1. The question for the determination of which this rehearing on review was granted, is whether the lower Court erred in awarding to plaintiff the amount due from the 1st defendant as rent of the suit property for faslis 1323 and 1324 with interest thereon,
2. No objection is now taken to the confirmation of the decision of the Lower Court in plaintiff's favour as to the principal amount claimed as rent; and the facts necessary for appreciation of the argument regarding interest can be stated shortly. Plaintiff's father leased property to 2nd and 3rd defendants for forty years and afterwards leased the same property to 1st defendant in perpetuity. That contract provided for 1st defendant's right to collect the rent from 2nd and 3rd defendants, until their lease expired, and his duty to pay it over to plaintiff. Disputes arose and plaintiff brought a suit for the cancellation of 1st Defendant's lease, which was compromised by a decree for inter alia payment by 1st defendant of what he had collected from 2nd and 3rd defendants up to Fasli 132.5. Although however 1st defendant's lease was to end under the compromise with Fasli 1322, he collected and admittedly is liable for the rent for Faslis 1323 and 1324, although the exact circumstances in which he collected it, whether fraudulently or by mistake, have not been ascertained.
3. The difficulty in the way of allowing plaintiff interest on these principal amounts is that he clearly cannot claim it on the strength of any contract, because his contract with 1st defendant related only to the period ending with Fasli 1321; and he must therefore support his claim by showing that interest is in the words of the interest Act (XXXII of 1839) 'payable by law'. He cannot claim it directly as damages, because such a claim would, it is conceded, be out of time. The alternative suggested by him is that his suit is one for money received by 1st defendant for his use and is subject to Article No. 62, Sch. 1 of the Limitation Act; and the suit no doubt is of that nature. For the facts resemble those in Durga Prasad v. Asa Ram I.L.R.(1880) All. 361 in which there was held to be a constructive trust; and there was certainly the privity between plaintiff and 1st defendant, which the decision in Ramaswami Naidu v. Muthuswami Pillai 35 M.L.J. 581 requires. It is urged however that, even so, plaintiff cannot claim interest in a suit for money received to his use; and such a claim in a suit of that nature was no doubt rejected in Fruhling v. Schroeder 2 Bing. N.C. 77 .
4. The answer to this objection is firstly that Fruhling v. Schroeder 2 Bing. N.C. 77 was decided under the Common Law and that a claim to interest, which would be inadmissible under it, may be sustainable in equity or in any court, such as this, which exercises both jurisdictions. Miller v. Barlow 8 Moo P.C.N.S. 127 and John v. Dowell and Company (1918) A.C. 563 . And next, plaintiff's substantive claim being sustainable under chapter IX of the Trusts Act, 1st defendant is subject under Section 95 thereof to the same liabilities as if he were a trustee of the money he has retained; and there can be no doubt that liability for interest is among them. On its merits it may be added that his plea is clearly unconscionable, since there is no reason why he should be allowed to profit by his wrongful conduct.
5. Plaintiff's memorandum of cross objections is against the lower court's award of interest at 6 per cent, 12 per cent being claimed. We see no reason for interference with the rate allowed.
6. The result is that with reference to this Court's previous judgment and to the calculation of interest, on which the parties have now agreed, clause 2 of the lower Court's Decree is modified by the substitution of Rs. 1,215-3-11 for Rs. 3,202-5-1. Corresponding alterations must be made in the portion of that clause and clause 3 relating to costs. The order of this Court in its previous judgment as to costs in appeal will be set aside and an order for proportionate costs in appeal substituted. The plaintiff will pay 1st defendant's costs in the review petition.
7. The memorandum of cross objections is dismissed with costs.
8. At the rehearing of this appeal before us it was conceded by the 1st defendant that the decree of the lower court so far as it awarded to the plaintiff the sum of Rs. 1,100 the amount received by him from the term lessee as rent for faslis 1322 and 1323 was not open to any objection and might be confirmed. The only point argued for him was that no interest should have been awarded on the said sum. The lower court gave interest by way of equitable damages at 6 per cent and I am of opinion that that award is correct.
9. It is true that there was no contract to pay interest and that interest was not awardable under the interest Act either, as there was no demand made for payment. But it is now settled that, apart from contract and the Interest Act, it is open to the Court to decree interest by way of equitable relief in a proper case where justice, equity and good conscience require it. The latest pronouncement of the High Court on the point is in the case of Abdul Gaffar Rowther v. Hamida Bivi Ammal I.L.R. (1918) Mad. 661. In that case the learned Judges granted interest by way of damages on a sum of money found due to the plaintiff as her share of her father's assets in a partnership business which was carried on by the defendants after the father's death, her money having been utilised by them in the business. The previous authorities are referred to and discussed at length by Arunachalam the learned Judges and they come to the conclusion that the Interest Act was not exhaustive of eases where interest is allowable when no contract exists but that interest could be given by way of equitable damages. It is not necessary, therefore, to discuss once again the prior authorities, which it may be observed include the rulings of the Privy Council in Miller v. Barlow 1 and other cases.
10. The question then is whether the circumstances here are such as to justify an award of interest by way of equitable damages. The 1st defendant had clearly no right to receive, much less to retain, the rents paid by the term lessee for the faslis in question, as his right to collect them had ceased with the termination of his permanent lease, under the terms of which alone he had such a right. His action therefore, in retaining the money was clearly wrongful, and he would be liable in damages for it. But it is contended that as plaintiff waived the tort and sued for the money received by the defendant as money had and received by him to the plaintiff's use, the defendant is not liable to pay damages in this suit in any form- It seems to me that this argument is not sound, as in granting equitable relief, we must, I think, look to the substance of the claim and not to the form of the action. 'When the grant is in the form of interest there cannot be any question of limitation when the claim for the principal is admittedly not barred. The 1st defendant having obtained the money himself and kept the plaintiff wrongfully out of it, the plaintiff is, in my opinion clearly entitled in equity to interest on it; the money was carrying interest in the hands of the term lessee under his contract and if it had been paid over to the plaintiff, he could also have earned interest on it. The case is thus really covered by the ruling of the Privy Council in Miller v. Barlow 8 Moore's P.C.N.S. 127 where their Lordships observed : 'It therefore appears that by the wrongful act of the defendant, the plaintiff has been deprived of money which was actually making interest and their Lordships are of opinion that under these circumstances a court of equity would clearly be entitled to give interest'--p. 151.
11. In England there has, no doubt, been a course of decisions against the granting of interest in such cases and Fruhling v. Schroeder 676 Bing N.C. 77 relied on by the respondent is one of such cases. But as pointed out in Abdul Gaffur Ravuthar v. Hamida Bivi Animal 2 the noble Lords who decided the case of London, Chatham and Dover Railway Co. v. South Eastern Railway Co. (1893) A.C. 429 and especially Lord Herschell actually regretted that they were prevented by principles of stare decisis from reopening the question and awarding interest on equitable grounds. We are under no such disability in this country and we need not follow the English rule. Our courts are courts of both equity and law; and there is nothing to prevent us from giving equitable relief in suitable cases.
12. I therefore agree to the order proposed by my learned brother in this appeal as well as in the memorandum of cross objections.