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Report No. 85

14.5. Later Acts.-

Notice should, however, be taken of the wider power1 to award interest conferred by the revised statutory law of interest-the Interest Act, 1978-on all courts, including Tribunals. That Act specifically empowers the court to award interest on damages, and "court" (as defined in the Act)2 includes a Tribunal and an arbitrator. It is enough to quote sections 3(1) and 3(2) of that Act which read3-

"3(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 rate 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 a 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:

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.

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

(a) judgment, order or award 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".

1. Section 3, Interest Act, 1978.

2. Section 2(1), Interest Act, 1978.

3. Sections 3(1) and 3(2), Interest Act, 1978.



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