M/S Home Komforts & Anr. vs M/S Bhor Industries Ltd. & Ors.
2011 Latest Caselaw 4023 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No.310/2002



%                                                      18th August, 2011

M/S HOME KOMFORTS & ANR.                                      ...... Appellants

                                Through:    Mr. D.S.Narula, Sr. Adv. with Mr.
                                            A.S.Narula, Advocate.



                          VERSUS

M/S BHOR INDUSTRIES LTD. & ORS.                     ...... Respondents

                          Through:          Mr. Udit Gupta and
                                            Mr.B.C.Pandey, Advocates for
                                            R-1.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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

    2.   To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal under Section

96 of the Code of Civil Procedure, 1908 (CPC), is to the impugned

judgment dated 31.1.2002, which has decreed the suit for recovery filed

by the respondent no.1/plaintiff.

2. The facts of the case are that the respondent No.1/plaintiff supplied

its goods being Marblex Floor Tiles, PVC Flexible Flooring Sheet etc. to the

defendant no.1/respondent no.2/M/s A.B.C.Incorporated Co. This was a

sole proprietary concern of late Mr. Arun Jain. The respondent

No.2/defendant no.1 did not make payments with respect to the goods

supplied and outstanding against the respondent No.2/defendant no.1

became Rs.2,22,612.00. Thereafter, an additional amount also became

due for wall covering and PVC Flooring Sheets for a sum of Rs.41,388/-.

The defendant no.1 in spite of requests failed to make the payment. The

liability of the defendant no.1 was thereafter taken over by the

defendants no.3 and 4, and who are the appellants before this court. An

Agreement dated 29.12.1988, Ex.PW 3/19, was entered into between the

appellants and respondent No.1/plaintiff whereby the appellants agreed to

pay a sum of Rs.2,88,201 to the respondent no.1/plaintiff. These

payments in terms of para 2 of the agreement were to be made by

demand drafts payable at Delhi. As per para 3 of this agreement on the

payment of the amount by the appellants/defendants no.3 and 4, there

would be no liability remaining of the defendant no.1. Para 4 of the

agreement states that after clearance of the liability of the defendant no.1

by defendants no.3 and 4/appellants, the dealership of the

plaintiff‟s/respondent no.1‟s products by the appellants/defendant nos. 3

and 4 will continue. In pursuance to this agreement dated 29.12.1988

Ex.PW3/19, the appellant No.1 paid the first installment of Rs.24,201/- but

did not make the subsequent payments/installments. The appellants were

however appointed as dealers of the products of the plaintiff/respondent

no.1 and there were transactions between the parties though, those

transactions are not the subject matter of the present suit as there are no

disputes concerning those transactions. On the failure of the appellants to

make the payment of Rs.2,64,000/- i.e. Rs.2,88,201/- minus Rs.24,201/-,

the respondent no.1/plaintiff claims to have written many letters to the

appellants, and one such letter is Ex.PW2/20 dated 30.12.1989. Since the

appellants did not pay the dues as claimed by the respondent

no.1/plaintiff, the suit came to be filed.

3. The appellants/defendant nos. 3 and 4 contested the suit basically

on three grounds. Firstly, it was claimed that the courts at Delhi had no

territorial jurisdiction. Secondly, it was argued that the agreement

Ex.PW3/19 dated 29.12.1988 was void for lack of consideration. Thirdly

and finally, it was pleaded that the respondent no.1/plaintiff had no right

to claim interest because the agreement in question specifically provided

that the respondent no.1 will not raise or charge interest for the dues.

These aspects have also been argued before me on behalf of the

appellants.

4. The trial court, after completion of the pleadings framed the

following issues.

"1. Whether the plaintiff has locus to file the present suit against defendant no.1?

2. Whether the suit of the plaintiff is within limitation?

3. Whether the suit has been signed, verified and filed by the duly authorised person?

4. Whether the agreement dated 31.12.88 signed by defendants no.3 and 4 can bind defendant no.2 or the estate of defendant no.1 in respect of the claim of the plaintiff in respect of his dealings with late Sh. Arun Jain?

5. Whether the plaintiff is entitled to the relief as claimed?

One additional issue as issue no.1-A was also framed on 14.1.2002 which is as follows:-

1-A. Whether the court has territorial jurisdiction to try and entertain the Suit? Onus on parties."

The issues which have been argued before me, and which were the

real issues even before the trial court, are issues 1-A pertaining to the

territorial jurisdiction and issue no.5 as to whether the respondent

no.1/plaintiff was entitled to the suit amount.

5. So far as the issue as to whether the courts at Delhi had territorial

jurisdiction, I agree with the findings in this regard of the trial court that

the courts at Delhi had territorial jurisdiction. The trial court held that the

courts at Delhi had territorial jurisdiction because part of the cause of

action accrued at Delhi as the original liability was with respect to goods

for which orders were placed upon the plaintiff/respondent no.1 by the

defendant no.1 at Delhi and payment with respect to which were also to

be made at Delhi. To fasten liability upon the appellants/defendant nos. 3

and 4, this was very much a part of the cause of action which was

required to be proved and therefore if part of the cause of action accrued

at Delhi, the courts at Delhi would have territorial jurisdiction. In any

case, no doubt remains as to the courts at Delhi having territorial

jurisdiction because as per para 2 of the agreement dated 29.12.1988

Ex.PW3/19, the appellants agreed to take over the liability of the

defendant no.1 and agreed to make the payments by means of bank

drafts payable at Delhi. Once payment shall be made at Delhi, the courts

at Delhi would have territorial jurisdiction in view of the judgment of the

Supreme Court in A.B.C. Laminart Pvt. Ltd & Anr. Vs A.P.Agencies,

Salem AIR 1989 SC 1239.

6. The main issue which has been argued by learned senior counsel for

the appellant was that the agreement Ex.PW3/19 is void on account of

lack of consideration. The trial court has dealt with this aspect by holding

that an agreement for payment as time barred dues by virtue of Section

25 of the Contract Act, 1872 cannot be said to be void for lack of

consideration. I completely agree. In fact, the agreement itself in para 3

makes it clear that consideration for entering into the agreement was that

on payment of the liability of the defendant no.1 by the

appellants/defendant no.3 and 4, the liability of the defendant no.1 would

stand extinguished. I therefore find no merit in the argument on behalf of

the appellants that the agreement Ex.PW3/19 was void for lack of

consideration and therefore could not be looked into.

7. So far as the third argument of the learned senior counsel for the

appellant is concerned, I find merits in the same. Para 3 of the agreement

Ex.PW3/19, specifically provided that the respondent no.1/plaintiff was not

entitled to claim interest on the amounts due. Thus no interest would be

payable as the admitted contract. However, it cannot be said that no

interest at any point of time will ever become payable because the object

of not claiming interest by the respondent no.1/plaintiff was assuming the

installments of payments were made in terms of the agreement

Ex.PW3/19 i.e., by 1.12.1990, and the agreement cannot be interpreted

to mean that even if the various instalments ending with the last

installment on 1.12.1990 are not paid and though the respondent no.1

was forced to file a suit even then, interest will not be payable pendente

lite and future till payment. Grant of pre suit interest is governed by the

Interest Act, 1978 (in short „the said Act‟), and as per which, it is

necessary that a notice claiming interest is required to be given under the

provision of Section 3 of the said Act, and admittedly, there is no notice

has been given by the respondent no.1/plaintiff for claiming interest. The

respondent no.1/plaintiff, therefore, cannot be entitled to pre-suit interest

and therefore the amount due on the date of the suit would not be a sum

of Rs.3,83,200/- but only a sum of Rs.2,64,000/-. I however cannot agree

with the submission of the learned senior counsel for the appellant that

this court cannot even grant pendente lite and future interest. Once a suit

is filed, a civil court has the necessary powers under Section 34 CPC to

grant pendente lite and future interest. The trial court in the present case

has granted pendente lite and future interest at 15% per annum. In my

opinion and in today‟s scenario, this rate of interest is unusually high. In

the facts and circumstances of the case, I deem it fit considering the

recent trend of the decisions of the Supreme Court in Rajendra

Construction Co. v. Maharashtra Housing & Area Development

Authority and others, 2005 (6) SCC 678, McDermott International

Inc. v. Burn Standard Co. Ltd. and others, 2006 (11) SCC 181,

Rajasthan State Road Transport Corporation v. Indag Rubber Ltd.,

(2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. v.

G.Harischandra, 2007 (2) SCC 720 & State of Rajasthan Vs. Ferro

Concrete Construction Pvt. Ltd (2009) 3 Arb. LR 140 (SC)

mandating the grant of lower rates of interest, that, interest at the rate of

9% per annum simple pendente lite and future be awarded in favour of

respondent no.1/plaintiff and against the appellants. I make it clear that

interest will run only till the complete decretal amount is deposited in this

court or paid to the respondent no.1. If certain balance amount is not yet

deposited then interest will be payable as per the present judgment on

the balance proportionate amount at 9% per annum simple till this

balance amount is deposited in this court or paid to the respondent

no.1/plaintiff.

8. With the aforesaid observations, the appeal is partly allowed to the

extent of refusal of pre-suit interest and also reducing the pendente lite

and future interest from 15% per annum simple to 9% per annum simple.

Decree sheet be prepared. Trial court record be sent back.

AUGUST 18, 2011                                   VALMIKI J. MEHTA, J.
ib