Sonali Bank vs. Respondent: Karnaphuli Works Ltd.

Jun 28, 2022

IN THE SUPREME COURT OF BANGLADESH
(APPELLATE DIVISION)

Civil Appeal No. 46 of 1991

Decided On: 29.11.1993

Appellants: Sonali Bank
Vs.
Respondent: Karnaphuli Works Ltd.

**Hon’ble Judges:**Shahabuddin Ahmed, C.J., M.H. Rahman, A.T.M. Afzal, Mustafa Kamal and Latifur Rahman, JJ.

Counsels:
For Appellant/Petitioner/Plaintiff: Asrarul Hossain, Senior Advocate, Supreme Court, Mozammel Hoque Bhuiyan, Advocate, Supreme Court, with him, instructed by Mvi. Md. Wahidullah, Advocate-on-Record

For Respondents/Defendant: Kh. Mahbubuddin Ahmed, Senior Advocate, Supreme Court, instructed by Md. Aftab Hossain, Advocate-on-Record

Subject: Contract

Catch Words

Mentioned IN

**Acts/Rules/Orders:**Code of Civil Procedure, 1908 (CPC) - Section 34; Contract Act, 1872 - Section 70, Contract Act, 1872 - Section 73; Negotiable Instruments Act, 1881 - Section 79, Negotiable Instruments Act, 1881 - Section 80; Sale Of Goods Act, 1930 - Section 61, Sale Of Goods Act, 1930 - Section 61 (2), Sale Of Goods Act, 1930 - Section 61(2)

Citing Reference:

Discussed

 

 7

Distinguished

 

 1

Case Note:
Civil - Power of Court - Grant of Interest - Section 61 of Sale of Goods Act and Section 73 of Contract Act - Whether Court got power, at least on facts of this case, to award interest for period prior to institution of suit? - Held, it is apparent that plaintiff was claiming compensation for business loss and damages for breach of contract and in reality plaintiff was awarded compensation which is permissible under law - Strictly speaking under law interest cannot be recovered as damages other than an agreement for payment of interest at a fixed rate or it is payable by usage of trade having force of law or under any substantive law - Question of granting interest under Section 73 of Contract Act does not at all rise as this section only speaks of compensation and not of interest - Thus, it is immaterial that whether amount which was awarded against defendant for breach of contract for non-payment of price of car was awarded either as interest or as compensation - Before parting with case it can be said that interest was not awarded by way of damages but prevailing rate of bank interest was taken into consideration for measuring business loss and damages of plaintiff - Trial Judge found that after delivery of cars plaintiff was entitled to price of same which was not also paid on due date of payment - It is found by both courts below that plaintiff suffered pecuniary loss and without entering into statement of accounts as given in plaint indemnified plaintiff on calculating 15% as bank interest - Court is not prevented from adopting this method for determining amount of compensation as per existing bank rate when sum due to plaintiff was ascertainable by Court after hearing parties. [23],[24],[25]

JUDGMENT

Shahabuddin Ahmed, C.J.

  1. This appeal by leave is from a judgment and decree of the High Court Division, dated 29 May, 1991 in FA No. 7 of 1988, affirming that of the Subordinate Judge, Dhaka, dated 30 September, 1987, in Money Suit No. 270 of 1986. The short question raised in this appeal is whether the Court got power, atleast on facts of this case, to award interest for the period prior to the institution of the suit. Mr. Asrarul Hossain, learned Counsel for the defendant-appellant (here-in-after defendant) contends that the Court got no power; and Kh. Mahbubuddin Ahmed, learned Counsel for the plaintiff-respondent (here-in-after plaintiff) contends that the Court certainly got such powers but, in this case, what has been awarded by the Court is not interest but compensation for loss of business for non payment of the balance of the price of goods supplied by the plaintiff to the defendant, and as such, the question as to interest is not of much relevance. The disputed questions as to facts of the case have been concluded by concurrent findings of the trial Court and the appellate Court, and as such, it is not necessary for us to enter into the details thereof. For the purpose of disposal of this appeal, however, salient features of the case are being described below.

  2. Defendant, Sonali Bank took up a scheme called “Bikalpa” for helping unemployed University graduates by providing them with taxi-cars so that they could earn their livelihood as taxi-drivers. Under this scheme the defendant-Bank decided to purchase 100 motor cars from Daihatsu Company of Japan and to hand them over to those graduates at reasonable price. Plaintiff, M/s. Karnaphuli Works Ltd. is a business company dealing in import and sale of such cars from Japan. After prolonged-negotiations between the plaintiff and the defendant it was finally agreed that the plaintiff would import 100 cars and sell them to the defendant at the rate of Taka 2.30 lacs each and that the price of the cars would be paid within a period of 180 days from the date of delivery. The defendant paid to the plaintiff in advance an amount of Taka 10 lakh as a part of the purchase-money. In due course the plaintiff imported the cars and the defendant took delivery thereof on three different dates, 12.1.85, 26.1.85 and 23.4.85. But at the time of taking delivery of the cars the defendant wanted to re-fix the price of the cars by reducing the earlier agreed price considerably, in view of the fact that the plaintiff, by representing to the suppliers in Japan namely, Daihatsu Company, that these cars would be used by the University students, got the original price reduced from 8.70 lac Yen to 6.64 lac Yen per unit and consequently this concession would go to the actual purchasers namely, the students. The plaintiff did not agree to make any reduction in the price taking the ground that even after delivery of the cars the plaintiff would be required to render free service to those cars for proper maintenance for several years. The defendant, however, unilaterally reduced the price of each car from Taka 2.30 lacs to Taka 1,25,439.00 and after deducting Taka 10 lacs which had been paid in advance, forwarded to the plaintiff a Pay Order dated 26.6.86 for Taka 1,15,43,900 “as full and final payment of the price of 100 cars”. The plaintiff after initial rejection of this offer, accepted it “as provisional” subject to final determination of the amount by a competent Court. In these circumstances, the suit was filed for recovery of the balance of the price on the basis of the original agreement at the rate of Taka 2.30 lac per car, that is, Taka 2 crore and 20 lac, as the principal sum and claiming compensation of Taka 80.81 lac for non payment of the balance of the price in due time, that is, 10.6.85. Furthermore, the plaintiff claimed interest on this amount from the period the payment became due, that is, from 10.6.85 to the date of the suit, in addition to interest during the pendency of the suit and also interest from the date of the decree till payment of the decretal amount.

  3. The trial Court upon consideration of evidence, oral and documentary, held that the price of each car was Taka 2.30 lac as agreed upon between the parties and rejected the defendant’s contention that the payment by the Pay-Order dated 26.6.86 at the reduced rate of Taka 1,25,439 per unit was full and final payment; the trial Court accepted the plaintiffs claim that this payment was “provisional”, and accordingly found that an amount of Taka 1,04,56,100 remained unpaid. The Court on this finding decreed this amount. As to the claim of compensation of Taka 80.81 lacs, the Court rejected this claim, but allowed interest of Taka 33 lac taking the ground that had the balance of Taka 1 crore, 4 lacs, 56 thousand 1 hundred been kept in a bank as deposit, the plaintiff would have received interest to this extent. The trial Court, therefore, passed a decree for Taka 1,37,56,100 and allowed interest thereupon at the rate of 15% from the date of institution of the suit till realisation.

  4. In the first appeal as referred to, the High Court Division concurred with these findings of the trial Court excepting that the awarding of interest of Tk. 33 lacs for the period prior to the institution of the suit was not interest, but was compensation in the form of interest for business-loss incurred by the plaintiff for non-payment of the balance on the date it fell due. In this connection the High Court Division observed that by not paying the price at the “agreed rate” the defendant committed a breach of contract and therefore the plaintiff was entitled to compensation which was rightly assessed by the trial Court at Taka 33 lac and that “in our view this amount was awarded as compensation.” As already indicated above, in this appeal before us, the concurrent findings have not been challenged excepting the order for payment of Taka 33 lac for the period prior to the institution of the suit, whether it is interest or compensation.

  5. Mr. Asrarul Hossain is of the view that the award of Tk. 33 lac is for interest for the period prior to the institution of the suit and contends that such interest is not authorised by any law, such as section 34 of the CP Code, nor by any agreement. He contends that interest for the period prior to the date of the suit cannot be granted on any unascertained sum of money. Interest for any period prior to the suit is awardable only if it is provided by any substantive law, agreement or usage and custom of trade, upon a certain amount of money, payable at a definite date. He has tried to show that none of these conditions are fulfilled in the instant case. In support of this contention he has referred to the Interest Act, 1839 (Act No. XXXII of 1839), one Decision of the House of Lords in the diocese of London, Chatham and Dover Ry Co. vs. South Eastern Railway Co, 1893-AC, 429 and one decision of the Privy Council in Bengal Nagpur Railway Co. vs. Ruttanji Ramji 65 Indian Appeals, 66 - AIR 1893 PC 70. Besides he has made passing reference to some decisions of Indian and Pakistan jurisdictions.

  6. Section 34 of the CP Code provides that when the Court passes a money decree, it may order interest to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest on the aggregate sum so adjudged from the date of the decree to the date of payment, (emphasis supplied). Purpose of this section has been expressed in a complex sentence, and if it is simplified, it will show that the court has got power to award interest for three distinct periods (1) the period from the date a sum is payable to the date of institution of the suit, (2) the period during which the suit remains pending and (3) the period from the date of decree till payment of the decretal amount. Mr. Asrarul Hossain does not dispute the grant of interest by the Court for the periods (2) and (3), but he contends that the Court’s power to grant interest for the period (1) that is, prior to the institution of the suit, is fettered by a number of prerequisites. These are, that to grant interest for this period the principal sum claimed must be definite and certain, that this sum is payable at a fixed or definite date and further that such payment is provided by any instrument, law, custom or usage. As to law, he argues that it is a substantive law which may authorise payment of such interest for pre-suit period. Section 34 Civil Procedure Code, he argues, is not a substantive law for this purpose.

  7. To consider these points I would first go to the Privy Council decision in the case of Bengal Nagpur Railway Co. vs. Rattanji Ramji. In that case respondent-plaintiff, a contractor, claimed the price of work done by him, that is construction of a branch railway, which he fixed at Rs.87339; and by a concurrent finding of the trial Court and the appellate Court (High Court at Madras) the claim was adjudged at Rs.66,980-10-6. It was also concurrently found that this amount adjudged fell due on 26 July, 1925 but it was not paid. The contractor filed the suit on 29 November, 1927 to recover this sum along with interest thereon from 26 July, 1925 to 29 November, 1927; besides this interest, the contractor claimed interest for the two subsequent periods as usual. The High Court allowed interests for all the three periods, as mentioned in section 34 CP Code, including the period prior to the institution of the suit. The Judicial Committee of the Privy Council rejected the claim of interest for the pre-suit period (from 26 July, 1925 to 29 November, 1927) showing reasons which are to this effect: The question is whether the Court, has authority to allow interest for the period prior to the institution of the suit, and the solution of this question depends not upon the CP Code, but upon substantive law; interest for this period may be awarded if there is any agreement for payment of interest at a fixed rate or it is payable by the usage of trade, or under the provision of any substantive law, such as, section 80 of the Negotiable Instruments Act, 1881. Their Lordships found none of these prerequisites present in that case, particularly the very principal sum was not an ascertained one but. it was to be ascertained by the Court which, on consideration of evidence, ascertained it by reducing the plaintiffs claim. In that case reference was made to the Interest Act, 1839 also.

  8. The Interest Act 1839 was passed by the Government of East India Company during the heyday of their rule over India, and obviously, it was influenced by their commercial interests. It was a one-section Act and it is quoted below:

  1. It is, therefore, hereby enacted that, 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 payable, if such debts or sums be payable by virtue of some written instrument at a 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 payment: provided that interest shall be payable in all cases in which it is now payable by law.

Substance of this Act is that upon a debt or sum which is definite and payable at a definite time, under any written instrument or any law, the Court may allow interest from the time when such debt or sum falls due. In other words, if the principal sum on which interest is claimed for the period before the suit is filed is not fixed, certain and definite, no such interest can be allowed by the Court. Reason for imposing these conditions is obvious; it is that unless a definite amount of the principal is there, how the debtor or the person from whom it is demanded, will know how much he is to pay and by what time. In the Privy Council case the principal sum was neither certain nor was it payable at a certain time, nor payment of interest thereon was provided by any written instrument and that is why the Privy Council rejected this claim. Similar was the position in the case decided by the House of Lords about half a century earlier. It is the case of London, Chatham & Dover Railway Co. Vs. South Eastern Railway Co. Therein two Rly companies made an agreement for joint traffic and it was provided in the Agreement that accounts should be rendered by each company to the other in May, that a payment of 75% should be made on the account of the balance appearing “due” on the face of the accounts so exchanged and that tins payment should be made by the 15th of June. A large balance became due from one company to the other to recover which an action was brought and interest claimed. This claim of interest was rejected since there was no debt or sum certain, payable by virtue of a written instrument, at a certain time. It was further held that “interest could not be given by way of damage for detention of the debt”.

  1. Kh. Mahbubuddin Ahmed, learned Counsel for the plaintiff, has argued that in the instant case the principal sum was definite and certain, that is, Tk. 2.30 lacs per car, that this amount was to be paid at a certain time, that is, within 180 days from the date of delivery of the ears and that these conditions were stated in the written Agreement and as such, he argues, facts of the cases of the Privy Council and the House of Lords are distinguishable from those of this case. Grant of Tk. 33 lac as interest is therefore, he argues, quite legal, particularly when the plaintiff had demanded it by a notice in due time. The Interest Act, 1839 has been repealed in Bangladesh by the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act VIII of 1973). Nevertheless, the general principles as to grant of interest for a period prior to the institution of the suit are so well-established that these principles cannot be departed from. These principles, as already explained above, are that the Court may allow interest for a pre-suit period if the principal sum is fixed and payable at a definite time and that such conditions were provided for in any agreement between the parties or in any substantive law.

  2. Mr. Asrarul Hossain is not prepared to accept the factual position of this case that the principal sum claimed by the plaintiff in this case is an amount “certain” since the defendant-bank put up a legitimate claim for reducing the price of the cars when the Japanese suppliers reduced it on their part for the benefit of the ultimate buyers, namely the University students. But the Agreement between the plaintiff and the defendant did not contain any provision that in case the suppliers reduced their price, it would correspondingly lead to reduction of the price settled between the importer-plaintiff and the buyer, the bank. Kh. M Ahmed contends that what had transpired between the importer and the foreign exporter is not an issue between the importer and the buyer and that this unnecessary question was raised by the defendant at the time of taking delivery of the cars just to show a dispute as to the agreed rate of price of the cars and this is a lame excuse which cannot render the unpaid balance an unascertained or uncertain sum. The learned Counsel may be right and well-founded in law and fact in rejecting the claim as to reduction; but when it is a fact that the plaintiff got the original import price considerably reduced about 23% in the name of the unemployed students graduates, this benefit should have gone to those students at a reasonable degree. Plaintiffs explanation is that he is required to render free service to the cars for a considerable time after delivery. Still this concession does not appear to be adequate. However, when the Agreement as to price of the cars does not provide for any re-fixation, there is hardly anything to prevent the plaintiff from insisting on his pound of flesh. Moreover, this question has been decided against the defendant by the concurrent findings of the two Courts below as already stated above and that this is also not a question raised in this appeal which is limited only to the payment of Tk. 33 lac for the pre-litigation period.

  3. It may be mentioned here that there are some other laws which specifically permit grant of interest for any period prior to institution of the suit Section 79 of the Negotiable Instruments Act, 1881 provides for interest when it is expressly made payable on a promissory note or a bill of exchange, and section 80 of this Act provides that the rate of the interest would be 6% per annum, when no rate of interest is specified in the instrument. Chapter VI of the Sale of Goods Act, 1930 (Act No. III of 1930) provides for recovery of unpaid price of goods sold as well as damage and interest. Section 61(2) of this Act provides that in the absence of a contract to the contrary the Court may award interest at such rate as it thinks fit on the amount of the price

(a) to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price is payable.

Kh. Mahbubuddin Ahmed is trying to bring the plaintiff’s claim within the purview of this section arguing that balance of the price of the cars which were delivered to the appellant at the appointed time, was not paid within the period fixed. The learned Counsel has also relied upon section 73 of the Contract Act, 1872 which provides for compensation for loss or damage caused by breach of contract. He has argued that the defendant broke the contract by not paying the price of the cars and thereby deprived him of his right to use the money for which he incurred loss in his business. Section 73, however, makes it clear that “such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.”

  1. Mr. Asrarul Hossain finds it difficult to counter the claim of interest under section 61(2) of the Sale of Goods Act, but contends that this claim, particularly for damage or compensation under section 73 of the Contract Act, is not sustainable because the business loss, if any suffered by the plaintiff, is very remote and indirect to the non-payment of the balance of the price of the cars. He refers to illustration (n) to this section. This reads: “A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day; B in consequence of not receiving the money on that day, is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest upto the day of payment (emphasis supplied). Here even if no compensation is allowed, interest on the principal sum is allowed from the date this sum falls due. The trial Court, it may be mentioned, took this factor into consideration when it refused compensation of Tk. 80.81 lac but allowed interest of Tk. 33 lac on the premise that had the principal sum been deposited with a bank the plaintiff would have got this amount as interest. Mr. Asrarul Hossain, referring to the decision of the House of Lords in the London-Dover Rly Case, contends that interest could not be given by way of damage for detention of the balance of the price. I do not think that this contention is sustainable, for the trial Court or for that purpose, the appellate Court did not allow interest by way of damage; the former allowed it in the form of compensation, and the latter as compensation within the meaning of section 73 of the Contract Act as well as section 61 (2) of the Sale of Goods Act But the broad fact is that the principal sum due to the plaintiff having been a definite one and payable within a definite time as provided in the Agreement, the order for its payment along with interest thereon also is quite lawful.

  2. The Indian Supreme Court took the view in Pillo Dhunji Shidwas Vs. Municipal Corp, Poona, AIR 1970 (SC) 1201 that the Court got power to award compensation under section 70, Contract Act, as well as interest under section 34 CP Code, for any period prior to the institution of the suit for goods supplied; but this court did not elaborate the circumstances in which interest for such period is permissible. Mr. Asrarul Hossain has referred to the decision of the Pakistan Supreme Court in AZ Company vs. M/s Moula Baksh Mohd. PLD (1965) (SC) 505=17 DLR (SC) 404; there it has been observed that a great number of decisions under the Interest Act are not easily reconcilable and that in the absence of an express or implied contract to pay interest or of usage of trade, interest cannot be allowed on damages for breach of contract. This view was however given in a matter which arose from a reference to an Arbitrator; appointed under the arbitration Act 1940 and it was held that the Arbitrator not being a Court, got no jurisdiction to award any interest if it is not provided in the arbitration Agreement

  3. Mr. Asrarul Hossain has also referred to two more cases from the Indian Jurisdiction in which interest for any period prior to the date of reference to the Arbitrator was refused on principles which should be applicable to suits before the court. Shet Thawardas vs. Union of India, AIR 1955 (SC) 468 and Exc. Engineer, Irrigation vs. A Jena, AIR 1988 (SC) 1520 are those cases in which it was held that the Arbitrator got no power to award interest.

  4. But in their latest decision in the case of Secretary, Irrigation Department vs. GC Roy, AIR 1992 ‘(SC) 732 the said Court held that when an agreement for arbitration is silent as to grant of interest it is to be presumed as implied terms of the agreement for grant of interest which the Arbitrator has power to award not only from the date of the reference to the date of payment, but also for the period prior to the date of reference. In the case before us, Kh. Mahbubuddin Ahmed contends, there is no question raised whether the Arbitrator has got power to award interest; but the principles on which the Indian Supreme Court held that the Arbitrator got such power are matters for consideration in cases before the court as well, he further contends. These principles are “A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name interest, compensation or damage; an arbitrator is an alternative form of resolution of disputes between parties; if so, he must have the power to decide all the disputes between them; if the arbitrator has no power, a party after getting a favourable award from the Arbitrator will have to go to some other forum, such as the Court, to realise interest on the award; interest pendente lite is not a matter of substantive law like interest for the period anterior to the reference; for doing complete justice; such power has always been inferred”. We however will not express any view on this question, as it is not before us.

  5. Having considered all aspects of the matter before us we find that both the Courts below are well-founded in law and fact to order payment of Taka 33 lac, whether it is called interest or compensation. This order is covered both by the general principles governing payment of interest for the period prior to institution of the suit and by specific laws providing for compensation for non-payment of price of goods supplied. The general principles governing interest of this nature, as elaborated above, are that the principal sum is definite, payable at a definite time and the payment is provided by any written instrument, such as an agreement or by any law or by any usage of trade having the force of law.

In the result, the appeal is dismissed; but in view of the question of law involved in, and of the facts and circumstances of, the case, parties will bear their respective costs.

Latifur Rahman J: I agree with the judgment of my Lord Chief Justice that the appeal should be dismissed. I like to add a few words of my own in this case.

  1. In this appeal, leave was granted to consider whether in view of section 34 of the Code of Civil Procedure and Interest Act XXXIII of 1989, the learned Judges of the High Court Division acted wrongly in awarding interest amounting to Tk. 33 lac for the period prior to the institution of the suit.

  2. Since Interest Act has been repealed by Act VIII of 1973, the efficacy so far it relates to interpretation of Interest Act has lost its relevance in this appeal. The question of consideration of section 34 of Code of Civil Procedure in awarding of interest prior to the institution of the suit is also of not much relevance in this case as interest can be claimed only in the three cases :

(i) on the ground of agreement :

(ii) on the basis of a statute : and

(iii) on the ground of usage.

  1. Hence the points on which leave was sought for and granted by us is not of much importance for our consideration in this appeal. In the case of Bengal Nagpur Railway Co. Ltd. vs. Rutharji Ramji & others reported in Indian Appeal 65 page 66, their Lordships of the Privy Council squarely mooted the point whether the court has authority to allow interest for the period prior to the institution of the suit and their Lordships in their judgment spelt out that interest can be granted only in the above three cases as referred herein earlier. In that judgment section 73 of the Contract Act came for consideration as the money due to the railway contractor was wrongfully detained by the Bengal, Nagpur Railway Company. In that decision it was observed that as per section 73 of the Contract Act interest is not recoverable under the Interest Act. I may point out that section 73 of the Contract Act only speaks of compensation for loss or damage caused by breach of contract. Thus, this section gives statutory recognition for compensation for any loss or damage. Section 73 does not contemplate awarding of any interest by way of damage.

  2. It appears from the plaint that the plaintiff entered into a written contract with the defendant to supply 100 cars; that the price was ultimately fixed at Tk. 2,30,000.00 per car; that the cars were delivered to the plaintiff in installments but the money was not paid in due time. Due to the non payment of the price of the cars, the plaintiff claimed compensation as detailed in schedule B of the plaint (statements of accounts). In paragraphs 26 & 27 of the plaint it has been categorically averred that due to the delay in making payment of the price of the cars the plaintiff has suffered business loss & other loss upto Tk. 80,81,726.00 (as per statements of accounts in the plaint). In para 27 of the plaint the plaintiff has also clearly stated that “if the amount of the balanced purchase price had been kept deposited in any bank, it would have given an amount of Tk. 33,16,645.00 by way of interest of the said amount.”

  3. The trial Court in the money suit framed relevant issues of which issue No. 3 is to this effect,
     From the judgment of the trial Court it appears that the trial Judge held that the plaintiff is entitled to compensation, but the trial Judge found that in the way the plaintiff has claimed 80 lac and odd as compensation it is not possible to award as per his claim. The trial Judge further found that if the outstanding balance money due to the plaintiff would have been deposited in any bank then the plaintiff would have got interest at the rate of 15% per annum and the interest was awarded at the bank rate of interest prevailing at the relevant time.

  4. The learned Judges of the High Court Division affirmed the judgment of the trial Court and also found that there was a breach of contract as the amount was not paid on due date as agreed upon by the parties and converted the interest as awarded by the trial Court as compensation.

  5. From the averments in the plaint and from the findings of the courts below it is apparent that the plaintiff was claiming compensation for business loss and damages for breach of contract and in reality the plaintiff was awarded compensation which is permissible under the law. Strictly speaking under the law interest cannot be recovered as damages other than an agreement for the payment of interest at a fixed rate or it is payable by the usage of trade having the force of law or under any substantive law. The Interest Act, 1839 (now repealed) speaks that interest is allowable by way of damages on liquidated claims.

  6. The question of granting interest under section 73 of the Contract Act does not at all rise as this section only speaks of compensation and not of interest. At Common Law interest was not recoverable by way of damages of wrongful withholding of money. Here I may refer to section 61(2) of the Sale of Goods Act which reads as follows:

In the absence of a contract to the contrary, the Court may award interest at such rate as it thinks fit on the amount of the price:

(a) to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable;

This sub-section (2) is positive and gives both the seller and the buyer a right under the statute to claim interest. Sub-section (2) of section 61 of Sale of Goods Act having provided for interest mere is also no lawful difficulty in awarding interest to the unpaid seller from the date on which the price was payable. Thus looking at from this angle as well, if, it is said that the trial Court granted interest then also no illegality was committed as section 61(2) of the Sale of Goods Act, speaks of granting of interest. Thus, it is immaterial for our purpose whether the amount which was awarded against the defendant for the breach of contract for non payment of the price of the car was awarded either as interest or as compensation.

  1. In the High Court Division some decisions were cited including Indian Appeal Case 65 Page-66. AIR 1970 (SC) 1201, is a case relating to a claim of compensation under section 70 of the Contract Act, where it speaks of an obligation of a person enjoying benefit of non gratuitous Act. In that decision it appears that interest was awarded at the rate of 6% per annum from the date of supply till the date of institution of the suit without any elaboration. In the case reported in,AIR 1960 Cal. 190, in paragraph 17 of that decision the Interest Act, 1839 was considered and also held the same view that interest can be granted in the aforementioned 3 cases as observed by their Lordships of the Privy Council. Mr. Asrarul Hossain, the learned Advocate appearing for the Appellant cited the decision reported in PLD 1965 (SC) 505. This is a case relating to awarding of interest by an arbitrator in an award, wherein the award was amended by striking off only that portion which related to the award of interest for the period prior to the award. This case is not very relevant for our purpose. The case reported in AIR 1976 (SC) 879, is a case where Interest Act had no application at all inasmuch as no interest was claimed by the plaintiff at all. But interest has been used as a measure to determine compensation. This is also not very relevant for our purpose. The next case cited by the learned Advocate is the case reported in AIR 1966 (SC) 275. This case is also not very relevant for our purpose. Before parting with the case it can be said that interest was not awarded by way of damages but the prevailing rate of bank interest was taken into consideration for measuring the business loss and damages of the plaintiff. The learned trial Judge found that after delivery of the cars the plaintiff was entitled to the price of the same which was not also paid on the due date of payment. It is found by both the courts below that the plaintiff suffered pecuniary loss and without entering into the statement of accounts as given in the plaint indemnified the plaintiff on calculating 15% as bank interest. The court is not prevented from adopting this method for determining the amount of compensation as per the existing bank rate when the sum due to the plaintiff was ascertainable by the Court after hearing the parties.
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