Sheri Narsimha Reddy vs Sri Jyothi Seeds
2022 Latest Caselaw 3385 Tel

             THE HON'BLE SMT. JUSTICE M.G.PRIYADARSINI
                            A.S.NO.2797 OF 2004
                                  JUDGMENT

Assailing the judgment and decree passed by the court of Junior Civil

Judge at Ibrahimpatnam, Ranga Reddy District in O.S.No.35 of 1999 dated

08.04.2002 in decreeing the suit for recovery of money, the defendant filed the

present appeal.

2. The respondent herein is the plaintiff in the suit, and it is the dealer

and distributor of pesticides and seeds and running business under the name

and style of Jyothi Seeds, Hyderguda, Hyderabad, and it is represented by its

proprietor P.Sathyanarayana s/o Venkateshwarlu. The appellant is the

defendant in the suit.

3. As per the plaint averments, the appellant / defendant was

purchasing the pesticides and seeds on credit basis, and was paying part

payments, and for the purchases made by him during the year 1995, he was

due an amount of Rs.99,526-64 ps., and out of the said amount, after

adjusting the amounts he paid, he was found to be due an amount of

Rs.54,026.64 ps., as on 17.12.1995. As he failed to pay the said amount

despite repeated demands, the respondent / plaintiff issued legal notice on

4.5.1998 demanding the said amount with interest at 24% per annum. As the

amount was not paid, it laid the suit for recovery of the money claiming an

amount of Rs.54,026-64 ps as principal, and Rs.38,898-36 towards interest

from 17.12.1995, to the date of filing of the suit, at the rate of 24% per annum.

Thus the plaintiff filed suit for recovery of an amount of Rs.93,425.00 with

interest at the rate of 24% per annum, as the transaction being commercial.

4. The appellant / defendant filed written statement before the trial

court denying liability.

5. The trial court after framing appropriate issues and considering the

evidence, both oral and documentary, adduced by the parties, decreed the

suit with costs for Rs.93,425.00 with interest at rate of 24% per annum from

the date of the suit till the date of realization. Assailing the same, the

defendant in the suit filed the present appeal.

6. In this appeal, learned counsel for the appellant/defendant submits

that the trial court has not properly appreciated the evidence available on

record while holding that the appellant / defendant is still due an amount of

Rs.54,026.64 ps. as on 17.12.1995. He submits that the trial court has

erroneously held that the respondent / plaintiff is entitled to interest as

calculated by him and for recovery of the amount. He submits that it is not a

suit for recovery of money, and it is a suit for the price of goods sold and

delivered, where no fixed period of credit was agreed upon. Hence levy of

interest at the rate of 24% is excessive and sought to reduce the same.

7. Though notice is served, none appeared for the respondent /

plaintiff.

8. As the appeal is of the year 2004 and had undergone number of

adjournments, the same is taken up for disposal on merits.

9. In view of the facts and circumstances of the case and the

submissions of the learned counsel for the appellant / defendant, the issue

that arises for my consideration is 'whether the impugned judgment and

decree of the trial court with regard to levy of interest warrants any

interference'?

10. The suit is for recovery of price of goods sold and delivered to the

plaintiff. The trial court based on the evidence held that the appellant /

defendant purchased the goods from the plaintiff vide bills Exs.A-2 to A-7, A-

13 to A-18 and paid certain amounts to the respondent / plaintiff vide Exs.A-8,

A-9, A-10, A-11 and A-12 respectively. The trial court further held that

appellant / defendant failed to show that he always purchased the goods i.e.,

pesticides and seeds from the respondents / plaintiffs on cash basis, and that

the evidence on record showed that he purchased the goods by payment on

credit basis and that he paid certain amount on different dates. The trial court

based on evidence held that the appellant / defendant is still due an amount of

Rs.54,026/- as on 17.12.1995.

11. The appellant / defendant has not pointed out any contra evidence

to interfere with this finding of the trial court.

12. The respondent / plaintiff issued a legal notice on 4.5.1998

demanding the appellant / defendant to pay the amount along with interest at

the rate of 24% per annum. But however, the same remained unpaid and

hence the suit came to be filed. The plaintiff claimed an amount of

Rs.54,026/- towards the principal and Rs.38,898.36 ps. towards interest at the

rate of 24% from 17.12.1995 till the date of filing of the suit on 16.12.1998.

Thus the principal claim is made at Rs.93,425/- and in the preceding

paragraph, it is found that the respondent / plaintiff could prove that appellant /

defendant is due an amount of Rs.54,026/- as on 17.12.1995, and the issue is

with regard to claim for interest on the said amount till the date of filing of the

suit.

13. As noted above, the claim in the suit is for unpaid amount for the

goods sold and delivered, and it is a commercial transaction and the plaintiff

also issued notice to the defendant claiming the principle amount along with

interest at the rate of 24% per annum, and as the same remained unpaid, filed

the suit. In these circumstances, the plaintiff is entitled to claim interest at the

rate of 24% per annum from 17.12.1995 i.e., the date on which the amount

was due for payment, till the date of filing the suit. (See M/s BANGLAORE

W.S. AND SEWERAGE BOARD vs. M/S SUGESAN & Co. (P) LTD. AIR

1999 MAD. 49.)

14. A five judge Constitutional Bench of the Apex Court in CENTRAL

BANK OF INDIA vs. RAVINDRA {2001(4) SUPPL. SCR 323}, in a reference

while considering the meaning to be assigned to the phrases "the principal

sum adjudged" and "such principal sum" as occurring in Section 34 of C.P.C.,

a question of frequent recurrence and having far reaching implications in suits

for recovery of money, specially those filed by banking institutions against

their borrowers, answered as under:

(1) Subject to a binding stipulation contained in a voluntary contract between the parties and/or an established practice or usage interest on loans and advances may be charged on periodical rests and also capitalised on remaining unpaid. The principal sum actually advanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum on the date of the suit.

(2) The principal sum so adjudged is 'such principal sum' within the meaning of Section 34 of the Code of Civil Procedure Code, 1908 on which interest pendentelite and future interest i.e. post-decree interest, at such rate and for such period which the Court may deem fit, may be awarded by the Court.

(3) Corporation Bank v. H.S. Gowda and Anr., [1994] 5 SCC 213 and Bank of Baroda v. Jagannath Pigment & Chem. have been correctly decided."

15. From the above Constitution Bench judgment of Apex Court it is

clear that the principal sum actually due coupled with interest by way of

capitalization method can be adjudged as principle sum as on the date of filing

of the suit, on which interest pendentelite and future interest i.e. post-decretal

interest, at such rate, and for such period, which the Court may deem fit, may

be awarded.

16. Thus, based on the facts and circumstances and the evidence on

record, the the respondent / plaintiff could prove that the appellant / defendant

is due an amount of Rs.93,425/-.

17. Coming to awarding of pendentelite and post decretal interest, as

per the above Constitution Bench of the Apex Court, the court has discretion.

As per the provisio to Section 34 of CPC, 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

contractual 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.

18. In the present case there is no written contract between the

parties, and the respondent / plaintiff claimed interest at the rate of 24% per

annum and also issued legal notice claiming the said rate of interest. Prior to

institution of suit, this court has allowed the interest claimed by the respondent

/ plaintiff. But pendentelite interest and post decree, as noted above, as per

the judgment of the Apex Court, this court has discretion, and same requires

to be exercised keeping in view the interests rates at which nationalized banks

lend money for commercial transactions, and that it shall not be excessive or

usurious.

19. In my considered view, levying of interest at the rate of 9% per

annum from the date of filing of the suit, till the date of decree, and thereafter

till realization at the rate of 7.5% would meet the ends of justice. The issue

framed is answered accordingly.

20. Accordingly, the judgment and decree passed by the trial court to

the extent of decreeing the suit with costs for Rs.93,425.00 is confirmed. And

with regard to rate of interest, the same is modified to the effect that, from the

date of filing of the suit till the date of decree, the respondent / plaintiff is

entitled to interest at the rate of 9% per annum, and from the date of decree,

till the date of realization, it is entitled to interest at the rate of 7.5% per

annum.

21. With the above modification with regard to rate of interest, the

appeal is disposed of.

22. Interlocutory Applications pending, if any, shall stand closed. No

order as to costs.

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M.G.PRIYADARSINI,J DATE: 05--07--2022 AVS