the in'lerest bill, 1977 i-to be/as introduced in 10k sabha 7 1 - page 2, line 3,-m "baking" ~ "banking" 2 page 2, line 38,-for "de mage s" ~ lid amage s " 3 page 5, line 12,-for "state" read "stage" agrahayana 22, 1 99 ( saka) diu no 1"7 of 1177  the interest sill, 1977 a billto conlozidate and amend the law relating to the alldwance of interest in certain cases be it enacted by parliament in the twenty-eighth ye8l' of the republic of india as follows:-1 (1) this act may be called the interest act, 1977 short title, extent and (2) it exfends to the whole of india except the state of jammu and commence-s jtubmir ment (3) it shall come into force on such date as the central government may, by notification in the oftlcial gazette, appoint z in this act, unless the context otherwise requires,-deftnitions (a) "court" includes a tribunal and an arbitrator; 10 is (b) rcurrent rate of interest" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by di1ferent clasaes of 1icheduled banks in accordance with the directions given or issued to banking companies generally by the reserve bank of india under the banking regulation act, 1949 10 of 1949 explanation-in this clause, "scheduled bank" means a bank, not being a co-operative bank, transacting any business authorised by the baking regulation act, 1949 (c) "debt" means any liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment 5 debt; (d) "personal injuries" includes any disease and any impairment of a person's physical or mental condition; (e) all other words and expressions used herein but not defined and defined in the reserve bank of india act, 1934, shall have the 10 2 of 1934 meanings respectively assigned to them in that act power ot court to allow interest 3 (1) in any proceedings for the recovery of any debt or damages or in any proceedings in whic:h a claim for interest in resped of any debt or damages already paid is made, the court may, if it thinks fit, auow interest to the person entitled to the debt or damages or to the person 15 making such claim, as the case may be, at a rate not exceeding the <!urrent 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 20 debt is payable to the date of institution of the proceedings; (b) it the proceedings do not relate to any such debt, then, from the date menti~ned in this reg8l'd in a writ~n 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 pro- 25 ceedings: provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment (2) where, in any such proceedings as are mentioned' in sub- 30 "ection (1 ),-(a) judgment, ordier or adr is gi~ lot ii 811m -whkh, apart from interest on damages, exceeds four' thousand rupees, jaild i (b) the sum represents or includes damages in respect of !personal injuries to the plaintiff or any other person, or in respect of a 35 person's death , then, the power conferred by tthat sub-section shall be exerc:ised so as to include in that sum interest on th05e demages or _ sueh part c)f them as the court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the 40 proceedings, ufiless the colll't i satisfied tlutt ff~re are 8petial reasons why no interest should be given its respect of th_ ~1ii'f (3) ,nothing in titis· seeti~-(0) shan pply 1ft relation tt-(i) any debt or damages upon whfth hit'erest is i"lt8me as 4s of richt, by virtue of any greemeat; or oi) any debt or damages upon which payment of interest js ba1"l'8d, by virtue of ad express agreement; s 26 of 1881 (b)·  dikt-(i) the eompedsation recoverable for the djshonour of a bui ijf n:tiaiiee, prodiiisory note or cheque, lis delbied hi the naptlatile instrumehts act, 1881; or 5 of 1908 (ii) the provisioaa of rule i of ordet 0 of the i'ltst sdledule to the code of qn procedure 1108 (c) s)ulli empoftr the court to awatd interest upon hiterfit 10 4 (1) notwithstanding anything contained in section 3, mterest shall be payable in all cases in which it is payable by virtue of any enactment or other ruie of law or usage having the force of iaw  (2) notwithstandiilg as aforesaid, and without prejudice to the gene-interest payable under certain enactments r~ty of the provisions of susectioil (1), the court sliad, in each of the is nilowldg eases, 8110w interest from the date specified below to the date of institution of the proceedings at such rate as the court may cqusider reasonable, unless the court is satisfied that there are special reason: why interest should not be allowed, namely:-20 (a)' where money or other property has been deposited as seeurity for the performance of an obligation imposed by law or contract, from tbe date of the deposit; (b) where the obligation to pay money or restore any property arises by virtue of a fiduciary relationsbip, from the aate of the cause of action; 2s (c) where money or other property is obtained or retained by fraud, (rom the elate of the cause of action; (d) where the claim is for dower or maintenance, from the date of the cause of action 5 of 1908 5 nothin'g in this act shall affect the provisions of section 34 of the section 34 30 code ofi civil procedure, 1908 of the code of civil procedure 1908 to apply 32 of 1839 6 (1) as from the commencement of this act, the interest act, 1839 repeal and and any other law corresponding thereto in force in any state immediatesaving iy before such commencement shall stand repealed (2) the provisions of this act shall not apply to any suit or other legal proceeding pending at the commencement of this act and the provisions 35 of the corresponding law applicable immediately before such commencement shall, notwithstanding the repeal of such law by sub-section (1), continue to apply to such suit or other legal proceeding (3) the mention of particular matters in sub-section (2) shall not be 40 held to prejudice or affect the general application of section 6 of the 10 of 1897 general clauses act, 1897, with regard to the effect of repeal  statement of objects and reasonsthe law commission of india in its sixty-third report had recommended the revision of the existing interest act, 1839 this act is a very short one; besides a preamble, it contains only one section and a proviso however, it is a statute of importance, since i'l; prescribes the general law of interest which becomes applicable in the absence of any contractual or statutory provisions specifically dealing with the subject according to the commission, almost every phrase used in the act has given rise to problems of interpretation and judicial decisions have disclosed divergence of views in respect of the same the commission has revised the act comprehensively so as to make its provisions more precise, specific, unambiguous and juristically satisfactory it is proposed to replace the existing act by a new act based on the recommendations of the law commission the bill seeks to achieve this object h m patel new delhi; the 7th december, 1977 clause 3 of the bill empowers a court to allow interest on any debt or damages already paid, or to include interest on damages where the sum exceeds four thousand rupees, or to allow interest in respect of certain other cases, _i clause 4 of the bill empowers a court to allow interpst from the date of institution of proceedings up to certain specified dates in the case of money or other properties deposited as security, or restored by virtue of a fiduciary relationship, or obtained or retained by fraud it is not possible to envisage the situations in which expenditure would have to be incurred from the consolidated fund of india hence no estimate of such expenditure can be given at this state j  i; , -dill to comolidate and amend the law relating to the allowance of interest in certain cases ) e 'is (shr' h m patel ml'nl'ster of rinance) , 