Order on Review Petition No. 1 of 2019 in Appeal No. 175 of 2015 - A386of19_20.09.21.pdf

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• ate mentioned in this regard in a written 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 proceedings

• the contracts entered into by the parties, or create new contracts for them, the moot question is as to whether the impugned direction constitutes such excess in law committed by the State Commission. Our answer is in the negative.

• the adjudicating authority is competent not only to award (or decree) the principal sum but also interest – past, pendente lite, and future

• the party held entitled to recover will not receive the money due in full, the compensation suffering erosion of real value due to time elapse. That would not be complete justice

• grievance of the appellant that the levy of additional penalty of 1.25% amounts to imposition of double penalty in the form of interest which is unjust particularly since it would negatively burden the appellant herein as the same would never be allowed to be a pass through in tariff. The submission is that penalty in the form of DPC in case of delayed payments having been imposed, the levy of penal interest on the same issue would effectively lead to penalizing the appellant for the same delay twice, which is against the principles of double jeopardy.

• The impugned direction comes in post the point of computation of principal sum plus the element of DPC

• 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 repaymen

• llow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,

• from the date when the debt is payable to the date of institution of the proceedings

• hall empower the court to award interest upon interest

• 35. The plea of the appellant is that, in law there is no principle of imposition of interest over interest and yet the MERC has practically awarded penalty interest of 1.25% on the DPC interest of 1.25% as envisaged under the WEPA. 36. It appears that in the impugned order on review, the MERC has proceeded on the reasoning that the claim of DPC merges with the principal amount, once such claim is submitted and, therefore, interest on the submitted claim can be awarded

• and capitalising the same on remaining unpaid. Such a practice is prevalent and also recognised in non- banking moneylending transactions

• nterest once capitalised, sheds its colour of being interest and becomes a part of principal so as to bind the debtor/borrower

• parties voluntarily entering into transactions,

• nterest pendente lite and future interest (i.e. interest post-decree not exceeding 6 per cent per annum) shall be awarded on such principal sum i.e. the principal sum adjudged on the date of the suit. It is well settled that the use of the word “may” in Section 34 confers a discretion on the court to award or not to award interest or to award interest at such rate as it deems fit. Such interest, so far as future interest is concerned may commence from the date of the decree and may be made to stop running either with payment or with such earlier date as the court thinks fit

• Recognition of the method of capitalisation of interest so as to make it a part of the principal consistently with the contract between the parties or established banking practice does not offend the sense of reason, justice and equity

• If the amount of interest is paid there will be no occasion for capitalising the amount of interest and converting it into principal. If the interest is not paid on the date due, from that date the creditor is deprived of such use of the money which it would have made if the debtor had paid the amount of interest on the date due. The creditor needs to be compensated for deprivation.

• may include the amount of interest, charged on periodical rests, and capitalised with the principal sum actually advanced, so as to become an amalgam of principal in such cases where it is permissible or obligatory for the court to hold so.

• enal interest, which is charged by way of penalty for non-payment, cannot be capitalised. Further interest, i.e. interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalised. It will be opposed to public policy

• on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet p