DODDAKALE GOWDA, J. ( 1 ) THE important question that arises for consideration in this appeal is whether the recipient of a certain sum of money by mistake is required to return the same with interest or not ? ( 2 ) THE circumstances leading to this litigation are as follows : the plaintiff instituted O. S. No. 34 of 1983 on the file of the Civil Judge, davanagere, for recovery of a sum of Rs. 1,00,000/- plus Rs. 33,438-75 p. as interest etc. , alleging that the defendant was its constituent from 23-5-1980 to 5-7-1985 maintaining accounts in the name of Sri Kottureshwara Rice Mill and oil Mills; that during that period, i. e. , on 14-6-1980 plaintiff-Bank had received t. T. (Telegraphic Transfer) advice from their R. S. . Puram, Coimbatore Branch to credit to the account of the defendant a sum of Rs. 1,00,000/- ; accordingly, this amount wascredited and drawn by the defendant on the same day ; that on receipt of confirmation telegram, dated 21-6-1980, by mistake or oversight a further sum of Rs. 1,00,000/- was credited to the account of the defendant bona fide believing that there was another t. T. Advice to credit the said sum, though, in fact, there was none. The official dealing with this particular work, thinking that the confirmation telegram itself was a separate T. T. advice, had credited another sum of Rs. 1,00,000/ -. The defendant took unfair advantage of this mistaken credit transfer and had drawn the said amount of Rs. 1,00,000/- on the same day, though he had no information from his constituent to credit a further sum of Rs. 1,00,000/- from R. S. Puram, Coimbatore Branch. Thereby the defendant made an unlawful gain of one lakh of rupees. There were some more transactions till the closure of the account, but the defendant had kept silent about the wrong credit and withdrawal of the same on 21-6-1980. After nearly two years, the plaintiff found out that there was a wrong credit on 21-6-1980 and immediately the plaintiff approached the defendant on 13-7-1982 and explained the circumstances under which the payment was made without receipt of T. T. on 21-6-1980. Despite a good deal of correspondence between the parties and furnishing of extract of accounts since its inception, upto the closure, defendant had failed to repay the same. Despite a good deal of correspondence between the parties and furnishing of extract of accounts since its inception, upto the closure, defendant had failed to repay the same. Thus, the cause of action to claim the refund was based on mistaken credit of Rs. 1,00,000/- with interest at 12% per annum from the date of credit till the date of filing of the suit in addition to the current interest. ( 3 ) THE defendant denied these averments and contended that the accounts had been settled and there remained nothing to be paid and that the claim based on an isolated entry was not maintainable. He also repudiated the mistaken credit and disputed his liability to pay interest, if any. ( 4 ) THE ccurt below framed the following issues for determination : 1. Whether there was a credit of rs. 1,00,000/- (twice) on 14-6-1980 and 21-6-1980 and the later being a double payment whether the plaintiff is entitled to recover the same ? And 2. Whether the plaintiff is entitled to interest ? ( 5 ) PLAINTIFF examined two witnesses in support of its case apart from marking 14 exhibits. No evidence was adduced by the defendant presumably because he had no answer to the plaintiff's claim. ( 6 ) COURT below on a consideration of oral and documentary evidence has held that the second credit, dated 21-6- 1980 was a 'mistaken credit' or 'a double payment' in respect of which there was no T. T. Advice from R. S. Puram Branch, coimbatore, and hence the defendant was liable to refund the same with interest. 'it is against this judgment and decree, the defendant has presented this appeal. ( 7 ) P. W. 1, the then Manager of the bank, has deposed that on receipt of Ex. P. 1 telegram from Madras Central Office, re-conciliation Department, he took up the matter with the defendant for the return of the amount ; that despite verification of the Pass Book defendant failed to respond to his request and hence he issued a notice Ex. P. 2. Ex. P. 3 is the reply sent by the defendant. Ex. P. 4 is another letter addressed to defendant enclosing extract of the account. Ex. P. 6 is the reply sent by Defendant. Ex. P. 7 and P. 8 are letters written by him demanding repayment. Ex. P. 9 is the legal notice. Ex. P. 2. Ex. P. 3 is the reply sent by the defendant. Ex. P. 4 is another letter addressed to defendant enclosing extract of the account. Ex. P. 6 is the reply sent by Defendant. Ex. P. 7 and P. 8 are letters written by him demanding repayment. Ex. P. 9 is the legal notice. Ex. P. 10 is the reply sent by the defendant with an enclosure which is marked as Ex. P. 11. Ex. P. 12 is the extract of account which covers the entire transaction from the inception till the closure of his account. Except the transaction noted in Ex. P. 12, defendant had no other transaction. Deposits noted in ex. P. 12 are the deposits received by transfer and credited to his account. Ex. P. 13 is the T. T. Advice received from r. S. Puram, Coimbatore Branch to credit a sum of Rs. 1,00,000/- to defendant's account. Ex. P. 14 is the confirmation telegram dated 21-6-1980 and he has explained how this credit was made twice with reference to a single T. T. Advice. P. W. 2 who was the then Accountant had corroborated in material particulars as to how the 'double credit' came to be made. In view of this unimpeachable oral and documentary evidence, the finding on the first issue, viz,, that there was a mistaken credit on 21-6-1980 does not call for interference. A person to whom money is paid by mistake is bound to repay or return it - vide Section 72 of the Contract Act. It is, having regard to this documentary evidence, this Court on 14-11-1986, when this case was listed for admission, ordered notice regarding award of interest only. ( 8 ) SRI B. V. Kategeri, learned counsel for the appellant, submitted that there was no agreement for payment of interest, much less the plaintiff had established any usage or trade practice for payment of interest on such mistaken credit and hence the defendant could not be saddled with interest for no fault of his. Sri Udaya Holla, learned counsel for the plaintiff/bank, contended that money belonging to the Bank remained with the defendant for a considerable period "and therefore he was liable to pay interest at the rate it would have earned had it been lent to its customers or at the rate at what defendant would have earned if he had invested as a shrewed businessman. Relying on Sections 70 and 73 of the contract Act, the INTEREST ACT, 1978 and certain provisions of the Indian Trust Act, he contended that the defendant who had derived the benefit of wrongful payment was liable to refund the same with interest. ( 9 ) THUS, the question that requires consideration is - Whether the plaintiff/ bank was entitled to claim interest on rs. 1,00,000/ -. If so, from what date and at what rate ? ( 10 ) IT is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of the same at a fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance S. 80 of Negotiable Instruments Act or S. 23 of the Trust Act - vide Vithal Dass v rup Chand (A. I. R 1967 S. C. 188) ( 11 ) THE claim for interest in the instance case is neither based on usage of trade having the force of law nor on an agreement to pay at fixed rate. It is also not based on equity since there is no pleading warranting the exercise of equity jurisdiction. In order to invoke the rule of equity, it is necessary in the first instance to establish the existence of a state of circumstances, which attracts the equitable jurisdiction-vide lord Tomlin in Maine and New Brunswick electrical Power Co. Ltd. V Hard (A. I. R. 1929 P. C. 185 ). In the absence of such pleading no interest could be awarded in the exercise of equity jurisdiction. Reliance placed on the decision of this Court in S. T. Thimmappa v S. L. Prasad (A. t. R. 1978 kar. 25) by Sri betageri to avoid the liability of interest is of no assistance, as this Court had repelled the contention of the lessor in that case to claim interest on rents withheld stating "no foundation was laid in the pleading to establish the existence of a state of circumstances which attracts the equitable jurisdiction". So also the decision of the'supreme court in D, Dhunji Shaw v Poona Municipality (A l. R. 1970 SC. So also the decision of the'supreme court in D, Dhunji Shaw v Poona Municipality (A l. R. 1970 SC. 1201) may not be of much assistance, as the award of interest appears to have been based on section 34 of the C. P. C. ' ( 12 ) GRANT of interest cannot also be sustained on the basis of quasi-contract in view of the decision of the Privy council in Bengal Nagpur Railway Co. Ltd. V Ruttanji Ramji and others (A. I. R, 1938 P C. 67) which reads thus : -"there is a considerable divergence of judicial opinion in India on the question of whether interest can be recovered as damages under S, 73, Contract act, where it is not recoverable under the Interest Act. Now, S. 73, Contract act, gives statutory recognition to the general rule that, in the event of a breach of a contract, the party who suffers by such a breach is entitled to recover from the party, breaking the contract, compensation for any loss or damage thereby caused to him. On behalf of the plaintiffs, reliance is placed upon lllus. (n) to that section. The illustration however, does not deal with the right of a creditor to recover interest from his debtor on a loan advanced to the latter by the former. It only shows that if any person breaks his contract to pay to another person a sum of money on a specific date, and in consequence of that breach the latter is unable to pay his debts and is ruined, the former is hot liable to make good to the latter anything except the principal sum which he promised to pay, together with interest upto the date of payment. He is not liable to pay damages of a remote character. The illustration does not confer upon a creditor a right to recover interest upon a debt which is due to him, when he is not entitled to such interest under any provision of the law. Nor. Can an illustration have the effect of modifying the language of the section which alone forms the enactment. The illustration does not confer upon a creditor a right to recover interest upon a debt which is due to him, when he is not entitled to such interest under any provision of the law. Nor. Can an illustration have the effect of modifying the language of the section which alone forms the enactment. As observed in 43 IA 6, S. 73 is merely declaratory of the common law as to damages and it has been held by the House of Lords in (1893) A C 429 that interest cannot be allowed at common law by way of damages for wrongful detention of debt. The judgment of the Privy Council in (1922) AC 631 dealt with a statute of New Brunswick, the relevant section of which was identical in terms with the Interest act of India, and it was held in that case that the plaintiff was not entitled to interest at law, and, as the case did not attract the equitable jurisdiction of the Court, no rule of equity in regard to interest could have any application. The law has however been amended in england by S. 3 Law Reforms (Miscellaneous Provisions) Act, 1934, empowering a Court of Record to award interest on the whole or any part of any debt or damages, at such rate as it thinks fit, for the whole or any part of the period between the date when the cause of action arises and the date of the judgment. But there has been no such amendment of the law in India. " ( 13 ) SECTION 34 of C. P. C. applies for award of interest during the pendency of the proceedings. Interest prior to the institution of the proceedings cannot rest upon Section 34 of C. P. C. but, must depend upon some substantive law. After excluding the possibility of award of interest on grounds referred to above, we are required to determine whether the liability to pay interest arises either under the Trust Act or Interest Act and incidentally the legal relationship between the parties. After excluding the possibility of award of interest on grounds referred to above, we are required to determine whether the liability to pay interest arises either under the Trust Act or Interest Act and incidentally the legal relationship between the parties. Contention of Sri Udaya Holla, learned counsel for the respondent, is that though the defendant may not fall within the meaning of 'trustee' as defined under the Trust Act, he will be a 'constructive trustee* in the eye of law and hence, he is liable to pay interest as provided under section 23 of the Trust Act or Section 4 of the Interest Act of 1978. ( 14 ) CONSTRUCTIVE Trusts can arise over a wide variety of situations. According to Cardozo, J. , "a constructive trust is a formula through which the conscience of equity finds expression". Shell has defined it as a 'trust' "which is raised by the construction of equity in order to satisfy the demands of justice without reference to any presumable intention of the parties, either expressed or implied. " "in United States, the concept of a constructive trust has been said to be 'one of the instrumentalities which a court of equity may employ to prevent the unjust enrichment of one person at the expense of another'. But the American doctrine regards a constructive trust, not as a substantive trust, but as a 'remedial institution', an equitable remedy of a proprietory nature, available to prevent unjust enrichment,whenever the personal remedy is inadequate. Statements in recent English cases, as will be seen, go beyond that; they have suggested the recognition of a constructive trust "of a new model," which will be imposed "whenever justice and good conscience required it. . . . . . . . " as an equitable remedy "by which the Court can enable an aggrieved party to obtain restitution. "-vide modern Equity by Jill E. Martin, 12th edn. 70. Constructive Trusts are also called trusts ex malefico, trusts ex delicto, trusts in invitum, or involuntary trusts. Story on Equity Jurisprudence has explained 'constructive Trust' thus : - "one of the most common cases in which a Court of Equity acts upon the ground of implied trusts in invitum, is where a party has received money which he cannot conscientiously withhold from another party. Story on Equity Jurisprudence has explained 'constructive Trust' thus : - "one of the most common cases in which a Court of Equity acts upon the ground of implied trusts in invitum, is where a party has received money which he cannot conscientiously withhold from another party. It has been well remarked, that the receiving of money which consistently with conscience cannot be retained is, in Equity, sufficient to raise a trust in favour of the party for whom or on whose account it was received. This is the governing principle in all such cases. And therefore, whenever any controversy arises, the true question is, not whether money has been received by a party of which he could not have compelled the payment, but whether he can now, with a safe conscience, ex oequo et bono, retain it. Illustrations of this doctrine are familiar in cases of money paid by accident, or mistake, or fraud. And the difference between the payment of money under a mistake of fact, and a payment under a mistake of law, in its operation upon the conscience of the party, presents the equitable qualifications of the doctrine in a striking manner. It is true that Courts of Law now entertain jurisdiction in many cases of this sort where formerly the remedy was solely in Equity; as for example, in an action of assums it for money had and received, where the money cannot conscientiously be withheld by the party; following out the rule of the Civil Law; Quod condictio indebiti non datur ultra, quam locupletior factus est, qui accepit. But this does not oust the general jurisdiction of Courts of Equity over the subject matter, which had for many ages before been in full exercise, although it rend, ers a resort to them for relief less common, as well as less necessary, than it formerly was. Still, however, there are many cases of this sort where it is indispensable to resort to Courts of Equity for adequate relief and. Especially where the transactions are complicated, and a discovery from the defendant is requisite. " prof. Still, however, there are many cases of this sort where it is indispensable to resort to Courts of Equity for adequate relief and. Especially where the transactions are complicated, and a discovery from the defendant is requisite. " prof. A. W. Scon in his book on trusts has explained the 'constructive trust' as follows : -"similarly where chattels are conveyed or money is paid by mistake, so that the person making the conveyance or payment is entitled to restitution, the transferee or payee holds the chattels or money upon a constructive trust. In such a case, it is true, the remedy at law for the value of the chattels or for the amount of money paid may be an adequate remedy, in which case a court of equity will not ordinarily give specific restitution. If the chattels are of a unique character, however, or if the person to whom the chattels are conveyed or to whom the money is paid is insolvent, the remedy at law is not adequate and a court of equity will enforce the constructive trust by decreeing specific restitution. The beneficial interest remains in the person who conveyed the chattel or who paid the money, since the conveyance or payment was made under a mistake. . . . The beneficial interest in the property is from the beginning in the person who has been wronged. The constructive trust arises from the situation in which he is entitled to the remedy of restitution, and it arises as soon as that situation is created. For this reason, the person who is wronged is entitled to specific restitution from the wrongdoer even though the wrongdoer becomes insolvent before suit is brought, and he is entitled to specific restitutions from a person to whom the wrongdoer has transferred the property, if the transferee is not a bona fide purchaser, even though the transfer is made before suit is brought for restitution. It would seem that there is no foundation whatever for the not/on that a constructive trust does not arise until ft is decreed by a Court. It arises when the duty to make restitution arises, not when that duty is subsequently enforced. " (emphasis supplied ). In Chase Manhattan Bank v, Israel british Bank [ (1979) 3 All E. R. 1025], after referring to the decisions in Sinclair v. Brougham [ (1914-15) All E. R. Rep. It arises when the duty to make restitution arises, not when that duty is subsequently enforced. " (emphasis supplied ). In Chase Manhattan Bank v, Israel british Bank [ (1979) 3 All E. R. 1025], after referring to the decisions in Sinclair v. Brougham [ (1914-15) All E. R. Rep. 622] and in Re Diplock's Estate [ (1948)2 all E. R. 318], it is stated : -"in the same way, I would suppose, a person who pays money to another under a factual mistake retains an equitable property in it and the conscience of that other is subjected to a fiduciary duty to respect his proprietary right. " (emphasis supplied) and further it is held : -"fiduciary relationship need not necessarily, 'originate in a consensual transaction',"this decision in turn has accepted the dictum of Coxe J. , in Re Berry [ (1906) 147 F 208] to the effect : -"when the money was paid under a plain mistake of fact equity impressed upon it a constructive trust which followed it through the bank and into the hands of the trustees. " (emphasis supplied) ( 15 ) SECTION 90 of the Trust Act states that if there is a person in a fiduciary relation to another, he cannot take advantage of that position so as to gain something exclusively for himself which he otherwise would not have obtained, but for his position which he held. Section 94 of the Trust Act reads thus :"94. Constructive trusts in case not expressly provided for.- in any case not coning within the scope of any of the preceding sections, where there is no trust, but the person having possession of property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be), TO the extent necessary to satisfy their just demands. "this section has incorporated the same principles referred to above. Though section 95 states that a person holding property shall perform the same duties and be subject to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it, authorities have tried to distinguish between an 'express trust' and a 'constructive trust'. Though section 95 states that a person holding property shall perform the same duties and be subject to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it, authorities have tried to distinguish between an 'express trust' and a 'constructive trust'. From the above discussion, we have no doubt in coming to the conclusion that there exists a fiduciary relationship between the plaintiff and the defendant. ( 16 ) BEFORE determining the liability of defendant as a 'constructive trustee' under the Trust Act, we would like to deal with his liability to pay interest under the Interest Act. Section 4 of the interest ACT, 1978, which has come into force with effect from 14-8-1981, reads thus : "4. Interest payable under certain enactments.- (1) Notwithstanding anything contained in Section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law. (2) Notwithstanding as aforesaid, and without prejudice to the generality of the provisions of sub-section (1), the Court shall, in each of the following cases, allow interest from the date specified below to the date of institution of the proceedings at such rate as the court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed, namely:- (a) (b) where the obligation to pay money or restore any property arises by virtue of a fiduciary relationship; from the date of the cause of action; © (d) in view of the fiduciary relationship established from the passages extracted above, we hold that the appellant is liable to pay interest under clause (b) of sub-section (2) of Section 4. of the interest Act for the period from the date of cause of action upto the date of the institution of the proceedings. ( 17 ) THE next point for consideration is the rate of interest and the date from which he is liable to pay. 'current rate of interest' is defined to mean the highest of the maximum rates at which interest may be paid on different classes of deposits by scheduled banks in accordance with the directions given or issued to Banking Companies generally by the reserve Bank of India-vide Section 2 (b) of the interest Act. 'current rate of interest' is defined to mean the highest of the maximum rates at which interest may be paid on different classes of deposits by scheduled banks in accordance with the directions given or issued to Banking Companies generally by the reserve Bank of India-vide Section 2 (b) of the interest Act. During June 1980 when this mistaken credit was made, the maximum rate of interest chargeable on fixed Deposits was in the range of 9 per cent ; hence liability is fixed at the rate of 9 per cent per annum. The fiduciary duty to restore this amount arose on 21-6-1980, the date on which the mistaken credit was made by the Bank. Hence, we feel that it is just and proper to direct the appellant to pay interest at the rate of 9 per cent annum from 21-6- 1980 till the date of filing of the suit. The appellant is" further liable to pay interest at the rate of 6 percent from the date of suit till the date of realisation under sub-section (1) of Section 34 of c. P. C. as the mistaken credit cannot be characterised as a 'commercial transaction' falling within the purview of proviso to sub-section (1) of Section 34 of c. P. C. ( 18 ) THE cases cited at the Bar have no bearing on the issue with which we are concerned in the present case, since the provisions of the interest Act in the present form did not come up for consideration. So there is no need, to refer to those cases. ( 19 ) FURTHER, in view of our conclusion that the defendant is liable to pay interest under the INTEREST ACT, 1978, we are of the opinion that it is unnecessary to determine his liability under the Trust act. ( 20 ) FOR the reasons stated above, this appeal is partly allowed, and the decree of the trial Court is modified directing the defendant to pay interest on Rs. 1,00,000/- at the rate of 9 per cent per annum from 21-6-1980 till the date of filing of the suit and also to pay interest at the rate of 6 per cent per annum from the date of suit till the date of realisation. In the circumstances of the case, parties to bear their own costs. --- *** --- .