Report No. 63
4.19. Interest why granted.-
It may be stated that interest is usually granted as a compensation for the unjust delay in payment. It is difficult to understand why a person who unreasonably delays payment of an amount due should be exempted from the liability to pay interest merely because the amount has been paid before the suit is filed. In such a case, there is no equitable consideration. Rather, the equities are all against him, by reason of his unreasonable delay and unjust detention of the debt, and by reason of the profit which he would ordinarily have made by investing the amount.
4.20. If the law is to be amended on the lines of the Calcutta view,1 then it would follow that if the debt payable by the debtor has been already paid by him to the creditor, an action by the creditor against the debtor to recover only the interest, which may be due to him in either of the two categories of cases specified in the latter part of the section, would not be competent. The bar against the competence of such a claim would, apparently, operate even if the creditor might have accepted the debt subject to his right to recover the amount of interest due by a suit. This position is, in our view unsound.
1. Paras. 4.18 and 4.19, supra.
4.21. Let us assume that the creditor gives notice to the debtor that if the debt due to him is not paid by a specified date, then, he would claim interest on the debt from the specified date. If, in such a case, after the issue of the notice and after expiry of the date, the debtor repays the debt due from him, but fails to pay interest on it which has become due, it seems unreasonable to prevent the creditor from making a claim for the recovery of such interest except where it is shown that he waives interest. The Court may, no doubt, exercise its discretion as to whether interest should be awarded, and if so, at what rate. But, subject to this provision, a claim for interest alone should not be totally barred from the very beginning. We would, accordingly, recommend an appropriate amendment1 in section 1.
We have incidentally considered the question if our recommendations2 to allow a suit for mere interest necessitates any amendment in the Limitation Act. In this connection, it may be pointed out that either Article 25, Limitation Act, 1963 (old Article 63), or the residuary article in the Act, would govern such a suit. An amendment of the Limitation Act does not, therefore, appear to be necessary.
1. The re-draft of the section is given later.
2. Para. 4.18, supra.