Andhra Pradesh High Court - Amravati

The Appeal vs Mr. Anupam on 16 June, 2023

          THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                       APPEAL SUIT NO.38 OF 2014

JUDGMENT:

1. The Appeal, under Section 96 of the Code of the Civil Procedure, is

filed by the appellant/plaintiff challenging the decree and Judg-

ment dated 16.11.2010 in O.S.No.127 of 2010 passed by the

learned II Additional District Judge, Guntur (for short, 'the trial

court'). The appellant is the plaintiff, who filed the suit in

O.S.No.127 of 2010 seeking the refund of advance money of

Rs.24,00,000/- along with interest at 12% p.a., from 06.06.2007

to 04.06.2010 which is an amount of Rs.8,64,000/- totaling to

Rs.32,64,000/- and for costs of the suit.

2. The parties will hereinafter be referred to as arrayed before the

trial Court.

3. The plaintiff's claims in the plaint are summarized as follows:

The defendant is the owner of the plaint schedule property

of Ac.3.00 cents in D.No.264 and 267 of the Village Jonnalagadda

Gram Panchayat within the boundaries given in the plaint sche-

dule. The defendant agreed to sell the same to the plaintiff at

Rs.32,00,000/- per acre. On 06.06.2007, he received an amount

of Rs.24,00,000/-. The plaintiff agreed that the remaining balance

would be paid within four months i.e., on or before 06.06.2007.

The defendant agreed to execute a registered sale deed in favour

A.S.No.38 of 2014

of the plaintiff or his nominee and deliver vacant possession of the

suit land. The defendant also further agreed that he receive the

balance of consideration with interest at 18% p.a., in case of any

delay on the part of the plaintiff. However, despite the paintif's

readiness and willingness to fulfill his obligation and repeated re-

quest to the defendant, but the defendant failed to perform his

part of the contract. Consequently, the plaintiff sent a registered

legal notice to the defendant on 01.06.2007 calling upon him to

refund the advance amount with interest. Since the defendant did

not come forward to perform his part of contract, the plaintiff filed

the suit for refund of the advance amount with interest.

4. The defendant remained exparte and he did not contest the suit.

5. Based on the above pleadings, the trial Court framed the following

issue:

Whether the plaintiff is entitled for refund of the advance money with interest?

6. During the course of trial, on behalf of the plaintiff, P.W.1was ex-

amined and Exs.A1 to A.3 were marked.

7. After completion of trial and considering the arguments, the trial

Court has partly decreed the suit with costs and ordered the de-

fendant to pay the plaintiff Rs.24,00,000/- along with interest at

12% p.a., from 01.06.2010 and till the date of decree and thereaf-

ter the interest at 6% p.a., till the date of realization on

A.S.No.38 of 2014

Rs.24,00,000/-. Aggrieved by the said judgment and decree, the

appellant/plaintiff filed the present appeal .

8. Learned counsel for the appellant/plaintiff contends that the trial

Court ought to have granted an additional amount of

Rs.8,64,000/- as interest at 12% p.a., from 06.06.2007 to

04.06.2010 on the principal amount of Rs.24,00,000/-. The ob-

servation of the trial Court that there is no agreement between the

parties, in the event of refund of advance amount, the respondent

will pay the interest on the advance money is not correct.

9. Per contra, the learned counsel appearing for the respon-

dent/defendant would contend that the trial Court correctly ana-

lyzed the facts of the case and reached an appropriate conclusion.

The reasons given by the trial Court do not want any modification.

10. Having regard to the pleadings in the suit, the findings recorded

by the Trial Court and in light of the rival contentions and sub-

missions made on either side before this Court, the following

points would arise for determination:

1) Whether the trial Court erred in not awarding the interest on the advance amount of Rs.24,00,000/- from the date of sale agreement i.e., 06.02.2007 till the sending of legal notice dated 01.06.2010?

2) Whether the Judgment passed by the trial Court needs any interference?

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POINT NOs.1 & 2:

11. As seen from the record, the defendant has not contested the suit

and he remained exparte. The plaintiff's case that the defendant

agreed to sell the plaint schedule property at Rs.32,00,000/- per

acre and executed Ex.A.1 agreement of sale on 06.06.2007 and

the plaintiff paid an amount of Rs.24,00,000/- on the same day to

the defendant and the plaintiff agreed to pay the balance of

consideration within four months and the defendant agreed to

execute the registered sale deed on receipt of balance amount, is

not disputed. As per the evidence of plaintiff as PW.1 and as per

the terms of the Ex.A.1 agreement, the defendant agreed to receive

the balance of consideration amount with interest at 18% p.a., in

case of delay on the part of the plaintiff.

12. The defendant's failure to produce the relevant record and fulfill

the agreement terms resulted in a breach of the contract of sale.

On 01.06.2010, the plaintiff sent a legal notice to the defendant,

as evidenced by Ex.A.2, with supporting evidence of sending in

the form of Ex.A.3 postal receipt.

13. After considering the material on record, the trial Court has found

no denial of the plaintiff's claim for refund of advance amount of

Rs.24,00,000/- by the defendant. As such, the plaintiff is entitled

to a decree for refund of Rs.24,00,000/- as advance amount. The

trial Court observed that there is no stipulation in the agreement

that in the event of refund of advance amount, the defendant will

A.S.No.38 of 2014

pay the interest on the advance amount and as such, the plaintiff

is not entitled for interest from the extended date of agreement

06.06.2007 till the date of legal notice i.e., 01.06.2010. The trial

Court partly decreed the suit by directing the defendant to pay

Rs.24,00,000/- which is the advance amount received by him

along with interest at 12% p.a., from 01.06.2010 to the plaintiff

till the date of decree and after that at 6% p.a., till the date of

realization.

14. The defendant has not preferred appeal against the said

Judgment. However, the plaintiff feeling aggrieved by the absence

of interest awarded from 06.06.2007 to 01.06.2010 has lodged

this appeal.

15. The respondent's counsel contends that since there was no

provision in the agreement regarding payment of interest, the trial

court was justified in not granting interest from the agreement's

date until the plaintiff issued the notice. Given that the defendant

did not contest the plaintiff's entitlement to a refund of the

advance amount, it must now be determined whether the plaintiff

can claim interest on the advance amount from the date of

agreement till the date of issuance of notice in the absence of such

a condition in the agreement.

16. The said question of law is no longer res integra. In M/s. Apollo

Health and Lifestyle Limited and Another Versus Mr. Anupam

A.S.No.38 of 2014

Saraogi of Indian Inhabitant1, the Common High Court of

Andhra Pradesh and Telagana at Hyderabad, held as follows:

79. In Central Bank of India v. Ravindra and others, 2002 (1) SCC 367 a question as to the meaning to be assigned to the phrases "the principal sum adjudged" and "such principal sum" as occurring in Section 34 of the Code of Civil Procedure, 1908 was referred to a Constitution Bench for an authoritative pronouncement. Though the question referred to the Constitution Bench was with respect to the language employed in Section 34 of the Code, the Supreme Court nevertheless went into the question as to the different classes of interests and the rationale behind the award of interest and held in Paragraph 36 of the report as follows:

"Black's Law Dictionary (7th Edition) defines 'interest' inter alia as the compensation fixed by agreement or allowed by law for the used or detention of money, or for the loss of money by one who is entitled to its use; especially, the amount owed to a lender in return for the use of the borrowed money. According to Stroud's Judicial Dictionary of Words and Phrases (5th edition) interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money. In Secretary, Irrigation Department, Government of Orissa & Ors. v. G.C. Roy, (1992) 1 SCC 508, the Constitution Bench opined that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages........this is the principles of Section 34, Civil Procedure Code. In Dr. Shamlal Narula v. C.I.T., Punjab, [1964] 7 SCR 668, this Court held that interest is paid for the deprivation of the use of the money. The essence of interest in the opinion of Lord Wright, in Riches v. Westminister Bank Ltd., [1947] 1 All ER 469, 472, is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had the use of the money, or, conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation; the money due to creditor was not paid, or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation whether the compensation was liquidated under an agreement or statute. A Division Bench of the High Court of Punjab speaking through Tek Chand, J. in C.I.T., Punjab v.

2017 4 ALD 176

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Dr.Shamlal Narula, AIR (1963) Punjab 411 thus articulated the concept of interest - "the words "interest" and "compensation" are sometimes used interchangeably and on other occasions they have distinct connotation. "Interest" in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owned to another. In its narrow sense, "interest" is understood to mean the amount which one has contracted to pay for use of borrowed money.......... In whenever category "interest" in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money, belonging to another, or for the delay in paying money after it has become payable." It is the appeal against this decision of Punjab High Court which was dismissed by Supreme Court in Dr. Shamlal Manila's case (supra)."

80. From the portion extracted above, it will be clear that both in England and in India Courts have treated interest as a payment which becomes due as compensation for the deprivation. Though in the narrow sense, interest is understood to mean the amount which one has contracted to pay for use of borrowed money, it is actually seen as a compensation allowed by law or fixed by the parties or permitted by custom or usage for use of money belonging to another.

17. In Ganuga Ranganath Vs. Hotel Garudadri (Private) Limited2,

the common High Court of Andhra Pradesh and Telagana at

Hyderabad, held that:

56.The question as to whether the interest can be awarded in the absence of any stipulation contained in the contract, came up for consideration before a Division Bench of this Court to which one of us (VRSJ) was a party, reported in Apollo Health and Lifestyle Limited v. Anupam Saraogi of Indian Inhabitant, 2017 (3) ALT 602.

After a detailed consideration of the origin and evolution of the Interest Act, 1978, this Court held in paragraph 80 of its judgment that both in England and in India, Courts have treated interest as a payment which becomes due as compensation for the deprivation. This Court also took note of the decision of the Constitution Bench in Central Bank of India v. Ravindra, (2002) 1

2018 3 ALD 40

A.S.No.38 of 2014

SCC 367 and held that the Court is entitled to award interest on such a rate as the Court considers reasonable, unless the Court is satisfied that there are special reasons why interest should not be allowed.

57. We are of the considered view that the defendant should be directed to pay interest at 9% p.a. This is in view of the fact that at the instance of the Court while granting an interim order of injunction, the plaintiffs have parked a huge sum of Rs.1,08,00,000/-. We do not know whether the amount was kept in fixed deposit so as to earn interest. The defendant, who is a commercial undertaking, has kept the amount of Rs.10,00,000/- paid by the plaintiffs with them for the past seven years. Therefore, we consider that interest at 9% p.a. may meet the ends of justice.

18. In line with the precedents cited, this Court holds that interest

can be awarded even in the absence of a stipulation in the

agreement. The defendant can be directed to pay interest at the

rate of 9% per annum on the advance amount from the extended

date of the agreement, i.e., 06.06.2007, until the date of the

notice, i.e., 01.06.2010

19. Considering the above, the trial court's impugned judgment

cannot be upheld regarding the non-awarding of interest on the

advance amount from the date of the agreement until the date of

the notice and is accordingly set aside to that extent.

20. In the result, the appeal is partly allowed, by holding that the

appellant/plaintiff is entitled to interest amount @ 9% per annum