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Nanchappa Goundan and ors. Vs. Vatasari Ittichathara Mannadiar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1930Mad727; (1930)59MLJ358
AppellantNanchappa Goundan and ors.
RespondentVatasari Ittichathara Mannadiar
Cases ReferredSavile v. Drax
Excerpt:
- - in fact, the argument of the learned advocate is precisely that which was adopted in the case of duncombe v. he thus mentions instances where interest was awarded before the, statute at common law as well as in equity. this distinction is most clearly brought out in the judgment of lord herschell in the house of lords in london, chatham and dover railway co. for example, in one case lord mansfield held that a debt carried interest where there was 'long delay under vexatious and oppressive circumstances'.in another case, best, c. but there is no warrant for saying that the courts awarded interest on debts on grounds such as were adverted to by lord mansfield and best, c. the subject is fully and clearly dealt with in the judgment of sir john wallis, c. in the action that was.....venkatasubba rao, j.1. this is a letters patent appeal from the judgment of mr. justice phillips. the question raised is whether the defendants are liable to pay interest on the rent due by them under a written lease. the learned judge has held that the interest act (xxxli of 1839) is not applicable but that interest is nevertheless payable on general equitable grounds. the case has been argued fully on both sides and numerous authorities have been cited. to my mind, the case presents no difficulty, although the state of the law is not satisfactory, and i shall briefly deal with the points raised without burdening my judgment with needless citation of cases.2. the effect of the lease deed is thus stated in the judgment of mr. justice phillips:it is clear from the terms of the document.....
Judgment:

Venkatasubba Rao, J.

1. This is a Letters Patent Appeal from the judgment of Mr. Justice Phillips. The question raised is whether the defendants are liable to pay interest on the rent due by them under a written lease. The learned Judge has held that the Interest Act (XXXlI of 1839) is not applicable but that interest is nevertheless payable on general equitable grounds. The case has been argued fully on both sides and numerous authorities have been cited. To my mind, the case presents no difficulty, although the state of the law is not satisfactory, and I shall briefly deal with the points raised without burdening my judgment with needless citation of cases.

2. The effect of the lease deed is thus stated in the judgment of Mr. Justice Phillips:

It is clear from the terms of the document that the payment of rent to the plaintiff is to commence as soon as the lands are assessed. The lease is an improvement lease under which the lands are to be gradually brought under cultivation and until they are so brought under cultivation nothing would be payable either to the Government or to the jenmi.

3. Again, the learned Judge refers to a clause in the lease,

Under which the tenant agrees to pay, from the year in which Gov-ernment revenue is paid, rent at the rate of three-fourth of a para for one para seed area.

4. It is not disputed that these passages correctly represent the effect of the document. The question then arises, does the interest Act apply?

5. I leave out the words which are not relevant for the present purpose and reproduce that part of the Act with which we are concerned.

it is, therefore, hereby enacted that, upon all debts or sums certain payable at a certain time, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable if such debts or sums be payable by virtue of some written instrument at a certain time, provided that interest shall be payable in all cases in which it is now payable by law.

6. The question then is, is the sum certain and is the time certain? Mr. Venkatarama Sastriar has contended that under the instrument, both the sum and the time should in the eye of the law be deemed to be certain. This contention cannot prevail in view of the authorities by which we are bound. in fact, the argument of the learned Advocate is precisely that which was adopted in the case of Duncombe v. Brighten Club and Norfolk Hotel Co (1875) L.R. 10 Q.B. 371 A different view had been taken by the Exchequer Chamber in the earlier case of Merchant Shipping Co. v. Armitage (1873) L.R. 9 Q.B. 99 in the last mentioned case, the Court came to the conclusion,

That where a, sum of money was payable under a charlerparty after the right delivery of the cargo, in cash two months after the date of the ship's report inwards at the custom house, although the time was ascertained and became settled by the event, the money was not payable at a 'time certain' within the meaning of the statute.

7. In the former case, the majority of the Court came to the conclusion

that although you had not the sum or the time actually mentioned in the written instrument, yet if the written instrument contained provisions which on the happening of an event rendered the time or the sum certain, that was sufficient within the meaning of the statute, and interest could be allowed. ...

8. It is in the words of Lord Herschell that I have stated above the effect of the two decisions to which I have referred; see London, Chatham and DovEr, Railway Co. v. South Eastern Railway Co. (1893) A.C. 429 Having' quoted these cases, the learned Lord, though disposed to treat the Armitage case as of greater weight, refuses to express any decided opinion as to which of these views is the correct one. Lord Morris feels no doubt that the law is correctly stated in the Armitage case (see p. 442). But Lord Shand observes that the Duncombe case appeals more forcibly to his mind than the other case. We are not concerned with this conflict, for the Indian Courts are bound by the law settled beyond doubt, by two Privy Council cases, one of them being a very recent one. In Maine and New Brunswick Electrical Power Co. v. Hart (1929) A.C. 631 (a case, the facts of which closely resemble the facts before us), the following passage contains a very clear statement of the law:

It is further to be observed that in Juggomohun Ghose v. Manick-chund (1859) 7 M.I.A. 263 their Lordships' Board held under an Indian Statute (Act XXXII of 1839) identical in terms with the relevant section of Lord Tenterden's Act, that a sum certain is not payable by the written instrument at a time certain if its payment is contingent upon events which may never happen and the amount payable is capable of ascertainment only if and when those events happen and the time for the happening of those events, if they ever do happen, may be indefinitely postponed.

9. Judged by this test, in the present case, neither the sum nor the time is certain.

10. In re Homer, Fooks v. Horner (1896) 2 Ch.D. 188 is not inconsistent with this principle, for the contingency there mentioned was the death of a certain person and 'death is not a contingent event--it is a certainty which must happen to all.

11. The sum was there payable within six calendar months after the testator's decease.

A covenant to pay within six calendar months after death, is a covenant to pay on the last day of the six months.

12. This case does not, therefore, help Mr. Venkatarama Sastri.

13. It is difficult to reconcile Surja Narain v. Pratap Norain I.L.R.(1899) C. 955 with the decision of the Privy Council. In that case, a specified sum was agreed to be paid in the event of counsel being engaged. The learned Judges treated the time of payment as being certain, a view opposed to that taken in the two decisions of the Judicial Committee.

14. I agree with Mr. Justice Phillips that a case has not arisen which gives the Court jurisdiction to allow interest under the Act.

15. The question then arises, are the defendants liable for interest independently of the Act? In other words, is interest payable under the proviso above quoted, which says 'interest shall be payable in all cases in which it is now payable by law?' Before Lord Tenterden's Act, interest was payable at common law and in equity in certain cases. The object of that Act was to make the law more liberal by statute in regard to the granting of interest, See the judgment of Lord Watson in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. (1893) A.C. 429 To carry out this object, a proviso was added, leaving untouched those cases in which there was already a right to interest when the Act was passed. The Indian Act, as its preamble shows, reproduces for this country the terms of Lord Tenterden's Act. What then are the cases which are saved by the proviso Lord Lindley in his judgment in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. (1892) 1 Ch. 120 (C.A.) attempts to state in what cases, before the Act, interest was granted first at common law and secondly in equity. The judgment does not, of course, profess to be exhaustive on the point, but the leading considerations are set forth in some detail. The learned Lord Justice refers to cases where a plaintiff for asserting his legal rights had to invoke the powers of the Court of Chancery and points out that that Court generally followed the law in dealing with legal claims. Such cases are those dealt with under the concurrent jurisdiction of the Court of Equity. Then the Lord Justice refers to purely equitable rights which fell within the exclusive jurisdiction of that Court. He thus mentions instances where interest was awarded before the, statute at common law as well as in equity. Though, as I have just stated, the Court of Equity followed the law in dealing purely with legal claims, sometimes in order to prevent injustice, it applied to such claims principles such as,

A Court of Equity will treat a wrong-doer as having done that which he ought to have done.

16. This then is the effect of Lord Lindley's judgment. Bearing this in mind, let us examine the contentions now advanced. When it is sought to bring a case within the proviso, the question that really arises is, would interest have been granted in such a case before the Act either at law or in equity? It is unnecessary to make a complete list of instances where interest was so awarded. It is sufficient to point out that before the Act, in the case of ordinary debts, interest was not payable at common law unless there was an agreement express or it could be implied as in the case of usage. (See the judgment of Lindley, L.J., at page 140 and the judgment of Bowen, L.J., at page 146.) Vague notions as to what are equitable principles have Led to some confusion; and a rule may vaguely be just, but it is not necessarily a principle of equity. This distinction is most clearly brought out in the judgment of Lord Herschell in the House of Lords in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. (1893) A.C. 429 already cited. The Courts at one time granted interest in cases of debts on general grounds of justice; for example, in one case Lord Mansfield held that a debt carried interest where there was 'long delay under vexatious and oppressive circumstances'. In another case, Best, C.J., observed that the Jury might give interest 'in the shape of damages for the unjust detention of the money'. This view of the law was not approved in later cases and interest was refused in cases of debts on any such broad equitable grounds. It was with the object of relaxing this law by statute, that Lord Tenterden's Act was passed. But the new rights created under that Act were within very narrow limits-too narrow indeed, as is pointed out by Lord Herschell, for the purposes of justice. Lord Shand similarly regrets that the law, as it stands, allows injustice to prevail.

17. I have now dealt with the principles that guide the Courts in England. Is the law of this country different? That would depend upon what the law was before the passing of the Interest Act. Cases, where before the Act interest was granted, are saved by the proviso in question. But there is no warrant for saying that the Courts awarded interest on debts on grounds such as were adverted to by Lord Mansfield and Best, C.J. The subject is fully and clearly dealt with in the judgment of Sir John Wallis, C.J., in Rajah of Pittapur v. Ballapragada Pallamraju. (1920) 40 M.L.J. 18 The Madras cases on which Mr. Justice Phillips relies must, with all respect, be held to be wrong. The learned Judge also refers to Miller v. Barlow. (1871) L.R. 3 P.C.733 That is not a case of a debt at all. But as it is strongly relied on by him, it requires a closer examination. That was an action for money had and received. A firm was adjudicated insolvent and the Official Assignee impeached a certain transaction which the insolvent firm had with the plaintiff. He then obtained an order from the Insolvency Court directing the plaintiff to hand over to him certain goods and monies. They were accordingly handed over. In the action that was brought, the plaintiff complained that the order was wrongly made and prayed for a declaration of his rights in the aforesaid goods and money. The question was, 'Was the Official Assignee liable to pay interest?' The effect of the judgment in the suit was that the order of the Insolvency Court was wrongly made. The money having been retained in the Official Assignee's hand by virtue of an order which was subsequently reversed, their Lordships held that the plaintiff was entitled to interest. The principle underlying this decision is further elucidated by another judgment delivered in the same year by the Privy Council in Rodger v. The Comptoir D'Escompte de Peris. (1871) L.R. 3 P.C. 465 The question directly arose in that case, whether, on the reversal of a judgment, a party is entitled to get interest on the amount that had been recovered from him under that wrong judgment. It was held that he was. These cases give effect to definite and well-recognised rules of equity. They have never been treated as authorities, in English Courts, for the position that interest can be allowed on a debt, on what are termed general equitable grounds.

18. The Privy Council case of Maine and Nezv Brunswick Electrical Power Co. v. Hart (1929) A.C. 631 to which I have already referred, is a decisive authority also on this point. The facts there, as I have said, are very similar to the facts of the present case. Their Lordships, after disposing of the contention that interest was payable under the statute, further held:

There is no place in the matter for the exercise of equitable jurisdiction and, therefore, no rule of equity in regard to interest can have any application.

19. I am, therefore, clearly of the opinion that, under the proviso, the plaintiffs cannot claim interest on what are known as general equitable grounds.

20. Lastly, interest is claimed on the ground that it may be granted by way of damages under Section 73 of the Indian Contract Act. This contention again is one which has been repeatedly overruled. In the judgment of the Court of Appeal of Lindley, L.J., already referred to, it is expressly laid down that damages cannot be granted for non-payment of debts. The question is directly raised by Lord Herschell in the House of Lords-Can interest be awarded by way of damages on the ground of wrongful detention of the debt? The question was, after full discussion, answered in the negative. Section.73 is merely declaratory of the common law as to damages. (See Pollock and Mulla's Commentaries on the Indian Contract Act.) If the English rule as to damages has not had the effect of superseding Lord Tenterden's Act in regard to interest on debts, why should it be assumed that Section 73 of the Contract Act has produced just the contrary result? I am not prepared to hold that the Legislature, by adding illustration (n) to Section 73, intended to depart from the law which must be treated as having been settled beyond doubt. The view I take is in conformity with several cases, of which Kamalammal v. Peeru Meera Lavvai Rowthen : (1897)7MLJ263 may be taken as typical. I cannot, therefore, uphold the contention of Mr. Venkatarama Sastri. 21. In the result, the claim to interest is disallowed except as regards what is claimed in O.S. No. 65 of 1915 (S.A. No. 137 of 1922). In that case a special contention is put fort-ward that, the rent being charged on land, interest becomes payable. This is taken to be settled law. See Drax, In re; Savile v. Drax (1903) 1 Ch. 781. Collins, M.R., thus observed:

It seems to me to be well established on the authorities, and the result or those authorities does not indeed appear to be disputed, that a Court of Equity has power to give interest, and in point of fact does so where a charge is created on land, although there are no words allowing interest in the instrument creating the charge' (page 793).

21. Mr. Sitarama Rao has not contested this proposition. In O.S. No. 65 of 1915, the judgment of Mr. Justice Phillips is affirmed and the appeal is dismissed with costs. In the other cases, the learned Judge's judgment is set aside and the appeals are allowed with costs.

Madhavan Nair, J.

22. The defendants are the appellants. They are lessees of the plaintiff holding lands under perpetual lease deeds, the terms of which in respect to material particulars are alike in all cases except in Letters Patent Appeal No. 255 of 1925, which will be referred to later. Under the lease deeds, waste lands were leased out on condition that rent should be paid on 'reclamations' as they are made. The maru-pat of the lease in L.P.A. No. 258 of 1925, Exhibit A, may be taken as typical to show the terms under which the lessees held their lands. Its main terms, so far as these are relevant for these Letters Patent Appeals, are as follows:.the remaining sthalams...shall be held and be held as saswatham (permanently) without surrendering the same for ever and enjoyed by me and my sons and grandsons for ever and ever in hereditary succession, and a proportionate pattom (rent) at the rate of 34th of a para of paddy for one para of the Nadan seed, will be paid by me to you from the year in which the assessment in levied by the Government.

23. The suits out of which these Letters Patent Appeals arise were instituted by the plaintiff for the recovery of arrears of rent together with 'interest' on the arrears. The District Munsif gave decrees to the plaintiff for the arrears claimed and also for the 'interest' on such arrears. On appeal the District judge disallowed the 'interest' on the ground that such interest was not claimable under the Interest Act (XXXII of 1839). In the Second Appeals filed by the plaintiff, Phillips, J., though he agreed with the District Judge that the Interest Act did not apply to these cases, reversed his decisions and held that the plaintiff was entitled to claim interest, 'on equitable principles'. The learned Judge relied mainly on Miller v. Barlow (1871) L.R. 3 P.C. 733 and the decision in Abdul Safflur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 in support of his conclusion.

24. The short question for determination in these Letters Patent Appeals is whether the plaintiff is entitled to claim 'interest' on the arrears of rent decreed to him. The respondent supports the judgment of Phillips, J., not only on the ground of 'equitable principles' on which he has based his decision but also on two additional grounds, namely, that interest can be claimed under the Interest Act and also under Section 73 of the Indian Contract Act. The appellants argue that none of these grounds affords any justification for awarding 'interest'.

25. I shall first deal with the arguments based upon 'equitable principles.' To understand the operation of these principles in relation to the law awarding 'interest' it is necessary to consider whether they were given effect to generally in all cases on grounds of equity and good conscience or whether their application was strictly limited to any special class of cases. At common law in England 'interest' was not payable on debts unless by agreement or by mercantile usage, nor could damages be given for non-payment of such debts. The law in this respect was altered by 3 and 4 Will. IV, c. 42 (which corresponds to the Interest Act, XXXII of 1839). In London, Chatham and Dover Railway Co, v. South Eastern Railway Co. (1892) 1 Ch. 120 (C.A.) the leading decision on the subject, the law was thus stated by Lindley, L.J.:

As regards interest it was settled by Higgins v. Sargent (1823) 2 B. & C. 348 : 107 E.R. 414 Page v. Newman (1829) 9 B. & C. 378 : 109 E.R. 140. and Foster v. Weston (1830) 6 Bing. 709 : 130 E.R. 1454 that at common law interest was not payable on ordinary debts unless by agreement or by mercantile usage; nor could damages be given for non-payment of such debts. The law in this respect was altered by 3 and 4 Will. IV, c. 42 (page 140).... Except as altered by the Act, the 3 and 4 Will. IV, c. 42, the old law as to interest remains the same' (page 142).

26. This decision was affirmed by the House of Lords in London, Chatham and Dover Railway Co. v. South Eastern Railway Co. (1893) A.C. 429 According to this decision, under the English Law 'interest' is not payable on debts nor could damages be given except in three cases-

1. Where there is an agreement to pay interest;

2. Where it is payable under the mercantile usage; and

3. Where it is payable under the statute.

27. To this may be added a fourth case:Certain other actions in which also Courts of Common Law gave interest by way of damages, as for example, for. breach of contract to give a bill of exchange, which, if given, would carry interest (see the judgment of Kay, L.J., at page 151). Before the Judicature Act, some cases in connection with debts, etc., where the question of 'interest' was involved, ordinarily triable in Courts of Common Law, were tried in the Court of Chancery as the plaintiff's right in such cases could not be enforced at law owing to the defective legal machinery. 'The Court of Chancery followed the law in dealing with legal claims.!' In cases of purely equitable demands, for instance, in suits against trustees, who misapplied trust moneys and in suits for equitable waste, the Court of Chancery usually decreed interest (see the observations of Lord Lindley at page 142). The cases in which interest is payable by the rules of equity are thus described in Halsbury's Laws of England, Vol. XXI,. page 40:

1. Money obtained by fraud and retained by fraud can be recovered with interest;

2. Interest may also be recovered in equity in some cases where a particular relationship exists between the creditor and debtor, such as mortgagor and mortgagee, obligor and obligee on a bond, executor and beneficiary, principal and agent, principal and surety, trustee and cestui que trust, vendor and purchaser, or in the case of arrears of annuities;

3. Where a person who is an officer of the Court, such as a sheriff, a solicitor or a receiver, wrongfully withholds money which he has obtained in the course of legal proceedings, he may be ordered to pay it with interest.

28. So, unless a claim for 'interest' on 'debts' fell within anyone of the above seven cases-assuming that the classification is exhaustive, for it is possible that further research may disclose more cases in 'equity'-including in this number the four cases under 'the common law' already mentioned, interest was not awarded under English Law. No authority has been cited to show that the abolition of the distinction between Courts of Common Law and Equity and their fusion by the Judicature Act resulted in enlarging the scope of cases in which interest could, be claimed on debts or in increasing the power of Courts in awarding 'interest'. As a result of the fusion, the same Court Was enabled to deal with 'legal' as well as 'equitable claims' and to award interest on 'equitable principles' as well. The same Court being a Court of Law and Equity recognised not only 'legal' claims to interest but also gave effect to such 'equitable' constructions as would be recognised in Courts of Equity only.

29. As regards a party's claim to interest, apart from the Interest Act, the law in India may be taken to be the same as in England [see Kamalammal v. Peeru Meera Lavvai Rowthen : (1897)7MLJ263 and. Juggomohun Ghose v. Kasiree Chund (1862) 9 M.I.A. 256 . I shall now consider how far the principles referred to above and given effect to. by English Courts have been followed in the decisions of this Court. As numerous cases were discussed in detail before us and as the case was very fully argued by both sides, a consideration of the case-law at some length becomes necessary. From 1863, that is, Kisara Rukkumma Rao v. Cripati Viyanna Dikshatulu (1863) 1 M.H.C.R. 369 onwards, the decisions of our Court proceeded on the view that interest not payable under the terms of the contract could only be paid under the Act or as being in accordance with the usage as to the particular class of instruments. [See Kamalammal v. Peeru Meerm Lavvai Rowthen : (1897)7MLJ263 Subramania Aiyar v. Subramania Aiyar : (1908)18MLJ245 Gopalaswami Chettiar v. Ramier (1909) 7 M.L.T. 108 and Nanu Nair v. Ashtamoorthi Nambudripad. 22]

30. In 1919, in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 Ayling and Seshagiri Aiyar, JJ., for the first time held that the Interest Act is not exhaustive of all cases where interest is allowed and that even in cases where payment of interest is not justified under the Interest Act interest may be allowed on 'equitable principles'. In so doing they mainly relied upon the decision in Miller v. Barlow (1871) L.R. 3 P.C. 733 in which the Judicial Committee pointed out that Indian Courts are Courts both of Law and Equity and that they can award as damages 'interest' on equitable grounds. They also referred to the decisions of the Privy Council in Hurropersaud Roy v. Shama Persaud Roy Hamira Bibi v. Zubaida Bibi and Ahmed Musaji Saleji v. Hashim Ebrahim Saleji and also to some decisions of the other High Courts in which interest was allowed apart from the Act. Though Seshagiri Aiyar, J., who delivered the judgment in Abdul Saffur Rowther v. Hamida Bivi Animal : (1919)36MLJ456 expressed this view, it may be noticed that it is not consistent with the view in Nam Nair v. Ashtamoorthi Nambudripad (1915) 29 M.L.J. 772 to which he was a party and also with the subsequent decision in Rajah of Pittaipur v. Ballapragada Pallamraju (1920) 40 M.L.J. 18 to which also he was a party. In that case Sir John Wallis, C.J., followed the prior decisions of this Court and declined to award interest apart from the provisions of the Act. The learned Judge distinguished the case in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 by pointing out that that was not a case of a contract and also observed, in the course of his judgment, that cases in which interest was allowed by the Privy Council in the absence of a contract and independently of the Act must be regarded as cases coming within the proviso to the Act, saving cases in which interest was payable by law when the Act was passed. Sesha-giri Aiyar, J., who delivered a separate judgment agreed with the conclusion arrived at by the learned Chief Justice and pointed out that he and the other learned Judge in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 did not differ from the prior decisions of this Court.

31. The view that interest might be awarded apart from the Act on broad equitable considerations first adumbrated in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 gradually began to find favour in this Court and that decision has been followed in three cases, namely, Arunachalam Chettiar v. Raja Rajes-wara Sethupathi (1921) 42 M.L.J. 74 by Oldfield and Krishnan, JJ., Venkatacha-lam Chettiar v. Ponnuswami Aiyangar : (1924)47MLJ312 , by Wallace, J., and Krishnan Nambudripad v. Ambu Kurup : AIR1927Mad59 , by Curgenven, J. It is not necessary to refer to the facts of these cases, as I shall presently consider how far and to what extent the cases relied on by Seshagiri Aiyar, J., in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 support the conclusion that apart from the Act, interest can be awarded on equitable considerations. Before proceeding further I may here state, to make the position clear, that so far as the point under discussion is concerned, if the true nature and scope of the equitable considerations affecting the award of interest is correctly understood, the question whether the Interest Act is exhaustive or not, is not in itself a very important one, for, the cases in which 'interest' could be awarded on equitable considerations may be brought within the proviso of the Interest Act, as observed by Wallis, C.J., in which view the Interest Act may be said to be exhaustive, or those cases may be treated as a separate class of cases not coming within the Act strictly, in which view the Act will not be exhaustive. However that may be, the important question to consider is to what extent do equitable considerations afford justification for decreeing 'interest'.

32. The main case relied on in Abdul Saffur Rowther v. Hamida Bivi Ammal : (1919)36MLJ456 and which was referred to in the present case also with great insistence is the decision in Miller v. Barlow. (1871) L.R. 3 P.C. 733 The facts of the case, which it may be observed is not one of contract, are somewhat complicated, but the head-note states them sufficiently to enable us to understand the scope of the decision so far as it relates to the point under discussion.

Proceedings were taken under the Insolvency Act, 11 and 12 Vic, c. 21, and the proceeds of certain goods claimed by the Official Assignee, paid by the Assignee into the Bank of Bengal. In a suit brought in the High Court at Calcutta, by A against the Official Assignee, claiming the proceeds of the goods paid into the Insolvent Court:Held, on the Court making a decree in favour of the plaintiff, that the High Court being a Court of Law and Equity, had power to award interest on the amount, as against the Official Assignee.

33. On the facts the learned Judges came to the conclusion that 'by the wrongful act of the defendant, the plaintiff has been deprived of the money which was actually making interest.' After observing thus, their Lordships proceed as follows:

Their Lordships are of opinion, that under these circumstances a Court of Equity would clearly be entitled to give interest; and it is by no means clear that even in a Court of Law, although the ordinary rule is that in actions for money had and received interest is not given, the fact of the defendant having received interest would not be a sufficient ground for making the defendant liable to pay interest; and as the High Court have the powers both of a Court of Equity and a Court of Law, their Lordships are of opinion that interest has been properly given.

34. These observations make it clear that their Lordships never intended by this decision to lay down a general rule that interest may be awarded in all cases on account of equitable considerations ; for they draw our attention to the special circumstance that 'by the wrongful act of the defendant the plaintiff was deprived of money which was actually making interest' and they state also that in such circumstances a Court of Equity certainly, and even a Court of Law departing from its usual rule would probably, award interest. In this connection it is important to note that in cases of this kind where Officers of the Court withhold money they have wrongfully obtained in the course of legal proceedings, interest was always made payable by the rules of equity. The case we are dealing with falls within the last class of cases mentioned in Halsbury, Vol. XXI, page 40, already referred to, where interest is payable by the rules of equity. Courts of Equity having been accustomed to give relief in such cases, their Lordships state that Indian Courts, being Courts of Equity as well as Courts of Law, may properly award interest. When we propose to apply equitable considerations in deciding the question whether a party may be awarded interest we have to ask ourselves the question whether a Court of Equity in such a case would usually award interest and unless a particular case falls within the well-recognised class of cases in which interest is demandable in equity, the Indian Courts, in my view, have no power to award interest in such ,1 case on equitable grounds. If the case is one in which Courts of Equity would ordinarily award interest, then, Courts of Law in this country, having the powers both of the Courts of Equity and of Law, can also award interest on equitable considerations. This seems to me to be the true scope of the decision in Miller v. Barlow (1871) L.R. 3 P.C. 733 and understood in this light it is clear that that decision cannot be relied upon in support of the view that the plaintiff is entitled to interest in this case on broad equitable grounds; for, it is not shown that the nature of the claim made by the plaintiff is one which will bring the suit within the purview of a Court of Equity in which it will award interest. In a very recent case, on appeal from the Supreme Court of New Brunswick see Maine and New Brunswick Electrical Power Co. v. Hart (1929) A.C. 631 which will be referred to later on in connection with the Interest Act also their Lordships of the Privy Council had to consider whether any rule of equity entitles the plaintiff to interest and in considering that question they state the rule thus:

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.

It must, however, be borne in mind that when once such a contract has been executed, then, apart from cases where rescission on the ground of fraud is sought, there remains nothing to attract the equitable jurisdiction, and the parties are left to their remedies at law.'

35. Applying this principle to the case before them, their Lordships held that, where covenants between the parties when construed according to the ordinary rules of construction do not give the. plaintiff interest, he cannot claim interest, unless it is given to him at common law or under Statute and apart from the case where rescission of payment on the ground of fraud is sought there is no place in the matter for the exercise of equitable jurisdiction, and, therefore, no rule of equity in regard to interest can have any application.

36. As the plaintiff, to use the language of their Lordships of the Privy Council, 'has not established in this case the existence of a state of circumstances which attracts the equitable jurisdiction,' I think he is not entitled to interest 'on equitable grounds'.

37. I shall now briefly consider the other Privy Council cases referred to by Seshagiri Aiyar, J., in Abdul Sajfur Rowther v. Hamida Bivi Animal I.L.R.(1919) M. 661 : 36 M.L.7. 456 in support of his decision, namely, Hurropersaud Roy v. Shania Persaud Roy and Hamira Bibi v. Zubaida Bibi and Ahmed Musaji Saleji v. Hashim Ebrahim Saleji . In Hurropersaud Roy v. Shama Persaud Roy 23 interest was allowed on mesne profits. This decision, as explained by Wallis, C.J., in Raja of Pittapur v. Ballapragada Pallamraju (1920) 40 M.L.J. 18 was based on the long settled practice of the Court and as the learned Judge remarked must be regarded as a case coming within the proviso to the Act, save in cases in which interest is payable by law when the Act was passed. In Hamira Bibi Animal v. Zubaida Bibi which was a case of unpaid dower, the Judicial Committee allowed interest as 'reasonable compensation' to a Muhammadan widow on account of the special features of the case and their Lordships observed that her right to claim 'interest' was consistent with the rules recognised under the English as well as under the Muhammadan Law. It seems to me that this does not support the broad proposition that interest may be charged on 'debts' in all cases on 'general equitable considerations'. In Ahmed Musaji Saleji v. Hashim Ebrahim Saleji interest was awarded on the well-settled principle 'that in certain cases, when on the dissolution of a firm one of the partners retains assets of the firm in his hands without any settlement of account and applies them in continuing the business for his own benefit, he may be ordered to account for these assets with interest thereon and this apart from fraud or misconduct in the nature of fraud' As I understand these Privy Council cases they do not support the general proposition for which they are cited in Abdul Saffur Rowther v. Hamida Bivi Ammal. I.L.R.(1919) M. 661 : 36 M.L.7 456

38. In support of this portion of the argument Mr. Sastri cited a new case, namely, the decision in Canadian Pacific Railway v. Toronto Corporation. (1905) A.C. 33 In that case interest on the arrears of rent was allowed by the Privy Council; but from the facts it will appear that the suit was one for 'specific performance' and for the enforcement of a covenant in a lease. Having regard to its nature the suit fell within the special jurisdiction of the Equity Courts and apparently it was on that account that interest was allowed. In this connection I may also refer to the decision in Johnson v. Rex (1904) A.C. 817 cited by Mr. Sitarama Rao. In that case their Lordships of the Privy Council held that interest on two sums, which one Johnson, a Government contractor in Sierra Leone, admittedly received from the Army Paymaster in excess of what was due to him and which he retained in his own hands for over a year, was not payable by him to the Crown. In so holding they gave effect to the law as settled by the judgment of the House of Lords in the case of London, Chatham and Dover Railway Co. v. The South Eastern Railway Co. (1893) A.C. 429 In the course of the judgment, their Lordships indicated the view that if the Crown had rested its case on fraud then interest would have been awarded, as interest is recoverable both at law and in equity on money obtained by fraud and retained by fraud. If fraud had been alleged and proved, the case would have come specially within the jurisdiction of the Equity Courts and would have fallen within the first class of cases mentioned in Halsbury, Vol. XXI, page 40. On this part of the case, my view is that the Interest Act is exhaustive and that only such equitable grounds as were generally recognised in Courts of Equity could be relied on in awarding interest on equitable grounds and that the case in Abdul Saffur Rowther v. Hamida Bivi Animal : (1919)36MLJ456 having regard to the principles which I have discussed here, has not been correctly decided. The remarks of Loral Blackburn as regards Lord Tenterden's Act in Duncombe v. Brighton Club and Norfolk Hotel Company (1875) L.R. 10 Q.B. 371 that'The statute ought to have said that wherever there is a debt at all it should bear interest, unless there is some strong reason to the contrary. But as the statute stands, this is not the case,' may well be applied to the Indian enactment also. But however much we may deplore the present state of the law it seems to me that the decisions do not permit us to stretch the doctrine of 'equitable grounds' to meet all the cases where we think interest should be awarded. In these circumstances, unless the plaintiff's claim to 'interest' comes within the Interest Act or any other rule of law, it cannot be supported.

39. The next question for consideration is whether the plaintiff is entitled to claim interest under the Interest Act XXXII of 1839. That Act provides that

Upon all debts, or sums certain payable at a certain time, the Court before which they may be recovered, may, if it shall think fit, allow interest to the creditor, at a rate not exceeding the current rate of interest from the time when such debts or sums were payable, if such debts or sums be payable by virtue of some written instrument at a certain time...

40. To attract the provisions of this Act to a written contract, two conditions are necessary (1) a certain sum must be payable, and (2) this sum must be payable at a certain time, under the contract. It was pointed but in Juggomohun Ghose v. Manick-chund (1859) 7 M.I.A. 263 that

The certainty required must exist at the time when the promise is made; and, therefore, that the Act does not...affect debts contingent in amount, and time becoming due.

41. On this reasoning, their Lordships held that a 'sum certain' is not payable by a written instrument at a 'time certain' if its payment is contingent upon events which may never happen and the amount payable is capable of ascertainment only if and when these events happen and that the time for the happening of those events, if they ever do happen, may be indefinitely postponed.

42. This decision was followed by their Lordships in a very recent decision, Maine and New Brunswick Electrical Power Co. v. Hart (1929) A.C. 631 in deciding a case under Section 24(1) of the New Brunswick Judicature Act of 1909, which in this respect is similar in terms to the Interest Act. The Indian enactment was framed in order to extend to India the provisions of Statute 3 and 4 William IV, c. 42, Section 28 and substantially adopts the language of it. That these terms are understood in the same way under the English enactment will appear from the decision in London, Chatham and Dover Railway Co. v. The South Eastern Railway Co. (1893) A.C. 429 which discusses the earlier English decisions on the same point, namely, Merchant Shipping Co. v. Armitage (1873) L.R. 9 Q.B. and Duncombe v. Brighton Club and Norfolk Hotel Company (1875) L.R. 10 Q.B. 371 In that case, Lord Herschell expressed the view that, where the time of payment is stated to be 'as soon after the 1st of June as possible, and not later than the 15th of June'

it is a little difficult to say that that is a 'time certain' even as regards the 15th of June'. The decision in In re Horner, Fooks v. Horner (1896) 2 Ch. 188 does not lay down any different principle; for the death of the testator within six months after which the sum was made payable in that case 'is not a contingent event, for death is a certainty which must happen to all; and so many days after death is a time certain for the purposes of the statute.' Having regard to these principles, can it be said that the amount sought to be recovered as rent in the present case is 'a certain sum;' recoverable at 'a certain time' within the meaning of the Interest Act? I think not. I have already referred to the main terms of the document at the commencement of this judgment. According to these terms, as pointed out by Phillips, J., in his judgment, the rent which the lessee has to pay varies with circumstances which are necessary to be proved, such as, the extent of the land cultivated in any particular year and also the amount of assessment levied by the Government in that year. It is also noticeable that no definite period is fixed for the payment of rent. In these circumstances it cannot be said in this case that 'a sum certain' is payable at 'a certain time' within the meaning of the Interest Act. I must, therefore, hold that the plaintiff is not entitled to invoke the provisions of the Act in support of his claim to interest.

43. The last question is whether the plaintiff is entitled to interest under Section 73, Illustration (n) of the Contract Act. This question of law arose for decision in Kamalammal v. Peeru Mecra Lavvai Rawthen : (1897)7MLJ263 . In that case, the plaintiff sued to recover some money due to her on an oral contract together with interest. No agreement or usage having a right to interest was alleged and no written demand or notice had been given under the Interest Act. It was held that the plaintiff was not entitled to interest. It was argued in that case that the plaintiff could claim interest under Section 73 of the Contract Act coupled with illustration (n). The learned Judges held that to construe the section as giving a right to interest in those cases in which it cannot be awarded according to the provisions of Act XXXII of 1839 would be to hold that the latter enactment was virtually repealed by the former. Their Lordships were not prepared to hold that it was so repealed. They also pointed out that there was no real conflict between Section 73 of the Contract Act and Act XXXII of 1839, since effect may well be given to Section 73 by holding that the award of interest as compensation contemplated by that section has reference to cases in which such award can be made without infringing the provisions of the other Act. In other words, illustration (n) to Section 73 merely states that, if a contract to pay a sum of money on a specified day is broken, nothing except interest up to the date of payment can be claimed as damages, provided such interest can be claimed under the Interest Act or any other rule of law. After referring to the 'Common Law Rule' regarding interest on debts, Pollock and Mulla make the following observations regarding the scope of illustration (n) to Section 73:

There does not seem to be any sufficient ground for reading into illustration (n) to the present section an intention to abolish this rule and superscde the Act of 1839. Indeed, the illustration does not say that the defendant is necessarily liable to pay interest, but only assumes that he may be so under the Act of 1839 or otherwise, and says that he is not in any event liable for more.

(See page 414, Pollock and Mulla, the Indian Contract Act, 5th Edition.)

44. The decision in Kamalammal v. Peeru Meera Levvai Rowthen : (1897)7MLJ263 has been dissented from in Calcutta see Surja Narain Mukhopadhya v. Pratap Narain Mukhopadhya I.L.R.(1899) C. 955 per Banerjee, J., and Khetra Mohan Poddar v. Nishi Kumar Saha. 22 C.W.N. 488 The view of the Calcutta High Court, says Sir Frederick Pollock, goes indeed beyond the English Common Law. The view of the Bombay High Court in Saundanappa v. Shiv-basawa I.L.R.(1907) B. 354 is also opposed to the decision in Kamalammal v. Peeru Meera Levvai Rowthen : (1897)7MLJ263 . In that case it was held that

neither the Interest Act nor the Contract Act affects the rule of Hindu Law, that in the case of a debt wrongfully withheld after demand of payment has been made interest becomes payable from the date of demand by way of damages. That law was in force when the Interest Act was passed, and under the proviso to the section of the Act it has continued to be in force. The Indian Contract Act has not interfered with that law. On the other hand, that law is consistent with the provisions of that Act.

45. This view of the Bombay High Court which is somewhat novel was not pressed before us by the respondents' learned Advocate. In Ghanshyam Singh v. Daulat Singh I.L.R.(1896) All. 240 which was a suit by the landlord for arrears of rent together with interest, it was held that though the lessee was not entitled to 'interest' under the N.W.P. Act, he was entitled to claim it under Section 73 of the Contract Act; but the learned Judges do not discuss the scope of illustration (n) on which the judgment is based; nor do they refer to the Interest Act. The observations of the learned Judges in Zwala Prasad v. Hoti Lal I.L.R.(1924) A. 625 do not throw any clear light on this question. Two decisions of the Privy Council, namely, Muhammad Mehdi Ali Khan v. Muhammad Yasin Khan I.L.R.(1898) C. 523 and Gmesh Bakhsh v. Harihar Bakhsh I.L.R.(1904) A. 299 were referred to in this connection to show that in one of the cases, namely, Muhammad Mehdi Ali Khan v. Muhammad Yasin Khan I.L.R.(1898) C. 523 their Lordships indicated, though very faintly, that their inclination is in favour of the view that interest cannot be awarded under Section 73 of the Contract Act and that in the other, namely, Ganesh Bakhsh v. Harihar Bakhsh I.L.R.(1904) A. 299 their Lordships indicated, though inferen-tially, that their view is in favour of the contention that interest can be so awarded. But the judgments do not bear . those interpretations; on the other hand they show that the question was not considered by their Lordships. In this state of authorities I must hold following the decision in Kama-lammal v. Peeru Meera Levvai Rowthen : (1897)7MLJ263 which has not been departed from in this Court in any of its subsequent decisions, that the plaintiff is not entitled to claim interest under Section 73 of the Contract Act read with illustration (n).

46. For the above reasons, the decision of Phillips, J., under appeal in Letters Patent Appeals Nos. 256 to 258 should be reversed and the plaintiff's suit so far as it relates to interest should be dismissed with costs.

47. L. P. Appeal No. 255 of 1925.-The lease deed in this appeal contains the following additional term:

If I allow the said Janmavakasa pattom (rent) to fall into arrears without paying the same at proper time, there is no hindrance by this Saswatha pattom for your duly recovering the said Janmavakasa pattom out of these properties or out of my other properties.

48. By this term, the leased properties and the other properties of the lessee are charged 'with the payment of rent due under the lease. Having regard to this fact, following the decision in Drax, In re; Savile v. Drax (1903) 1 Ch. 781 I must hold that the landlord is entitled to claim interest on the arrears of the rent in this case. In Drax, In re; Savile V. Drax (1903) 1 Ch. 781 the principle to be applied is thus stated by Collins, M.R., at page 793:

It seems to me to be well established on the authorities, and the result of those authorities does not indeed appear to be disputed, that a Court of Equity has power to give interest, and in point of fact does so where a charge is created on land, although there are no words allowing interest in the instrument creating the charge. ' Indeed, we may go back to the principle laid down in many cases showing that, in point of fact, the Court of Equity does charge interest.

49. Romer, L.J., and Cozens-Hardy, L.J., also express the same view. This principle is not disputed by Mr. Sitarama Rao. This Letters Patent Appeal is dismissed with costs.


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