2000 (2) TMI 862 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement to interest on the deposited amount.
2. Justification of the Trial Court's decree.
3. Entitlement to future interest.
4. Limitation period for filing the suit.
5. Admissibility of evidence regarding the rate of interest.
6. Quantum of interest payable.

Detailed Analysis:

1. Entitlement to Interest on the Deposited Amount:
The plaintiff participated in an auction for standing timber and deposited a sum of Rs. 1,03,000. His bid was not accepted, and the sale was not confirmed. Despite a court order directing the refund of the deposit with interest, only the principal amount was refunded, leading the plaintiff to file a suit for the interest accrued. The High Court had directed the refund of the deposit with interest that would have been earned if the deposit had been made in the State Bank of Mysore. The court held that the plaintiff was entitled to interest on the deposited amount from the date of deposit until the date of actual refund at the prevalent bank rate, irrespective of the deposit being kept in a revenue deposit account by the government.

2. Justification of the Trial Court's Decree:
The Trial Court decreed the plaintiff's suit, holding that the plaintiff was entitled to interest on the deposited amount and notice charges but not future interest at the rate of 24%. The Trial Court found that the plaintiff had proven entitlement to interest and that the service of notice under Section 80 of the CPC was valid. The court also held that the suit was filed within the limitation period.

3. Entitlement to Future Interest:
The plaintiff appealed for future interest at the rate of 24%, while the defendants contested the entire decree, including the limitation aspect. The High Court modified the Trial Court's decree, awarding the plaintiff interest at the rate of 5% per annum on the sum of Rs. 1,03,000, amounting to Rs. 33,475, plus Rs. 250 as notice charges. The court also granted pendente lite and future interest at the rate of 6% per annum on the total amount of Rs. 33,725.

4. Limitation Period for Filing the Suit:
The defendants argued that the suit was barred by limitation. The Trial Court applied Article 55 of the Limitation Act, which provides a three-year limitation period for compensation for breach of contract. The High Court, however, held that Article 113, which provides a three-year limitation period from when the right to sue accrues, was applicable. The court noted that the right to sue accrued on 18-7-1990 when the defendants denied the interest claim in their reply to the plaintiff's notice. Thus, the suit filed on 5-7-1993 was within the limitation period.

5. Admissibility of Evidence Regarding the Rate of Interest:
The Trial Court's reliance on a letter from the State Bank of Mysore (Ext. P-9) to determine the rate of interest was contested. The letter was not properly proved by producing a witness to authenticate it. The High Court held that the document could not be considered admissible evidence without proper proof. Consequently, the court accepted the defendants' statement in their written submission that the prevailing interest rate was 5% per annum.

6. Quantum of Interest Payable:
The High Court modified the Trial Court's decree, holding that the plaintiff was entitled to interest at the rate of 5% per annum on the sum of Rs. 1,03,000, amounting to Rs. 33,475, plus Rs. 250 as notice charges. The total amount decreed was Rs. 33,725, with pendente lite and future interest at the rate of 6% per annum until payment.

Conclusion:
The High Court modified the Trial Court's decree, awarding the plaintiff Rs. 33,475 as interest and Rs. 250 as notice charges, with pendente lite and future interest at 6% per annum on the total amount of Rs. 33,725. The court held that the suit was filed within the limitation period and that the plaintiff was entitled to interest on the deposited amount as per the court's earlier direction. The appeals were disposed of with the modification of the Trial Court's decree.