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Issues: Whether interest was recoverable on the amount of drainage tax refunded by the Municipality, and whether the Small Cause Court order allowing such interest was not according to law under Section 25 of the Provincial Small Cause Courts Act.
Analysis: The claim for interest did not fall within the Interest Act, Act XXXII of 1839, because there was no written instrument under which interest was payable and no order for payment of interest had been made. Interest could not be awarded merely on the footing of justice, equity and good conscience, since the governing authority held that in such a case interest is not recoverable by way of damages unless there is an agreement for interest or a usage of trade having the force of law. The plea that the suit was really in tort did not assist the claimant, and Section 206 of the Bombay Municipal Boroughs Act, 1925, also stood in the way on limitation.
Conclusion: The claim for interest was not maintainable, and the order allowing it was not according to law.
Final Conclusion: The revision succeeded and the order granting interest was set aside with costs throughout.
Ratio Decidendi: Interest cannot be awarded as damages in a case outside the Interest Act unless it is payable under an agreement, a written instrument, or a usage of trade having the force of law.
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