STATE OF RAJASTHAN Vs. MAHADEV PRASAD

JUDGEMENT

(1.) IN this appeal by the defendant -State of Rajasthan, the only point involved is in respect of interest prior to the date of the institution of the suit.

(2.) IN brief, the facts of the case are that the plaintiff -respondent gave bid of Rs. 19,500/ - at the auction conducted by the State of Rajasthan in res -pect of certain property situate in Karauli. The auction took place under the Rajasthan Nazool Building Disposal by Public Auction Rules, 1967. Under the Rules the bid has to be sanctioned and confirmed by the Deputy District Disposal Committee. The plaintiff, however, deposited one -fourth of the amount of the bid, that is Rs. 4875/ - on 2 -2 -68 the date on which he gave the bid. It appears that the required sanction from the authority was not conveyed to the plaintiff for a sufficiently long time. The plaintiff therefore served a notice Under Section 80 CPC calling upon the State either to accept his bid or to return the amount deposited by him with interest at the rate of 12% per annum within two months of the receipt of the notice. The plaintiff ultimately filed the present suit for the recovery of Rs. 4875/ - as principal and Rs. 1616/ - by way of interest - -total Rs. 6491/ -. The learned Additional District Judge, Gangapur City, decreed the suit in to and allowed pendente lite and future interest at the rate of six percent per annum on the principal amount of Rs. 4875/ -. The defendant -State of Rajasthan has now preferred this appeal challenging the decree to the extent of Rs. 1616 allowed as interest prior to the date of the suit. It is common ground between the parties that there was no agreement between the parties for payment of interest in respect of the one -fourth amount of the bid deposited by the plaintiff The learned Additional District Judge has allowed interest as damages on the ground that if the amount had been refunded to the plaintiff, he would have earned interest at the rate of two to three percent per month. As held by the Judicial Committee in Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji and Ors. AIR 1938 PC 67 interest cannot be allowed by way of damages, to a person for wrongful detention of money. The plaintiff is entitled to interest prior to the date of the suit either on the basis of contract or usage or under any provision of law justifying the award of interest. The usage has neither been alleged nor proved. There is also no agreement to pay interest. The Interest Act allows interest on all debts or sums certain when a notice is given that interest will be charged from the date of demand until the date of payment. In the present case, it is not disputed that the notice Under Section 80 CFC served by the plaintiff fully satisfies the conditions of Section 1 of the Interest Act. The plaintiff, in the circumstances, is entitled to interest only from the date of the notice that is 18 -4 -70. No interest can be allowed to the plaintiff prior to the date of the notice.