Refund of deposit with earned interest supports bank-rate interest claim, residuary limitation, and proof-based quantification

A writ direction requiring refund of a deposited amount together with the interest the deposit would have earned created an enforceable right to bank-rate interest from the date of deposit until refund, regardless of the amount being held in revenue deposit. A claim for such unpaid interest was treated as a residuary limitation matter, not a suit for breach of contract, so time ran from refusal of the claim after demand and notice. The higher interest rate claimed was rejected for want of admissible proof, and the court confined relief to the proved amount, while also allowing pendente lite and future interest on the decreed sum.

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Issues: (i) whether the plaintiff was entitled to interest on the refunded deposit under the earlier writ direction; (ii) whether the suit was within limitation; (iii) whether the rate and quantum of interest claimed were proved, and whether future interest could be awarded.

Issue (i): whether the plaintiff was entitled to interest on the refunded deposit under the earlier writ direction.

Analysis: The writ direction required refund of the deposited amount together with the interest that such deposit would have earned in the bank. The right arose from that direction and not from any contract between the parties. The amount could not be treated as non-interest-bearing merely because it had been kept in revenue deposit.

Conclusion: The plaintiff was entitled to interest on the deposited sum from the date of deposit until refund.

Issue (ii): whether the suit was within limitation.

Analysis: The claim was not one for breach of contract, so Article 55 was inapplicable. The suit fell under the residuary provision because the right to sue accrued when the interest claim was refused after demand and notice. Applying the three-year period from the denial of liability, the suit filed in July 1993 was within time.

Conclusion: The suit was within limitation under Article 113 of the Schedule to the Limitation Act, 1963.

Issue (iii): whether the rate and quantum of interest claimed were proved, and whether future interest could be awarded.

Analysis: The bank letter relied upon to prove an 11% rate was not proved by admissible evidence. In the absence of proof of the higher rate, the amount admitted by the defendants as payable on the footing of 5% interest was adopted. The court also granted pendente lite and future interest on the decreed amount.

Conclusion: The decree was modified to the proved amount, with notice charges and pendente lite and future interest at 6% per annum.

Final Conclusion: The plaintiff succeeded only to the extent of the quantified interest and notice charges, while the higher claim was reduced for want of proof of the bank rate; the suit decree was correspondingly modified and the appeals were disposed of partly in each side's favour.

Ratio Decidendi: Where a court directs refund of a deposit together with the interest the deposit would have earned, the claimant is entitled to bank-rate interest from deposit till refund, and a suit for such unpaid interest is governed by the residuary limitation article from the date of refusal of the claim.

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