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Report No. 63

7.11. Fraud.-

Interest should also be payable where money is obtained or retained by fraud,1 by a specific provision. This, in fact, is the present position, under the case law. For example the Supreme Court made the following observations in Trojan & Co. v. Nagappa Chettiar, AIR 1953 SC 235 (240).

"We think it is well settled that interest is allowed by a court of Equity in the case of money obtained or retained by fraud. As stated in Article 423 of Vol. 1 of Halsbury, the agent must also pay interest in all cases of fraud and on all bribes and secret profits received by him during his agency."

The Supreme Court quoted with approval the judgment of the Privy Council in Johnson v. Rex, where it was held:2

"In order to guard against any possible misapprehension of their Lordships' view, they desired to say that in their opinion there can be no doubt whatever, that money obtained by fraud and retained by fraud can be recovered with interest, whether the proceedings be taken in a court of Equity or a Court of law, or in a court which has jurisdiction both equitable and legal."

It would be useful to insert an express provision on the subject.

1. Cf. The English, Law, summarised in para. 7.3, supra.

2. Johnson v. Rex., 1904 AC 817 (PC).

Interest Act, 1839 Back

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