Report No. 63

9.2. Recommendation relating to section 1, Existing section 1, main paragraph.-

Section 1 should be replaced by the following sections:-

"2. (1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate1 not exceeding the current rate of interest, for the whole or part of the following period, that is to say-

(a) if the proceedings relate to a debt payable by virtue of some written instrument at a certain time, then from the date when the debt is payable to the date of institution of the proceedings;

(b) if the proceedings do not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed to the date of institution of the proceedings:

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment."

1. Alternative draft for rate-"at such rate as the court thinks fit".

(2) Where, in any such proceedings as are mentioned in sub-section (1),

(a) judgment or order is given for a sum which, apart from interest on damages, exceeds four thousand rupees, and

(b) the sum represents or includes damages in respect of personal injuries to the plaintiff or any other person, or in respect of a person's death, then, the power conferred by that sub-section shall be exercised so as to include in that sum interest on those damages or on such part of them as the court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the proceedings, unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages.

(3) Nothing in this section shall apply in relation to-

(a) any debt or damages upon which interest is payable as of right, by virtue of any agreement, or

(b) any debt or damages upon which the payment of interest is barred, by virtue of an express agreement.

(4) Nothing in this section shall affect-

(a) the compensation recoverable for the dishonour of a bill of exchange,1 promissory note or cheque;

(b) the provisions of rule 2, Order 2 in the First Schedule to the Code of Civil Procedure, 1908."

1. The various savings can be combined, if so desired.

(5) Nothing in this section shall empower the court to award interest upon interest.

Explanation.-In this section,-

(a) "court" includes a tribunal and an arbitrator;

(b) 'debt' means any liability for an ascertained sum of money, and includes a debt payable in kind, but does not include a judgment debt;

(c) 'personal injuries' includes any disease and any impairment of a person's physical or mental condition.

3. (1) Existing section 1, Proviso.- Notwithstanding anything contained in section 2, interest shall be payable in all cases in which it is payable by any enactment or other rule of law or usage having the force of law.

(2) Notwithstanding as aforesaid, and without prejudice to the generality of the provisions of sub-section (1), the court shall, in the following cases, allow interest from the date specified below in each case to the date of institution of the proceedings at such rate as the court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed-

(a) where money or other property has been deposited as security for the performance of an obligation imposed by law or contract, from the date of the deposit;

(b) where the obligation to pay money or restore any property arises by virtue of a fiduciary relationship, from the date of the cause of action;

(c) where money or other property is obtained or retained by fraud, from the date of the cause of action;

(d) where the claim is for dower or maintenance, from the date of the cause of action.

4. Nothing in this Act shall affect the provisions of section 34 of the Code of Civil Procedure, 1908."

We would like to place on record our warm appreciation of the valuable assistance we have received from Shri Bakshi, Member-Secretary of the Commission in the preparation of this Report.

P.B. Gajendragadkar, Chairman.

P.K. Tripathi, Member.

S.S. Dhavan, Member.

S.P. Sen-Varma, Member.

B.C. Mitra, Member.

P.M. Bakshi, Member-Secretary.

New Delhi,

Dated: 21st February, 1974.