S.K. Sayal vs State of Punjab

The only dispute arising for adjudication in this Regular Second Appeal is that the plaintiff-appellant should have been allowed interest on the amount due to him at the rate of 15% per annum and not at 6% per annum as has been done by the first appellate Court.

The facts.

The plaintiff, an Advocate of this Court, was appointed as Assistant Advocate-General, Punjab with effect from July 15,1976. His service record throughout was categorised as ''good'' and very good''. His services were terminated by order dated June 15, 1982 on the ground that he had interpolated the opinion in the case State of Punjab Vs. Mohinder Singh and Others, filed appeal against the order of termination from service. In the meantime, the apex Court decided the criminal appeal titled Mohinder Singh and Others Vs. State of Punjab and Another, . The apex Court held that there was no interpolation and that the Public Prosecutor was authorised by the Under Secretary (Home) to file appeal before the High Court against the acquittal and the High Court had erred in holding that the appeal filed by the Slate was not properly presented. Having been exonerated of the charge of interpolation by the apex Court on the basis of which plaintiff''s service was terminated, the order of termination was set aside by the State of Punjab vide order dated December 26, 1984 and the plaintiff was reinstated in service. He joined his duty as Assistant Advocate General on January I, 1985. However, it was ordered that the period from June 15,1982 to the date of reinstatement (i.e. December 31, 1984) be treated as dies non. Presumably, the purpose to treat the period as dies non was to declare Shri G.S. Bains, Assistant Advocate General, Senior 10 the plaintiff. The plaintiff challenged the Government''s order dated December 26, 1984 by which the period from June 15, 1982 to December 31, 1984 was treated as dies non. He also challenged the order dated June 24,1987 passed by the State Government, by which Shri G.S. Bains was declared senior to him. The trial Court decreed the suit by judgment and decree dated March 9,1989. The State of Punjab challenged the judgment and decree of the trial Court in appeal before the first appellate Court and the plaintiff filed cross-objections assailing the decree of the trial Judge to the extent to which he was denied interest on the arrears of salary. Vide judgment and decree dated January 17, 1990. The appeal filed by the State was dismissed but the cross-objections filed by the plaintiff were accepted by the first appellate Court and it was ordered that the plaintiff would be entitled to payment of interest on the amount due @6% per annum till payment. The State challenged the judgment and decree of the first appellate Court through R.S.A. No. 1375 of 1990, which was dismissed in limine on July 31, 1990.

In the instant appeal, the plaintiff has assailed the judgment and decree of the first appellate Court whereby he was allowed interest @ 6% per annum only on the amount due till payment. He claims that he should have been allowed interest on the amount due @15% per annum till payment.

In response to the notice issued by this Court, Shri O. P. Goyal Additional Advocate-General has put in appearance of behalf of the State of Punjab and stated that interest beyond 6% per annum cannot be awarded in view of the mandatory provision of S. 34 of the Code of Civil Procedure.

Section 34 of the CPC for short, the Code) applies only where the decree is for payment of money''. The expression "decree is for the payment of money" as used in the section includes a claim for unliquidated damages. The interest that can be awarded to a plaintiff in a suit for money may be divided into three heads, according to the period for which it is to be allowed, namely

i) interest accrued due prior to the institution of the suit on the principal sum adjudged (as distinguished from the principal sum Claimed);

ii) additional interest on the principal sum adjudged, from the date of the suit to the date of the decree, "at such rate as the Court deems reasonable."

iii) further interest on the principal sum adjudged from the date of the decree to the date of the payment or to such earlier date as the Court thinks fit, at a rate not exceeding 6 per cent per annum.

The interest can only be awarded on the principal sum and not on the principal and interest as on the date of the decree. However, the instant suit is not a suit for payment of money. S. 34 of the Code is not applicable in the instant case. Interest will be payable under the provisions of the Interest Act, 1978 (Act 14 of 1978) (hereinafter referred to as the Act). Indisputably, the Act applies to the State of Punjab. Under S. 3 of the Act, interest can be awarded even by way of damages. The respondent withheld the payment of salary to the plaintiff on illegal grounds and he was thus deprived of the use of the money. Interest can be awarded on the amount illegally withheld. In the instant case, interest of justice will be met if the plaintiff-appellant is allowed interest on the amount due @ 12% per annum instead of 6% per annum as already allowed by the first appellate Court.

For the reasons aforesaid, the appeal succeeds, to the extent that the plaintiff-appellant will be entitled to interest on the amount due at the rate of 12% per annum from June 15,1982 till payment. There will be no order as to costs.

Appeal partly allowed.