law: Interest Act, 1978
  3.
  
  Power of court to allow Interest.-
  (1)
  
  In any proceeding for the recovery of any debt or damage or in any proceedings
  
  in which a claim for interest in respect of any debt or damages already paid is
  
  made, the court may, if it thinks fit, allow 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;-
  (a) If the proceedings relate to a debt payable by virtue of a written
  
  instrument at a certain time ,then from the date when the debt is payable to
  
  the date of institution of the proceedings;
  (b) if the proceedings do not relate to any such debt, then, from the
  
  date mentioned in this regard in a written notice given by the person entitled  orthe person making the claim to the person liable that
  
  interest will be claimed to the date of institution of the proceedings:
  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 repayment.
  (2)
  
  Where in any such proceedings as are mentioned in sub-section (1):-
  (a) judgment , order or award is given for a sum
  
  which, apart from interest on damages, exceeds four thousand rupees, and
  (b) the sum represents or includes damages in
  
  respect of personal injuries to the plaintiff or any other person or in respect
  
  of a person's death. then, the power conferred by that sub-section shall be
  
  exercised so as to include in that sum interest on those damages or on such
  
  part of them as the court considers appropriate for the whole or part of the
  
  period from the date mentioned in the notice to the date of institution of the
  
  proceedings, unless the court is satisfied that there are special reasons why
  
  no interest should be given in respect of those damages.
  (3)Nothing
  
  in this Section;-
  (a) shall apply in relation to:-
  ( i ) any debt or
  
  damages upon which interest is payable as of right, by virtue of any agreement;
  
  or
  (ii) any debt or damages upon which payment of
  
  interest is barred, by virtue of an express agreement;
  (b) shall affect:-
  ( i ) the compensation recoverable for the
  
  dishonour of a bill of exchange, promissory note or cheque, as defined in the
  
  Negotiable instrument Act, 1881: or
  (ii) the provisions of rule 2 of Order II of
  
  the First Schedule to the Code of Civil Procedure, 1908;
  (c) shall empower to court to award interest
  
  upon interest.  
  Comment: Under certain circumstances even compound interest may be allowed by
  
  Courts, especially when dealing with commercial or bank contracts. See  Renusagar Power Co. Ltd. v. General Electric Co AIR 1994
  
  SUPREME COURT 860