Definitions
Section 2 of the Interest Act, 1978 deals with definitions. In this Act, unless the context otherwise requires,-- (a) "court" includes a tribunal and an arbitrator; The Act came into force on 19 Aug 1981.
In this Act, unless the context otherwise requires,--
(a) "court" includes a tribunal and an arbitrator;
(b) "current rate of interest" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949 (10 of 1949).
Explanation.--In this clause, "scheduled bank" means a bank, not being a co-operative bank, transacting any business authorised by the Banking Regulation Act, 1949 (10 of 1949);
(c) "debt" means by liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment debt;
(d) "personal injuries" includes any disease and any impairment of a person's physical or mental condition;
(e) all other words and expressions used herein but not defined and defined in the Reserve Bank of India Act, 1934 (2 of 1934), shall have the meanings respectively assigned to them in that Act.
Section 2, The Interest Act, 1978 (Act 14 of 1978).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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M/s Om Parkash Gita Devi & Co. & Ors. v. Food Corporation of India
Court's Decision & Legal Precedent
DATE VERIFIED Order 2000-11-30 (order-1.pdf; body 'Date : 30/11/2000' / 'November 30, 2000' matches index): FCI godown-lease arbitration interest reduced. SC held under Interest Act s.3 an arbitrator may award interest because s.2(a) defines 'court' to include an arbitrator, and interest may not exceed the 'current rate of interest' as defined in s.2(b) (highest maximum scheduled-bank deposit rate per RBI directions under the Banking Regulation Act). Current rate is a ceiling, not an automatic award — maximum rate needs specific reasons; on facts lease arrears were not a commercial transaction justifying 18%, modified to 12% p.a.
On this section: s.2(a) brings arbitrators within 'court' for Interest Act powers; s.2(b) supplies the statutory ceiling definition of 'current rate of interest' that s.3 awards must respect.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 2
What have the courts held on Section 2 of the Interest Act?
M/s Om Parkash Gita Devi & Co. & Ors. v. Food Corporation of India (30 Nov 2000) is the leading judgment on this section among those set out below: s.2(a) brings arbitrators within 'court' for Interest Act powers; s.2(b) supplies the statutory ceiling definition of 'current rate of interest' that s.3 awards must respect.
How do I find court cases under Section 2 of the Interest Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Interest Act 1978 2, section 2 Interest Act 1978, section 2 of the Interest Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with M/s Om Parkash Gita Devi & Co. & Ors. v. Food Corporation of India (30 Nov 2000).
What should I read with Section 2 of the Interest Act, and has it changed?
3 other provisions in this corpus refer back to it.
When did Section 2 of the Interest Act come into force?
Section 2 of the Interest Act, cited as Interest Act 1978 2, came into force on 19 Aug 1981, having been enacted on 31 Mar 1978. It is in force as at the date shown on this page.
Other sections of this Act
- 3. Power of court to allow interest453 words
- 4. Interest payable under certain enactments193 words
- 6. Repeal and saving127 words
- 1. Short title, extent and commencement46 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.