M/S. Voltas Limited & Another vs Union Of India & Others
2008 Latest Caselaw 2118 Del

                                        UNREPORTED
       IN THE HIGH COURT OF DELHI AT NEW DELHI



+     CS(OS) 1225/2007



                             DATE OF DECISION:         December 1, 2008



      M/S VOLTAS LIMITED & ANR.                    ..... Plaintiffs
                     Through: Mr. D.S. Chauhan and Ms. Ruchi Singh,
                              Advocates.

                   versus

      UNION OF INDIA & ORS.          EC+         ..... Defendants
                     Through: Ms. Zubeda Begum, Advocate



      CORAM:
      HON'BLE MS. JUSTICE REVA KHETRAPAL



1.    Whether reporters of local papers may be allowed
      to see the judgment?

2.    To be referred to the Reporter or not?

3.    Whether judgment should be reported in Digest?

      JUDGMENT

: REVA KHETRAPAL, J.

CS(OS) 1225/2007 and IA Nos.12722/2007 [u/O-37 R-3(5) read with Section 151 CPC on behalf of the defendant No.3] and 12724/2007 [u/O-37 R-3(5) read with Section 151 CPC on behalf of the defendant No.2]

1. The present suit for recovery of a sum of Rs.22,81,822/- (Rupees

Twenty Two Lacs Eighty One Thousand Eight Hundred Twenty Two only)

has been filed by the plaintiff under the provisions of Order XXXVII of the

Code of Civil Procedure (hereinafter referred to as the 'Code') which is based

upon a written contract between the parties, viz. the invoices raised by the

plaintiffs upon the defendants from time to time for the execution of various

purchase orders for supply and installation of air-conditioners by the plaintiff

No.1.

2. Two applications, being IA 12722/07 and IA 12724/07 were filed by the

defendant Nos.2 and 3 for leave to defend the suit. However, during the

pendency of the said applications, the following order was passed by this Court

on 24th March, 2008:-

"Counsels for the parties state that during the pendency of the present proceedings, the plaintiffs have received the principal amount due and payable thus leaving the issue of interest. They state that the issue of interest may be referred to the mediator to enable the parties to arrive at a negotiated settlement.

Accordingly, the matter is referred to the Delhi High Court Mediation and Conciliation Centre. The parties along with their respective counsels are directed to appear before the Mediator to be appointed by the Delhi High Court Mediation and Conciliation Centre on 04.4.2008, at 4.30 P.M. The learned Mediator shall have discussions with the parties and make efforts for arriving at a negotiated settlement. The parties shall ensure that the officers competent to take decision in the case shall remain present before the Mediator on the date fixed.

A report shall be submitted by the learned Mediator before the next date.

List on 07.5.2008, in the category of "Directions", for reporting settlement, if any.

A copy of this order be given to counsels appearing for the parties.

...... ....... ......."

3. The matter was accordingly referred to the Mediation and Conciliation

Centre to enable the parties to arrive at a negotiated settlement in respect of the

interest due and payable by the defendants to the plaintiffs. Such efforts

however proved futile and the issue of interest is, therefore, left to be

adjudicated by this Court. In this view of the matter, leave to defend the suit

on this limited aspect alone is granted to the defendants 2 and 3. Both the

aforesaid applications stand allowed to this extent only.

4. I have heard the learned counsel for the parties, Mr.D.S.Chauhan,

Advocate for the plaintiffs and Ms.Zubeda Begum, Advocate for the

defendants, the defendants having opted not to file any written statement/s.

5. The learned counsel for the plaintiffs contends that in view of the fact

that the defendants have unduly delayed the payment of the legitimate dues of

the plaintiffs, the plaintiffs are entitled to interest including pendente lite and

future interest on the principal amounts due. The counsel further contends that

despite there being the existence of a mutually agreed term that the payment

shall be made against installation or within 45 days from the date of delivery,

whichever is earlier, a period of about two years had gone by since the

completion of the contract by the plaintiffs without the defendants making any

payment. The plaintiffs were, therefore, left with no option except to file the

present suit on 04.07.2000. The defendant still not having cared to make the

payment of the due amounts to the plaintiffs, have rendered themselves liable

to pay interest to the plaintiffs on the overdue amount at the rate of 15% p.a.,

which is the bare minimum rate of interest charged by the scheduled banks on

lending.

6. The plaintiffs' claim for interest is contested by the defendant, who state

that no interest is payable to the plaintiffs and that, in any case, the claim for

interest at the rate of 15% p.a. is exorbitant.

7. The learned counsel for the plaintiffs has drawn my attention to the

tender floated by the defendant No.2 inviting bids from reputed manufacturers

and other dealers for the purchase of 122 numbers of window type AC units of

1.5 ton capacity and 122 numbers of 5 KVA stabilizers of standard make. The

defendant No.3 was the implementing agency.

8. The learned counsel has also drawn my attention to the bid offer of the

plaintiff company M/s. Voltas Limited whereunder the payment term

mentioned by the plaintiff No.1 was 90% against the delivery and the balance

10% within 30 days after the delivery, but, he points out, that in the course of

negotiations after the opening of price bids on 13th May, 2005, the plaintiff

No.1, inter alia, agreed for payment against installation or within 45 days from

the date of delivery, whichever is earlier. The said communication bearing

reference No.CABD/VS/D014/05/05 dated 13.05.2005 reads as under:-

"VOLTAS LIMITED

Ref.: CABD/VS/D014/05/05 Date: 13.05.2005 To,

The Addl. Commissioner of Police Prov. & Logistics 5, Rajpur Road, New Delhi.

Sub: Your requirement of air conditioners

Dear Sir,

As per the discussion had with you & tender committee, we hereby confirm that:

(1) Installation cost of Rs.200/- can be read as Nil.

(2) Balance terms; payment terms - Payment should be made against installation or within 45 days from the date of delivery, whichever is earlier.

(3) Warranty - Three years from the date of installation.

Thanking you & assuring our best services at all times.

Regards,

sd/-

Vivek Srivastava Area Sales Manager Voltas Limited"

9. The learned counsel further contends that the plaintiffs' claim for

interest at the rate of 15% p.a. is based on the invoices placed on the record,

which stipulate that over due payments will carry an interest at the rate of 15%

p.a.. Thus, the defendants are liable to pay the interest at the aforesaid rate to

the plaintiff No.1, which as calculated on the principle amount of

Rs.3,15,095.75 (already paid) from 16.09.2005 till the date of the institution of

the suit, works out to Rs.80,350/-. Likewise, the plaintiff No.2 on the total

principal amount of Rs.14,62,780/- (already paid), is entitled to interest at the

rate of 15% from the defendants, which as calculated on the aforesaid principal

amount, comes to Rs.4,23,597/- from the date of the installation of the air

conditioners, that is, 23.06.2005 till the date of the institution of the suit.

Additionally, both the plaintiffs are also entitled for pendente lite and future

interest at the aforesaid rate of 15% p.a.

10. The law is well settled that where the terms and conditions on the

invoices stipulate that interest at a certain rate per annum is payable, the said

interest constitutes the agreed rate of interest. Accordingly, the submission of

the learned counsel for the defendants that in the instant case there was no

agreed rate of interest and the claim for interest of the plaintiffs at the rate of

15% p.a. is exorbitant, must be rejected, as the conditions of invoices stipulate

the rate of interest. [See: AIR 2004 Delhi 186 : M/s. Dura Line India Pvt.

Ltd. Vs. BPL Broadband Network Pvt. Ltd.]

11. Accordingly, the plaintiffs are held to be entitled for interest at the rate

of 15% on the principal amounts from the date the principal amounts became

due and payable till the date of realization.

CS(OS) 1225/2007 and I.A.Nos.12722/2007 & 12724/2007 stand

disposed of in the above terms.

REVA KHETRAPAL,J DECEMBER 1, 2008 dc