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Report No. 55

5. Interest prior to suit.-

This section does not deal with interest prior to suit. That is a matter of substantive law. As the Privy Council observed:1

"The crucial question, however, is whether the Court has authority to allow interest for the period prior to the institution of the suit; and the solution of this question depends, not upon the Civil Procedure Code, but upon substantive law. Now, interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest, as for instance, under section 80, Negotiable Instruments Act, 1881, the Court may award interest at the rate of 6 per cent. per annum, when no rate of interest is specified in the promissory note or bill of exchange."

1 B.N. Rly. v. Rulia Singh, AIR 1938 PC 67 (70). 55.5

Rate of Interest for the Period after Decree and Interest on Costs Under Sections 34 and 35 of the Code of Civil Procedure, 1908 Back

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