Compania Maritima International S.A. vs The Union of India (UOI)

Ganapatia Pillai, J.—The plaintiffs are the appellants. The suit was laid for the balance of freight due and for demurrage and interest on these

sums under the following circumstances. The appellants were the owners of a steamship called Rio in which a consignment of goods was received

by the Union Government at the Port of Madras. The charterers were liable for payment of the balance of the freight, but they did not pay the

freight when the steamer arrived in the Port of Madras. Consequently the ship-owners refused to discharge the cargo and thereupon the

Government of India gave an undertaking to pay the balance of freight due.

The lower Court gave a decree for the sum claimed but disallowed interest for the period prior to 13th February, 1953 on balance of freight and

demurrage. The reasoning of the lower Court was that interest was not payable because the principal sums claimed were not payable at a certain

time and therefore interest was payable only from the date of demand.

The learned Counsel for the appellant referred to the decision in Province of West Bengal Vs. Basant Properties Ltd., as authority for his

contention that interest should have been allowed as claimed. That was a case where interest was claimed u/s 1 of the Interest Act of 1839 in

respect of compensation money due for land acquired under the Land Acquisition Act. The argument addressed to that Bench was that interest on

compensation money would amount to damages (on damages) and therefore could not be awarded under the Interest Act. In repelling this

argument the Bench observed that interest was paid in that case for wrongful detention of compensation money and was therefore payable in

equity. A contrary view was taken by this Court in The Associated Oil Mills Ltd. Vs. The Provincial Government of Madras, . We do not

therefore feel compelled to follow the Calcutta view in preference to the. Madras view on the question of liability for payment of interest for claims

in the nature of compensation amounts.

Clause 7 of the charterparty makes provision for payment of demurrage. Though the sums are payable by virtue of a written instrument there is

no indication as to the time when such sums should be paid. In the very nature of things the payment of demurrage was a contingent payment with

reference to which no certain time can be indicated. The learned Judge in the Court below was therefore right in awarding interest from the date of

demand. The appeal fails and is dismissed with costs.

The Memorandum of Cross-objections preferred by the Union Government in this appeal relates to the liability for demurrage and interest

awarded by the lower Court on freight and demurrage. The dispute regarding liability for demurrage was not pressed by the learned Government

Pleader, but, he pressed the claim with regard to interest. He contended that freight was payable on delivery, but for demurrage no time was fixed.

Even so interest on freight can be awarded because it was payable as soon as the steamer reached the Madras Port. But as regards demurrage it

was a contingent liability which may or may not arise and therefore it must be construed to be a liability for a debt which was not payable at a

certain time. Even if there was no agreement to pay interest, in the undertaking given by the Government the interest awarded by the lower Court is

proper under the provisions of the Interest Act. The Memorandum of Cross-objections is therefore dismissed with costs.