Report No. 63
4.6. Ambiguity as regards the necessity of a written instrument.-
Connected with the question of the power of the court is the question whether it is necessary that there must be a written instrument. The material words of the section are1- "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." (The rest of the section is not material for the present purpose). The question that arises for consideration is whether the word "otherwise" is to be read as in contrast with the words "written instrument", or whether it constitutes a contrast only to the words "at a certain time". Either of the two constructions may be plausible.
It is not necessary, for the present purpose, to examine the relative merits of the two constructions. But, as a matter of good legislation, there is no reason why the fact that there is no written instrument should be material in regard to giving discretion to the court to allow interest under the section. No doubt, the existence of a written instrument creating the debt has evidentiary value, and this is of practical importance, as disputes of fact are thereby minimised.
But that should not come in the way of allowing interest where there is no written deed, if the justice of the case requires the award of interest. The origin of the debt in a written instrument, coupled with payability at a certain time, can legitimately be regarded as justifying a difference in treatment in relation to the starting point of running of interest; but it need not be regarded as destroying the very basis of the admissibility of interest. We are, therefore, recommending an amendment of the section for the purpose, so as to make it clear that section covers the case discussed above.
1. Para. 4.1, supra.