Sany Heavy Industry India Pvt Ltd vs Tata Capital Limited
2015 Latest Caselaw 7007 Del

$~27.
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+     CS(OS) 195/2011 and I.A. 1297/2011, 1298/2011, 2131/2011,
      4203/2011, 18307/2011 and 9923/2014

      SANY HEAVY INDUSTRY INDIA PVT LTD         ..... Plaintiff
                    Through: Mr. P.D. Gupta, Advocate with
                    Mr. Abhishek Gupta, Mr. Dinesh Sabharwal
                    and Mr. Niteen Sinha, Advocates

                         versus


      TATA CAPITAL LIMITED                         ..... Defendant
                      Through: Mr. Joginder Sukhija, Advocate with
                      Ms. Karuna Chhatwal, Advocate

      CORAM:
      HON'BLE MS. JUSTICE HIMA KOHLI

                         ORDER

% 16.09.2015

1. The plaintiff has instituted the present summary suit against the

defendant/Tata Capital Limited for recovery of a sum of

Rs.2,35,05,500/-.

2. As per the averments made in the plaint, a company by the

name of M/s Aggcon Equipments International (P) Limited (hereinafter

referred to as 'M/s Aggcon') based in Faridabad, Haryana had issued a

purchase order dated 16.04.2010 in favour of the plaintiff for supply of

one unit of Piling Rig on a High Seas Sale basis at the price of

Rs.2,21,75,000/-. As per the terms and conditions of payment

mentioned in the purchase order, M/s Aggcon had agreed that the

payment for the Piling Rig(hereinafter referred to as `the equipment')

shall be released by its financer, Tata Capital Ltd., the defendant

herein for 100% value of the equipment. The said payment was to be

released within a period of 180 days of the payment of customs duty

in respect of the equipment. On 21.04.2010, M/s Aggcon had issued a

release order in favour of the plaintiff undertaking/assuring that on

delivery of the equipment, the payment would be made within 179

days of the payment of the customs duty/customs clearance. The

equipment was supplied by the plaintiff to M/s Aggcon on 28.04.2010

and the credit period of 179 days reckoned from the said date would

have expired on 26.10.2010.

3. In terms of the purchase order, the defendant was required to

release the payment of Rs.2,21,75,000/- to the plaintiff on or before

26.10.2010. However, one day prior to the expiry of the 179th day, on

25.10.2010, M/s Aggcon instituted a suit for declaration and injunction

against the plaintiff and the defendant herein in the court of the Civil

Judge, Senior Division, Faridabad and prayed for an interim injunction

for restraining the defendant herein from releasing the amount

financed by it, in favour of the plaintiff. It is an undisputed position

that no interim order was passed in favour of M/s Aggcon in the

aforesaid proceedings and therefore, there was no legal impediment

on the defendant to honour the Release order dated 21.04.2010.

4. Counsel for the plaintiff states that after exchanging some

correspondence with the defendant, when the plaintiff gathered an

impression that the defendant was wrongfully withholding the amount

payable to it only on the ground that it would have to await the

decision in the suit instituted by M/s Aggcon, it was compelled to

institute the present suit under Order XXXVII CPC for recovery of a

sum of Rs.2,35,05,500/-. Out of the aforesaid amount, the principal

amount is to the tune of Rs.2,21,75,000/- and the interest component

is of Rs.13,30,500/-, calculated by the plaintiff @24% per annum from

27.10.2010, the date on which the period of 180 days for making the

payment for the equipment had expired, till the date of institution of

the suit.

5. The records reveal that the suit was listed for admission on

28.01.2011, on which date summons were issued and the counsel for

the defendant had entered appearance and accepted notice.

Thereafter, memo of appearance was filed by the defendant within the

stipulated time, followed by a leave to defend application. On

09.08.2011, at the request of the counsel for the defendant,

permission was granted to the defendant to deposit in Court, the

principal amount payable to the plaintiff under the purchase order

dated 16.04.2010 and the said amount was directed to be placed in a

FDR. On 29.09.2011, it was ordered that subject to the plaintiff

furnishing a bank guarantee for the full amount deposited by the

defendant, the same shall be released in its favour.

6. On 23.11.2011, counsel for the plaintiff had submitted that no

further adjudication may be required in the present suit in view of the

fact that M/s Aggcon had paid to the defendant, the value of the

equipment financed by it. The defendant was directed to clarify as to

the extent of money outstanding and payable to it by M/s Aggcon. On

14.03.2012, counsel for the defendant had stated on instructions that

a sum of Rs.1,60,00,000/- (approx.) inclusive of the principal amount

remained to be recovered from M/s Aggcon.

7. Finally, on 28.05.2014, counsel for the defendant had informed

the Court that M/s Aggcon had paid the entire amount to his client. In

view of the above, the bank guarantees offered by the plaintiff for

seeking release of the amount deposited by the defendant, were

permitted to be released/discharged and the Court had observed that

the only remaining dispute was with regard to the interest component

and the costs in the suit that the plaintiff was pressing. Counsel for the

plaintiff had stated that he would leave it to the Court to assess the

rate of interest payable by the defendant. However, counsel for the

defendant had resisted the claim of the plaintiff for payment of interest

on the principal amount.

8. Even today, learned counsel for the defendant asserts that his

client is not liable to pay any interest on the principal amount to the

plaintiff for the reason that its customer, M/s Aggcon had instituted a

civil suit for cancellation of the purchase order. The said submission is

however not borne out from a perusal of the averments made in the

plaint and the reliefs prayed for by M/s Aggcon in the civil suit

instituted by it against the plaintiff and the defendant herein.

9. The prayer made by M/s Aggcon in the aforesaid suit was for a

decree of declaration that the termination of the subsequent purchase

order for 10 Rigs by the plaintiff herein vide letter dated 26.08.2010,

is illegal and not binding. As an interim measure, M/s Aggcon had

requested the Court to restrain the defendant herein from releasing

the amount financed by it for purchasing the equipments from the

plaintiff herein, vide Release orders dated 21.04.2010 and 11.05.2010

respectively. Thus there was no dispute that the equipment in

question was duly supplied by the plaintiff to M/s Aggcon vide

purchase order dated 16.04.2010 and under the said purchase order,

the defendant was under an obligation to release the payment to the

plaintiff within 180 days. The said fact is substantiated from the

conditions recorded in the Release order dated 21.04.2010 issued by

the defendant in favour of the plaintiff. The only condition imposed by

the defendant in the said Release order was that in the event the

customer cancels the order, full payment alongwith interest should be

released to it.

10. It is no one's case that the purchase order dated 16.4.2010 was

ever cancelled by M/s Aggcon. The relief sought by M/s Aggcon in the

civil suit instituted by it was to declare as null and void, the

termination by the plaintiff of the subsequent purchase order dated

26.08.2010 placed by M/s Aggcon, in respect of 10 other Rigs. It is

also a matter of record that ultimately, M/s Aggcon had paid the entire

value of the equipment supplied by the plaintiff to the defendant and

in view of the said development, the amount deposited by the

defendant in Court was permitted to be released in favour of the

plaintiff. Resultantly, the bank guarantees offered by the plaintiff were

permitted to be discharged. This leaves the interest on the principal

amount claimed by the plaintiff against the defendant and the costs of

the suit.

11. Counsel for the plaintiff submits that once the price of the

equipment has been released in favour of the plaintiff in terms of the

purchaser order dated 16.04.2010 issued by M/s Aggcon, there can be

no justification for denying interest to the plaintiff at the market rate

or at a reasonable rate, from the date when the amount had become

due and payable, till the date the defendant had deposited the said

amount in Court. In support of the said submission, he relies on the

decision of the Supreme Court in the case of Thazhathe Purayil Sarabi

and Ors. vs. UOI and Anr. reported as (2009) 7 SCC 372.

12. Per contra, counsel for the defendant states that the delay in

releasing the amount to the plaintiff was only on account of the

pendency of the civil suit instituted by M/s Aggcon against the

defendant and the plaintiff herein. He states that the defendant had

demonstrated its bonafides, by volunteering to deposit the principal

amount, as recorded in the order dated 09.08.2011, which amount

was duly deposited on 24.08.2011. He contends that the aspect of

payment of interest, if any, to the plaintiff is a triable issue and it

ought to be taken to trial.

13. The Court has considered the rival submissions of the counsels

for the parties in respect of the interest claimed by the plaintiff on the

principal amount.

14. It has been consistently held by courts that payment of interest

is only a consequence of passing a money decree. Normally, when a

money decree is passed, it is essential that interest be granted for the

period during which the money had remained due but could not be

utilised by the person in whose favour the order of recovery of money

was passed. As a matter of fact, interest is only a form of restituting a

party who has been denied the right to utilise the money due on

account of the fact that the said amount has been utilised by the

person in whose hands the money had remained.

15. Though there is no provision for payment of interest on the

awarded sum, Section 3 of the Interest Act, 1978 confers powers on

the court to allow interest and further, Section 34 of the CPC also

empowers the court to award interest on a money decree. As held by

the Supreme Court in the case of Thazhathe Purayil Sarabi (supra),

while passing a decree for payment of money, the court is entitled to

grant interest at the current rate of interest or the contractual rate, as

it deems reasonable to be paid on the principal sum adjudged to be

payable from the date of the claim or from the date of the order or

passing of the decree for recovery of the outstanding dues. This is not

a triable issue as claimed by the counsel for the defendant and can be

decided on the facts of the case.

16. In the facts of the present case, though the principal amount

was deposited by the defendant in the Court on 24.08.2011, the

money had passed into the hands of the plaintiff only on 19.12.2011.

There is no dispute about the period for which interest can be claimed

by the plaintiff for the reason that the purchase order dated

16.04.2010 issued by M/s Aggcon had stipulated that 100% value of

the equipment will be released by the defendant in favour of the

plaintiff on the 180th day, reckoned from the date of the customs

clearance. Since the equipment in question was delivered to M/s

Aggcon on 28.04.2010, the period of 179 days reckoned from the said

date would have expired on 26.10.2010. Therefore, 27.10.2010 can

safely be stated to be the date from which the defendant became

liable to release the price of the equipment in favour of the plaintiff,

which amount was finally received by the plaintiff only on 19.12.2011.

However, the Court is inclined to restrict the period for which interest

is payable to the plaintiff, from 27.10.2010, i.e., the 180th day from

the day of custom clearance, to 24.08.2011, the date on which the

defendant had deposited the money in the Registry. It is a different

matter that the procedural formalities for the amount to be actually

released by the Registry in favour of the plaintiff, had taken some

time.

17. Coming to the interest factor, the plaintiff has prayed for

pendente lite and future interest @24% per annum. However, this

Court is of the opinion that it would meet the ends of justice if the

interest is calculated @10% per annum on the principal amount

deposited by the defendant in Court, so as to recompense the plaintiff

for being denied the right to utilise the money for the period between

27.10.2010 to 24.08.2011.

18. Accordingly, the defendant is held liable to pay interest to the

plaintiff @10% per annum on the principal amount of

Rs.2,21,75,000/-, for the period from 26.10.2010 to 24.08.2011,

within one month from today. If the said amount is not paid within the

timeline stipulated hereinabove, then the interest component shall be

enhanced from 10% per annum, to 12% per annum from 18.10.2015,

till the date of realization.

19. The suit is decreed in favour of the plaintiff on the lines noted

above, alongwith costs and litigation fees quantified as Rs.30,000/-.

Decree sheet be drawn accordingly.

20. The suit is disposed of alongwith the pending applications.

HIMA KOHLI, J SEPTEMBER 16, 2015 rkb/mk