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PETITIONER: STATE OF RAJASTHAN

       Vs.

RESPONDENT: RAGHUVEER SINGH & ORS.

DATE OF JUDGMENT05/02/1979

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) SARKARIA, RANJIT SINGH

CITATION:  1979 AIR  852            1979 SCR  (3)   6  1979 SCC  (3) 102  CITATOR INFO :  R          1988 SC1520  (22)

ACT:      Interest Act  1839 (32  of 1839)-Suit  for recovery  of amount due  in respect  of building contract-Claim if a "sum certain" under the Act.      Notice of  demand for  payment claiming "loss by way of interest"-If valid  and sufficient-Notice not to be strictly construed.

HEADNOTE:      The Interest  Act, 1839 (32 of 1839) empowers the Court to allow  interest to the plaintiff if the amount claimed is a sum  certain which  is payable at a certain time by virtue of a written instrument at la rate not exceeding the current rate of  interest from  the  time  when  such  amounts  were payable and  if the  amount is  payable otherwise, then from the time  when the demand of payment shall have been made in writing.      As the  amounts due  in respect  of  a  building  works contract remained  unpaid despite  demands and  notices, the respondent  (plaintiff)   filed  a  suit  for  its  recovery together with  interest. Decreeing the suit, the trial court award ed interest at 4 1/2 per cent. But in appeal, the High Court enhanced the rate of interest pendente life from 4 1/2 per cent to 6 per cent.      In the  further appeal  to this  Court it was 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 a "sum certain" within the meaning of the Act. [9F]      The claim  was ascertainable  on a  calculation made in terms of  the agreement  and was  therefore  a  sum  certain within the  meaning of  the Act. It is "a sum of money which is now  playable or  will become  payable in  the future  by reason of  a present  obligation" and in any case it was not for the  payment of  any unliquidated  damages  or  for  the payment of any amount arising out of an inchoate obligation. [9E-F]

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    2. The  respondent issued  two notices.  In the  second notice a  definite 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 explanatory. Without any manner of doubt the  respondents were  claiming interest as such. [9G- 10D]      3. Nor again can it be said that there was no claim for future interest. A claim for past interest would necessarily imply a claim for future interest.                                                        [10E] 7      Kuppusami Pillai  v. Madras  Electric Tramway Co. Ltd., ILR 23  Mad. 41; Sita Ram & Ors. v. Mrs. S. Sullivan, [1901] 2 Punjab Law Reporter 464; referred 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  defaults committed by  the appellant  and its officers the High court was justified  in enhancing  the rate  of interest  to 6 per cent. [11E]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2008 of 1969.      From the  Judgment and  Order  dated  7-4-1965  of  the Rajasthan High  Court in  D. B.  Civil  Regular  Appeal  No. 67/53.      S. M. Jain for the Appellant.      B. D.  Sharma, Ramesh  Chandra and B. P. Maheshwari for the Respondent.      The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J.-The State  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  a certificate  granted under Article 133(1) (a) of the  Constitution of India (as it stood prior to the 30th amendment). The plaintiff respondent took a 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 a considerable amount due  to him remained unpaid. He, therefore, filed the suit out  of which the appeal arises to recover a sum of Rs. 3,19,458/11/-together with  interest at the rate of 12%. The suit was  contested by  the State  of Rajasthan.  An interim decree for a sum of Rs. 66,517/- was passed on 7th November, 1955.  After   full  trial   a  decree  for  Rs.  1,67,619/- (including the  sum of  Rs. 66,517/- for which a preliminary decree had  already been passed) was passed on 11-6-1958/30- 6-1958. The  decree also  awarded interest  at the rate of 4 1/2% 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 a 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 1/2 to 6%. The High Court having varied  the decree  of the  Trial Court, the State of Rajasthan

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8 sought and obtained a certificate under Article 133(1)(a) of the Constitution and has filed this appeal.      The controversy  in the High Court related primarily to (i) conveyance 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  was,  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 appellant  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 cubic contents from the general wall 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 use  of Jodhpur  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. According 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 9 submitted that the Interest Act, 1839, was not applicable as no sum  A certain  was payable  and there  was no demand for payment of interest. 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 4 1/2 % pendente lite, the  High Court  ought not to have interfered with the discretion of  the Trial Court. Reliance was placed upon the decision in Mahabir Prasad Rungta v. Durga Datt(1) and Union of India v. A. L. Rallia 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 a 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 a rate not exceeding the current rate of interest from  the time when such debts or sums certain were

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payable, if  such debts or sums be payable by virtue of some written  instrument   at  a  certain  time;  or  if  payable otherwise, then D 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 payment: 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 a sum which was ascertainable  on a  calculation made in accordance with the terms  of the  agreement. It was clearly a "sum certain" within the meaning of the Interest Act. In any case it would be a  debt, i.e.,  "a sum  of money  which is now payable or will become  payable in  the future  by reason  of a present obligation".  The  further  question  for  consideration  is whether the  plaintiff had  made a 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 payment". 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 was said "by with-holding payment of his bills absolutely, the Government has put  my client  to enormous loss by way of interest also .. I intimate to you      (1)[1961] 3 S.C.R. 639.      (2)[1964] 3 S.C.R. 164. 2-196SCI/79 10 through this notice that the said Shri Ramsingh claims a sum of Rs. 2,50,519/- from the Rajasthan State as under:      1. Unpaid bills for work done:           Rs. 1,37,177/-      2. lnterest on the above.                      11,511/-      3.................      4................      5.................      6..................                                               --------------           Total:                              Rs. 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 or technically. The mention of loss was only  explanatory. The plaintiff was, without any manner of doubt  claiming interest  as such.  Nor are  we impressed with the  argument  that  there  was  no  claim  for  future interest. In  our opinion  a claim  for past  interest would necessarily  imply   a  claim   for  future  interest,  vide Kuppuswami Pillai v. Madras Electric Tramway Co. Ltd.(1) and Sita Ram & Ors. v. Mrs. S. Sullivan(2).      In Mahabir  Prasad 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 apply.  On the  question  whether interest could  be awarded  on grounds of equity it was held that what  was claimed by Durga Datt was interest as damages and that  it could  not, therefore,  be  awarded.  The  suit

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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.  Rallia  Ram,  (supra)  the Arbitrator had awarded interest by way of compensation since the party  had to  borrow a  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  a  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      (1) I.L.R. 23 Mad. 41.      (2) [1901] 2 P.L.R. 464.      (3) [1961] 3 S.C.R. 639. 11 mentioned that  the plaintiff  had suffered loss of interest also. In  our view  the condition prescribed by the Interest Act that  such demand  shall give  notice to the debtor that interest shall  be  claimed  is  fulfilled  if  interest  is claimed, notwithstanding  the fact that the notice of demand explains that  loss by  way of  loss of  interest  has  been suffered. Ta  take any  other  view  would  be  to  be  over technical  in   the  construction  of  pleadings,  including notices preceeding the action.      We must notice here an argument advanced by the learned counsel for  the appellant  that the contract prohibited the award of  interest. He  relied upon  the following  sentence occurring in  paragraph 16  of the  Contract dated 11th May, 1947: "Neither  the earnest  money deposit nor the with-held amount shall  bear any  interest". This  sentence  far  from supporting the  case of the appellant appears to support the case of  the plaintiff.  The  reference  to  "the  with-held amounts" is  to the amounts represening five per cent of the running bills which are required to be with-held at the time of payment  of the  running bills.  The provision  that  the contractor is  not entitled  to interest  on these with-held amounts appears to imply that interest is claimable on other amounts due to the contractor.      While awarding  interest pendente  lite the Trial Court adopted the rate of 4’ % but the Trial Court gave no reasons for so  doing. The  High Court considered the matter in some detail and  having regard to the various continuous defaults committed by  the defendant and its Officers, the High Court enhanced the  rate of  interest to  6%. The  High Court  was justified in  doing sol  and we  see no  reason to interfere with the  discretion exercised  by the  High Court.  In  the result the appeal is dismissed with costs. N.V.K.                                     Appeal dismissed. 12