Ranbir Singh Bhardwaj vs R.K. Kapadia

V.K. Jain, J.—This is a suit for recovery of Rs. 20,06,591/-. It is alleged in the plaint that the plaintiff is a manufacturer and seller of

lubricating oil, carrying business under the name and style of M/s. Parvati Oils & Chemicals. The defendant placed a purchase order dated 30th

September, 2008 on him for purchase by order of goods worth Rs. 16,58,340/-. The plaintiff accordingly supplied the goods vide two invoices,

both dated 20th October, 2008. The defendant, in due discharge of his legal liabilities, paid the price of the aforesaid goods by issuing a cheque for

a sum of Rs. 16,58,340/- dated 14th October, 2008 to the plaintiff. The cheque when presented to the bank was returned for want of insufficient

funds. The plaintiff issued a demand notice dated 15th December, 2008 calling upon the defendant to pay the amount of the dishonoured cheque.

Since the defendant has failed to pay the price of the goods, the plaintiff has claimed the principal sum of Rs. 16,58,340/- along with interest on

that amount at the rate of 18% per annum amounting to Rs. 3,48,251/-. The defendant was proceeded ex parte on 8th October, 2010. In his

affidavit by way of ex parte evidence, the plaintiff has stated, on oath, the case set out in the plaint and has proved various documents. He has

further stated that the purchase order Ex. PW-1/1 was placed by the defendant on him and he sent proforma invoice Ex. PW-1/2. The goods

were thereafter supplied vide invoices Ex. PW-1/3 and Ex. PW-1/4. The material was sent to the defendant through M/s. Rajesh Road

Corporation (India) vide consignment note No. 478 dated 20th October, 2008. He has further stated that the cheque Ex. PW-1/6 was issued by

the defendant but was dishonoured for want of insufficient funds.

Ex. PW-1/1 is the copy of the purchase order dated 30.9.2008 placed by the defendant upon the plaintiff whereas Ex. PW-1/2 is the performa

invoice which the plaintiff sent to the defendant on receipt of the purchase order. Ex. PW-1/3 and Ex. PW-1/4 are the two invoices whereby the

goods were sold to the defendant. The consignment note Ex. PW-1/5 shows that the goods were sent by M/s. Parvati Oils & Chemicals to M/s.

Sharda Auto Stores. Ex. PW-1/6 is the cheque for a sum of Rs. 16,58,340/- issued by the defendant as proprietor of M/s. Sharda Auto Stores in

favour of the plaintiff on 14th October, 2010. The bank memo Ex. PW-1/7 shows that the cheque was dishonoured for want of sufficient funds.

I see no reason to disbelieve the unrebutted deposition of the plaintiff which finds corroboration from the documentary evidence produced by

him. The value of the goods supplied by the plaintiff to the defendant is confirmed from the invoices Exs. PW 1/3 and PW 1/4. It is further

confirmed from the cheque issued by the defendant to the plaintiff. I, therefore, hold that the plaintiff is entitled to recover principal sum of Rs.

16,58,340/- from the defendant.

A perusal of the invoices Ex. PW 1/3 and Ex. PW 1/4 shows that interest @ 18% per annum was payable in case payment of the goods was

not made within 15 days. This term on the invoice constitutes an agreement between the parties for payment of interest @ 18% per annum.

Assuming that there is no agreement between the parties for payment of interest, since this is a suit for price of goods by seller and delivery, interest

can be awarded to the plaintiff u/s 61 of the Sale of Goods Act, which, to the extent it is relevant, provides that in the absence of a contract to the

contrary, the Court may award interest at such rates as it thinks fit on the amount of the price of the goods, to the seller, in a suit by him for the

amount constituting price of the goods and the interest under this can be awarded from the date of tender of the goods or from the date on which

the price of the goods was payable.

Even if the provisions of Section 61 of the Sale of Goods Act are not applied, interest can be awarded to the plaintiff u/s 80 of the Negotiable

Instruments Act, which to the extent is relevant provides that when no rate of interest is specified in the instrument, interest on the amount due

thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument, be calculated at the rate of 18% per annum,

from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such

date after the institution of a suit to recover such amount as the Court directs.

I find no justification for restricting the scope of Section 80 of Negotiable Instruments Act to only those cases, where the instrument provides for

payment of interest, but the rate of interest is not specified and thereby allows unjust enrichment to a person who has defaulted in honouring his

contractual obligation with respect to repayment of principal sum. In my view, the provisions of Section 80 of Negotiable Instruments Act would

equally apply to those cases where no term regarding payment of interest is contained in the instrument. Since the aforesaid provision, as amended,

carries interest at the rate of 18% per annum, the plaintiff is entitled to interest at the rate of 18% per annum u/s 80 of Negotiable Instruments Act

and the interest would be payable from the date on which the principal amount ought to have been paid by the defendant to the plaintiff. The view

being taken by me find support from the decision of a Division Bench of Allahabad High Court in Nath Sah Vs. Lala Durga Sah, ; decision of the

Orissa High Court in Ghasi Patra Vs. Brahma Thati, , decision of Patna High Court Bishun Chand Vs. Babu Audh Bihari Lal, and decision of

Karnataka High Court in P. Mohan Vs. Basavaraju, .

The amount of interest at the aforesaid rate, according to the plaintiff comes to Rs. 3,48,251/-. The plaintiff has, therefore, proved his claim with

respect to interest as well. For the reasons stated hereinabove, a decree of Rs. 20,06,591/- with costs and pendente lite and future interest at the

rate of 12% is hereby passed in favour of the plaintiff and against the defendant.

Decree sheet be drawn accordingly.