1. This is an appeal by a defendant, Mahanth Digbijai Nath, who was sued by the respondent, Tirbeni Nath Tewari for a sum of Rs. 4001 with damages amounting to Rs. 1200 or in the alternative a sum of Rs. 611 by way of interest on the sum of Rs. dOOl. The parties reside in Gorakhpur. The plaintiff respondent is a contractor and the appellant is the owner of certain forest property at Sonari. It is common ground that on 5th July 1940, the parties entered into an agreement whereby the plaintiff undertook to pay the defendant a sum of Rs. 27,250 for certain rights of extraction from this forest. It is also common ground that a sum of Rs. 1001 was paid by the plaintiff as earnest money to the defendant on that date, and that a further sum of Rs. 3000 was paid by the plaintiff to the defendant on 9th July 1940. After that it is said that a difference of opinion occurred between the parties in regard to the terms of the contract and no further action was taken in pursuance of it. The defendant sent a notice to the plaintiff on 25th November 1940, in which he said that the plaintiff had promised to execute a deed of agreement according to the terms settled within a week. He had not done so and the defendant had been suffering great loss. He gave a notice to the plaintiff to execute the agreement within a week of the receipt of the notice, intimating that otherwise the plaintiff would not be entitled to recover the sum of Rs. 4001, which he referred to as earnest money, and he (the defendant) would be entitled to sell the forest to another person.
2. The suit was instituted on 13th November 1941. According to the plaint, the sum of Rs. 3000 was paid by the plaintiff by way of advance on 9th July 1940, as the defendant was in need of money. The plaintiff alleged that the defendant had agreed to execute a patta or lease, the understanding being that cutting was to commence after its execution. The defendant evaded execution of the lease, and when the plaintiff sent him a notice demanding the return of his money he ignored the demand. In his written statement, the defendant appellant admitted receipt of the sums of Rs. 1001 and Rs. 3000 and stated that according to the agreement the plaintiff should have paid a further sum of Rs. 6000 by 18th July 1910, Rs. 10,000 by 30th March 1941, and Rs. 7249 by the end of July 1941. It was also agreed that the terms of the agreement should be reduced to writing and a deed of agreement executed by the plaintiff within a week. The defendant had sent the notice referred to the plaintiff because the plaintiff had himself broken the contract by not executing the agreement. The learned Civil Judge framed the following issues:
(1) Did the plaintiff agree to pay the sale consideration at specified dates and did he also agree to execute an Ekrarnama or not?
(2) Is or is not the plaintiff entitled to the damages or to the interest claimed? Is the amount of the damages claimed excessive?
(3) Is or is not the plaintiff entitled to get back Rs. 4001 which has been paid to the defendant?
(4) To what relief is the plaintiff entitled?
3. The Civil Judge found that the defendant had resiled from the contract in consequence of a rise in the price of timber or the probability of such a rise. He was of opinion that the plaintiff's oral evidence was more reliable than that produced by the defendant and he also thought that the documentary evidence, to a great extent, supported the plaintiff's case. Ho, accordingly, decreed the suit for the amount paid by the plaintiff, namely Rs. 4001 together with interest thereon amounting to us. Gil as claimed. Before coming to the merits of the case, we have to deal with the objection taken by the appellant in the last ground of the memorandum of appeal. This is that ho was seriously prejudiced by the rejection of his application for the appointment of a Commissioner to record his evidence. It appears that the Court originally allowed an application made by the defendant that his evidence should be recorded on commission. This was on 9th July 1942. The ground on which he wanted to have his evidence recorded was that of illness. No further steps were, however, taken at that time to have his evidence recorded. It is said, and it appears to be a fact, that there had been negotiations between the parties for a compromise, but it would also seem that those negotiations had been broken off before 9th July 1942. At all events we find that the plaintiff's evidence was recorded from 24th July 1942, that three witnesses for the defendant were examined on 28th July and that the plaintiff himself was examined on 28th July. On 30th July 1942, an application was presented on behalf of the defendant, supported by an affidavit, in which it was stated that he had gone to Benares on 25th July for examination by a Vaid. He had intended staying there for a short time only, but his condition had deteriorated and he was unable to return to Gorakhpur. He had received a telegram from his general agent on the previous day, that is 29th July informing him that he would be examined by the Commissioner on 30th July. He had replied by telegram that he could not come from Benares. It was prayed, therefore, that a commission might be issued to have his evidence taken at Benares.
4. The civil Judge passed an order on the same date in which he said that he was not satisfied that all the allegations made in the application or affidavit were correct. He added that if they were correct the simple fact remained that if the defendant had really been anxious to have his statement recorded that could have been easily recorded much earlier. So no case had been made out for issuing a commission to Benares or for adjourning the case. It has been contended by the learned Counsel for the appellant that this order was not justified, but we see no reason to accept the contention. The circumstances are undoubtedly suspicious. Evidence in the case was already being recorded when the defendant left for Benares. We are not satisfied that it was necessary for him to go there. We are not, therefore, prepared to hold that an adjournment should have been granted to give the appellant a further opportunity of having his evidence recorded on commission.
5. We come now to the facts of the case. Among the witnesses produced by the appellant was his general agent, Chandrabali Pande, who appears to have been present when the parties came to the agreement of 5th July. According to his evidence, the parties agreed that a sum of Rs. 10,000 should be paid by the plaintiff by 18th July 1940, and that then a patta and qabuliyat would be executed. This is not precisely what the appellant himself stated in his written statement. There he said that an agreement had to be executed within a week, whereas according to his general agent it was to be executed after the payment of Rs. 10,000, nearly two weeks being allowed for this payment. The general agent was also unable to explain why payment of as much as us. 10,000 was required by 18th July. He further admitted that he was unable to say whether the earnest money was Rs. 4001 or Rs. 10,000. Reference has been made to a draft agreement which is said to have been drawn up on 5th July and also to an agreement which was actually executed in respect of the same forest a year later. The draft agreement, Ex. A, naturally supports the case set up by the appellant in his written statement. The deed of agreement executed on 3rd August 1941, between the appellant and a third party (Ex. B) shows that the earnest money paid was Rs. 1001 and thereafter other instalments of a total sum of rupees 28,000 were to be paid on 20th August 1941, 30th April 1942, and by the end of August 1942. It was presumably intended by producing this deed to show that similar procedure was followed in 1941-42 as had been contemplated for 1940-41. There is, however, one important difference, this being that the agreement of 1941 was executed on the same day that payment of earnest money (Rs. 1001) was made. In the present case too the draft deed of agreement was ready, according to the appellant's case, on 5th July 1940, and there is no apparent reason why execution should have been deferred for a week. This throws serious doubt on the truth of the appellant's version.
6. The respondent himself gave evidence. The only doubt with regard to his story would appear to be in respect of the payment of Rs. 3000, He says that he paid this sum because he was pressed by the appellant and he implies that the appellant was not willing to execute a patta before payment, but there is also some evidence which suggests that this payment was made by way of 'nikasi' the meaning of this presumably being that such payment was required before extraction commenced. We have been taken through all the evidence in the case by the appellant's learned Counsel and we think that the view taken by the Court below as regards the facts was justified. We see no reason to doubt that the appellant broke the contract by refusing to execute a patta. His general evidence shows that it was intended that a patta should be executed. It was stated by the learned Counsel for the appellant that according to the agreement arrived at on 5th July 1940, the whole sum paid was to be forfeited if the defendant did not execute the deed of agreement, but we can find no evidence to this effect and it seems clear that only the sum of us. 1001 was paid by way of earnest money. It may be that if the plaintiff had broken the contract the defendant would have been entitled to retain that sum, but on the view which we have taken of the facts it is not necessary to consider that. Learned Counsel for the appellant contended that the plaintiff was not entitled to any interest by way of damages and he cited in support of this contention the Privy Council case in B.N. Ry. Co., Ltd. v. Ruttanji Ramji . The passage on which he relies (at p. 173) runs thus:
The learned Judges of the High Court have allowed interest by way of damages caused to the plaintiffs for the wrongful detention of their money by the railway, but the question is whether this view can be sustained. There is a considerable divergence of judicial opinion in India on the question of whether interest can be recovered as damages under Section 73, Contract Act, where it is not recoverable under the Interest Act. Now, Section 73, Contract Act, gives statutory recognition to the general rule that, in the event of a breach of a contract the party who suffers by such breach is entitled to recover from the party breaking the contract compensation for any loss or damage thereby caused to him. On behalf of the plaintiffs, reliance is placed upon illust. (n) to that section. The illustration, however, does not deal with the right of a creditor to recover interest from his debtor on a loan advanced to the latter by the former. It only shows that if any person breaks his contract to pay to another person a sum of money on a specific date, and in consequence of that breach the latter is unable to pay his debts and is ruined, the former is not liable to make good to the latter anything except the principal sum which he promised to pay, together with interest up to the date of payment.
We do not consider that this case is authority for the proposition that interest cannot be claimed by way of damages for breach of a contract under Section 73, Contract Act. All that was held in it was that interest cannot be allowed by way of damages for wrongful detention of debt. Where payment of money is claimed on a contract interest cannot be allowed except under the provisions of the Interest Act. The position is different where interest is claimed as part of the damages for breach of a contract. We see no objection, therefore, to interest being allowed by the Civil Judge by way of damages on the amount paid by the plaintiff-respondent. Finding no reason to differ from the learned Civil Judge we dismiss this appeal with costs.