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TMI Blog2005 (10) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... aler of the plaintiff in respect of the aforesaid pump sets throughout India during the period from 1985 to 1993. On the basis of the comprehensive orders placed by the first defendant, the plaintiff used to despatch the goods to various branches and at times the various branches are directly placing orders with the plaintiff. The plaintiff under the advice of the first defendant used to raise the invoices in the name of the concerned branches and the original invoices along with the Hundis were being sent to the second defendant for payment. As per the instruction of the first defendant, all payments were to be made by the second defendant, namely, the Madras Branch of the first defendant. Initially, the Hundi was raised in favour of the second defendant giving 45 days time. Subsequently, such time limit was revised to 60 days and ultimately to 75 days. On many occasions the second Defendant honoured the Hundi after the due dates, for which they have duly paid proportionate interest at the rate charged by the Nationalised Bank. The plaintiff had been availing bill discounting facility from the Bankers for which the plaintiff was required to pay interest to the bank at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further amount thereafter. Since the defendants were making delayed payments and the transactions were commercial in nature, the plaintiff is entitled to charge interest at the rate of 24$ on the outstanding amount and accordingly the plaintiff charged interest on the delayed payment upto September 1993 to the tune of Rs. 9,19,463/-, which was duly entered in the books of account of the plaintiff as on 30.9.1993 along with the then principal amount of Rs. 80,01,955.93. The plaintiff was entitled to charge interest at the rate of 24% for the amount retained by the defendants from 1.10.1993 to 24.4.1995, the date of filing of the suit, on the outstanding amount due and payable by the defendants. A sum of Rs. 14,74,523/- is payable on such head. Accordingly in the plaint, the following calculation was made by the plaintiff regarding the amount payable :- 1. Principal amount due after giving credit for returned goods as on 23.7.94 Rs. 27,12,660- 2. Interest at 24% per annum on the delayed payment upto September 1993 on the then outstanding Rs. 9,19,463- 3. Interest at 24% per annum on the proportionate principal amount remained on various dates from 1.10.03 to 22.7.94 on which date la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance amount, including pre-suit interest at the rate of 24% per annum, was payable as the transactions were commercial in nature. Accordingly, the learned single Judge partly decreed the suit for a sum of Rs. 51,06,646/- with 12% pendente lite and future interest. The counter claim filed by the defendants was dismissed as being devoid of any substance. Such decree has been challenged by the defendants in the present appeal. 8. The main contentions raised by the appellants are two fold. Firstly it is contended that the learned single Judge has committed illegality in rejecting the counter claim made by the defendants. The second submission is to the effect that even assuming any amount was due, in the absence of any contract providing for payment of interest and in the absence of any demand in writing, pre-suit interest was not payable. It is also submitted that in view of Section 34 CPC, pendente lite interest and future interest at the rate of 12% is also unjustified. 9. Learned counsel for the plaintiff / respondent has supported the decree of the trial court and has contended that since the transactions were commercial in nature and the plaintiff has to pay interest at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udged; (2) pendente lite interest on the principal sum adjudged from the date of the suit to the date of the decree; and (3) future interest on the principal sum adjudged from the date of the decree to the date of the payment. 14. So far as pendente lite and future interest are concerned, Section 34 of the Code of Civil Procedure is applicable. As per Section 34 of CPC, the court may order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree. So far as the future interest is concerned, the court may direct payment of interest not exceeding six per cent on the sum adjudged. The proviso to Section 34, however, makes it clear that where the liability in relation to the sum adjudged has arisen out of commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or when there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. 15. Section 34 therefore covers the question of payment of pendente lite and future interest. However, paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) where money or other property has been deposited as security for the performance of an obligation imposed by law or contract, from the date of the deposit; (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; (c) where money or other property is obtained or retained by fraud, from the date of the cause of action; (d) where the claim is for dower or maintenance, from the date of the cause of action. 17. Since Section 4 starts with a non-obstante clause, the plaintiff would be entitled to pre-suit interest if interest is payable by virtue of any enactment or other rule of law or usage having the force of law. Even where Section 4 is not applicable, interest is payable by exercising the power under Section 3. But, such power would depend upon certain contingenci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit; and the solution of this question depends, not upon the Civil Procedure Code, but upon substantive law. Now, interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest, as for instance, under Section 80, Negotiable Instruments Act, 1881, the Court may award interest at the rate of 6 per cent per annum, when no rate of interest is specified in the promissory note or bill of exchange. There is in the present case neither usage nor any contract express or implied to justify the award of interest. Nor is interest payable by virtue of any provision of the law governing the case. Under the Interest Act, 32 of 1839, the Court may allow interest to the plaintiff, if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument. It was further observed :- ...There is a considerable divergence of judicial opinion in India on the question of whether interest can be recovered as damages under Section 73, Contract Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest can be sustained only if it is proved that a written notice to that effect has been issued. 21. In the present case, admittedly no written notice was ever issued claiming interest at any point of time. Ex.P-25, which is the basis of the claim, does not provide for payment of interest. Even the accounts made by the plaintiff do not contain any entry regarding interest. 22. In such view of the matter, the appellants are right in their contention that no interest could have been claimed and decreed prior to the date of filing of the suit. So far as pendente lite and future interest are concerned, it is well settled that such matters are within the discretion of the Court. Therefore, the calculation of interest at the rate of 12% per annum during pendency of the suit and after the decree, which is based on discretion of the trial court, cannot be said to be arbitrary and in view of the decision of the Supreme Court in : (1997)10SCC681 (Mahesh Chandra Bansal v. Krishna Swaroop Singhal and Anr.), we do not find any reason to interfere with such part of the decree. 23. Accordingly, while confirming the decree of the trial court regarding principal amount payable, we direct that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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