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1936 Supreme(Nagpur) 67

HIGH COURT OF NAGPUR
Vivian Bose
JIWANDAS AND ANOTHER – Appellant
Versus
BABU LAL AND ANOTHER – Respondent
Second Appeal No. 290 of 1933
Decided on : 23-03-1936

Advocates Appeared:
A R Kulkarni, A V Khare, D B Najbille, M B Kinkhede, W B Pendharkar, W R Puranik, Advocates

Headnote:

Interest - Trustee's claim for interest on amounts borrowed by defendant - No specific stipulation for payment of the amount - No express or implied contract for interest - Exhaustive judicial enquiry on the subject of interest - Interest can be allowed only if it would have been granted before the Interest Act, either at law or in equity - Interest cannot be awarded on broad equitable grounds beyond cases in which a Court of equity in England, or a Court of law departing from its usual rules, would probably have awarded it - Interest can be awarded by way of damages for breach of contract to pay on a certain date - No breach until demand was made - Claim for interest disallowed up to the date of suit - Principal sum decreed by lower appellate Court to stand - Further interest allowed from date of suit till date of judgment - Costs to be borne according to success and failure

Fact of the Case:

The plaintiff, as a trustee to the estate of Mulchand, claimed interest on amounts borrowed by the defendant from Mulchand and the plaintiff. The defendant did not pay the amounts in spite of repeated demands, leading to the suit for interest.

Finding of the Court:

The court disallowed the claim for interest up to the date of the suit, allowed the principal sum decreed by the lower appellate Court to stand, and further allowed interest from the date of the suit till the date of judgment. Costs were to be borne according to success and failure.

Issues: The main issue was whether the plaintiff was entitled to claim interest on the amounts borrowed by the defendant, and whether there was a breach of contract to warrant the award of interest.

Ratio Decidendi: The court held that interest can be allowed only if it would have been granted before the Interest Act, either at law or in equity. It also emphasized that interest cannot be awarded on broad equitable grounds beyond cases in which a Court of equity in England, or a Court of law departing from its usual rules, would probably have awarded it. The court further clarified that there was no breach until demand was made, and thus disallowed the claim for interest up to the date of the suit.

Final Decision: The court disallowed the claim for interest up to the date of the suit, allowed the principal sum decreed by the lower appellate Court to stand, and further allowed interest from the date of the suit till the date of judgment. Costs were to be borne according to success and failure.

JUDGMENT

Vivian Bose—The main question in this appeal is about interest. The plaintiff claims as a trustee to the estate of one Mulchand under a will executed by him. His case is that the defendant borrowed money from time to time from Mulchand, and then, after his death, from the plaintiff. The money was advanced, partly in the shape of cash advance made by Mulchand and the plaintiff, and partly by payments which Mulchand's debtors were authorised to make to the defendants in discharge of their debts to Mulchand. The plaint sets out the amounts, and then continues : ''There was no specific stipulation for payment of the amount. The defendant does not pay it in spite of repeated demands and hence the suit.'' The plaintiff claims interest on each of these amounts from the dates on which the defendants received them. The learned Judge of the lower appellate Court has allowed this, and the question is whether he was right in doing so. It seems clear that interest cannot be allowed as of course. Their Lordships of the Privy Council stated in Kalyan Das v. Maqul Ahmad, 1918 AIR(PC) 53, ''interest depends on contract, express or implied, or on some rule of law allowing it.'' In the present case there is no express contract, nor can I see anything from which one can be implied. Custom or usage, or some other special circumstances might supply the deficiency but it would have to be pleaded and proved. The mere fact that money was lent would not be enough, even though it is well known that persons do not ordinarily lend money without expecting a return for their outlay, for it does not follow that this is an ordinary case; moreover any such presumption would be counterbalanced by a fact equally well known; when persons expect a return for their money they usually take care to say so, unless the law or some particular usage says it for them. As Sir Shadi Lal, C. J., points out in Motan Mal v. Muhammad Bakhsh,1922 AIR(Lah) 254 no presumption can be made about this one way or the other.

2. Even in mortgage cases, where interest is payable under the deed up to the date fixed for repayment, and is silent about the rest, the House of Lords have held that no contract to pay interest beyond that can be implied Cook v. Fowler,1874 7 HL 27. It is true they allowed interest by way of damages for the breach of the contract to pay on the date fixed, but that is another matter. It is governed by different principles, and is within the discretion of the Court. Their Lordships of the Privy Council did the same thing in Chajmal Das v. Brij Bhutan Lal,1895 17 ILR(All) 511. I observe in passing that the ratio decidendi in Parasharam v. Krishna, 1932 AIR(Nag) 39 appears to conflict with these decisions, though not the ultimate result. I am clear then that no contract to pay interest can be implied here, and all that remains is to see whether there is any rule of law which allows it instead. There is a difference of opinion as to whether the provisions of the Interest Act are exhaustive or permissive. Wort, J. is of the opinion that they are exhaustive, and that unless the matter can be brought within the proviso, interest cannot be awarded for the mere detention of money, however wrongful : . H. Pattinson v. 8m. Bindhya Debi, 1933 AIR(Pat) 196. The decision in Jwala Prasad v. Hoti Lal,1924 AIR(All) 711 is to the same effect, and so is that in 56 Mad 391 Bellary Electric Supply Co. Ltd. v Kanniram Rawoothmal, 1933 Mad 820=141 I C 120= 56 Mad 391=64 M L J 130 at p 394. Hallifax, A. J. C, on the other hand, considered that the Act was only an enabling one in Haridayal v. Sunder Lal, 1925 AIR(Nag) 451, and there appears to be consider, able force in that point of view. He is supported by Sale, J. in Marshall v. Bengal Spinning and Weaving Co.,1897 1 CalWN 219, and. by Seshagiri Ayyar, J. inMahomed Abdul Gaffur Rowther v. Hamida Beevi Ammal,1919 ILR(Mad) 164. The last of these cases has been virtually overruled by Nanchappa Goundan v. Ittichathara Mannadiar, 193





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