Report No. 11
136. Sections 79-80.-
As regards interest payable on instruments, no difficulty is experienced when the instrument provides for payment of interest and specifies the rate. The contract between the parties is, however, subject to any law for the time being in force for the relief of debtors which authorises the courts to scale down the interest and give relief to the debtors. Section 34 of the Code of Civil Procedure, on the other hand, gives a discretion to the court regarding interest from the institution of the suit till the date of decree and thereafter till payment. When, however, the contract is silent as regards interest or it refers to interest but does not mention the rate, the question arises whether any rate of interest should be allowed or not. The existing section 80, which deals with this question, is somewhat unintelligible.
The difficulty is created by the words-notwithstanding any agreement relating to the contract between any parties to the instrument" which must necessarily refer to an independent agreement, as the section starts by saying that the provision would apply only when no rate of interest is specified in the instrument. It is also not clear from the section whether it is intended to apply only where the parties contemplated payment of interest under the instrument but did not provide for the rate of interest or also where the contract is silent on both matters. To avoid all these difficulties we have combined sections 79 and 80 with verbal changes and have provided for the two liabilities in one section.1 The provision has also been made subject to the law for the time being in force relating to the relief of debtors and to section 34 of the Code of Civil Procedure.
1. Section 82 App I.
The Explanation to section 80 has been omitted because on principle there is no basis for making any distinction between the two cases mentioned under sections 79 and 80. If the indorser's liability is as a surety, it must be co-extensive with that of the principal debtor so that there is nothing to distinguish between the two cases specified in sections 79 and 80. We have, accordingly, considered it fit to omit the Explanation.