be awarded in the absence of a stipulation in the agreement, and is considered as compensation for the deprivation of the use of money.
The court has discretion to award interest under Section 34 of the C.P.C. even if not specified in the contract, affirming the trial court's decree for interest on the principal amount.
Court upheld contractual interest of 18% from pre-suit period while awarding 9% future interest post-decree, reflecting equitable considerations of a commercial transaction.
Point of Law : Agreement of Sale - On the basis of such admission, though the Court denied the specific performance, has granted relief of recovery of such amount from the defendant.
Pre-suit interest is impermissible under CPC unless stipulated by contract or statute; interest rates must align with statutory limits.
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