Skip to content


Pana Ana Rana Arunachallam Pillai Vs. Govindaswami Naicker and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1932Mad109; (1932)62MLJ266
AppellantPana Ana Rana Arunachallam Pillai
RespondentGovindaswami Naicker and anr.
Cases Referred and Pandurang v. Dadabhoy I.L.R.
Excerpt:
.....procedure code the award of interest as well as the rate at which it is to be awarded from the date of suit to date of decree is in the discretion of the court though where the contract rate is not inequitable that rate will be adopted (sophia or. the principle on which a valid tender must be kept good in order to stop running of interest is explained at length in jag at thrifu dasi v. in the case of ordinary money claims not based on mortgage as to which the effect of tender is laid down by section 84 of the transfer of property act the best way in which a defendant whose,tender has been refused can show that he has kept the tender good is by depositing the money in court when sued for it. we may add that it was the debtor who applied to have the award made a decree of court and..........the respondent's argument that as he had made tenders which were wrongfully refused before the award decree, interest ceased to run from the date of tender even without paying the money into court. for this section 84 of the transfer of property act and the decision in velayuda naicher v. hyder husssan khan sahib i.l.r. (1909) 33 m 100 : 19 m.l.j. 648 which was a mortgage case, were relied on. we must respectfully say that neither section 84 of the transfer of property act nor the decision cited governed the case as it was not a mortgage case. we may add that it was the debtor who applied to have the award made a decree of court and that therefore there was no proceeding or suit by the creditor in answer to which the debtor could have paid the money into court to keep the tender.....
Judgment:

1. This appeal is by the defendant in a suit for money and raises two points as to interest. The amount sued for consisted partly of the price of cloth sold by the plaintiff, a trader, to the defendant, who is also a trader in cloth and partly of an amount of Rs. 500 advanced to the defendant on a pledge of a kasimalai. The defence as to interest on the price of the cloth was that there was no contract for interest either express or to be implied from the usage of trade and as to interest on the loan on the pledge that the defendant had tendered the amount borrowed (Rs. 500) with interest at Re. 1-2-0 per cent. per mensem on 20th September, 1923, i.e., about 25 days before the suit, that the plaintiff had improperly refused to accept the amount and return the pledged jewel and that, therefore, the plaintiff was not entitled to further interest from the date of tender or to costs of suit on that head of the claim.

2. As to interest on the price of cloth it has been found by both the Lower Courts that according to the usage of trade interest was payable. There is considerable evidence to support this finding including the defendant's own admission that he has charged interest against other traders on similar transactions and in view of this finding which is one of fact, the appellant's objection is not sustainable.

3. As to interest on the pledge the question is whether on the findings of both Courts that the defendant did tender the money on 20th September, 1923 and that the plaintiff improperly refused to accept the tender on the allegation that the pledge covered the price of the cloth also, subsequent interest on that amount of Rs. 500 was allowable. The District Munsif disallowed subsequent interest and proportionate costs. But the learned Subordinate Judge held that as defendant had not deposited the money in Court when sued for it, the tender prior to suit though improperly refused was ineffective to stop running of interest. He awarded plaintiff interest at the contract rate up to the date of decree and also the costs disallowed by the first Court. This is the question which was strenuously argued before us for the appellant. Before going into the question it may be pointed out that in this case the tender was made on 20th September, 1923, and the suit was brought on 15th October, 1923. By Section 34 of the Civil Procedure Code the award of interest as well as the rate at which it is to be awarded from the date of suit to date of decree is in the discretion of the Court though where the contract rate is not inequitable that rate will be adopted (Sophia Or.de v. Alexandat Stiinner ). Therefore, the only interest to which the appellant's objection, if successful, can apply is that for the period of 25 days between the above two dates which amounts to Rs. 4-11-0.

4. The Subordinate Judge has relied on Sabapathy v. Van-mahalinga I.L.R. (1914) 38 M. 959 : 26 M.L.J. 331, which itself follows Haji Abdul Rahman1 v. Haji Noor Mahomed I.L.R. (1891) 16 B. 141 for the proposition that in order to stop the running of interest a tender before suit must be followed by payment into Court when the creditor sues for the money. The appellant's advocate argues that there was no decision of the point in Sabapathy v. Vannnahalinga I.L.R. (1914) 38 M. 959 : 26 M.L.J. 331 and that the observation to that effect at page 970 was obiter. This argument is correct. But thje observation is based on Haji Abdul Rahman v. Haji Noor Mahomed I.L.R. (1891) 16 B. 141 where the point was expressly decided. The rule is based on English authorities and practice of long standing mentioned there. The general rule is referred to by Wilson, T., in Bolye Chntid Singh v. Mouhrd I.L.R. (1878) 4 C. 572 and by a Bench of the Calcutta High Court in Rakhal Chandra Ckakladar v. Baikunlfha Nath Barai (1928) 32 C.W.N, 1082, which was a case under the Bengal Tenancy Act by Section 150 of which the defendant is required to deposit the admitted amount of rent into Court before the Court can take cognizance of a plea that the plaintiff's suit is for an excessive amount. The principle on which a valid tender must be kept good in order to stop running of interest is explained at length in Jag at ThrifU Dasi v. Naba Gopal Chaki I.L.R. (1907) 34 C. 305 et seq. In the case of ordinary money claims not based on mortgage as to which the effect of tender is laid down by Section 84 of the Transfer of Property Act the best way in which a defendant whose,tender has been refused can show that he has kept the tender good is by depositing the money in Court when sued for it. That appears to be the reason of the rule. The rule is expressly stated in Mulla's Civil Procedure Code in the commentary on Order 24, Rule 3.and is illustrated by Form No. IV of written statements in Appendix A to the Code.

5. But the appellant's advocate has referred to Pedda Veeraftna v. Gondimatta veeranna (1916) 5 L.W. 718 and Gajetidral Narain Maity v. Sita Nath Das (1925) 90 I.C. 637 in addition to numerous decisions turning on Section 84 of the Transfer of Property Act. In Pedda Veeratina v. GonSmalla Veeranna (1916) 5 L.W. 718 there was an award ordering payment of a debt in three instalments. After one instalment was paid the creditor refused the debtor's tender of the other two instalments though made on or before the due dates. The. debtor thereupon got the award made into a decree of Court by which the instalments were made payable on the dates mentioned in the award which had already expired and apparently without providing for any interest on the sums mentioned. As this decree was passed after contest by the creditor who attacked the award as invalid one would have thought that he could not in execution claim any interest which would be held to have been refused by the decree. See Section 34, Civil Procedure Code. But he did make such a claim and it was refused by the District Judge. In upholding such refusal their Lordships made no mention of what appears the plainest ground for the refusal that the decree did not provide for interest. But they supported the refusal by accepting the respondent's argument that as he had made tenders which were wrongfully refused before the award decree, interest ceased to run from the date of tender even without paying the money into Court. For this Section 84 of the Transfer of Property Act and the decision in Velayuda NaicHer v. Hyder Husssan Khan Sahib I.L.R. (1909) 33 M 100 : 19 M.L.J. 648 which was a mortgage case, were relied on. We must respectfully say that neither Section 84 of the Transfer of Property Act nor the decision cited governed the case as it was not a mortgage case. We may add that it was the debtor who applied to have the award made a decree of Court and that therefore there was no proceeding or suit by the creditor in answer to which the debtor could have paid the money into Court to keep the tender good. On this point therefore we are unable to follow the grounds of that decision, though the decision itself was correct on the ground mentioned above. The language of the decision in Gajendra Narain Maity v. Sita Nath Das (1925) 90 I.C. 637 is directly in favour of the appellant's argument. The defendant who had borrowed Rs. 350 at 36 per cent. from the plaintiff tendered the money with interest in July, 1916. But the plaintiff wrongfully refused it and brought a suit in 1920 for the sum with interest to date of suit. The Lower Appellate Court held the tender good and the plaintiff's refusal wrong but as the defendant had not. deposited the money in Court awarded the plaintiff 6 per cent...interest from the date of tender. The plaintiff appealed and it was obvious that if the tender without payment into Court did not stop the running of interest as the award of 6 per cent, showed, the plaintiff should have got not 6 per cent, but the contract rate of 36 per cent. But if the tender stopped the running of interest the award of 6 per cent, was wrong, though in the absence of an appeal by the defendant the Court could not interfere with that. The Court consisting of Suhrawardy and Duval, JJ., held that in the absence of any provision in the law of contract or of procedure applicable to Indian Courts it cannot be laid down as a binding rule of law that if a tender is not followed by a deposit in Court it is ineffectual to stop running of interest. The reasoning of this decision pronounced in 1925 is in direct conflict with that of Rakhal Chandra Charladar v. Baikuntha Nath Barain (1928) 32 C.W.N. 1082 pronounced in 1928 and in both of them Suhrawardy, J., participated. We consider the later Calcutta decision more in accord with precedent and the reason of the thing. A debtor who is required to keep his tender good must when he is sued certainly understand that the debt is being demanded through the Court and as he must be able and willing at any time after tender to pay it on demand he can demonstrate his ability and willingness after the matter has come to Court only by bringing the money into Court. Although in the abstract it is possible to argue that though the defendant has not deposited the money in Court and so placed his ability and willingness beyond question, he may be able to prove by other evidence that he was always ready and willing to pay the debt; to accept that argument would be to introduce much uncertainty into a test which is simple and conclusive and which has been accepted and acted on by the Courts in England and India for a very long time.

6. We think it unnecessary to consider in detail the effect of tender in mortgage transactions which is governed by Section 84 of the Transfer of Property Act or the large number of decisions which have been cited. Velayuda Ndicker v. Hyder Hwssan Khan Sahib I.L.R. (1909) 33 M. 100 : 19 M.L.J. 648, Krishnais-iuami Chettiar v. Ramaswami Qhettiar I.L.R. (1910) 35 M. 44, Theva-raya Reddy v. Venkalackalam Pundithan I.L.R. (1916) 40 M. 804 : 31 M.L.J. 548, Ramabhadra Thevar v. Arunachalam Pillai I.L.R. (1926) 49 M. 609 : 50 M.L.J. 468, Venkatarama Aiyar v. Gopcdakrishna Pillai I.L.R. (1928) 52 M. 322 : 56 M.L.J. 255 and Pandurang v. Dadabhoy I.L.R. (1902) 26 B. 643. It is clear from Section 84 that in mortgages a tender alone has the effect of stopping interest from the date of the tender. The reason of the difference between mortgages and other debts in this respect would appear to be that the rule in Chancery was different from that at Common Law:

A tender of the amount due on the mortgage at a time when the mortgagee is bound to receive it stops interest from running if the mortgagor keeps the money ready to pay over to the mortgagee.'--(Halsbury's Laws of England, Vol. XXI, page 229.)

Refusal of a proper tender is not equal to payment, but if the money, after the refusal, has been paid into Court or kept ready for immediate payment to the mortgagee, no further interest is payable.

7. The rule at law is stated to be that

Where the promise is to pay a sum of money, the debt is not discharged by a tender of payment, but such tender, coupled with continued readiness to pay the debt, is an answer to a subsequent action for nonpayment if the amount of the debt is paid into Court and operates as a bar to any claim for subsequent interest.'--(Halsbury's Laws of England, Vol. VII, page 418.)

8. For these reasons, we think that the opinion of the Subordinate Judge on this point was right.

9. The second appeal is dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //