Maharashtra State Electricity ... vs Union Of India (Uoi)
2004 Latest Caselaw 480 Bom

JUDGMENT

S.T. Kharche, J.

1. The present appeal is directed against the order dated 2.11.1991 passed by the Railway Claims Tribunal in Claim Case No. 117/OA/1/RCT/NGP/91, whereby the Tribunal allowed the application claiming damages but refused to grant interest of Rs. 43,868 calculated at the rate of 18 per cent per annum from 13.3.1988 to 26.2.1991.

2. Brief facts are required to be stated as under:

Appellant Maharashtra State Electricity Board through Assistant Controller has filed an application under Section 16 of the Railway Claims Tribunal Act, 1987 claiming damages of Rs. 82,366.61 with ad litem interest of Rs. 43,868 at 18 per cent per annum from 13.3.1988 to 26.2.1991 along with notice charges, etc. It is contended that the claim arose out of non-delivery of 21150 kilolitres of L.S.H.S. oil loaded in tank wagon No. ERTK 32642 out of consignment of five tank wagons all booked Ex-Bagwa to T.P.S. siding Chandrapur by consignor Indian Oil Corporation Limited under railway receipt No. 727494 dated 12.3.1988 for delivery to Chief Engineer, T.P.S. siding at Chandrapur. It is contended that the applicant had booked the oil loaded in five tank wagons and due to nondelivery of contents of tank wagon No. ERTK 32649, applicant has suffered loss and, therefore, made the claim to the Chief Commercial Superintendent vide a letter dated 28.4.1989. The claim was not settled by respondent/railway administration and, therefore, the applicant filed claim application before the Railway Claims Tribunal on the ground that the non-delivery was on account of negligence and misconduct on the part of the railway servants. The railway administration in defence contended that the contents of tank wagon No. ERTK 32642 were transhipped into tank wagon No. ERTK 32649 at Bhusaval on 23.4.88 and thereafter the contents were decanted by the representatives of Indian Oil Corporation Limited, Vasai Road and the latter was requested by the railway administration to adjust the matter with the consignee and assured the railway administration that on receipt of original railway receipt and the certificate of non-delivery, credit would be given to the consignee to the extent of 15000 litres and as the claim was settled nothing was due to the applicant. On these pleadings Tribunal had framed the issues and thereafter on considering the evidence adduced by the parties granted decree for damages to the extent of Rs. 71,623.16 on account of non-delivery of L.S.H.S. oil. However, Tribunal refused to grant interest at the rate of 18 per cent from 13.3.1988 to 26.2.1991 amounting to Rs. 43,868. Being dissatisfied with this judgment of the Tribunal, the appellant has filed this appeal challenging the finding of non-grant of interest.

3. Mr. H.D. Dubey, learned Counsel for the appellant contended that Tribunal committed an error in making the observation that the postal acknowledgment of notice, Exh. A6, dated 20.10.1989 has not been produced and on this basis drew the conclusion that there was no demand for the claim of interest. He pointed out that in the notice dated 20.10.1989 the relief claimed was recovery of Rs. 82,366.61 with interest at the rate of 18 per cent per annum and notice charges of Rs. 140. He pointed out that in the written statement it has been specifically stated by the railway administration that the receipt of notice under Section 80 of the Code of Civil Procedure is not disputed. He further contended that in such circumstances Tribunal was not justified in making the observation that there was no demand for interest as is required under Section 3(1)(b) of Interest Act, 1978 (for short 'the Act'). Mr. Dubey further contended that the impugned judgment is not sustainable in law and the appellant is entitled to receive interest of Rs. 43,868 at the rate of 18 per cent from 13.3.1988 to 26.2.1991, which has been claimed by way of damages. He contended that appellant is entitled to claim interest in view of the provisions of Section 34 of Civil Procedure Code. In support of these submissions, he relied on the decision of Supreme Court in the case of Union of India v. Steel Stock Holders Syndicate, Poona and also on the decision of Karnataka High Court in the case of Union of India v. Visveswaraya Iron and Steel Ltd. AIR 1987 Kar 16L

4. Mr. P.S. Lambat, learned Counsel appearing for the railway administration, contended that the provisions of Section 34 of the Civil Procedure Code are not applicable to claims before the Railway Claims Tribunal and as per the procedure provided for inquiry into the claims, the only restricted provisions of Civil Procedure Code, 1908 could be made applicable in view of Rule 20 Appendix XXVII to the Railway Claims Tribunal (Procedure) Rules, 1989. In support of these submissions, he relied on the decision of this Court in Diwan Rahu Nanda v. Nitish G. Kotak 1998 (3) Mah LJ 35. He contended that the Tribunal was perfectly justified in not granting interest as there was no specific written demand as is required under Section 3 (1)(b) of the Act and, therefore, no interference into the impugned judgment is warranted. Mr. Lambat contended that there is no reason for this Court to interfere into the impugned judgment of the Tribunal and the appeal may kindly be dismissed with costs.

5. This court has given thoughtful consideration to the contentions canvassed by the learned Counsel for the parties. The only question that arises for determination is, whether the appellant can successfully claim recovery of interest. In this context, reference may be had to the provisions of the Interest Act. Sub-section (1) of Section 3 of the Act reads thus:

3. Power of court to allow interest.- (1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,-

(a) If the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;

(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings.

6. It appears from the reading of the aforesaid provision of law that the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, if the proceedings do not relate to any such debt, from the date mentioned in this regard in a written notice given by the person entitled or the person liable for interest from the date of institution of the proceedings. In present case, it would clearly reveal from the notice dated 20.10.1989 that the relief claimed was for recovery of Rs. 82,366.61 with interest at the rate of 18 per cent per annum and notice charges of Rs. 140. This notice could be termed as notice of demand of interest. It is not in dispute that respondent railway administration has specifically admitted in para 5 of the written statement that the receipt of notice under Section 80 of Civil Procedure Code is not disputed. When there was a demand of interest and when the notice was received by the railway administration, it is not possible to accept that there was no written demand of interest and, therefore, it is obvious that the Tribunal has committed an error in not considering the claim of interest put forth by the appellant on the ground that the postal acknowledgment regarding receipt of notice by the railway administration has not been produced. It is thus clear that the appellant would be perfectly entitled to claim interest under provisions of Section 3(1)(b) of the Act and in these circumstances the impugned judgment cannot be sustained in law.

7. In the case of Union of India v. Steel Stock Holders Syndicate, Poona , it has been held that "thus it is clear that there is no question of Section 73 of Contract Act overriding the provisions of Interest Act, because in the instant case the Interest Act had no application at all inasmuch as no interest is claimed by the plaintiff at all but interest had been used as a measure to determine the compensation which the plaintiff could seek against the defendant for its negligence in causing inordinate delay for the delivery of the goods. The contention raised by the Solicitor-General on this point is, therefore, overruled".

8. Karnataka High Court in the case of Union of India v. Visveswaraya Iron and Steel Ltd. , held that "it goes without saying and it is also not disputed before us that he is entitled to that amount of interest from the date of the suit till the date of realisation, particularly in view of Section 34 of the Civil Procedure Code, as amended by Act 104 of 1976, which has come into force with effect from 1.2.1977 and also the rate of interest levied by any of the nationalised banks. It is to this extent, the decree passed by the trial court has to be modified".

9. On resume of the aforesaid authorities, it would be clear that interest can be awarded in view of Section 3 (1)(b) of the Act as well as under Section 34 of the Civil Procedure Code. This court is, therefore of the considered opinion that the contention of Mr. Lambat that the provisions of Section 34 of the Civil Procedure Code have no application to the facts and circumstances of the present case in view of the provisions of Section 28 of Railway Claims Tribunal Act, 1987, is totally misconceived and liable to be rejected. The decision of this Court in Diwan Rahu Nanda v. Nitish G. Kotak 1998 (3) Mah LJ 35, is not of any assistance to him as the said decision is not applicable to facts and circumstances of this case. Since there was compliance of Section 3 (1)(b) of the Interest Act it is obvious that the railway administration would be liable to pay interest in view of Section 34 of the Civil Procedure Code.

10. This provision reads thus:

34. Interest.-(1) Where and insofar as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court thinks fit:

Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.

11. It is common knowledge that in the year 1991 when the claim application was filed the nationalised banks were granting interest on deposits at the rate of 9 per cent per annum. Therefore, in view of the aforesaid provision of law regarding payment of interest, this Court is of the considered opinion that appellant would be entitled to receive interest at the rate of 9 per cent per annum from the date of suit till realisation on the decretal amount of Rs. 71,623.16. Therefore, the impugned judgment is set aside and modified to that extent and the respondent railway administration is held liable to pay interest as mentioned above. Appeal is, therefore, allowed as indicated above with costs.