Rishi Electronics Ltd. vs Prem Prakash Aggarwal
1985 Latest Caselaw 480 Del

JUDGMENT

D.K. Kapur, J.

(1) His Regular First Appeal involved a very short point, so while hearing the stay matter, we decided to admit the appeal and hear it without any paper-book on merits.

(2) The plaintiff claimed the recovery of Rs.25,917.00 in the Suit of the basis of the supply of four carpets to the defendant. The price payable was Rs. 23,937.00 for which a cheque was issued by the defendant on 17th January, 1982, which was dishonoured. The defendant did not pay the amount, so the Suit was instituted. An amount of Rs. 1,980.00 was added to the price as interest calculated at the rate of 18 per cent per annum on the basis of usage and custom of the trade.

(3) The Suit was resisted on the ground that the carpets were defective and not in accordance with the specifications. This was denied in the replication.

(4) The final issues framed in the Suit were as follows :- "1. Whether the carpets supplied to the defendant were defective and not according to the specification and requirement of the defendant ? (onus on defendant). 2. Relief."

The defendant did not produce any evidence. An application under Order 14, Rule 5 of the Code of Civil Procedure was moved for amendment of the issues and an application for the examination of witnesses on interrogatories was also rejected. Even the defendant did not come into the witness box. Naturally, in these circumstances, the principal issue was decided against the defendant.

(5) In the +result, the Suit was decreed for a sum of Rs. 25,917.00 and pendents li and future interest was allowed at the rate of 18 per cent per annum.

(6) The appeal before us has been confined in arguments to the question of interest. The interest to be allowed on the Suit amount depends to some extent on the application of Section 34 of the Code of Civil Procedure. It provides as follows :- 214 "Interest 34(1). Where and in so far as a decree is for the payment of money, the Court may, in the decree, 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, in addition to any interest adjudge on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment or to such earlier date as the Court thinks fit. 2. Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie: Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contracted rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. Explanation 1 :-In this sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). Explanation Ii :-For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability. The interest which can be allowed by the Court can conveniently be divided into three portions. There is the interest before the suit. there is the interest during the pendency of the suit and there is the future interest after the decision of the suit. Taking up the first part of this interest claim, it may be mentioned that the suit was instituted under Order 37 of the Code on the basis of a dishonoured cheque. In para No. 3 of the plaint, it was claimed that interest was chargeable at the rate of 18 per cent per annum as per usage and custom of the trade. It was in fact stated as follows . "That the defendants are also liable for the payment of interest @ 18% per annum as per usage and custom of the trade, and their mutual commitment, which is even otherwise banking rate of lending and accordingly a sum of Rs. 1,980.00 have become due and recoverable from the defendants as interest from 26th January, 1982 till the filing of the suit..............." 215 After leave to defend had been granted, the defendant filed a written statement, in which amongst other things, it was stated in para No. 3 that the plaintiff is not entitled to interest as claimed by him. The question of late of interest is connected with the question whether the transaction is a commercial transaction and for this purpose Explanation Ii reproduced above is important. It states that 'for the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability' There is no allegation in the plaint that the transaction is a commercial one qua the defendant. But in the written statement it is stated in para No. 2 as follows : "....................-.....................it is submitted that the defendant was desirous of furnishing their newly constructed building including administrative office building and other allied constructions therein at B-319, Okhla Industrial Area, Phase I, New Delhi and M/s. Industrial Engineer offered to do the work of furnishing including the supply of carpets and consequently they received from the defendant advances amounting to Rs. 46,000.00 on various dates against the supply of carpets and furnishing of the same in the said building.........................." From the pleadings by the defendant, it clearly appears that the carpets were required for the business premises of the defendant, and therefore within the meaning of the IInd Explanation appearing it the foot of Section 34 of the Code of Civil Procedure, this would be a commercial transaction. However, the plaintiff did not lead any evidence regarding the rate of interest. No usage has, therefore, been established regarding the rate being 18 per cent, nor is there any contracted rate of interest. We have, therefore, to determine what is the rate of interest applicable to this case under Section 34 of the Code.

(7) It may be mentioned here that leave to defend the suit was granted on furnishing of a Bank guarantee to the extent of Rs. 30,000.00 and that Bank guarantee was furnished and has been encashed by the plaintiff-respondent. We think that in the absence of proof of rate of interest, the interest should be 12 per cent per annum and not 18 per cent per annum. We do not think this is * case in which interest can be disallowed keeping in view the nature of the transaction and the relationship between the parties. The price of the carpets having been withheld and the cheque having been dishonoured, a reasonable rate of interest has to be allowed to the plaintiff. As no special rate of interest has been proved, the rate of interest which is reasonable in our view would be 12 per cent per annum. The rate of interest for the period during which the suit remained pending and future interest should also be 12 per cent per annum, it being a commercial transaction.

(8) In the result, we would accept this appeal partially to the extent that the sum of pre-suit interest calculated by the plaintiff at Rs. 1,980.00 would be reduced to Rs. 1,320.00 because of the allowable interest being 12 per cent per annum. This would mean that the suit would be decreed for a sum of Rs. 25.257.00 with costs with interest pendente lite and future interest at the rate of 12 per cent per annum. We do not award any costs in this appeal which will be borne by the parties themselves.