VIMLADEVI Vs. MANDSAUR ELECTRIC SUPPLY CO.

JUDGEMENT

(1.) THE Appellant has obtained a decree on the basis of four fixed deposit receipts, each valued at Rs. 5,500 payable within three months from 1 -10 -54. The money was deposited with the Defendant -Respondent Company with the agreed rate of interest at 10% per annum. The Court however allowed interest 9% from the date of filing suit till the date of decree and at 4% per annum on Rs. 22,000 from the date of decree till final payment.

(2.) IT is against the latter part of the decree viz., the grant of interest at 4% per annum from the date of suit till realisation that the Appellant -Plaintiff has come up in appeal. There is also a cross -objection filed by the Defendant -Respondent to the effect that the amount of Rs. 22,000 included interest of Rs. 2,000. The Court has therefore allowed interest on interest which is illegal.

(3.) IT is true that Rs. 5,000 was the original amount on which Rs. 500 was earned as interest but the transaction cannot be said to be a continuous one. A fixed deposit receipt is issued when money is deposited for a fixed term with a fixed rate of interest. After the period is over, the amount be comes payable and the receipt matures. On presentation of the receipt, the holder is entitled to get the amount stipulated. If he takes the amount and purchases another receipt, one cannot say that the account is continuous. The previous accounts are closed and the transaction is over as soon as the fixed deposit receipt is returned back. The subsequent transaction is a new transaction. If instead of taking the money in his own hand, the depositor after returning the old receipt as discharged, asks issue of a fresh receipt for the amount payable to him, the nature of the transaction does not change. There is no special significance in taking the money in one hand and paying on the other. We therefore do not think that this is a case of charging interest on interest. Cross -objection is therefore dismissed with costs