IN THE HIGH COURT OF JUDICATURE OF MADRAS DATED: 13..06..2008 CORAM: THE HONOURABLE MR. JUSTICE G.RAJASURIA A.S.No.1007 of 1995 1. Government of Tamil Nadu rep. By its District Collector, Salem. 2. Rasipuram Muncipality by its Commissioner, Rasipuram, Salem District. ... Appellants/Defendants Vs. K.S.R.Murugesan ... Respondent/Plaintiff Appeal against the judgment and decree of the Sub Court, Namakkal made in O.S.No.36 of 1994 dated 30.11.1994. For appellants :: Mr.V.Srikanth, AGP(CS) For respondent :: Mr.N.Varadarajan JUDGMENT This appeal is focussed as against the judgment and decree dated 30.11.1994 passed by the learned Sub Judge, Namakkal, in O.S.No.10758 of 1988, which was filed by the plaintiff as against the defendants for recovery of a sum of Rs.3,53,700/-. For convenience sake, the parties are referred to here under according to their litigative status before the trial Court. 2. Broadly but briefly, narratively but precisely, the case of the plaintiff as stood exposited from the plaint could be portrayed thus: The plaintiff and D-2 Municipality entered into a contract as revealed by Ex.B1, whereby the plaintiff agreed to supply water to the Municipality and even earlier the Municipality passed an order as per Ex.A1 dated 20.03.1991. Accordingly, the plaintiff supplied water during the period between 21.03.1991 and 05.11.1991; 7260 lorry loads/trips of water, each load/trip bearing 12000 litres of water. As such, for 7260 loads/trips of water, Rs.19,60,200/- was to be paid https://hcservices.ecourts.gov.in/hcservices/ by the defendants. However, the second defendant paid only a sum of Rs.16,06,500/- towards 5950 lorry loads of water at the rate of Rs.270/- for 12,000 litres. For the balance 1310 loads of water, the defendants are yet to pay a sum of Rs.3,53,700/-. Despite incessant demand made by the plaintiff to the defendants for payment of the said balance amount, there was no positive response. Hence the plaintiff issued Ex.A2 notice dated 26.07.1993 and thereafter filed the suit. 3. Per contra, denying and refuting, challenging and impugning the allegations/averments in the plaint, the second defendant filed the written statement with the averments which run thus: As per the agreement Ex.B.1, the plaintiff is having no right to claim interest. However, the rate of interest claimed at 18% is untenable. The second defendant is having no money at present and that it undertakes to pay the principal amount due with interest within a period of three years. 4. The trial Court framed the relevant issues. During the trial, the plaintiff examined himself as PW1. No oral evidence was adduced on either side. However, on the side of plaintiff before the trial Court, Exs.1 to 4 were marked. On the defendants' side, Ex.B1 was marked during cross of PW1. 5. The trial Court decreed the suit directing the second defendant to pay a sum of Rs.3,53,700/- with 10% interest p.a. with effect from 06.11.1991 till the date of the suit and 6% interest p.a. from the date of decree till its realisation. 6. Being aggrieved by and dissatisfied with the judgment and decree of the trial Court, the appellant filed this appeal on the following grounds among others: The judgment and decree of the trial court relating to the direction to pay interest by the defendants is against law, weight of evidence and probabilities of the case. The trial court was wrong in holding that the defendants are liable to pay interest at 10% from 06.11.1991 till the date of judgment and thereafter at 6% till the amount is realised. In the absence of any stipulation for payment of interest under Ex.B.1, the trial Court was not justified in ordering interest. The trial Court misapplied the provisions of the Interest Act, 1978. Accordingly the appellants prayed for setting aside the judgment and decree of the trial Court relating to awarding of interest alone. 7. The point for consideration is as to whether the trial Court was justified in awarding 10% interest p.a. with effect from 06.11.1991 till the date of decree and 6% interest p.a. from the date https://hcservices.ecourts.gov.in/hcservices/ of decree till realisation? 8. This appeal is only relating to the award of interest by the trial Court. At the outset, I would like to extract hereunder the relevant portion of Section 3 of the Interest Act, 1978: "3. Power of Court to allow interest:-(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,- (a) ... (b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings: ...... (emphasis supplied) 9. The facts and circumstances as narrated supra would clearly and unambiguously highlight the point that under Ex.B.1 agreement, there is no reference to any payment of interest and in such a case, by virtue of sub clause(b) of Sub-section (1) of Section 3, interest has to be calculated only from the date of notice. Failing to take note of the same, the trial Court awarded interest from the date on which the last supply was made. In my considered opinion, such awarding of interest from that date i.e., 06.11.1991 is not tenable. It should have been from the date of notice Ex.A.2 dated 26.07.1993. There is no dispute relating to the then prevailing current rate of interest i.e., 10% p.a. 10. There is one other flaw in the judgment of the trial Court. As per Section 34 of the Code of Civil Procedure, no doubt, the contractual rate of interest could be awarded upto the date of decree relating to commercial transaction. Here, under Ex.B.1, there is no contractual rate of interest contemplated much less any interest payable at all is contemplated. Hence, the award of 10% interest should have been restricted upto the date of filing of the suit. From the date of the suit till realisation, awarding of 6% interest would be legal. As such, I am of the considered opinion that the judgment and decree of the trial Court was not passed au fait and au curente with law and fact in respect of awarding of interest and consequently they shall stand modified to the limited extent as under:- https://hcservices.ecourts.gov.in/hcservices/ "The defendants are jointly and severally liable to pay interest to the plaintiff on Rs.3,53,700/- at the rate of 10% p.a. from 26.07.1993 till the date of filing of the suit and at 6% interest from the date of the suit till realisation. The rest of the Judgment shall hold good". 11. Accordingly, the appeal is disposed of. However, there shall be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar rg To The Sub Court, Namakkal (With the record) 2.The Section Officer V.R.Section High Court, Madras A.S.No.1007 of 1995 ssv(co) pmk/12.7.08 https://hcservices.ecourts.gov.in/hcservices/