Trident Architectural vs Messrs Jindal Steels
2021 Latest Caselaw 3467 Kant

                             1

                                                       R
     IN THE HIGH COURT OF KARNATAKA BENGALURU

       DATED THIS THE 22ND DAY OF OCTOBER, 2021

                         BEFORE

        THE HON'BLE MS. JUSTICE JYOTI MULIMANI

      REGULAR FIRST APPEAL NO.500 OF 2017 (MON)

BETWEEN:

1.     TRIDENT ARCHITECTURAL
       ALUMINIUM PRIVATE LIMITED
       NO.13/2, 2ND FLOOR, R K COMPLEX
       RAGHUVANAHALLI
       KANAKAPURA MAIN ROAD
       BANGALORE - 560 062
       REPRESENTED BY ITS
       MANAGING DIRECTOR.

2.     MR.M.V.RAMU
       MANAGING DIRECTOR
       TRIDENT ARCHITECTURAL
       ALUMINIUM PRIVATE LIMITED
       NO.13/2, 2ND FLOOR, R K COMPLEX
       RAGHUVANAHALLI
       KANAKAPURA MAIN ROAD
       BANGALORE - 560 062.              ...APPELLANTS

(BY SRI.SIBU GOPINATHAN ADVOCATE FOR
      SRI.BALARAM.M.L - ADVOCATE)

AND:

1.     MESSRS. JINDAL STEELS
       A PARTNERSHIP FIRM
       NO.110/7, KRISHNAPPA LAYOUT
       LALBAGH ROAD
       BANGALORE - 560 027
       REPRESENTED BY ITS PARTNER
       MR.MOHANLAL JINDAL.
                              2




2.   MR.IRFAN AHMED
     EXECUTIVE DIRECTOR
     M/S. TRIDENT ARCHITECTURAL
     ALUMINIUM PRODUCTS PRIVATE LIMITED
     NO.13/2, 2ND FLOOR
     R K COMPLEX
     RAGHUVANAHALLI
     KANAKAPURA MAIN ROAD
     BANGALORE - 560 062.         ...RESPONDENTS

(BY SRI.MADHUKAR DESHPANDE - ADVOCATE FOR R1;
      R2 - SERVED)


     THIS RFA IS FILED UNDER SECTION 96 OF CIVIL
PROCEDURE CODE, 1908.


     THIS RFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THROUGH VIDEO CONFERENCING THIS DAY, SITTING AT
DHARWAD, THIS COURT DELIVERED THE FOLLOWING:

                         JUDGMENT

Sri.Sibu Gopinathan learned counsel on behalf of

Sri.Balaram.M.L for appellants and Sri.Madhukar

Deshpande learned counsel for respondent No.1 have

appeared in person.

This is an appeal from the Court of IX Additional City

Civil and Sessions Judge, Bangalore.

2. For the sake of convenience, the parties are

referred to as per their rankings before the Trial Court.

3. The facts of the case are simply stated as

under:-

It is stated that the first defendant has got business

association with the plaintiff partnership firm Jindal Steels

and as per purchase orders placed by the first defendant,

the plaintiff supplied goods to the first defendant. As per

the terms of the agreement, it was mutually agreed that

the first defendant has to pay the invoice amount within

thirty days from the date of receipt of goods from the

plaintiff and in failure, the first defendant was liable to pay

interest at the rate of 21% per annum calculated from the

date of respective materials supplied till the date of

payment.

The first defendant maintained a running account

with the plaintiff.

The first defendant made a purchase worth

Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand

Seven Hundred and Fifty-Five only) for the period

commencing from August 2011 to February 2013 and

defendants have also paid the major portion of outstanding

amount to the plaintiff.

It is averred that when the plaintiff instructed that

the defendants were liable to pay outstanding amount of

Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine

Hundred and Fifty-Two only) as on 27.06.2014, the

defendants returned long time retained beam-stalk

purchased from other suppliers wherein plaintiff helped the

defendants in recovery of Rs.7,36,095/- (Rupees Seven

Lakhs Thirty-Six Thousand and Ninety-Five only).

Accordingly, the defendants issued a cheque in favor of

plaintiff for the remaining sum of Rs.1,77,857/- (Rupees

One Lakhs Seventy-Seven Thousand Eight Hundred and

Fifty-Seven only) on 25.11.2014 drawn on Bank of Baroda.

The plaintiff presented the aforesaid cheque with its

banker which came to be dishonored for want of sufficient

funds in the first defendant's account.

The fact that the cheque was dishonored, was

brought to the notice of defendants over phone and also

by way of legal notice. The defendants received the legal

notice and they paid only the value of the cheque i.e.,

Rs.1,77,857/- (Rupees One Lakh Seventy-Seven Thousand

Eight Hundred and Fifty-Seven only) but did not pay the

entire outstanding amount as aforesaid.

The plaintiff sent legal notice on 07.01.2015 calling

upon the defendants to pay the entire outstanding amount.

The notice was received by the defendants but they did not

pay the said amount. Therefore, plaintiff filed the suit for

recovery of money, contending that the cause of action for

the suit arose on the date of placing orders by the

defendants for supply of goods, on the date of supplies of

goods to the defendants, on the date of payments, on the

date of issuance of cheque dated 25th November 2014, on

the date of dishonor of the cheque, when the defendants

have paid the value of cheque, on 7th January 2015 and 9th

February 2015, 5th March 2015, 25th March 2015 when the

plaintiff has issued legal notices, on the date of receipt of

the legal notice, issuance of reply to the legal notice, the

rejoinder and also on various dates where the parties are

carrying their respective business within the territorial

jurisdiction of this Hon'ble Court.

After the issuance of the suit summons, defendants

1 and 2 appeared through their counsel and filed written

statement. They denied the plaint averments. They

contended that there is no cause of action to file the suit

and the suit is barred by time.

It is contended that the first defendant company had

made the purchase worth of Rs.52,50,755/- (Rupees Fifty-

Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five

only) for the period commencing from August 2011 to

January 2013 and also paid the major portion of

outstanding amount to the plaintiff. There was no

agreement or oral understanding between the plaintiff and

defendants to pay the interest on supply of goods.

They further contended that the crystallized

outstanding liability was Rs.9,13,952/- (Rupees Nine Lakhs

Thirteen Thousand Nine Hundred and Fifty Two only) and

the plaintiffs recovered a sum of Rs.7,36,095/- (Rupees

Seven Lakhs Thirty-Six Thousand and Ninety-Five only)

and defendants have paid the balance amount of

Rs.1,77,857/- (Rupees One Lakh Seventy-Seven Thousand

Eight Hundred and Fifty-Seven only) on 13.01.2015

through RTGS of Bank of Baroda to the account of plaintiff.

Hence, they contended that they are not liable to pay the

amount as claimed by the plaintiff. Accordingly, they

prayed for the dismissal of the suit.

On the basis of the rival pleadings of the parties, the

Trial Court framed the following issues:-

1. Whether plaintiff firm proves that defendants

1 to 3 are still due an amount of

Rs.5,31,398/-?

2. Does the plaintiff firm proves that liability of

defendants 1 to 3 is joint and several and

they are liable to pay interest at the rate of

21% p.a. from the date of suit till the date of

payment?

3. Whether defendants 1 to 3 prove that they

are not liable to pay any amount to the

plaintiff firm?

4. Whether plaintiff is entitled for relief as

prayed for?

5. What order and decree?

Plaintiff examined one witness V.Karthik as PW1 and

produced seventeen documents which were marked at

Ex.P.1 to Ex.P.17. The second defendant got examined as

DW1 and no documents were produced.

On the trial of the action, the suit came to be

decreed holding that plaintiff is entitled to recover

Rs.5,31,398/- (Rupees Five Lakhs Thirty-One Thousand

Three Hundred and Ninety-Eight only) from defendants 1

and 2 with cost and interest at the rate of 6% p.a from

the date of suit till realization. The liability was joint and

several. Hence, this Regular First Appeal is filed Under

Section 96 of CPC.

Sri.Sibu Gopinathan learned counsel on behalf of

Sri.Balaram.M.L for appellants submitted that the

Judgment and decree of the Trial Court is opposed to facts

and law.

Next, he submitted that there was no cause of action

to initiate action against the defendants.

A further submission was made that the suit is

barred by time. He submitted that plaintiff did not make

any claim of interest from August 2011 till January 2015.

He submitted that it is the specific case of the

plaintiff that as on 27.06.2014, the entire liability was

crystallized for a sum of Rs.9,13,952/- (Rupees Nine Lakhs

Thirteen Thousand Nine Hundred and Fifty-Two only) and

the defendants were liable to pay the crystalized

outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs

Thirteen Thousand Nine Hundred and Fifty-Two only). The

same was paid by the first defendant. Hence, the

defendants are not liable to pay any amount much less as

claimed by the plaintiff.

Counsel submitted that it is common knowledge that

when a claim is made as outstanding amount, it would

mean all amount including interest and costs thereof. In

the present case, the pleading and legal notice clearly

evinces that the original intent of the plaintiff as on June

2014 was to receive the crystallized outstanding amount of

Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine

Hundred and Fifty-Two only). But the Trial court has failed

to consider the same and has erroneously decreed the suit.

In this context Sri.Sibu Gopinathan learned counsel

for appellants has drawn the attention of the Court to the

definition of "Outstanding" as defined in "Black's law

dictionary" which defines as follows;

"Unpaid: uncollected, outstanding debts"... Debt is further defined in the dictionary as "the aggregate of all existing claims against a person".

As on 27.06.2014, the plaintiff made a clear claim of

crystallized outstanding amount as Rs.9,13,952/- (Rupees

Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two

only) in which there was no component of interest. Hence

the plaintiff had clearly waived its purported right to claim

interest.

It was argued that the plaintiff did not make any

claim of interest from August 2011 till January 2013. It

waived of its right. The waiver binds the plaintiff against

the enforcement of such a right in 2015.

It was also argued that having made first defendant

act on such waiver to come back after more than four

years to claim interest is illegal and against the specific

understanding arrived at between the parties.

To substantiate the said contention counsel placed

reliance on Sec.63 of Indian Contract Act, 1872. It was

submitted that the conduct of the plaintiff in not exercising

its right to claim interest under the contract, accruing from

August 2011, and the outstanding crystallized liability as

on June 2014, as claimed by the plaintiff as Rs.9,13,952/-

(Rupees Nine Lakhs Thirteen Thousand Nine Hundred and

Fifty-Two only) meant that the plaintiff had waived its right

to enforce any interest on the principal amount.

Lastly, counsel submitted that there was a clear

understanding between the parties that once the liability is

settled as computed as on June 2014 there was nothing

pending to be paid. If at all there was any intent to enforce

the contractual right of interest, the same should have

been evinced in some manner of whatsoever nature from

2011 to 2015. Therefore, it is submitted that not having

done so, there is a legal presumption Under Sec.115 of

Indian Evidence Act, 1872 in favor of first defendant that

the liability was duly discharged and was settled as on

June 2014 and plaintiff did not make any attempt to rebut

the said presumption in favor of first defendant.

In this regard counsel strenuously urged that this is

a clear case of promissory estoppel, wherein the plaintiff

made a final claim towards its outstanding and forced the

first defendant to redress and determine the said claim

and acted on it by receiving certain articles and accounting

its value towards the total liability. Further accepting the

remaining sum in the form of cheque which was

dishonored and further reiterating its claim that the said

sum which was issued vide cheque which was due, was

again received by the plaintiff through RTGS payment,

clearly evinces the fact that the plaintiff had represented

that it will not insist upon its strict rights under the

contract to enforce interest as against the total payment

and therefore the plaintiff should not be allowed to now

resile from that position.

Learned counsel also submitted that the plaintiff has

not produced any document to show its status as a

partnership firm or its registration, therefore the plaintiff

under Section 69 of the Indian Partnership Act, 1932 is

non-suited. The Trial Court in complete ignorance of these

contentions of the defendant conducted the trial, in

violation of the mandate of law.

Lastly, he submits that the judgment and decree of

the Trial Court lacks judicial reasoning. Accordingly, he

prayed that the appeal may be allowed and the judgment

and decree of the Trial Court may be set-aside.

Learned counsel for appellants has placed reliance on

the following judgments:-

1. (1950) 1 KB 616 - CHARLES RICKARDS LD. VS. OPPENHAIM.

2. (1965) 3 ALL ER 837 : (1965) 2 QBD 617 - D & C BUILDERS LIMITED VS. REES.

3. (1877) 2 APP CASE 439 : (1875) 1 CPD 120 - HUGHES VS. THE METROPOLITAN RAILWAY COMPANY.

4. (1956) 1 ALL ER 256 : (1947) KBD 130 - CENTRAL LONDON PROPERTY TRUST LIMITED VS. HIGH TREES HOUSE LIMITED.

5. (2012) 11 SCC 1 - MONNET ISPAT & ENERGY LTD. VS. UNION OF INDIA.

    6. (1977)       1    SCC   379       -    SETH       LOONKARAN
       SETHIYA AND OTHERS VS. MR.IVAN E.JOHN
       AND OTHERS.


      Sri.Madhukar         Deshpande           learned     counsel      for

respondent No.1 justified the judgment and decree of the

Trial Court.

Next, he submitted that the plaintiff company

received a sum of Rs.52,50,755/- (Rupees Fifty-Two Lakhs

Fifty Thousand Seven Hundred and Fifty-Five only) at an

interval period.

He submitted that as per the terms of the

agreement, it was mutually agreed that the first defendant

has to pay the invoice amount within thirty days from the

date of receipt of goods from the plaintiff and in failure,

the first defendant was liable to pay interest at the rate of

21% per annum calculated from the date of respective

materials supplied till the date of payment which in fact

finds its place in the invoice itself. In this regard, learned

counsel Sri.Madhukar Deshpande has drawn attention to

Ex.P.16.

A further submission was made that the first

defendant was maintaining a running account with the

plaintiff. The first defendant has made purchase worth of

Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand

Seven Hundred and Fifty-Five only) from the plaintiff for

the period commencing from August 2011 to February

2013. The defendants also paid major portion of the

amount to the plaintiff.

It is submitted that as on 27th June 2014, the

crystallized outstanding amount was Rs.9,13,952/-

(Rupees Nine Lakhs Thirteen Thousand Nine Hundred and

Fifty-Two only). Out of the total crystallized outstanding

amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen

Thousand Nine Hundred and Fifty-Two only), a sum of

Rs.7,36,095/- (Rupees Seven Lakhs Thirty-Six Thousand

and Ninety-Five only) was recovered from the purchase of

beam-stalk and the remaining amount of Rs.1,77,857/-

(Rupees One Lakhs Seventy-Seven Thousand Eight

Hundred and Fifty-Seven only) was paid by cheque. The

cheque was dishonored. Subsequently, the amount was

recovered from the defendant.

Counsel, therefore, submits that there was a delay

on the part of first defendant to make payment of the

invoice amount. Accordingly, as per the contract, the

plaintiffs were entitled to claim interest as and when there

is a delay in payment of the invoice amount. Therefore, he

submitted that the plaintiff's partnership firm is justified in

initiating action against the defendants to recover the

interest.

It was argued that to claim waiver of interest, there

should be a contract to the contrary, but in the instant

case there is no contract between the plaintiff and the first

defendant for the waiver of the interest.

Counsel urged that accord and satisfaction demands

consensus ad idem between the Plaintiff and Defendants

and conclusive agreement to that effect must be entered

into by the parties regarding satisfaction of the claim. He

also submitted that Section 63 of the Contract Act,

requires an agreement resulting in satisfaction of the claim

of the plaintiff and discharging the defendants from the

liability. None of the requirements of Sec.63 are

forthcoming in the pleadings as well as the evidence of the

defendants. Insofar as the contention regarding estoppel

under Sec.115 of the Evidence Act is concerned, counsel

submitted that it has no application.

It is also submitted that the contention of the

defendants that only a registered partnership firm has a

right to claim, is only urged before this Hon'ble Court for

the first time. It is however submitted that the plaintiff has

placed the necessary records i.e., partnership registration

certificate, to show that it is a partnership firm along with

the memo dated 23.09.2021.

Lastly, he submitted that the Trial Court in extenso

referred to the oral and documentary evidence on record

and was justified in concluding that the defendants are

liable to pay the interest. The appellants have not made

out any good grounds to interfere with the judgment and

decree of the trial court. Accordingly, he submitted that

the appeal may be dismissed.

Learned counsel for respondent No.1 has placed

reliance on the following judgments:

1. AIR 1962 CAL 166 - DIPCHAND GOLENCHA VS. MESSRS. M.ABHECHAND AND CO.

2. AIR 1961 PAT 37 - TATA LOCOMOTIVE AND ENGINEERING CO. LTD. VS. SARDAR KARTAR SINGH.

3. (2001) 2 SCC 41 - TATA IRON & STEEL CO. LTD. VS. UNION OF INDIA AND OTHERS.

4. AIR 2003 SC 4630 - CITI BANK N.A. VS.

STANDARD CHARTERED BANK AND OTHERS.

CANARA BANK AND OTHERS VS. CITI BANK N.A. AND OTHERS.

Heard the contentions urged on behalf of the parties

and perused the record with care.

The points that arise for consideration are:-

1. Whether the material facts disclosed in the

plaint constitutes a cause of action so as to

initiate action against the defendants for

recovery of interest?

2. Whether the suit is barred by time?

3. Whether the conduct of the plaintiff in

acceptance of delayed payment without

interest would constitute waiver on his part to

enforce the interest clause as envisaged in the

invoice?

4. Whether the acceptance of crystallized

outstanding liability of Rs.9,13,095/- (Rupees

Nine Lakhs Thirteen Thousand and Ninety-Five

only) by the plaintiff would affect his legal right

to initiate action for recovery of interest?

The facts in this case are few and simple, but they

raise a question which may be of some general

importance.

Before discussing as to whether the plaint in

question discloses a cause of action against the

defendants, I would like to make a mention of the

established principles of law relating to cause of action.

CAUSE OF ACTION

CAUSE OF ACTION is not defined in the Code. The

term "Cause of action" used in Section 20(c) of the Code of

Civil Procedure denotes the whole bundle of material facts

which are necessary for the plaintiff to prove, in order to

entitle him to the reliefs claimed in the suit.

The expression "cause of action", has acquired a

judicially settled meaning. In the restricted sense "cause of

action" means the circumstances forming the infraction of

the right or the immediate occasion for the action. In the

wider sense it means the necessary conditions for the

maintenance of the suit, including not only the infraction of

the right, but the infraction coupled with the right itself.

Compendiously the expression means every fact by which

it would be necessary for the plaintiff to prove, if

traversed, in order to support his right to the judgment of

the Court. Every fact which is necessary to be proved, as

distinguished from every piece of evidence which is

necessary to prove each fact, comprises "cause of action".

In REED V. BROWN reported in [1888] 22 QBD

128, P 131 Lord Esher M.R., defined "cause of action" to

mean "every fact which it would be necessary for the

plaintiff to prove, if traversed, in order to support his right

to the judgment of the Court. It does not comprise every

piece of evidence which is necessary to prove each fact,

but every fact which is necessary to be proved."

Fry L.J., agreed and said: --

"Everything which, if not proved, gives the defendant an immediate right to judgment, must be part of the cause of action."

The aforesaid passages have received the approval

of the Privy Council in AIR 1949 PC 78 and also of the

Supreme Court in AIR 1960 SC 1309. To put it in a

concise form, the words "cause of action" means the whole

bundle of material facts which are necessary for the

plaintiff to prove, in order to entitle him to the reliefs

claimed in the suit.

Order 6, Rule 2 of C.P.C requires that every pleading

shall contain and contain only, a statement in a concise

form of the material facts on which the party pleading

relies for his claim or defence as the case may be, but not

the evidence by which they are to be proved.

Reading Order 6, Rule 2 of C.P.C it is clear that the

words "material facts" occurring in Order 6, Rule 2 of C.P.C

with reference to a plaintiff means the facts necessary to

form a complete cause of action. It is imperative that the

facts constituting the cause of action must find place in the

plaint. Material facts means all facts upon which the

plaintiffs cause of action or the defendant's defense

depends.

A suit is always based on cause of action. There can

be no suit without a cause of action. A cause of action is a

bundle of facts which taken with the law applicable, gives

the plaintiff a right to relief against the defendant. It must

include some act done by the defendant since in the

absence of an act, no cause of action can possibly accrue.

It is not limited to actual infringement of right sued on, but

includes all the material facts on which it is founded. It

does not comprise of evidence necessary to prove such

facts, but every fact is necessary for the plaintiff to prove

to enable him to obtain a decree.

It is a medium upon which the plaintiff asks the

Court to arrive at a conclusion in his favor. In legal

parlance, the expression "cause of action" is generally

understood to mean a situation or a state of facts that

entitles a party to maintain an action in a court or a

Tribunal; a group of operative facts giving rise to one or

more basis for suing; a factual situation that entitles one

person to obtain a remedy in court from another person.

It is true that a plaint which does not disclose any

cause of action should be rejected. But it would be

relevant to note that there is a clear difference between

the non-disclosure of cause of action in the plaint and the

absence of cause of action for the suit. What is required to

be disclosed by the plaintiff is a clear right to sue.

In the words of Krishna Iyer J. as stated in

T.ARIVANDANAM case (AIR 1977 SC 2421); To

ascertain whether a plaint does or does not disclose a

cause of action, plaint must be read in a meaningful

manner. What is excluded indeed is a frivolous plaint or

one which merely pretends to have a cause of action which

merely creates an illusion of a cause, where there is none.

Bearing these principles, let me see what facts I

have here.

The plaintiff has pleaded that the first defendant was

maintaining a running account with the plaintiff. The first

defendant has made purchase of Rs.52,50,755/- (Rupees

Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty-

Five only) from the plaintiff for the period commencing

from August 2011 to February 2013. The defendants also

paid the major portion of the amount to the plaintiff.

As on 27th June 2014, the crystallized outstanding

liability was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen

Thousand Nine Hundred and Fifty-Two only). Out of the

total crystallized outstanding amount of Rs.9,13,952/-

(Rupees Nine Lakhs Thirteen Thousand Nine Hundred and

Fifty-Two only), a sum of Rs.7,36,095/- (Rupees Seven

Lakhs Thirty-Six Thousand and Ninety-Five only) was

recovered from the sales proceeds of beam-stalk and the

remaining amount of Rs.1,77,857/- (Rupees One Lakhs

Seventy-Seven Thousand Eight Hundred and Fifty-Seven

only) was paid by cheque. The cheque was dishonored.

Subsequently, the amount was recovered from the first

defendant.

It is also pleaded that there was a delay on the part

of first defendant to make payment of the invoice amount.

Accordingly, as per the contract, the plaintiffs were entitled

to claim interest as and when there is a delay in payment

of the invoice amount.

As could be seen from the plaint, the cause of action

pleaded (para No.13 of the plaint) is the entire course of

business between plaintiff and the defendants and also the

legal notices dated 07.01.2015 and 09.02.2015

respectively. The prayer sought is directing the defendants

to pay the outstanding amount of Rs.5,31,398.41/-

(Rupees Five lakhs Thirty-One Thousand Three Hundred

Ninety-Eight and Forty-One paise) along with interest at

the rate of 21% per annum from the date of the suit till

the date of payment.

The question for consideration is whether there is

any cause of action against defendants in support of the

relief claimed in this suit.

The cause of action pleaded at para No.13 of the

plaint is as under:

"The plaintiff humbly submits that the cause of action for this suit on the date of placing orders by the defendants for supply of goods, on the date of supplies of goods to the defendants, on the date of payment, on the date of issuance of cheque dated 25th Nov.2014, on the date of dishonour of the cheque, when the defendants have paid the value of cheque, on 7th Jan.2015 and 9th Feb.2015, 5th March 2015, 25th March 2015 when the plaintiff has issued legal notices, on the date of receipt of the legal notice, issuance of reply to the legal notice, the rejoinder and also on various dates where the parties are carrying their respective business within the territorial jurisdiction of this Honourable Court."

The material facts which require to constitute a

complete cause of action against defendants in this case,

according to this court would be are:

a) The circumstances forming the infraction of

the right.

b) The immediate occasion for the action.

c) The facts which give rise to a plaintiff to

assert a claim for interest.

d) The factual situation that entitles plaintiff to

obtain a remedy.

e) The particulars so as to enable the defendant

and the court to ascertain whether in facts

and in law the cause of action did arise.

f) The facts constituting the cause of action for

recovery of the interest.

I have carefully perused the pleadings. In the plaint,

there is absolutely no mention of the aforesaid material

facts except a vague allegation thereof to the effect that

defendants are liable to pay the interest.

On a careful consideration of the plaint, the material

facts which are necessary to constitute a cause of action

against defendants have not been pleaded by the

plaintiff. Hence, I have no hesitation in holding that the

plaint does not disclose the material facts constituting a

cause of action so as to initiate action against the

defendants for the claim of interest. On this ground alone,

the Trial Court ought to have dismissed the suit.

LIMITATION

Let me answer the next point for consideration i.e.,

whether the action brought by the plaintiff is well within

time?

While addressing the argument, Sri.Sibu Gopinathan

learned counsel for the defendants submitted that the suit

is barred by time. I have given my anxious consideration

to the said contention. Let me examine whether the suit is

in time or is barred by limitation.

It is not in dispute that the transaction between the

plaintiff and the first defendant commenced during 2011.

The plaintiff supplied materials to the first defendant. The

transaction was a credit sale, where, on supply of

materials, the first defendant was required to make the

payment within the credit period of 30 days from the date

of issuance of invoice. A sale with a stipulation to charge

interest after 30 days is a sale on credit for the period

stipulated, and not cash sale.

For the price of goods sold and delivered to be paid

for after the expiry of a fixed period of credit, the time is

three years, when the period of credit expires. Under such

circumstances, Article 15 of the Limitation Act is

applicable.

A careful perusal of the plaint depicts that the

transaction between the plaintiff and the defendant

commenced in the year 2011, whereas the suit was filed in

the year 2015. Admittedly, the transaction having

commenced from the month of August 2011, the plaint

averments and also the evidence on record depicts that

the plaintiff received the amount without insisting on the

interest prior to 08.01.2013. Hence, the period of credit

has long expired during the year 2011. Despite there being

a breach of the credit period, the plaintiff has accepted

payment of principal amount. The time period stipulated

under Article 15 of the Limitation Act being three years (3

years), bars the plaintiff from claiming remedy in the year

2015. Hence, the suit is barred by time.

An appeal is the continuation of the proceedings of

the Lower Court and is in the nature of re-hearing. This

Court being the first court of appeal is fully within its

power to re-examine and re-appreciate the documentary

and oral evidence. In light of the same, this Court

proceeds to answer the other contentions.

WAIVER, ESTOPPEL OR FORBEARANCE

Having held that there is no cause of action and that

the suit is barred by time, the next point to be answered is

whether the conduct of plaintiff in accepting the

crystallized outstanding liability of Rs.9,13,095/- (Rupees

Nine Lakhs Thirteen Thousand and Ninety-Five only)

without interest would amount to waiver of its right to

claim interest as per the invoice.

To answer this contention, this Court finds it

necessary to address the law on the principle of waiver.

Waiver. Where one party voluntarily accedes to a

request by the other that he should not insist on the

precise mode of performance fixed by the contract, the

Court will hold that he has waived his right to insist that

the contract be performed in this respect according to its

original tenor.

It appears that the genesis of the doctrine of waiver

is attributable to the difficulties which arose out of a strict

application of the provisions of the Statue of Frauds 1677.

It has been noticed that any variation of a contract

required to be evidenced by writing must itself be in

writing. If it is merely oral, it is of no effect. Thus, any oral

forbearance or concession made by one party to the other

should also strictly be unenforceable. Nevertheless, the

courts showed themselves reluctant to apply this rule in its

full severity. Accordingly they established a distinction

between a variation (for which writing will be necessary in

the case of a contract required by the Statute to be

evidenced by writing) and a waiver (which may be oral in

any event). This distinction is most difficult to apply in

practice, although it has become much less important

since the almost total repeal of the Statute by the Law

Reform (Enforcement of Contracts) Act 1954.

A waiver may be oral or written or inferred from

conduct even though the provision is found in a contract

required to be evidenced by writing.

In the landmark case of PLEVINS V. DOWNING

(R), along with BESSLER, WAECHTER, GLOVER & CO.

V. SOUTH DERWENT COAL CO. LD., It was observed

that:

"...If the defendant, as he did, led the plaintiffs to believe that he would not insist on the stipulation as to time, and that, if they carried out the work, he would accept it, and they did it, he could not afterwards set up the stipulation as to the time against them. Whether it be called waiver or forbearance on his part, or an agreed variation or substituted performance, does not matter. It is a kind of estoppel. By his conduct he evinced an intention to affect their legal relations. He made, in effect, a promise not to insist on his strict legal rights. That promise was intended to be acted on, and was in fact acted on. He cannot afterwards go back on it."

In CHARLES RICKARDS LD. VS. OPPENHAIM

reported in (1950) 1 KING'S BENCH DIVISION 616 =

[(1950) All ER 420], the King's Bench Division while

answering the question of what constitutes waiver,

Denning L.J. has observed as under:

"...Upon this point I would say that in order to constitute a waiver there must be conduct which leads the other party

reasonably to believe that the strict legal rights will not be insisted upon. The whole essence of waiver is that there must be conduct which evinces an intention to affect the legal relations of the parties."

In JAGAD BANDHU CHATTERJEE V. NILIMA

RANI reported in (1969) 3 SCC 445, the Hon'ble

Supreme Court held: (SCC pp. 446-47, para 5)

5. In India the general principle with regard to waiver of contractual obligation is to be found in Section 63 of the Contract Act. Under that section it is open to a promisee to dispense with or remit, wholly or in part, the performance of the promise made to him or he can accept instead of it any satisfaction which he thinks fit. Under the Indian law neither consideration nor an agreement would be necessary to constitute waiver. This Court has already laid down in Waman Shriniwas Kini v. Ratilal Bhagwandas & Co. [Waman Shriniwas Kini v. Ratilal Bhagwandas & Co., 1959 Supp (2) SCR 217 : AIR 1959 SC 689] , SCR p. 226 that: (AIR p. 694, para 13)

13. ... waiver is the abandonment of a right which normally everybody is at liberty to waive. "A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right".

It is also pivotal to observe that under the Indian

Law, waiver can occur without consideration in exchange

for waiving off the right or an agreement to the effect of

waiving off of such a right, the conduct of the party is

sufficient in construing whether he has waived of his right.

Reverting to the facts of the case, the defendants

have specifically contended that the plaintiff by their

conduct has waived of their right to seek the relief of

interest.

In this regard, it would be relevant to refer to the

evidence of PW1 - Karthik, the Marketing Head of the

plaintiff's partnership firm, who was examined as PW1, he

has deposed in paragraph 4 of his chief examination as

under:

"I submit that the first defendant is maintaining a running account with the plaintiff for couple of years. The first defendant has made a purchase worth Rs.52,50,755/- (Rupees Fifty Two Lakhs Fifty Thousand Seven Hundred and Fifty Five only) from the plaintiff for the period commencing from August 2011 to February 2013 and the defendants have also paid the major portion of the outstanding amount to the plaintiff."

In the cross examination, he has further deposed

that the plaintiff has received a sum of Rs.52,50,755/-

(Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred

and Fifty-Five only) without interest and that as on

27.06.2014, the crystallized liability of the first defendant

was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand

Nine Hundred and Fifty-Two only).

"gÀÆ.52,50,755/-gÀ LgÀ£ï ¥ÉèÃmïì EvÁå¢ ¥ÀæwªÁ¢UÉ ¥ÀÆgÉʹzÉÝêÉ. F PÀÄjvÀÄ ¥ÀæwªÁ¢AiÀÄjAzÀ EAlgɸïÖ ºÉÆgÀvÁV ºÀt ¥ÀqÉ¢zÉÝêÉ. gÀÆ.52,50,755/-

ºÀtªÀ£ÀÄß ¥ÀqÉ¢zÉÝêÉ. ¢:27-06-2014 gÀAzÀÄ gÀÆ.9,13,952/- ªÀiÁvÀæ ¥ÀæwªÁ¢AiÀÄgÀÄ Qæ¸ÀÖ¯ÉʸïØ ®AiÀÄ©°n ºÉÆA¢zÀÝgÀÄ, ¤d. vÀzÀ£ÀAvÀgÀ JµÀÄÖ ºÀtªÀ£ÄÀ ß CªÀjAzÀ ¤ÃªÀÅ ¥ÀqÉ¢j JA§ ¥Àæ±ÉßUÉ ¸ÁQëAiÀÄÄ CªÀgÀÄ AiÀiÁªÀÅzÉ ºÀtªÀ£ÀÄß ¸ÀAzÁ¬Ä¸À°®è DzÀgÉ £ÁªÉà CªÀjAzÀ £ÁªÀÅ ¥ÀÆgÉʹzÀ ªÉÄnÃjAiÀÄ®ì£ÀÄß ªÀÄgÀ½ ¥ÀqÉzɪÀÅ. D PÀÄjvÀÄ ¸ÁPÀëöåzÀ°è ºÉýzÉÝãÉ. CzÀÄ gÀÆ.7,36,095/- PÉÌ JA§ÄzÀÄ ¤d. vÀzÀ£ÀAvÀgÀ ¥ÀæwªÁ¢¬ÄAzÀ gÀÆ.1,77,857/- ZÉPï ªÀÄÆ®PÀ ¥ÀqÉzÀgÀÆ ¸ÀzÀj ZÉPï £ÀUÀzÁUÀ°®è. vÀzÀ£ÀAvÀgÀ ¸ÀzÀj ºÀtªÀ£ÀÄß ¥ÀæwªÁ¢AiÀÄjAzÀ DgïnfJ¸ï ªÀÄÆ®PÀ ¥ÀqÉ¢zÉÝêÉ. ¢:27-06-2014 gÀAzÀÄ ¥ÀæwªÁ¢AiÀÄgÀÄ gÀÆ.9,13,952/- Qæ¸ÀÖ¯ÉʸïØ ®AiÀÄ©°n ºÉÆA¢zÀÝPÉÌ CzÀgÀ ªÉÄÃ¯É §rØ ¸ÀAzÁ¬Ä¸À¨ÉÃPÉA§ zÁR¯É EzÉAiÉÄà JA§ ¥Àæ±ÉßUÉ ¸ÁQëAiÀÄÄ D ¢£À CAvÀºÀ AiÀiÁªÀÅzÉ zÁR¯É EgÀ°®è JAzÀÄ £ÀÄrAiÀÄÄvÁÛgÉ."

The above deposition makes it evident that the

transaction between plaintiff and defendant commenced

from August 2011 and there was a pre-existing

contractuality between them prior to 08.01.2013. This

being the state of affairs, the conduct i.e., the acceptance

of the principal amount by the plaintiff without interest

prior to the said date, depicts the conduct that he evinced

an intention to affect their legal relationship.

It is needless to say that from the material available

on record, the conduct of the plaintiff in acceptance of

payment of the principal amount over a period of different

transactions, without the claim of interest from the

defendants amounts to waiver of his right to claim such

interest, as this conduct of the plaintiff, led the first

defendant to believe that they would not insist on such

claim and that they would merely accept the principal

amount. Therefore, by its conduct, the plaintiff evinced an

intention to affect their legal relations, and in effect made

a promise not to insist on its strict legal right to claim

interest. That promise was intended to be acted on, and

was in fact acted on, when they accepted the payments

made by the defendants post the credit period, without

raising a claim for interest. Hence, they cannot now go

back and claim the interest.

In the last resort, Sri.Madhukar Deshpande learned

counsel for the first respondent vehemently urged that

though the plaintiff received in total the crystallized

outstanding, the same was not in full and complete

satisfaction of the liability of the defendants. He also

submitted that such a satisfaction of discharge of liability

has to be in writing. In the absence of such a discharge in

the instant case, the defendants are liable to pay the

interest in full and complete satisfaction of their liability as

per the invoice.

I have considered the aforesaid contention. This

Court is unable to accept it for the simple reason that a

waiver may be oral or written or any be inferred from

conduct even though the provision waived is found in a

contract required to be evidenced by writing. Further, the

law on this point is well settled by the Hon'ble Apex Court

in JAGAD BANDHU CHATTERJEE's case referred to supra

that, Under the Indian Law neither consideration nor an

agreement would be necessary to constitute waiver.

Therefore, a written agreement discharging liability is not a

mandate of law, hence this contention fails.

In conclusion, the action initiated by the plaintiff

against the defendants must necessarily fail for the

following reasons:

1. Non-disclosure of facts constituting the

cause of action to claim interest.

2. Non-disclosure of the circumstances

forming the infraction of the right.

3. Action is barred by time.

4. Waiver of right to claim interest.

Accordingly, the points are answered.

Counsel for appellants and respondent have cited a

number of cases, but I do not think that the law is in

doubt. Each decision turns on its own facts. The present

case is also tested in the light of the aforesaid decisions.

For the reasons stated above, this Court is of the

view that there is no justification in confirming the

judgment and decree of the Trial Court.

In the result, the appeal is allowed. Accordingly, the

Judgment and decree dated 27.10.2016 passed by the

court of IX Addl. City Civil and Sessions Judge, Bangalore

in O.S.No.3204/2015 is hereby set-aside.

Parties to bear their own costs.

Sd/-

JUDGE TKN