OUSEPH Vs. PICHI AMMAL

JUDGEMENT

(1.) This appeal filed by the first defendant relates only to the interest decreed by the lower court on the principal amount admittedly due to the plaintiff under Ext. A bond. On account of interest an amount much larger than one-half of the principal amount of Rs. 986 has been claimed by the plaintiff up to the date of the suit and has also been decreed by the lower court. The defendants contention that such interest has to be limited to half the principal sum was negatived by the Trial Court and hence this appeal.

(2.) There is a stipulation in Ext. A bond that in case of default to pay up the interest on the due date, such interest also will carry further interest at 9%. This provision has been construed by the lower court as an agreement between the parties to treat the defaulted interest also as a principal amount by itself. In support of such a contention the lower court has relied on the rulings reported in 10 TLJ 367, 29 TLJ 1275, 1943 TLR 384 and 1943 TLR 529. The decision in 10 TLJ 367 was at a time when S.31 of the Travancore Civil Procedure Code was not in existence. It was by this section that a statutory limitation was imposed the amount which could be awarded by way of interest up to the date of suit wherein a specified amount is claimed as principal amount. The section laid down that anything more than half the principal cannot be awarded by way of such interest. The decisions in 29 TLJ 1275, 1943 TLR 384 and 529 have not gone against such a limitation imposed by S.31 C.P.C. On the other hand it was found in those cases, on a construction of the stipulations in the document on which the claim was based, that the parties had agreed to a capitalisation of arrears of interest and to treat the ascertained amount of such arrears as a principal amount and accordingly it was held that interest equal to one-half of such principal amount could be claimed and allowed and thus it did not offend S.31 C.P.C. To the same effect are the rulings in 1944 TLR 716 and 1948 TLR 1044. The test laid down in these rulings is not satisfied by the document Ext. A in the present case. Even in the matter of construing the documents in the cases quoted above the language of S.31 C.P.C. has been considerably strained. At any rate we strongly feel that there will be no justification at all to still further strain the wording of that section so as to cover cases of claims for interest on interest also. To do so would be clearly going against the statutory limitation imposed by the section. In Ext. A there is no express or implied stipulation to treat the arrears of interest as principal amount. On the other hand the stipulation is clearly to the effect that defaulted interest will also carry future interest ie., such arrears of interest treated as interest will carry further interest at 9%. In the face of such a clear and unambiguous stipulation in Ext. A, there is no scope for any argument to treat arrears of interest as a capitalised amount of principal sum by itself carrying further interest. It follows therefore that under Ext. A there is only one principal amount contemplated and that interest on that amount can be allowed only up to one-half of that amount up to the date of the suit.

(3.) In the result this appeal is allowed and the lower courts decree modified by fixing the plaint amount as due on the date of the suit at B. Rs. 986 plus 493 i.e. B. Rs. 1479. On this basis revised calculations will be made in the decree. Appellants costs also allowed.