BASNAYAKE, C.J.—Maniekam Chettiar v. Murugappa Chettiar
Present: Basnayake, C.J., Pulle, J., and K. D. de Silva, J.MANICKAM CHETTIAR and others, Appellants, and MURUGAPPACHETTIAR, Respondent
S. C. 19—D. C. Colombo, 18,581!M
Interest—Obligation to pay interest—Express agreement necessary.
Minor— Debt due to him—Eight of guardian to receive it—Requirement of authority of
Court—Civil Procedure Code, s. 585.
An obligation to pay interest on money duo does not arise unless there is anexpress agreement in that behalf. Mere payment of interest over a numberof years without any prior agreemont in that behalf does not give rise to a dutyto pay interest thereafter.
Where a debt falls due to a minor, the debtor would be justified in not payingthe minor’s money to a guardian until tho guardian obtains tho authority of theCourt to receive it.
j/^PPEAL from a judgment of the District Court, Colombo.
H. V. Per era, Q.C., with M. L. 8. Jayasekera, for Defendants-Appellants.
Sir Lalita Bajapakse, Q.G., with S. Sharvanartda, for Plaintiff-
Cur. adv. vvtt.
November 28, 1957. Basnayake, C.J.—
The sole question for decision on this appeal is whether for the yearsMarch 1931 to March 1938 interest is payable on a sum of Rs. 38,800 depo-sited with Suppramaniam Chettiar, the father of the defendants-appel-lants, by the agent of the 1st plaintiff’s father, at the rate customaryamong Chettiars known as “ nadappu watti ” (hereinafter referred to as“ nadappu watti ”) or at the Bank rate of b} %. The former was in thenature of compound interest. It would appear that “ nadappu watti ”is a rate of interest fixed by the association of Chettiars from time to timeat a meeting held at their temple. Once fixed the rate endures untilaltered. The last time it was fixed was somewhere in March 1942, therate being 3/8 % per month.
Briefly the material facts are as follows : Muttiah Chettiar, the fatherof the 1st plaintiff, who was carrying on a money lending business inCeylon, died in July 1929. Shortly before his death his assets weredivided among the members of his family with the assistance of arbitrators.The share of the 1st plaintiff in the cash assets came to aboutRs. 200,000, which included the sum of Rs. 38,800 deposited with Suppra-maniam Chettiar. This sum was credited to an account in the name of
aJ. N. B 2235—1,693 (5/59).
BASNAYAKE, C.J.—Manickam Chettiar v. Murugappa Chettiar
the vilasam M. It. M. M. M. R. the registered proprietor of which wasMuttiah Chettiar and interest at the “ nadappu watti ” rate was addedtill March 1934:. During the period for which interest was added at thatrate the money was used in Suppramaniam’s business. Prom March1934: to March 1938 the money was not so utilised and interest wasadded only at the Bank rate of 1| %.
On 21st March 1934 Suppramaniam’s proctor wrote the letter D8 toMuttiah’s widow Sigappi Achchy, in reply to a request made by her by aletter which is not produced, informing her that a sum of Rs. 52,950 beingprincipal and interest till 31st March 1934 less income tax was due toM. R. M. M. M. R., and that it would be paid on her producing lettersof administration. She was also informed that, if she failed to produceher authority to receive the money before 15th April 1934, Suppramaniamwould be compelled to apply for letters of administration and depositthe money in court, and that interest would be paid not at the rate atwhich it was paid up to the date of the letter, but at the Bank rate forfixed deposits. On 24th April 1934 Sigappi Achchy’s lawyer informedSuppramaniam’s proctor by letter D9 that the money “ in deposit ”belonged to her minor son Murugappa, the proprietor of the firm ofM. R. M. M. M. R., and that she as his lawful guardian under Hindu Lawwas prepared to receive the money and that Suppramaniam remainedliable to pay interest. On 26th May 1934 by DIO written apparentlybefore D9 reached him, Suppramaniam’s proctor wrote to Sigappi Achchydenying any liability to pay interest. This was followed up with letterDll of 1st April 1935 informing her that Suppramaniam was preparedto deposit the minor’s money in the Bank, and that, if by 10th April 1935authority to do so was not given, steps would be taken to deposit themoney in court. Suppramaniam died in 1936 and Manickam Chettiar,his son and the administrator of his estate, through his proctor wroteletter D12 of 4th December 1936 informing Sigappi Achchy that he wasprepared to pay the money lying to the credit of her minor son to the dulyappointed curator and that if no application was made by a curator hewould not hold himself liable for interest. Sigappi Achchy does not appearto have taken any action to have herself or any other person appointedas curator and on 6th January 1942 the firm M. R. M. M. S. through theirproctor wrote D13 informing her that as she had taken no action to have acurator appointed, despite repeated requests in that behalf, they wouldtake steps to do so and deposit the money in court if no definite reply wasgiven before 14th January 1942. It was only on 1st March 1942 that areply was received (D14). It called for details of the minor’s account toenable Sigappi Achchy to apply for a certificate of curatorship. On4th March 1942 the 2nd defendant Sundaram Chetty depositedRs, 64,172/71 in court, Rs. 38,800 being capital and Rs. 25,372/71 beinginterest to the credit of curatorship case No. 3,836/G instituted at hisinstance. The 1st plaintiff claims that a sum of Rs. 11,602/15 is still dueto him being the “ nadappu watti ” for the period March 1934 to March1938. The chief witness for the 1st plaintiff was Vellasamy Pillai,his next friend, who was also described as 2nd plaintiff till the 1st plaintiff
BASNAVAKE, C.J.—Manieham Chettiar v. Murvgappa Chettiar 3811
attained majority. He had been Muttiah’s kanakapulle from about 1900till his death, and claimed to be familiar with Muttiah’s business inCeylon. He said, “ When I gave these moneys to M'. R. M. M. S.I spoke to Suppramaniam Chetty himself and told him whose money itwas. r told him it was money belonging to the 1st plaintiff. It wasagreed that he should keep that money according to the prevailingrate of interest customary among chettiars called Nadappu watti. Sup-pramaniam Chetty accepted that position. I also told him to whom thomoney had to be returned. He had to return it to the 1st plaintiffMurugappen Chetty. ”
Sunderam Chettiar one of the defendants contradicted Vellasamy onthe point that Suppramaniam was in Ceylon at the relevant time. Hesaid that between 1928 and 1932 his father was in India and did not cometo Ceylon at all.
The learned District Judge has rejected Vellasamy’s evidence that hearranged with Suppramaniam that “ nadappu watti ” should be paid onthe sum ofBs. 38,800 deposited with him. But he says, “lam, however,satisfied irrespective of whether such an agreement was reached or not,the money was taken by Suppramaniam Chettiar on the understandingthat rate of interest would be paid, namely, Nadappu Watti He alsosays, “The fact that on the money deposited up to 1934 Nadappu Wattiwas entered in the books and in fact deposited along with the principalin the curatorship case is in my opinion sufficient evidence to justifythe inference that even if there was no specific agreement in regard tothe rate of interest there was in point of fact an implied undertaking topay interest at the Nadappu rate
Learned counsel for the appellant challenges the soundness of theseconclusions. He submits that an obligation to pay interest does not ariseunless there is an agreement in that behalf. He also submits that thelearned Judge’s conclusion that Suppramaniam accepted the money onthe “ understanding ” that “ nadappu watti ” would be paid cannot besustained in view of his finding that Vellasamy did not speak to Suppra-maniam and fix the rate of interest.
The learned District Judge’s conclusion that Suppramaniam took themoney on the understanding that “ nadappu watti ” would be paidcannot be reconciled with his rejection of Vellasamy’s evidence. Anunderstanding is an agreement of an informal nature but explicit. OnceVellasamy’s evidence is rejected there is no evidence of an explicit agree-ment of an informal nature. Then if there was no understanding to payinterest, what was the liability of Suppramaniam ? The money waspaid to Suppramaniam’s firm as a deposit and not as a loan, The liabilityto pay interest on money can arise from an express agreement. But whereas in this case there is no evidence of an express agreement can one pre-sume, as the learned District Judge has done, from the circumstance ofinterest having been paid over a period of years that there was an agree-ment to pay interest ? Both Voet and Huber take the view that merepayment of interest over a number of years without any prior agreement
388BAS5TAYAKE, C.J.—Mrmichmt Ghettiar v. Mnrugappa Chettiar
in that behalf does not give rise to a duty to pay interest thereafter. Thisis what Voet says : “ The mere payment of interest continued over severalyears, without any precedent obligation to pay it, does not bring aboutany duty to pay interest thereafter (Book 22.1.13). Huber statesthe same proposition thus: “ Prolonged payment of interest is not heldto be a cause for establishing a liability for interest, but he who haspaid may stop if he discovers that he is not liable for the same ;…
(Huber’s Jurisprudence of My Time, Vol. I, p. 578, Gane’s Translation).Even if it is assumed that there had been an agreement between Muttiahand Suppramaniam to pay interest, it was terminated in Suppramaniam’slife time by letters D8 of 21st March 1934 and DIO of 26th May 1934.In those letters the 1st plaintiff’s natural guardian, his mother, (he beinga minor of about 5 years at the time), was informed that interest at theBank rate only would be paid thereafter. In my opinion Suppramaniam’sliability to pay “ nadappu watti ” or any other interest ceased in March1934. The fact that after his death his sons paid “ nadappu watti ” from1938 to 1942 does not make them liable to pay that rate for the years1934 to 1938 because there was no agreement to do so during that period.The offer was to pay interest at the Bank rate for fixed deposits and thedefendants have not resiled from that offer.
The correspondence between Suppramaniam’s proctor and SigappiAchchy’s lawyer shows that Suppramaniam was not aware that he wasreceiving a minor’s money at the time it was given to him. His offerto return the money to Muttiah’s administratrix indicates that he wasunder the impression that it belonged to Muttiah. The moment he wasinformed that it was money belonging to a minor he offered to pay itback provided the natural guardian obtained the authority of court.Suppramaniam was justified in asking the minor’s mother to obtainauthority to receive the money by getting a certificate of euratorsliip.Voet states that when there are no guardians legally appointed paymentmay be made to the father of minors as being the natural guardian of hischildren, and adds it would be wiser for a claim to be made from a Magis-trate that the father may be confirmed as the legal guardian of his children(Bk. XLIV, Tit. 3, Sec. 3, Gane Vol. 7, p. 97). In the instant case thefather being dead the mother was the natural guardian (Voet, Bk. XXVI,Tit. 2, Gane Vol. 4, p. 419); and Suppramaniam advisedly offered topay the 1st plaintiff’s money on her obtaining the necessary authorityof court to be the curator of the minor’s property. Was he wrong indoing so 1 I think not. Voet says, “ Nay indeed not even a father or amother are nowadays ipso jvre guardians among us, if they have notclearly been assigned by the last will of the deceased spouse or of somestranger. So far is this so that, if they wish to hold the legal guardianshipof children, it would be prudent for them to seek to have themselvesconfirmed by the magistracy (Voet, Bk. XXVI, Tit. 4, Gane Vol. 4,p. 422). Our equivalent of confirmation by a magistrate is a certificateof curatorship from the District Court prescribed in section 585 of theGvil Procedure Code. The 1st plaintiff’s mother whose duty it was toget such a certificate neglected to do so and Suppramaniam or hisheirs are not answerable for her failure because he was under no legal
T. S. FERNANDO, 3.—Cooray v. Samarasinghe
duty to move the court for the appointment of a curator for the purposeof receiving the money. (Arunasalam Chettiar v. Murugappa Chettiar)l.Suppramaniam was justified in not paying the minor’s money to a guardianwho had not the authority of the District Court to receive it. The plain-tiff has failed to establish his claim and his action must be dismissed.
I accordingly allow the appeal with costs and set aside the judgment,of the District Judge in the plaintiff’s favour and make order dismissinghis action with costs.
K. D. de SiiAA, J.—T agree.
MANICKAM CHETTIAR and others, Appellants, and MURUGAPPA CHETTIAR, Respondent