Report No. 63
4.10. Aspect of equity.-
This case approaches the matter from the point of view of general rules of law. A Nagpur case may1 be taken as illustrating the aspect of equity. The suit was solely for interest by a widow in respect of an insurance policy. The interest was claimed at the rate of 6% per annum, for 7 months from November, 1940 to 25th June, 1941. The Insurance Company had, after a long delay, paid the principal amount due on the death of the plaintiff's husband, and the amount was sent by cheque on 18 June, 1941 which the plaintiff accepted. The Court of Small Causes had awarded interest against the Insurance Company, on the ground that there was unjustifiable remiseness.
It is not clear from the report when the plaintiff made the demand for interest. The case, however, was decided with reference to the Interest Act, and one of the objections of the Insurance Company was that a suit for mere interest could not lie. The High Court rejected this contention. No authority had been cited in support of the contention. It appears that the Calcutta case was not cited.2 The High Cour,- was in agreement with the Lahore view3 on the subject. The High Court also held that Article 63 of the Limitation Act4 suggested that a suit for mere interest is perfectly possible. It also saw no objection in principle to the maintainability of a suit for mere interest.
The counsel for the defendants sought to rely on section 63 of the Contract Act.5 But the High Court pointed out, first, that, there was no necessary data, (for applying section 63), and secondly, that since the interest claimed in this case was not by virtue of any promise the performance whereof could be "dispensed with or remitted", section 63 could have no relevance.
1. Westerns India Life Insurance Company v. Seeta Bai, AIR 1944 Nag 122 (Bobde J.).
2. Marshall's case, para. 4.7, supra.
3. Bhandari Brothers v. Municipal Committee, Amritsar, AIR 1931 Lah 46.
4. Article 63, Limitation Act, 1963, is referred to later.
5. Section 63, Contract Act, 1963 is discussed in detail later.
4.11. In one of the Nagpur cases1 which took a restrictive view, the Municipal Committee of Akola demanded the payment of certain tax, but the liability to pay the tax was disputed by the defendants. We are not concerned with the history of the litigation disputing the liability, but it may be noted that in May, 1929, the Municipal Committee demanded payment of the tax by a notice in which it also Included a demand for interest at the rate of 121/2 per cent. per annum on the arrears of the tax. In November and December 1929, it recovered the arrears of tax without interest, after the litigation had become unsuccessful. Then it served on the defendants a fresh notice of demand for interest. Since; the defendant failed to pay the interest, the Municipal Committee applied to the Magistrate for recovering the amount under the Municipal Act.
The Magistrate issued the necessary warrant, but, on appeal, the Deputy Commissioner held that the notice of demand for interest only was illegal, and the eventual warrant was also illegal. The Municipal Committee then filed the present suit in which, so far as is relevant, one of the questions was whether the plaintiff could recover interest on a tax which was not paid on the due date but was paid later. The claim for interest was negatived by the High Court on the following grounds:-
"Even on the assumption that the Civil Court has jurisdiction notwithstanding section 77, Municipalities Act, I am unable to see how the Committee's claim for recovering mere interest after the principal amount had been recovered is tenable. In the circumstances of this case, the Civil Court may have the power to award interest either under the Interest Act, 1839 (32 of 1839) or section 73, Contract Act. The latter provision cannot apply because the right is not founded on any contract and there has been no breach of it. Under the Interest Act, the Court has a discretion to award interest when a claim is made for recovering any debt or any sum certain payable at a stipulated time but the Municipal Committee has already recovered its debt, assuming that the taxes could be regarded as a debt, after they fell due. The Interest Act gives power to the Civil Court but does not create any right in favour of a creditor and it could not therefore be the subject-matter of a suit."
Thus, in the Nagpur High Court, there is a conflict of decisions,2 one judgment taking a wide view and another judgment taking a restrictive view.
1. Akola Municipal Committee v. S.G. and Pressing Factory, AIR 1933 Nag 119 (Niyogi J.).
2. Paras. 4.10 and 4.11, supra.