Important Points:
3(1)(b) of the Interest Act, it is so obvious that the proceedings involved in the case in hand do not relate to a debt payable by virtue of a written instrument at a certain time, but it is `arrears of pay`. Then, as per Section 3(1)(b) of the Act it is from the date mentioned in this regard (emphasis supplied) 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`. Admittedly, she retired from service on 30.4.2000 but her retirement benefits were disbursed only in the month of October, 2003 after the disposal of the Writ Petition whereby the audit objection was set aside by this Court. Thereafter, she issued A3 notice narrating the details regarding entitlement of her pensionary benefits. No doubt, the key words employed in Section 3(1)(b) that `the date mentioned in this regard in a written notice given by the person entitled` relates to the date of her retirement which is mentioned in the notice (30.4.2000) and it is not the date of the notice issued by her (27.3.2004 or 31.3.2004), so as to fix the interest from the date of notice.

This appeal is preferred by the additional plaintiffs in O.S.No.294/2004 before the Sub Court, Kollam. The suit was instituted by a retired employee of the Kerala State Electricity Board (for short “KSEB”). During the pendency of the suit, she expired and the additional plaintiffs were brought on record as her legal representatives. Certain facts are not in dispute. The original plaintiff while working as Senior Superintendent under KSEB, retired from service on superannuation on 30.4.2000. Though she was entitled for pension, her entire pensionary claims have not been granted in view of the objection raised in an audit report. She availed leave without allowance for three spells during 1979 and 1980. So annual increments from 1996 were not paid and the pensionary claims were not settled. Therefore, she filed O.P.No.23404 of 2000 before this Court and by a judgment dated 4th March, 2003, the audit objection raised against her was quashed. In the said judgment, it was made clear that she was entitled to get arrears of salary and pension due to her and a further direction was given to release the same within a time frame. It was further made clear that the claim of the petitioner for interest for the said amount was kept open and she was given the liberty to agitate it before the appropriate civil court. In the light of the said verdict she filed this suit as O.S.No.297 of 2004 before the Principal Sub Court, Kollam claiming interest on the delayed payment as the defendants paid the amount due her only during 2003. But unfortunately her claim for interest at the rate of 9.5% was allowed only from 31.3.2004, the date of Ext. A3 notice till the date of the suit on 21.8.2004.

2. The Electricity Board had taken a stand that the leave without allowance for 92 days were not sanctioned and hence increments from 1997 were not granted to the plaintiff. But in compliance of the Judgment in O.S.23404/2000 pension was refixed and pensionary benefits were disbursed within six months from the date of retirement and therefore she was not entitled to claim any interest for the said sum.

3. The trial court though granted interest for the delayed payment on the finding that the arrears to be paid would come within the sweep of the term debt, it was granted only from the date of Ext. A3 notice. Feeling aggrieved and dissatisfied by the said judgment and decree, this appeal has been preferred by the appellants who are the legal representatives of the original plaintiff.

4. Heard Sri.Vinoy Varghese Kallumoottil, the learned counsel for the appellant/plaintiff and the Sri.Sudheer Ganesh Kumar, the learned Standing Counsel for the Kerala State Electricity Board.

5. Admittedly, the original plaintiff had a pretty long service in the Electricity Board. She retired on superannuation on 30.4.2000. Her pensionary benefits were delayed due to some audit objection and it was disbursed to her only in year 2003 by the intervention of this Court in O.P.23404/2000. By Ext.A2 judgment the audit objection regarding availing of leave without allowance was quashed and the Board was directed to re-fix the pay and pensionary benefits and disburse the same within a time frame and admittedly it was granted in the year 2003 without any interest. As the claim for interest was left open the suit was filed and it was decreed. However, interest was granted only from the date of Ext.A3 notice till filing of the suit and that is the grievance agitated in this appeal.

6. The court below treated the amount due to the plaintiff as debt. But debt is normally treated as a liability to pay in present or in future an unascertainable sum of money. On the other hand the term 'arrear' involves the existence of some default on the part of the debtor. That includes 'money which remains unpaid though due'. It is 'delayed payment'. That means the money remains unpaid at the due time. So the amount due to the plaintiff is 'arrears of pay' or 'delayed payment' and not 'debt'.

7. As the co