N.A. Britto, J.––This appeal was admitted on the following substantial question of law :––

"Whether under Section 34 of the CPC it is permissible for the appellate Court to grant interest at the rate of 12% to the respondent from the date of receipt of land acquisition compensation by the appellant (i.e. 17.11.1986) till the date of realization."

2. Some facts need be stated to answer the said question. The appellants herein were the defendants in R.C.S. No. 101/89. The plaintiffs in the said suit had claimed that they had purchased two properties namely "Varzea Pasqualem" having survey No. 5/15 and "Pasqualem" having survey No. 335/2 both of Verna village. A portion of the said properties was subsequently acquired by the Government, but the LAO paid to the defendants the compensation payable thereon on 19.6.1986 in the sum of Rs. 18,523.60. The plaintiffs claimed that they approached the defendants, after they came to know about the said acquisition and the receipt of compensation by them, and though the defendants initially promised to pay, subsequently declined to pay the same and both the plaintiffs sent a notice to the defendants which was received by them on 8.6.1988 and since the said compensation was not paid by the defendants to the plaintiffs, the plaintiffs filed the suit to recover the same on 2.5.1989 which came to be decreed by the learned Civil Judge, Junior Division, Margao for the sum of Rs. 18,523.60. Although the plaintiffs in the said civil suit had prayed for the said sum along with interest at the rate of 12% per year from the date of receipt of the said compensation by the defendants (defendant No.1), the learned Civil Judge refused to award any interest to the plaintiffs without any reason.

3. The plaintiffs filed an appeal against the same, bearing RCA No. 45/98 and the learned Addl. District Judge, Margao, who heard and decided the appeal, allowed the same and directed the defendants to pay interest on the said principal sum of Rs. 18,523.60 at the rate of 12% from the date of receipt of the said compensation by the defendant No.1. In other words, it can be seen from the judgment of the learned Addl. District Judge dated 14.8.1998 that the learned Addl. District Judge awarded pre-suit, pendente lite and future interest to the plaintiffs at a flat rate of 12%.

4. The plaintiffs/respondents have chosen to remain absent at the hearing of the present appeal.

5. As regards pre-suit interest, Shri Thali, the learned counsel of the defendants has submitted that no interest could have been ordered to be paid at the rate of 12%. Referring to Section 3 of the Interest Act, 1978 (Act, for short), Shri Thali has submitted that if at all any interest was payable, it was at the rate of 10% and that too from the date of notice only in terms of Section 3(1)(b) of the Act.

Section 3(1) of the Act provides that :––

"(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;"

(The remaining portion of Section 3 is not relevant in the case at hand).

6. At this stage Section 34, CPC could also be reproduced with advantage. Section 34, CPC reads as follows :––

"34. Interest.––(1) Where and