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TMI Blog2007 (11) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff and execution of sale deed and other necessary documents. That the defendant failed to perform its part of obligations under the agreement. That it was a stipulation of the agreement that in case of breach by the defendant he i.e. the defendant would be liable to pay to the plaintiff double the amount of the earnest money. Thus, the suit for recovery of Rs. 2 lakhs was filed. 4. Vide judgment and decree dated 6.5.03 the learned Civil Judge has held that the defendant had breached the agreement to sell dated 17.9.90 and that the plaintiff is entitled to recover a sum of Rs. 1 lakhs together with the interest @ 12% p.a. for the period from 17.9.90 (date of payment of earnest money of Rs. 1 lakhs) till the date of the decree. plaintiff was further held entitled to future interest @ 6% p.a. from the date of decree till date of realization. 5. Against the said judgment and decree the defendant filed an appeal under Section 96 of the Code of Civil Procedure. Vide judgment dated 5.8.04, the learned Additional District Judge dismissed the appeal and affirmed the judgment and decree dated 6.5.03. 6. In these circumstances the appellant/defendant has filed the present second appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in relation to the sum adjudged has arisen out of commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or when there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. 13. Interest Act, 1978, governs payment of pre-suit interest. Section 3 and 4 of the Interest Act, 1978 are relevant for the aforesaid purpose. The relevant portions of the said provisions are quoted hereunder: 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) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras High Court in the decision reported as Batliboi & Co. Ltd. v. Beama Mfg Pvt. Ltd. (2006)1MLJ276 observed as under: A combined reading of the provisions contained in Sections 3 and 4 makes it clear that, (1) interest is payable on a pre-suit claim, if there is any statutory enactment to that effect (provisions contained in the Negotiable Instruments Act or the Land Acquisition Act or specific instances where interest is payable under an enactment); (2) interest is payable under other rule of law; (3) interest is payable by virtue of any usage having the force of law; (4) interest is payable as of right by virtue of any agreement as contemplated under Section 3(3)(a): Keeping in view the fact that in Section 3 the expression "agreement" has been used in contradistinction with Section 3(1)(a), where the expression "written instrument" has been used, it is obvious that such agreement contemplated under Section 3(3)(a) can be express agreement or even implied agreement. (5) interest is payable if the claim relate to a debt payable by virtue of a written instrument at a certain time; (6) interest is payable from the date of any written notice g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plaintiffs, reliance is placed upon Illus.(n) to that section. The illustration however does not deal with the right of a creditor to recover interest from his debtor on a loan advanced to the latter by the former. It only shows that if any person breaks his contract to pay to another person a sum of money on a specified date, and in consequence of that breach the latter is unable to pay his debts and is ruined, the former is not liable to make good to the latter anything except the principal sum which he promised to pay, together with interest up to the date of payment. He is not liable to pay damages of a remote character. The illustration does not confer upon a creditor a right to recover interest upon a debt which is due to him, when he is not entitled to such interest under any provision of the law. Nor can an illustration have the effect of modifying the language of the section which alone forms the enactment. 17. The claim of the plaintiff/respondent for pre-suit interest is to be judged keeping in view the aforesaid principles. 18. There is no dispute that in the present case there is no written instrument under which the debt is payable at a certain time. The pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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