R C DATTA Vs. RAJIV ANAND

JUDGEMENT

(1.) The plaintiff filed a suit for recovery of Rs. 5,67,240/- together with pendente lite and future interest @ 24% per annum from the date of filing suit till the date of actual realisation and recovery, The application for leave to defend (IA No.9389/97) under . Order 37 Rule 3(5) CPC has been refused by orders dated 4th October, 2002 passed in IA No.9389/97. The plaintiff is entitled to the judgment forthwith.

(2.) The case set up by the plaintiff is that on 13th June, 1992, plaintiff paid Rs. 3,26,000/- (then equivalent to US $ 10,000) to defendant No.1 towards investment, in the form of shares in the company (M/s.Tabe Treatment Clinic Hong Kong Ltd.) proposed to be set up by defendant No.1 (hereinafter, "the principal amount"). The company was never set up and shares were not issued. The receipt, Ex.P-3, filed by the plaintiff shows that principal amount was received by defendant No.1 on 13.6.1992. The defendant No.1 also issued a cheque on the same date for Rs.3,26,000/- in the name of the plaintiff, assuring the return of the said amount. The payment was not made despite notice for payment dated 8.5.1995, Ex.P-I, which was duly served on the defendants. The defendants in written statement did not contest receipt of the said amount or the cheque issued by defendant No.1. The defence set up is that the amount was invested by the plaintiff in the company, which suffered losses, therefore, plaintiff is not entitled to receive the amount. The defence raised by defendants in an application for leave to defend, has been held to be not sustainable in law by a detailed order, as the company in question was never came into existence, Accordingly, plaintiff is held entitled to Rs.3,26,000/- towards principal amount and the reasonable interest thereon.

(3.) The plaintiff has prayed for a decree of Rs.5,67,240, including interest at the principal amount @ 24% per annum from 30.6.1992. The interest can be divided into three heads, according to the period for which it pertains, namely; (i) interest accrued due prior to the institution of the suit on the principal sum; (ii) additional interest on the principal sum adjudged from the date of filing the suit to the date of decree; and (iii) Interest on the principal amount from the date of decree to the date of payment. As per settled law, the award of interest can only be on the principal amount adjudged and not on the principal and interest, as on the date of the decree. Section 34 of the Code of Civil Procedure (for short "CPC") does not refer to payment of interest under the first head. It applies only to the second and third heads. Regarding the interest antecedent to the suit, it has to be considered, whether there is any stipulation for the payment of interest at a fixed rate. In this case, although the plaintiff has pleaded in the plaint that defendants had agreed to pay interest @ 24% but the same is denied in the written statement. No document has been filed to support this plea. There is no stipulation for payment of interest in the receipt Ex.P-B. The receipt does not show any contractual rate of Interest agreed between the parties. There is no document to show whether the plaintiff even demanded the principal amount from the defendants at any time prior to Issuance of notice Ex.P.1 dated 8th May, 2002. Therefore, plaintiff is entitled to interest prior to the date of notice. This was In the nature of a commercial transaction, plaintiff is entitled to a reasonable interest from the date of demand. For the foregoing reasons, I feel that interest of justice would be met, if the defendants are directed to pay interest @ 10% per annum, from the date of demand, i.e. 8.5.1995, till the date of realisation on Rs. 3,26,000/- (principal amount adjudged). The decree, be prepared, accordingly.