STATE OF RAJASTHAN versus RAGHUVEER SINGH & ORS.

STATE OF RAJASTHAN

RAGHUVEER SINGH & ORS.

February 5, 1979

(R. S. SARKARIA AND 0. CHINNAPPA REDDY, JJ.J

Interest Act 1839 (32 of 1839)-Suit for recovery of aniount due in res-pect of building contract-Claim if "sum certain" under the Act,

Notice oj demand for payment clain1ing "los.r by way of intcrest"-If, valid and suffecient-Notice not to be strictly construed.

The Interest Ac~ 1839 (32 of 1839) empowers the Court to allow interest to the plaintiff if the amount claimed is sum certain which is payable at certaifl time by virtue of written instrument at lei rate not exceeding the current rate of interest from the time when such amounts were payable and if the amount ~ payable otherwise, then from the time when the demand of payment !hall have been made in writing.

As the amounts due in respect of building work! contract renl6ined un-paid despite demands and notices, the re,pondent (plaintiff) filed suit for its recovery together with interest. Decreeing the suit, the trial court award-ed interest at 4t per cent. But in appeal, the High Court enhanced the rate of interest pendente Ute from 4t per cent to 6 per cent.

In the further appeal to this Court it vAl• contended that the Interest Act 1839, was not applicable as no sum certain was payable and there was no demand for payment of interest.

Dismissing the appeal,

HELD : 1. The claim was for la "sum certainl! within the meaning of the Act. [9F]

The claim was ascertainable on calculation made in terms of the agree-ment and was therefore sum certain within the meaning of the Act. It is "a sum of money which is now payable or will become payable in the future by reason of present obligation" and in any case it was not for the pay-ment of any unliquidated damages or for the payn1ent of any amount arising out of an inchoate obligation. [9E-F]

2. The respondent issued hvo notices. In the second notice it dc;finite claim of interest had been made by them. The term "loss by way of interest" mentioned in the first notice suggested that what was being claimed was compensation for the damages suffered by them. The notice should not be construed literally or technically. The mention of loss was only explann~ tory. Without any manner of doubt the respondents were claiming interest as such. [9G-10DJ

3. Nor again ctln it be said that there was no claim for future interest. claim for past interest would necessarily imply claim for future interest.

Kuppusanii Pillai v. Madras Electric Tramway Co. Ltd., ILR 23 Mad. 41; Sita Ram & Ors. v. Mrs. S. Sullivan, [1901] 2 Punjab Law Reporter 464; re-ferred to.

Mahabir Prashad Rungta v. Durga Datt, [1961] 3 SCR 639 and Union of India v. A.. L. Rallia Ram, [1964] 3 SCR 164; distinguished.

4. Having regard to the various continuous default'5 committed by the appe1lant and its officers the High Court v.~i justified in enhancing the rate of interest to 6 per cent. [1 lE]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2008 1969.

From the Judgment and Order dated 7-4-1965 of the Rajasthan High Court in D. B. Civil Regular Appeal No. 67153.

S. M. Jain for the Appellant.

B. D. Sharma, Ramesh Chandra and B. P. Maheshwari for the Respondent.

The Judgme_nt of the Court was delivered by

CHINNAPPA REDDY, J.-The Staie of Rajasthan, defendant in Civil Suit No. 9 of 1963 in the Court of the Senior Civil Judge, Udaipur, is the appellant in this appeal filed pursuant to certificate granted under Article 133(1) (a) of the Constitntion of India (as it itood prior to the 30th amendment). The plaintiff respondent took building work on contract from the erstwhile Government of the State of Udaipur. He completed the work on 6th June, 1950. Despite demands and notices issued by the plaintiff considerable amount due to him remained unpaid. He, therefore, filed the suit out of which the appeal arises to recover sum of Rs. 3,19,458111/-together with interest at the rate of 12 % . The suit was contested by the State of Rajasthan. An interim decree for sum of Rs. 66,517/- was passed on 7th November, 1955. After full trial decree for Rs. 1,67,6191- (including the sum of Rs. 66,517 /-for which preliminary decree had already been passed) was passed ou 11-6-1958/30-6-1958. The decree also awarded interest at the rate of 4!% on the amount decreed from the date of suit till the date of realisation. The plaintiff and the defendant preferred appeals to the High Court of Rajasthan. The High Court reduced the decreetal amount by sum of Rs. 9,991/-. The High Court, however, held that the plaintiff was entitled to interest from 1st January, 1951, and not merely from the date of suit. The High Court also enhanced the rate of interest pendente lite from 4!% to 6%. The High Court having varied the decree of the Trial Court, the State of Rajasthan

sought an<l obtained certificate under Article 133(1) \a) of the Constitution and has filed this appeal.

The controversy in the High Court related primarily to (i) con-veyance and lift charges; (ii) alleged double benefit in regard to bond-stones, lintels and sills; (iii) use of Jodhpur slabs and their high cost; (iv) charge for C. P. Teak wood at the same rates as for Burma Teak. In regard to conveyance and lift charges the High Court pointed out that no question was raised in the Memorandum of grounds of appeal and there ~as, therefore, no justification for permitting the learned Counsel for the State to assail the finding of the Trial Court relating to those charges. We do not see any reason either why the learned Counsel should be permitted to agitate this question in this appeal. Regarding double-charge for bond-stone, lintels and sills, the complaint of the appe!Iant was that while separate payment was being made for them, they had also been included in the measurements of the walls in which they happened to be fixed. From the office circular issued by the Chief Engineer of the Public Works Department of the United State of Rajasthan on 12th July, 1948, it appears that it was the practice uptill then to allow payment for bond-stones, lintels and sills separately without deducting their ~ubic contents from the general wa!I masonry. This had always been the practice and this was never objected to by the Accountant General. In view of the practice obtaining till then it could not be said that the contractor had wrongfully claimed double payment for bond-stones, lintels and sills. The nse of Jodhpnr slabs was not questioned in the written statement. All that was said was that the rate was high but at the trial there was no evidence worth the name, as observed by the High Court to show that the charge was excessive. Again there was no objection to the use of C.P.Teak-wood instead of Burma teak wood as the latter was not available. Accord-ing to the letter of the Superintending Engineer dated 6th February, 1950, where Burma teak wood was not available and C. P. Teak wood was used, the rates specified for Burma teak wood should be taken for C.P. teak wood. It could not, therefore, be said that the contractor had charged more than what he should for C.P. Teak wood.

The last question which was argued before us by Shri Jain, learned Counsel for the State of Rajasthan was that no interest should have been awarded for the period before the filing of the suit and that the rate of interest should not have been enhanced by the High Court for the period subsequent to the filing of the suit. It was

submitted that the Interest Act, 1839, was not applicable as no sum certain was payable and there was no demand for payment of interes~. It was argued that what was demanded by the plaintiff was damages and not interest. It was also contended that the Trial Court having, in exercise of its discretion, awarded interest at the rate of 4t% pendente lite, the High Court ought not to have interfered with the discretion of the Trial Court. Reliance was placed upon the de-cision in Maha]lir Prasad Rungta v. Durga Datt(') and Union of India v. A. L. Ral/ia Ram([2]).

We are unable to agree with the submission of the learned Counsel for the appellant. Under the Interest Act, 1839, "upon all debts or sums certain payable at certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at 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 certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of pay-ment : provided that interest shall be payable in all cases in which it is now payable by law". The claim of the present plaintiff was not for the payment of any unliquidated damages or for the payment of any amount arising out of an inchoate or contingent obligation. It was for the payment of sum which was ascertainable on calcula-tion made in accordance with the terms of the agreement. It was clearly "sum certain" within the meaning of the Interest Act. In any case it would be debt, i.e., "a sum of money which is now pay-able or will become payable in the future by reason of present obligation". The further question for consideration is whether the plaintiff had made demand of payment, "so as such demand shall give notice that interest will be claimed from the,date of such demand until the term of p11.yment''. The plaintiff issued two notices to the defendant demanding payment. The first was on 21st December, 1950, and the second was on 5th April, 1953. There is no dispute that in the second notice of demand of payment of definite claim for interest had been made. In the first notice it wall said "by with:hold-ing payment of his bills absolutely, the Government h!!.S put my client to enormous loss by way of interest also .......... I intimate to you

(I) !I %11 3 S.C.R. 639.

(2l r1%4J 3 S.C.R. 164.

2-196SCI!79

:A ·through this notice that the said Sbri Ramsingh claims sum of

Rs. 2,s0,519/- from the Rajastban State as under :

1. Unpaid bills for work done Rs. l,37,177/-2. Interest on the above. ll,511/-3. 4. 5. 6.

Total : R•. 2,50,519/-

The learned counsel submitted that what was claimed by the plaintiff in this notice was damages and not interest and that too for the past, without any indication that future interest was also being claimed. It is true that the plaintiff mentioned "loss by way of interest", suggesting that what he was claiming was compensation for the damage suffered by him. We are, however, not prepared to construe the notice so literally cir technically. The mention of loss was only explanatory. The plaintiff was, without any manner or doubt clai{ning interest as such. Nor are we impressed with the argu-ment that there was no claim for future interest .. In our opinion claim for past interest would necessarily imply claim for future interest, vide Kuppuswami Pillai v. Madras Electric Tramway Co. Ltd.(') and Sita Ram & Ors. v. Mrs. S. Sulliv(m([2]).

In Mahabir Pras(ld Rungta v. Durga Datt([3]) interest was disallow-ed on the ground that the notice which was given did not specify the sum which was demanded and therefore, the Interest Act did not ap_ply. On the question whether interest could be awarded on grounds of equi-F, ty it was held that what was claimed by Durga Datt was interest as damages and that it could not, therefore, be awarded. The suit itself was one for damages for breach of contract. We do not think that this case is of any assistance to the appellant. In Union of India v. A. L. Ral/ia Ram, (supra)° the Arbitrator had awarded interest by way of compensation since the party had to borrow large amount of money from its banker to meet its obligation under the contract. The Supreme Court pointed out that interest 'could not be awarded by way of damages. The Supreme Court also noticed that an Arbitrator was not Court within the meaning of the Interest Act. No question . arose before the Supreme Court whether interest· could not be awarded under the Interest Act merely because the notice demanding payment

(I) l.L.R. 23 Mad. 41.

(2) !l901J 2 P.L.R. 464 .

. !3) [1961) 3 S.G.R. 639.

In our fulfilled To

mentioned that the plaintiff IJ!!d snfl't.inw IP.SS of interest also. In our view the condition prescribed by the Interest Act that such demand shall give notice to the debtor t)lat iµterest shall be claimed is fulfilled if interest is claimed, notwithstanding the fact that the notice of demand explains that Joss by way of loss of interest has been suffered. To take any qther view would be to be over teehni_cal in the copstruetion of pleadings, including notices preceeding the action.

We 11m&t 11m&t notice here an argument acjvanced • H~ re)i~d re)i~d vr. the Coµtract dated 1 Jth Jth Mi!Y· -/ deposit nor

We 11m&t 11m&t notice here an argument acjvanced by the learned counsel for the appellant that the contract prohibited the award of interest. H~ re)i~d re)i~d upon the following sentence ocrnrring in paragraph lo of the Coµtract dated 1 Jth Jth Mi!Y· 1947: "Neither the earnest money deposit nor the with-held amount shall bear any interest". This sen-tence far from supporting the case of the appellant appears to s4pp,c.ct the ca&e of the plaintiff. The reference to "tile wi\)1-):)e\d amounts" is tq the al!IOl!nts represe11iflg jiye per cent of tl!e ruµning bills which are required to be with-held at the time of payment of the rumiing bills. The provision that the contractor is not entitled to interest on these with-held amounts appears to imply that inten,st is claimable on otjier a111ounts pue to the contractor.

While awarding interest pendente lite the Trial Court adopted the rate of 4t% but the Trial Court gave no reasons for so doing. The Uigh court considered the matt!'!' in som1> detail a11d having regard to the variQ!lS contjnqous defaults committed by the defendant and its Officers, the High Court enhanced the rate of interest to 6%. The High Court was ·jl)stified in doing so and we see no reason to interefere with th" c]jscretion exercised PY the Uigh Court. ln the resiilt !lie appeal is dismissed with costs.

N.V.\{.

Appeal dismissed.