Karnataka High Court
I. Armugam vs Channagiri N. Govindaraj Shetty on 25 February, 1992
Equivalent citations: AIR1992KANT347, ILR1992KAR1660, 1992(2)KARLJ659, AIR 1992 KARNATAKA 347, (1992) ILR (KANT) 1660, (1992) 2 KANT LJ 659, (1993) 1 BANKLJ 420, (1993) BANKJ 609, (1993) 1 CIVLJ 330, (1992) 1 BANKCLR 614
ORDER K. A. Swami, J.
1. At the stage of admission respondent has been served and he is represented through a counsel. The records of the case are also received. As the appeal lies in a very narrow compass, it is admitted. Production of paper books is dispensed with and the appeal is heard for final disposal.
2. In the light of the contentions urged by both sides, the following points arise for consideration :
1. Whether the Trial Court is justified on facts and in law in passing a decree for a sum of Rs. 1,23,535/- on the basis of three cheques dated 12-11-1987, 12-11-1987 and on 27-7-1987 for Rs. 30,000/- each?
2. Whether the Trial Court is justified in law and on facts in awarding interest at the rate of 18% p.a. on the principal sum as claimed by the plaintiff from the date of issuance of the cheques up to the date of suit and also from the date of suit till realisation on a sum of Rs. 90,000/- at the same rate ?
3. In this judgment, respondent will be referred to as the plaint iff and the appellant as the defendant.
4. Points 1 and 2:-- The plaintiff filed the aforesaid suit for recovery of a sum of Rs. 1,23,535/- on 7-10-1989, on the grounds that the defendant was a building contractor at Shimoga; that he was known to the plaintiff and was also the friend of the plaintiff; that in view of the friendship the defendant sought for a loan of Rs. 90,000/- for his contract work; that the plaintiff issued the cheque dated 27-7-1987 in favour of the defendant for a sum of Rs. 30,000/- and endorsed the two cheques dated 12-11-1987 for Rs. 30,000/-each in favour of the defendant. Thus, according to the case of the plaintiff in all he paid a sum of Rs. 90,000/- to the defendant on an understanding that it was to be returned within a short period. But, the defendant did not return the amount. Therefore, a legal notice was issued on 5-9-1989 calling upon him to pay the amount with interest at 18% from the date of advancement of the amount; that the defendant inspite of receipt of the notice did not send any reply. Hence, the plaintiff averred that he was constrained to file a suit for recovery of a sum of Rs. 90,000/-with interest amounting to Rs. 33,435/- and notice charges of Rs. 100/-. Thus in all, he prayed for a decree for a sum of Rs. 1,23,535/-.
5. The defendant resisted the suit and inter alia contended that no doubt the plaintiff issued a cheque for Rs. 30,000/- on 20-7-1987 and also endorsed in his favour two cheques of the same date i.e., 12-11-1987 each for a sum of Rs. 30,000/- and all the three cheques were encashed by him; but, he contended that these payments were made by the plaintiff towards the contract work done by him informing a lay out in the land belonging to the plaintiff and another person by name Sri B. R. Jagadeesh; that the plaintiff in all was to pay a sum of Rs. 2,09,000/-; that he was not in a position to pay the entire sum in a lump sum; that after he paid a sum of Rs. 30.000/- through the cheque dated 20-7-1987, according to the defendant, the plaintiff asked him to bring the customers for purchasing the sites made out in the lay out formed by the defendant for the plaintiff so that he could pay the amount due to the defendant, therefore, the defendant took two customers by name Smt. Jayalakshmi and Smt. Sumitra who look one site each and each issued a cheque for Rs. 30,000/- on 12-11-1987 and the same were endorsed in his favour; therefore he contended that there was no loan transaction between the plaintiff and the defendant; that the money paid through cheques by the plaintiff to the defendant was towards the part discharge of the debt due to him out of Rs. 2,09,000/- and the plaintiff went on postponing the payment of the balance amount.
6. The trial court framed the following issues for trial :
1. Whether the plaintiff proves that the defendant had borrowed a sum of Rs. 90,000/- under the cheques referred to in para 3 of the plaint, agreeing to repay the said sum with interest at the rate of 18% p.a. ?
2. Whether the defendant proves that he had received the aforesaid sum of Rs. 90,000/- from the plaintiff towards partial discharge of the debt which the plaintiff owed to him allegedly in respect of transaction averred in para 4 of the written statement?
3. Whether the plaintiff is entitled to suit claim from the defendant ?
4. To what reliefs the parties are entitled ?
5. What order or decree ?
7. In support of the case of the plaintiff, he examined himself as PW1 and also produced two documents which were marked as Exs. P.1 and P.2. The defendant gave evidence as DW 1 and also examined one Sri B. R. Jagadeesh as DW 2 and did not produce any document on his behalf.
8. The Trial Court in the light of the arguments advanced and on consideration of the evidence on record answered Issues 1 and 3 in the affirmative and Issue No. 2 in the negative. It accordingly decreed the suit for a sum of Rs, 1,23,535/- with cosls and further interest at the rate of 15% p.a. on the principal amount of Rs. 90,000/- from the date of suit till realisation.
9. It is contended by Sri Rudregowda, learned counsel for the defendant that the payments by cheques by themselves are not the proof of advancement of loan; whereas, as per the provisions contained in Section 6 of the Negotiable Instruments Act (hereinafter referred to as 'the Act') the issuance of a cheque is for consideration, therefore, the fact that the plaintiff issued one cheque for Rs. 30.000/- on 20-7-1987 and endorsed two cheques dated 12-11-1987 for Rs.30,000/-each did not by itself prove the case of the plaintiff that the defendant had borrowed a sum of Rs. 90,000/- from the plaintiff. The learned counsel also placed reliance on the decisions of this Court in Sangappa Basappa v. Chidenanda Basavantraya, 1980 (2) Kar LJ 202, and Guddan Gouda Tirakangouda v. Shivappa Gnddappa, 1981 (l) Kar LJ 29. He also relied on adecision of the Supreme Court in Kundan Lal Raliaram v. Custodian, Evacuee Property, Bombay, AIR 1961 SC 1316. In addition to this, the learned counsel also relied on the statement of law made by Bhashyam and Adiga Negotiable Instruments Act, 15th Edition, at page 132.
10. No doubt it is stated by learned authors Sriyuthus Bhashyam and Adiga thus :
"Prima facie all payments by cheque are to extinguish an existing debt, not to create a new one. Hence a cheque presented and paid is of itself no evidence of money lent or advanced by the banker to the customer, on the other hand, it is prima facie evidence of the repayment of money previously lodged by the customer in the banker's hands, except perhaps, when the cheque was paid without funds or when the payment itself creates an overdraft. Nor again a paid cheque is in itself an evidence of a loan by the drawer to the payee. Yet it may be shown by other evidence that the cheque was in fact loaned to him."
There is no doubt that mere payment by cheque is not a prima facie evidence of advancing loan because the cheque is deemed to have been issued on consideration. As such there cannot be any quarrel with the statement of law made by the aforesaid authors. However, it is necessary to remember that it is not an irrebuttable presumption of law. It is permissible in law to show by other evidence that the cheque issued was not to extinguish the existing debt but it was for the money lent. Learned authors have also recognised this aspect as is clear from the last underlined portion. The plaintiff may adduce other direct evidence to rebut this presumption, or rely upon the defence pleaded by the defendant and the evidence adduced by the defendant.
11. In the instant case, the plaintiff has denied that he had entrusted any contract work for formation of layout to the defendant. He has also denied that the amount in question was paid towards the contract work alleged to have been done by the defendant.
11.1. The defendant on the contrary, in his evidence specifically stated that the contract was obtained from the plaintiff for formation of the layout and for filling up the pits and also for forming the roads in the layout for a sum of Rs. 2,09,000/-. He also admitted that in respect of the contract work in question, there was no written agreement. It was oral. However, he admitted that in the accounts maintained by him these payments have been entered and on the completion of the work, the bill was issued to the plaintiff and the bill was prepared by his son and a copy of it was also kept with him. He did not produce the accounts. Nor did he produce a copy of the bill. Thus the defendant withheld the material evidence which, if it had been produced, would have gone against him.
11.2. In a case where the defendant sets up a special plea, burden is upon him to prove it and if he fails to prove the special plea the case of the plaintiff stands proved. No doubt the defendant has examined the co-owner of the land in which a lay out was claimed to have been formed by the defendant, but during the course of the evidence it has been elicited from DW2 that the relationship between the plaintiff and DW2 is strained and there is a suit -- O.S. No. 168/1989 filed by the plaintiff against DW 2. The Trial Court has disbelieved the evidence of DW 2 on the ground that the relationship between the plaintiff and DW 2 is strained. There is every possibility of DW2 coming forward to depose against the plaintiff. On going through the evidence of DW2. We are satisfied that the trial court is justified in rejecting the evidence of DW 2. Hence, we are of the view that as the defendant admitted receipt of money under cheques but pleaded that payment through the cheques was towards the contract work done by him to the plaintiff which was specifically denied by the plaintiff and as the defendant failed to produce the accounts and a copy of the bills pertaining to the contract work claimed to have been maintained by him, an adverse inference has to be drawn against the defendant for withholding the best evidence. Therefore, it follows that :
If the account books and a copy of the bill were produced by the defendant the same would have gone against him. We may also mention here that the plaintiff issued the notice dated 5-9-1989 as per Ex.P2 which was received by the defendant on 7-9-1989. No reply was sent by the defendant to the notice. However, it is contended by Sri Rudregowda, learned counsel for the defendant that on 7-10-1989 itself the suit was filed, the defendant was out of Head Quarters, therefore, he could not send his reply. However, the fact remains that no reply was sent to the notice. It is also contended by Sri Rudregowda learned counsel for the appellant that the plaintiff has admitted that he was obtaining the document for having lent the money. In the instant case if the plaintiff had lent the amount to the defendant he would not have failed to obtain a document having advanced the loan to the defendant. In this regard it is relevant to notice the evidence of the plaintiff. The plaintiff has stated that when he was doing Mandi business in the Mandi he was maintaining the accounts and also obtaining the documents from the persons to whom he advanced the money. But, he has stated that he has ceased to do the business in Mandi from 1982 onwards. Therefore, the fact that when the plaintiff advanced money to the defendant on 20-7-1987 and 12-11-1987 hedid not obtain any document from the defendant and did not maintain the accounts cannot be held against him because he has ceased to be a Mandi merchant since 1982. Therefore, on consideration of the totality of the evidence on record we are satisfied that there was no contract work entrusted by the plaintiff to the defendant for forming a lay out and filling up of the pits and also forming a road. The defendant has failed to prove his special plea that the suit amount was paid through cheques towards the contract work done by him. The evidence of the defendant is also discrepant inasmuch as in the written statement he has specifically pleaded that a sum of Rs. 90,000/ - through three cheques was paid towards the contract work done by him. However, in the evidence he has tried to state that a sum of Rs. 5,000/ - was returned to the plaintiff. He has stated in his evidence thus :* This is quite contrary to the defence set up by the defendant. In addition to this he has failed to produce the accounts and a copy of the bill. He has also not produced any evidence as to what action he has taken for recovery of the balance of the amount due from the plaintiff, in as much as he would have taken action, if really he had done the work under the alleged contract and had issued the bill for Rs. 2,09,000/-. He has specifically pleaded in para 4 of the written statement that the plaintiff went on postponing payment of the balance amount. The last payment, according to the defendant, was made by the plaintiff on 12-11-1987 by endorsing the two cheques in question in his ' favour. The plaintiff issued notice dated 5-9-1989 as per Ex.P.2 through a lawyer demanding the suit amouni with interest. The suit was filed on 7-10-1989. The defendant filed the written statement on 26-6-1990. The defendant was examined as DW1 on 25-4-1991. As such it is clear that if really there was a contract work done by the defendant as pleaded by him and the plaintiff was due to pay a sum of Rs. 2,09,000/ - and out of this, he had paid Rs. 90,000/- through the suit cheques, the defendant ought to have filed the suit for recovery of the balance of the amount within three years from 1-11-1987. If not, the defendant at least ought to have made a counter-claim in the present suit itself. He has neither filed a suit for recovery of the balance amount nor he has made a counter-claim. This demonstrates that the defence set up by the defendant is not true as otherwise the defendant would not have allowed his claim for the balance of the amount to be barred by time. The balance of the amount was more than the suit claim. Hence the trial court is justified in rejecting the defence of the defendant.
12. Thus this is a case in which the defendant, on admitting the receipt of the amount under the cheques, has set up a plea that the said payment was made towards the work done by him as a contractor; that he has maintained the accounts and the transactions of the cheques in question are entered in the account books; that he has issued the bill for the work done by him and has retained a copy of the bill; but he has nevertheless withheld the account books, copy of the bill and failed to produce any record to show that there had been such a contract between him and the plaintiff; that he has done the contract work, the presumption stands rebutted as it will have to be held that if the defendant had produced the records as averred by him, the same would have gone against him. This view of ours receives support from the decision of the Supreme Court in Kundanlal's case. The relevant portion of the Judgment reads thus :
"Learned counsel for the appellant contended that the finding of the Custodian-General was vitiated by the fact that he had held erroneously that the presumption under S. 118 of the Negotiable Instruments Act in favour of the appellant that the consideration had passed for the endorsement of the promissory note was rebutted by evidence and circumstances in the case, when as a matter of fact the respondent did not produce any evidence in rebuttal.
To appreciate this argument it would be necessary to notice at the outset the scope of the presumption under S. 118 of the Negotiable Instruments Act and also the different methods available to a person against whom such a presumption is drawn to rebut the same. The relevant part of S. 118 of the Negotiable Instruments Act reads :
"Until the contrary is proved the following presumptions shall be made :
(a) that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration."
This Section lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The question is, how the burden can be discharged ? The rules of evidence pertaining to burden of proof or embodied in Chapter VII of the Evidence Act. The phrase "burden of proof" has two meanings : one the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and in unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e.. oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under S. !OI of the Evidence Act "whoever desires any Court to give judgment as to any legal right or liability dependant on the existence of facts which he asserts, must prove that those facts exist". Therefore, the burden initially vests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in Section 118 of the Negotiable Instruments Act helps him to shift the burden of the other side. The burden of proof as a question of law rests therefore, on the plaintiff; but as soon as the execution is proved, Section 118 of the Negotiable Instruments Act imposes a duly on the Court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration, and, if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in S. 114 and other sections of the Evidence Act. Under Section 114 of the Evidence Act, the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular ease. Illustration (g) to that section shows that the court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. A plaintiff, who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration, should produce the said account books, for he is in possession of the same and the defendant certainly cannot be expected to produce his document. In those circumstances, if such a relevant evidence is withheld by the plaintiff, S. 114 enables the court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption if raised by a court, can under certain circumstances rebut the presumption of law raised under S. 118 of the Negotiable Instruments Act. Briefly stated, the burden of proof may be shifted by presumtions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned herewith irrebuttable presumptions of law."
Therefore in the instant case, as the defendant has failed to produce the accounts and the bills for the production of which there was no difficulty whatsoever, the presumption that the three cheques in question were issued for consideration namely, towards the amount payable for the contract work done by him to the plaintiff is rebutted and the case of the defendant shall have to be rejected.
12.1. It is also not possible to apply the decisions of this Court on which the reliance was placed by Sri Rudrcgowda, learned counsel for the defendant. In the case of Guddangouda Tirakangouda v. Shivappa Guddappa, the defendant took up a plea that though the cheque was issued in the name of the defendant but that he encashed it for the plaintiff and paid it to the plaintiff. Therefore, it was held that the plaintiff had failed to prove that the transaction was one of loan. The relevant portion of the Judgment is as follows :--
"Three issues were framed by the trial court placing the burden on both the plaintiff and the defendant equally as to their rival contentions and on appreciating the evidence came to the conclusion that the defendant's version was worthy of credence and therefore, the plaintiff had not proved that he had advanced the handloan of Rs. 3,000/- much-less stipulating any interest. The lower appellate Court, more or less, followed the same reasoning as that of the trial court.
Mr. Banurmath, learned counsel appearing for the appellant made a slender attempt on the basis of S. 28 of the Negotiable Instruments Act, that on account of the fact that the defendanl admitted his signature on the back of the counterfoil of the cheque, benefit of S. 28 of the Negotiable Instruments Act should go to the plaintiff. I do not see how this would be available to the plaintiff. Section 28 of the Negotiable Instruments Act contemplates the signing of the instrument itself by the agent. In other words, the agent must be drawing the instrument himself and not merely affixing his signature in some part of . the cheque or counterfoil, as the case may be, not being the drawer or at tbe place marked for the signature of the drawer.
Similarly, the learned counsel's argument that S. 118 of the Negotiable Instruments Act would come to his aid is neither here nor there. The presumption under S. 118(l)(a) of the said Act is that the drawer of the cheque or a pronote or any other bill of exchange had so drawn it for consideration. This actually operates against the plaintiff and not against the defendanl."
Therefore, it is clear that the aforesaid decision is confined to the facts of that case. It is not a case of special plea set up by the defendant for having received the amount towards a particular contract work done or for a particular purpose.
12.2. Similarly in Sangappa Basappa v. Chedenanda Basawantraya, 1980 (2) Kar LJ 202, the cheque was drawn in the name of the defendant. The plea of the defendant was that the plaintiff always used to sit in the shop of the defendant and sometimes he was carrying on his money lending business by issuing cheques to his borrowers. As the plaintiff was not conversant with the writing of cheques, he used to get them written by the defendant and used to give those cheques to his borrowers. Sometimes, the plaintiff used to ask the defendant to write the cheque in his (defendant's) name and request him to get the cash for him (plaintiff). Thus, it was the Case of the defendant that the suit cheques Kxs.P.1 to P.3 were written by the defendant ;it , lie instance of the plaintiff in his (defendant's) name and paid the amount to the plaintiff immediately after encashing them. Therefore, Sangappa Basappa's case is also similar to the case of Guddangoucla Tirakangouda's case. Hence, we are of the view that this decision is also confined to the facts of the case. As such it cannot be applied to a case where a special defence has been set up by the defendant.
12.3. Consequently, we affirm the finding recorded by the trial court that a sum of Rs. 90,000/- was advanced by the plaintiff to the defendant as loan under the three cheques in question.
13. The next question for consideration is as to whether the trial court is justified in law in decreeing the interest at the rate of 18% as claimed by the plaintiff from the date of issuance of the cheques till the date of suit and also from the date of suit till realisation on the sum of Rs. 90,000/-.
14. The case of the plaintiff is that he advanced the money to the defendant under the three cheques in question. Therefore, S. 80 of the Act as it stood prior to 30-12-1988 was attracted.
15. It is contended by Sri Rudregowda, learned counsel appearing for the defendant that no interest could have been awarded because there was no agreement for payment of interest. Learned counsel placed reliance on the decisions of the Supreme Court in the Union of India v. The West Punjab Factories Ltd., and Maula Bux v. Union of lndia, .
15.1. In the case of Union of India v. The West Punjab Factories Ltd., the Supreme Court was concerned with the claim for damages. It was not a case involving the claim for a specified sum or for recovery of the amount advanced as loan to defendant. The question arose as to whether the interesi could be awarded on the damages. It was held that "in the absence of any usage or contract, express or implied or of any provision of law to justify the award of interest, it is not possible to award interest by way of damages for the period up to the dale of the suit." Therefore, it is clear that the proposition of law laid down in that case cannot be applied to a case for recovery of the amount advanced as loan. Further, the instant case is governed by S. 80 of the Act which specifically provides for awarding inleresl at a particular rate in a ease where no rale of interest is specified in the instrument. Therefore, it is not possible to apply the decision in Union of India v. West Punjab factories Ltd. to the case on hand.
15.2. Similarly, the decision in Maula Bux v. Union of India also related to the damages sought under S. 74 of the Contract Act for breach of contract. While considering S. 34 of the C.P.C. and also the provisions of the Interesi Act, 1839 it was observed thus :
"The High Court has held that the plainliff is not entitled to any interest prior to the date of the suit. No argument has been advanced before us challenging that view. Since interest was not recoverable under any contract or usage or under the provisions of the Interest Act, 1839, the High Court allowed inlcrest at the rate of 3 per cent per annum on Rs. 416.25 from the date of the suit; the rate of interest allowed on the claim decreed also should not exceed 3 per cent per annum."
Therefore, it is clear that it is not possible to apply the aforesaid decision to the case on hand.
16. It is next contended that the provisions of S. 80 of the Act as they stood prior to 30th December, 1988 governed the suit transactions as the three cheques were issued prior lo 30th December, 1988, therefore, the interest ought to have been awarded at the rate of 696 per annum from the date the amount became payable until tendered or realisation of the amount due thereof and not al the rate of 18% per annum because the amendment effected by Central Act 66/1988 is not, and cannot be construed as, retrospective. On the contrary, it is contended on behalf of the plaintiff that the plaintiff is entitled to interest at the rate of 18% at least from 30-12-1988 as the amendment has come into force on that day.
17. We are of the view that the contention of the learned counsel for the plaintiff cannot at all be accepted: All the three cheques were issued prior to 30th December 1988. Section 80 of the Act as it stood prior to 30-12-1988 was as follows :--
"80. Interest when no rate specified.--When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument be calculated at the rate of six per centum per annum from the date at which the same ought to have been paid by the parly charged, until tender or realisation of the amount due thereon or until such date after the institution of a suit to recover such amount as the court directs."
By Act No. 66/1988, Section 80 of the Act was amended. The words "eithteen per centum" were substituted for the words "six per centum" with effect from 30-12-1988.
17.1. Unlike Section 79, Section 80 of the Act provides for the case where no rate of interest is mentioned in the instrument. This section governs a case where, in a negotiable instrument, payment of interest is mentioned but no rate is stipulated and also a case where there is no interest mentioned at all in the instrument. Any agreement between the parties contemporaneous with or subsequent to the date of negotiable instrument, as to interest will not have any effect and such agreement will not be enforceable because the Section specifically states that "notwithstanding any agreement relating to interesi between any parties to the instrument", interesi shall be calculated at the rate of six percent per annum (of course from 30-12-88 onwards eighteen per cent per annum). The non-obslanle clause contained in the section supersedes or sets aside such agreement if any between the parties to the instrument. The section further provides "interest on the amount due thereon shall................... be calculated at the rate of six per cent per annum from the date at which the same ought to have been paid by the party charged until tender or realisation of the amount due thereon or until such date after the institution of a suit to recover such amount as the court directs". Thus the rate of interest on the amount due under the instrument attracting S. 80 of the Act as it stood prior to 30-12-88 will have to be calculated at the rate of 6% per annum from the date the amount ought to have been paid and until it is tendered or realised. The amendment effected by Act No.66/88 which came into force on 30-12-1988 docs not apply to the transactions effected prior to 30-12-1988. The amendment applies to the transactions effected on and from 30-12-88.
18. The next question for consideration is as to from what date the interest has to be awarded. The S. 80 of the Act specifically provides : "from the date at which the same ought to have been paid". Therefore, the interest shall have to be calculated from the dale the amount is required to be paid. If there is no such agreed date for repayment between the parties, the interest shall have to be paid from the date it is demanded. According to the averments made in the plaint, the defendant borrowed a sum of Rs. 90,000/- from the plaintiff under three different cheques promising to repay the same along with the interest thereon at 18% per annum to the plaintiff within six months. In the notice also the claim is made in the same manner. Therefore, even according to the case of the plaintiff, the amount was to be paid on or before the expiry of six months from the date of lending. Thus the interest has to be calculated from the date on which six months expired from the dates the three cheques in question were issued as six months were allowed for repayment of the loan. Therefore, as per S. 80 of the Act as it stood prior to 30-12-88, the interest has to be calculated at 696 per annum, irrespective of the case of the plaintiff that the agreed rate of interest was 18% from 20-1-88 on the sum of Rs. 30,000/-as the cheque was issued on 20-7-87 and on the remaining sum of Rs. 60,000/- from 12-5-88 as the two cheques were indorsed in favour of the defendant on 12-11-1987 for a sum of Rs. 30,000/- each. The trial court has not taken into consideration S. 80 of the Act. If it had adverted to S. 80 of the Act it would not have allowed interest at 18% from the date of transactions as claimed by the plaintiff up to the date of the suit. The trial court has also awarded interest at the rate of 18% per annum on a sum of Rs. 90,000/ - from the date of suit till the date of realisation. In the light of the conclusions reached by us, we hold that the defendant is required to pay current and further or future interest at the rate of 6% per annum on the sum of Rs. 90,000/- from the date of suit till the date of realisation.
19. For the reasons stated above, points 1 and 2 are answered as follows :
"The trial court is not justified on facts and in law in passing the decree for a sum of Rs. 1,23,535/ - with interest at 18% on the sum of Rs. 90,000/- from the date of the suit till realisation. It ought to have passed a decree for a sum of Rs. 90,000/- with interest at 6% per annum on the sum of Rs. 30,000/- from 20-1-88 till the dale of suit and on the amount of Rs.60,000/- from 12-5-88 till the date of the suit and current and further or future interest on the sum of Rs. 90,000/-at 6%per annum from the date of suit till realisation."
20. For the reasons stated above, this appeal is allowed in part. The judgment and decree of the trial court are modified. The suit of the plaintiff is decreed for a sum of Rs. 90,000/- with inlcresl at 6% per annum from 20-1-88 on the sum of Rs. 30,000/- till the date of suit and on the sum of Rs. 60,000/ -from 12-5-88 till the date of the suit and current and further or future interest at 6% per annum on the sum of Rs. 90,000/- from the date of suit till the date of realisation.
21. Parties are entilled to pay and receive the costs throughout proportionate to their success.
22. Order accordingly.