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Thayar Ammal and ors. Vs. Lakshmi Ammal and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1895)ILR18Mad331
AppellantThayar Ammal and ors.
RespondentLakshmi Ammal and anr.
Cases ReferredGudri Koer v. Bhubaneswari Goomar Singh I.L.R.
Excerpt:
.....the date on which the principal amount became payable. but, if on the other hand, the interest in question is money charged on land' the claim is not barred as the article applicable to such a case is 1321 and not article 116. 19. in determining the question whether post diem interest, in a case like this, is or is not mere 'compensation 'for breach of a contract to pay money on the due date, the two senses in which the word 'interest 'is now commonly used in law, according as it is or is not payable under a contract express or implied, should be borne in mind. that it is hardly possible to come to any other conclusion than that at which i have arrived will be perfectly plain if the state of the common law of england as to interest in cases similar to the present, before the passing of..........for breach of a contract in writing registered. but, if on the other hand, the interest in question is money charged on land' the claim is not barred as the article applicable to such a case is 1321 and not article 116.19. in determining the question whether post diem interest, in a case like this, is or is not mere 'compensation ' for breach of a contract to pay money on the due date, the two senses in which the word 'interest ' is now commonly used in law, according as it is or is not payable under a contract express or implied, should be borne in mind. when it is payable under a contract it is said to be recoverable as a part of the debt itself, but when it is not so payable it is recoverable only as damages for the detention of the debt. (see mayne on damages, 5th edition,.....
Judgment:

Best, J.

1. The sole question for decision in this appeal is whether plaintiffs (appellants) are entitled to interest post diem. The Judge has given them a decree for the principal amount with interest at the rate stipulated in the bond to 31st December 1882, the date mentioned in the bond as that on which the principal amount was to be paid and the property redeemed.

2. The Judge is right in holding that Exhibit A contains no provision for interest post diem and that Exhibit B cannot be said to contain any admission of liability to pay such interest.

3. It has been held by the Allahabad High Court in Mansab Ali v. Gulab Chand I.L.R. 10 All. 85 and Bhagwant Singh v. Daryao Singh I.L.R. 11 All 416 also by the Calcutta High Court in Gudri Koer v. Bhubaneswari Goomar Singh I.L.R. 19 Cal 19 and two other cases therein referred to--one of which is reported as a note at page 23,--and also by this Court in Badi Bibi Sahibal v. Sami Pillai I.L.R. 18 Mad. 257 that post diem interest is awarded in such cases only by way of damages, and can only be awarded if the suit is brought within the period allowed by the Limitation Act for a suit for damages, i.e., in a case like the present (where the document is registered) within six years from the date on which the principal amount became payable.

4. Our attention has been called by appellants' Vakil to Act XXXII of 1839 and the decisions of the Calcutta High Court in Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal 274 and of this Court in Rama Reddi v. Appaji Reddi I.L.R. 18 Mad. 248

5. The provisions of Act XXXII of 1839 were considered in Gudri Koer v. Bhubaneswari Coomar Singh I.L.R. 19 Cal 19 with reference to the remarks of their Lordships of the Privy Council in Juggomohun Ghose v. Manickchund 7 M.I.A. 263 and in Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal 274 the Judges expressly distinguish that case from the case of Gudri Koer v. Bhubaneswari Goomar Singh I.L.R. 19 Cal 19 and the case reported in the note, by saying 'the only question in those cases was the question of limitation--a question which is entirely different from that which is now before us' which was merely whether post diem interest can be made a charge on the property. Rama Reddi v. Appaji Reddi I.L.R. 18 Mad. 248 purports to follow Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal 274 without noticing, however, that the question of limitation did not arise in that case. Moreover, this Court's decision in Badi Bibi Sahibal v. Sami Pillai I.L.R. 18 Mad. 257 does not appear to have been brought to notice.

6. Act XXXII of 1839 extends to India the provisions of 3 and 4 Will. IV, cap. 42, Section 28, and on referring to that statute it is clear that what is awarded in such cases is damages. As observed in Juggomohun Ghose v. Manickchund 7 M.I.A. 263 'The Act supposes a party to have been. sued for breach of a contract for the payment, by vritue of a written instrument, of a sum certain at a certain time;' and as held by the Allahabad and Calcutta High Courts the breach takes place when the defendant fails to pay the money due in accordance with the terms of the contract and it is from that date that the time begins to run. There can be no recurring cause of action.

7. I would therefore dismiss this appeal with costs.

Subramania Ayyar, J.

8. The substantial question in this case is, when the mortgage instrument does not provide for the payment of post diem interest, whether the plaintiffs' claim for it is barred under Article 116 of the Limitation Act; the plaint having been presented more than six years after the date when the principal amount due under the mortgage became payable. Now if the claim for interest here is one for mere 'compensation for breach of a contract' to pay money, the claim is undoubtedly barred under that article which is applicable to suits for compensation for breach of a contract in writing registered. But, if on the other hand, the interest in question is money charged on land' the claim is not barred as the article applicable to such a case is 1321 and not Article 116.

19. In determining the question whether post diem interest, in a case like this, is or is not mere 'compensation ' for breach of a contract to pay money on the due date, the two senses in which the word 'interest ' is now commonly used in law, according as it is or is not payable under a contract express or implied, should be borne in mind. When it is payable under a contract it is said to be recoverable as a part of the debt itself, but when it is not so payable it is recoverable only as damages for the detention of the debt. (See Mayne on Damages, 5th Edition, page 160.) In other words, when interest is agreed to be paid, it is treated as the value promised for the use of money, but when, in the absence of such promise, a Court awards interest, it is given as 'compensation for withholding money.' (Compare Sedgwick on Damages, 8th Edition, Vol. I, page 418.) In the present case there being no promise to pay post diem interest, there can be no doubt that the plaintiffs' claim for it can be sustained only on the ground that it is compensation for the detention of a debt due under a contract in writing registered and consequently Article 116 must apply.

20. On behalf of the plaintiffs (appellants) it was however argued that the said article does not apply and great stress was laid on the provisions of Act XXXII of 1839 and Sections 862 and 88 of Act IV of 1882, as if they were inconsistent with the position that interest awardable by a Court under Act XXXII of 1839 is compensation for the detention of a debt and nothing more. That it is hardly possible to come to any other conclusion than that at which I have arrived will be perfectly plain if the state of the Common Law of England as to interest in cases similar to the present, before the passing of the statute 3 and 4 Will. IV, cap. 42, Sections 28 and 29 (which are substantially the same as the provisions of Act XXXII of 1839) and the changes introduced by those sections are carefully considered. What the old law was will be seen from three decisions pronounced not long before the passing of the said statute.

21. 'In Higgins v. Sargent 2 B. & C. 348 decided in 1823 Holeoyd, J. said, 'It is clearly established by the later authorities, that unless interest be payable by the consent of the parties express or implied from the usage of trade (as in the case of bills of exchange) or other circumstances, it is not due by Common Law.'

22. Again, in Shaw v. Picton 4 B. & C. 715 decided two years later, Abbott, C.J. observed, 'The general rule is that interest is not due by 'law for money lent, unless from the usage of trade or other dealings between the parties, a contract for interest is to be implied.'

23. And especially Page v. Newman 9 B. & C. 378 decided in 1829 but four years before the statute was passed, is very instructive on this point. There the claim was for money lent, but which was not repaid on the day appointed for the purpose by the written instrument between the parties. At the trial Lord Tenterden, C.J., was of opinion, there being no agreement to pay interest, that the plaintiff was not in law entitled to recover any interest. On the motion for new trial, it was argued for the plaintiff that interest was recoverable on the authority of Arnott v. Redfern 3 Bing. 353 where Best, C.J. was reported to have said: 'However a debt is contracted if it has been wrongfully withheld by a defendant, after the plaintiff has endeavoured to obtain payment of it, the jury may give interest in the shape of damages for the unjust detention of the money.' Lord Tenterden refused to accede to the contention and said, 'It is a rule sanctioned by the practice of more than half a century, that money lent does not carry interest.' As to Arnott v. Redfern 3 Bing. 353 359 cited before him, the Chief Justice observed, 'If we were to adopt as a general rule that which some of the expressions attributed to the Lord Chief Justice of the Common Pleas in Arnott v. Bedfern 3 Bing. 353 would seem to warrant, viz., that interest is due wherever the debt has been wrongfully withheld after the plaintiff has endeavoured to obtain payment of it, it might frequently be made a question at nisi prius whether proper means had been used to obtain payment of the debt and such as the party ought to have used. That would be productive of great inconvenience. I think we ought not to depart from the long established rule, that interest is not due on money secured by a written instrument unless it appears on the face of the instrument that interest was intended to be paid or unless it be implied from the usage of trade as in the case of mercantile instruments.'

24. It was to remedy the disadvantages that creditors were thus subject to under the common law, that the provisions of the statute 3 and 4 Will. IV, cap. 42, Sections 28 and 29, were enacted empowering juries to allow interest in the cases specified therein.

25. It will thus be seen that in cases like the present, Courts had, under the common law, no power to give damages for wrongful detention of money, but by the statute they were enabled, through the instrumentality of juries, to give interest which, as already stated, is only another name for 'compensation for money withheld.' It is therefore difficult to see how it can be rightly contended that interest awarded under the corresponding Indian Act XXXII of 1839 is not such compensation so as to make Article 116 inapplicable to the case.

26. It was next urged for the plaintiffs, so far as I have been able to follow the argument on this point, that under Sections 86 and 88 of Act IV of 1882 when interest is awarded by a Court under Act XXXII of 1839, on account of money due under a written instrument creating a mortgage of immoveable property, such interest becomes, ipso facto, a charge on the property. Granting for argument's sake that this is so, it stands to reason that that can happen only when a claim for interest under Act XXXII of 1839 is not barred by the law of limitation, which is not the case here if the view taken by me above is correct.

27. Such is the conclusion at which I have arrived independently of the decided cases, English and Indian. As to the former it was argued on behalf of the respondents, that a mortgagor in England is not obliged to pay post diem interest up to date of redemption unless as plaintiff he wants to redeem, and consequently, English decisions, in which such an equity has been imposed on mortgagors, are inapplicable to this case where the mortgagor is not seeking to redeem as plaintiff but is only a defendant. But though there are dicta to be found here and there in the English reports in support of the contention that the obligations of a mortgagor in the matter under consideration vary with his position as plaintiff or defendant in a suit upon the mortgage instrument, yet the better opinion is against the validity of such contention. In Sober v. Kemp 6 Hare 155; Wigram, V. C. said, 'It has always appeared to me that the terms on which a mortgagor or those claiming under him are entitled to redeem must be the same whether they are to be ascertained in a suit for redemption or for foreclosure. It is truly said that a plaintiff seeking equity must do equity ; but in determining what is equity, the question is what are the duties and liabilities which his situation at the time of instituting the suit imposes, and not whether he is 'plaintiff or defendant on the record.' (See also Coote on Mortgages, 5th Edition, page 981). The ground, therefore, on which the respondent tries to distinguish the present case from the English decisions on the point, does not seem to me to be sustainable.

28. Nevertheless, I think that those authorities form no useful guides for determining the present question, owing to important differences which exist between the provisions of Article 116 of the Indian Act and the rules of limitation governing similar cases in England.

29. The difference is most marked as to mortgages of personalty, for under the English law no specific period of limitation is prescribed for the recovery of interest due on moneys secured by such mortgages Mellersh v. Brown L.R. 45 Ch. D. 225. No doubt it is otherwise as to interest on any sum of money charged upon or payable out of any land or any damages in respect of such interest, as these cases are provided for by 3 and 4 Will. IV, cap. 27, Section 42, according to which none is recoverable, but within six years next after the same shall have become due. But obviously there is no real analogy between the provisions of this section and those of Article 116, notwithstanding the coincidence that six years is the limit under both the enactments. And even if there were any analogy between them, I have not been able to find any decisions on Section 42 of the Statute which are opposed to the conclusion arrived at by us. On the contrary, it is with reference to this very section that Sir Edward Sugden held, it applied to every remedy for the recovery of money falling within its provisions, observing, ' when the Act of Parliament says no action shall be maintained after a given number of years for the recovery of suqh sum or such interest, how can a man after that period bring any action in respect of the debt?' Henry v. Smith 2 D. & W. 381 . And the language of Kay, J. in Mellersh v. Brown L.R. 45 Ch. D. 225 referred to above, implies that if 3 and 4 Will. IV, cap. 27, Section 42, had applied to that case, the mortgagee could not have recovered more than six years' interest. As to Indian cases, the decision of Muttusami Ayyar and Best, JJ., in Badi Bibi Sahibal v. Sami Filial I.L.R. 18 Mad. 257 and the cases therein referred to fully support my view.

30. We have, however, been referred on behalf of the appellant to Rama Reddi v. Appaji Reddi I.L.R. 18 Mad. 248, and Krishna Reddi v. Varadarajulu Reddi 3 in which it appears post diem interest was awarded under Act XXXII of 1839, notwithstanding that the plaints therein were presented after the lapse of six years from the dates fixed for the payment of the principal amounts. But in neither of these decisions is the question of limitation noticed at all. On the contrary, in the judgment in Rama Reddi v. Appaji Reddi I.L.R. 18 Mad. 248 the learned Judges expressly follow Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal. 274 which in its turn quotes with approval Gudri Koer v. Bhubaneswari Goomar Singh I.L.R. 19 Cal. 19 where Machperson and Amir Ali, JJ. held that a claim like the present is barred unless instituted within six years from the date of the breach of contract. In these circumstances, the decisions in the second appeal and the original side appeal, relied upon by the appellant, can hardly be said to be in conflict with that of Muttusami Ayyar and Best, JJ., referred to above.

31. I concur therefore in holding that the appeal fails and should be dismissed with costs.

1

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[Article 132:

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Description of Suit Period of Time from which period

limitation begins to run.

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To enforce payment of money Twelve years.... When the money sued

charged upon immoveable for becomesdue.]

property.

Explanation.--The allowance

and fees respectively called

malikana and haqqs shall, for

the purpose of this clause,

be deemed to be money; charged

upon immoveable property.

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2

[Section 86: In a suit for foreclosure, if the plaintiff succeeds, the Court shall make a decree,

ordering that an account be taken of what will be due to the

Decree in foreclosure plaintiff for principal and interest on the mortgage, and for his

suit. costs of the suit, if any, awarded to him, on the day next herein-

after referred to or declaring the amount so due at the date of such

decree, and ordering that, upon the defendant paying to the plaintiff or into Court the amount

so due, on a day within six months from the date of declaring in Court the amount so due, to be

fixed by the Court, the plaintiff shall deliver up to the defendant, or to such person as he

appoints, all documents in his possession or power relating to the mortgaged property, and

shall transfer the property to the defendant free from all incumbrances created by the plaintiff

or any person claiming under him, or, where the plaintiff claims by derived title, by those under

whom he claims; and shall, if necessary, put the defendant into possession of the property; but

that, if the payment is not, made on or before the day to be fixed by the Court, the defendant

shall be absolutely debarred of all-sight to redeem the property.]

3

Original side appeal No. 19 of 1894. Before Collins, C.J.,

and Pabkeb, J.


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