1. This appeal by the defendant is directed against the judgment and decree dated 10-4-1973 in O. S. No. 2 of 1971 on the file of the Court of the Principal Civil Judge, Mysore decreeing respondent-plaintiff's suit for recovery of arrears of rent with interest end costs.
2. The facts necessary for the disposal of this appeal, briefly stated, are :
Respondent having come into possession of a vacant site in Mysore under a lease granted to him by the Nanjaraj Bahadur Chatram Fund Committee, Mysore, granted a sub-lease of the same in favour of the appellant, who took the site for the purpose of running a toddy shop therein. It is not disputed that the appellant commenced his business of vending toddy on the said site from 1-1-1968. It is also common ground that there was an agreement of lease dated 31-12-1967 executed between the parties, which, however, was not registered. After being put into possession of the said site, appellant did not make any payments towards rent to the respondent.
Pursuant to an order of eviction made in H. R. C. 300 of 1970 on the file of the Court of the Munsiff, Mysore, respondent took possession of the site on 17-12-1972. As to these facts, there is no dispute.
3. On 4-1-1971, respondent instituted the suit from which this appeal arises alleging that the appellant had failed to pay rents for the period between 1-1-1968 and 31-12-1970 and sought recovery of the sum of Rs. 18,000/- in this behalf together with the sum of Rs. 4,320/-claimed as interest prior to suit on the unpaid rents.
4. The appellant while admitting the relationship of landlord and tenant, however, contended that the rent of Rs. 500/-per month was agreed to be paid not for the mere vacant site alone, but in consideration of the promise on the part of the respondent to erect certain structures on the land for the use of the appellant, and that as the respondent had failed to carry out this obligation on his part, appellant was liable to pay only Rs. 150/- per month, which was the rate at which respondent, in turn, had to pay to the said Nanjaraj Bahadur Chatram Fund Committee.
5. On these pleadings, the Court below settled the following issues :
1. (a) Whether the defendant took the schedule property on lease from the plaintiff on a monthly rent of Rs. 500/-as alleged by the plaintiff ?
1. (b) Whether the defendant is liable to pay at Rs. 150/- per month for the reasons stated in para 12 of his written statement ?
2. Whether the plaintiff is entitled to recover 18% interest, as claimed?
3. To what reliefs the parties are entitled
In the Court below appellant and respondent tendered evidence as D. W. 1 and P. W. 1 respectively and Exhibits P-1 to P-6 were marked on the side of the respondent. The agreement dated 31-12-1967 which was also sought to be relied upon by the respondent was held inadmissible by the Court below, as, according to it, the said document was compulsorily registrable, but was unregistered. However, on an appreciation of the evidence on record and on the basis of the admitted relationship of landlord and tenant between the parties, the Court below came to record finding on Issue-1 in favour of the respondent and entered a decree in his favour. The Court below also held on Issue No. 2 that respondent was entitled to interest prior to suit under the provisions of the Interest Act and awarded interest in the sum of Rs. 2,880/- at the rate of 12% per annum. The appellant questions the correctness of the judgment and decree in this appeal.
6. We have heard Shri P. Shivanna, learned counsel for the appellant and Sri B. S. Keshava Iyengar, learned counsel for the respondent. We have been taken through the evidence on record and the judgment of the Court below.
7. In support of the appeal Sri Shivanna urged the following contentions :
(a) That the finding of the Court below that the rate of rent was Rs. 500/-p.m. is erroneous and is not supportable on the basis of the evidence on record; and
(b) that award of interest prior to suit was not permissible.
8. These, then are the points that arise for determination in this appeal.
9. Point (a) : In reaching the conclusion that the rate of rent was Rs. 500/-p.m. and not Rs. 150/- per month as contended by the appellant, the Court below relied upon two circumstances. The first was that, admittedly, appellant started his business in the demised land with effect from 1-1-1968, and had not caused any notice to be issued to the respondent in the matter of alleged failure on the part of the latter to put up constructions on the site. Secondly, the Court below took note of the fact that the appellant who had been examined as a witness in the said H. R. C. 300 of 1970 on the file of the Additional First Munsiff, Mysore, had admitted that the rent was Rs. 500/-per month for the vacant site alone. The portions of his earlier depositions to which appellant's attention was drawn in the course of his cross-examination were marked Exhibits P-2 and P-3 respectively. It is no doubt true that admissions are not conclusive; but what a party himself admits to be the true state of affairs may reasonably be presumed to be so unless the admission is satisfactorily explained or successfully withdrawn. In the present case, appellant did not come forward with any explanation. Indeed, he went to the extent of totally denying the previous statements. The Court below relying on these admissions held that the rate of rent was Rs. 500 per month. Sri Shivanna is unable to show how this conclusion is erroneous and how on the basis of the material on record, a conclusion different from the one reached by the Court below is warranted. We, accordingly, hold point (a) against appellant.
10. Point (b): This concerns the award of interest prior to suit. The Court below haw awarded a sum of Rs. 2,880/- as interest prior to the suit on the view that grant of such interest, in the circumstances of the case, is warranted by and permissible under the Interest Act, 1839. It was conceded before us by Sri Keshava Iyengar, learned counsel for the respondent, that the provisions of Interest Act were not extended to the then State of Mysore and that no recourse could be had to the provisions of that statute in the present case.
Interest for the period prior to the commencement of the suit is claimable either under an agreement, or usage of trade or under a statutory provision or under the Interest Act. Interest is also awarded in some cases by Courts of equity. It is equally well settled that interest as damages cannot be awarded (See: Bengal-Nagpur Rly. Co. Ltd. v. Ruttanji Ramji and Mahabir Prasad Rungta v. Durga Dutta : 3SCR639 ). In the present case, admittedly, there is no contract to pay interest; nor is the grant of interest sought to be supported by any usage or under any statutory provision.
11. Sri Keshava Iyepgar, learned counsel for the respondent, however, urged that interest on arrears of rent can be granted in equity and the award of interest made by the Court below is supportable on equitable considerations. Sri Keshava Iyengar pointed out that interest on arrears of rent is contemplated by Section 114 of the Transfer of Property Act. He also pointed out that a solatium on arrears of rent is envisaged in Section 21 (2) (iii) of the Karnataka Rent Control Act, 1961. Sri Keshava Iyengar sought to rely on certain observations in the decision of the Supreme Court in R. S. Lala Praduman Kumar v. Virendra Goyal : 3SCR950 in this behalf. Paragraph 7 of the said decision relied on by Sri Keshava Iyengar relates to the jurisdiction of Courts in the matter of relief against forfeiture for non-payment of rent. Provisions of Section 114 of the Transfer of Property Act and Section 21 (2) (iii) of the Karnataka Rent Control Act are instances of statutory stipulation for the payment of interest and solatium respectively in the context of grant of relief against forfeiture and default. The analogy of the permissibility of interest under Section 114 of the Transfer of Property Act or of the solatium under Section 21 (2) (iii) of the Karnataka Rent Control Act does not appear to us to be apposite in the context of the proposition urged by Sri Keshava Iyengar that in appropriate cases interest can be awarded on arrears of rent on equitable grounds.
12. Sri Keshava Iyengar, however, referred to certain observations of the Supreme Court in Union of India v. Watkins Mayor & Co. : AIR1966SC275 , where the Supreme Court, referred with approval, to the passage in Bengal-Nagpur Rly. Company's case .
'As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. v. Hart, (1929) AC 631, at P. 640 : (AIR 1929 PC 185 at p. 188). 'In order to invoke a rule of equity, it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as, for example, the non-performance of a contract of which equity can give specific performance.'
Relying upon the above observation, Sri Keshava Iyengar contended that in appropriate cases, even in the absence of provision in the contract stipulating payment of interest, award of interest on contractual payments in exercise of equitable jurisdiction is permissible.
Interest is allowed by Courts of equity, for instance, in the case of money obtained and retained by fraud. In Trojan & Co. v. Nagappa Chettiar : 4SCR789 , the Supreme Court referred with approval to the following statement of the law by the Privy Council in Johnson v. Rex, (1904) AC 817 : (at p. 241 of AIR SC) :
'In order to guard against any possible misapprehension of their Lordships' views, they desire to say that, in their opinion, there is no doubt whatever that money obtained by fraud and retained by fraud can be recovered with interest, whether the proceedings be taken in a Court of equity or in a Court of law, or in a Court which has a jurisdiction both equitable and legal...............'
In National Insurance Co., Ltd., Calcutta v. Life Insurance Corporation of India : AIR1963SC1171 interest in equity was held payable on purchase price which belongs to the seller, the reason of the rule, being that the parties 'exchange their characters in a Court of equity, the seller becomes the owner of the money and the purchaser becomes the owner of the estate' and that 'on entering possession the purchaser becomes entitled to rents but it he has not paid the price, interest in equity is deemed payable by him on the purchase price which belongs to the seller.'
In the present case no foundation is laid in the pleadings to establish the existence of a state of circumstances which attracts the equitable jurisdiction. If such circumstances had been urged in the pleadings, appellant would have had an opportunity to plead equities on his side. Indeed it was stated in the course of the arguments that a part of the arrears of rent had come to be deposited in Court in the course of the said II.R.C. 300 of 1970. In the stele of pleadings in the present case, the grant of interest would amount to award of interest on ground alone -- without more -- of a mere detention of a debt. In London, Chatham and Dover Rly. Co- v. South Eastern Rly. Co., (1893 AC 429), the the House of Lords hold that interest could not be given by way of damages for detention of a debt. A similar view has been taken by the Privy Council in Bengal-Nagpur Rly. Company's case cited above. The present case does not, on the pleadings, attract the equitable jurisdiction of the Court. We. therefore, think that the award of interest prior to the suit was not justified. We, accordingly, hold and answer point (b) in favour of the appellant.
13. In the result, this appeal is allowed in part and while the judgment enddecree of the Court below in so far asthe arrears of rent of Rs. 18,000/- withpendente lite and future interest at 6%per annum is concerned are affirmed, thesward of interest prior to the suit is setaside. Respondent is entitled to costsproportionate to his success in this appeal, while appellant will bear and payhis own costs. Ordered accordingly.
14. Appeal partly allowed.