1. This second appeal is filed under Section 100 r/w Order XLII Rule 1 of CPC by the respondent/plaintiff in A.S.144/2001 on the file of the Additional District Court, Kottayam, who is the plaintiff in O.S. No. 741/1998 on the file of the Principal Munciff Court, Kottayam, against the judgment and decree dated 22.9.2003 reversing the judgment of the trial court.

2. The brief facts necessary for the disposal of this Appeal are as follows:

The appellant is a PWD contractor. He had undertaken a work of the 1st respondent through the 5th respondent and an agreement was entered into in that respect on 14.3.1997. The work was completed on 5.7.1997 and bill for an amount of Rs. 4,81,078/- was presented before the respondents. Since the bill amount was not disbursed, he had issued a notice to the respondents on 24.11.1997. Thereafter on 31.3.1998, the respondents disbursed a sum of Rs. 4,81,078/-. According to the appellant, for the delayed period he is entitled to get interest at the rate of 24% per annum. Accordingly, he filed the Suit before the Munsiff Court, Kottayam demanding a sum of Rs. 84,895/- being interest at the rate of 24% per annum for the bill amount of Rs. 4,81,078/-. The learned Munsiff allowed the Suit in part and decreed an amount of Rs. 56,932/- which was granted calculating interest at the rate of 18% for the bill amount. However, the 1st Appellate Court reversed the above finding of the trial Court and dismissed the Suit. Aggrieved by the above judgment and decree of the 1st Appellate Court, this appeal has been preferred.

3. At the time of admission, the following substantial questions of law were formulated by this Court:

(i) Whether a suit for interest alone is maintainable?

(ii) Whether the defendant can plead accord and satisfaction for the first time before the first appellate court and if so, whether the acknowledgment issued for receipt of the final bill amount operates as an estoppel against the appellant/plaintiff against claiming interest?

4. Both sides were heard in detail on the above substantial questions of law.

5. The 1st question that arise for consideration is whether a Suit for interest alone is maintainable. Relying upon Section 3(1) of the Interest Act, 1978 (in short ‘the Act’) the learned counsel for the appellant would argue that a suit for interest alone is maintainable. Sub-Section (1) of Section 3 of the Act states as follows:

“3. Power of court to allow interest:

(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 the 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:

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.”

6. On a perusal of the above provision, it is clear that a Court is empowered to award interest in any proceeding for recovery of any debt or damages or in any proceeding in which the claim for interest in respect of any debt or damages already paid is made.

7. The learned counsel for the appellant also relied upon the decision of a Division Bench of this Court in Anirudhan vs. Government of Kerala, 1999 KHC 527, in support of his argument tha