Andhra Pradesh High Court
Judges : K.S.SHRIVASTAVA
Andhra Cotton Mills Ltd., Deputy General Manager, Proddatur - Appellant
Versus
Sri Lakshmi Ganesh Cotton Ginning Mill, rep.by its Partner, K.M.Mohana Rao, Guntur - Respondent
Decided On : 09-05-95
SALE OF GOODS ACT, 1930 - SECTION 61(2) - INTEREST ON UNPAID PRICE - COURT'S POWER TO AWARD INTEREST - SCOPE - SUIT FOR RECOVERY OF INTEREST ONLY - MAINTAINABILITY.
Fact of the Case:
Plaintiff sued defendant for recovery of Rs. 373-37 ps. towards principal and interest at 18% per annum on the total price of cotton sold on credit, claiming a decree of Rs. 49,010-05 ps. Defendant denied the agreement for payment of interest and pleaded that no interest was payable till 19-12-1979 as per their oral agreement. The trial court granted interest at 12% per annum under Section 61(2) of the Sale of Goods Act, 1930, amounting to Rs. 24,064-28 ps., and passed a decree for the balance amount of Rs. 378-37 ps.
Finding of the Court:
The court held that Section 61(2) of the Sale of Goods Act, 1930, empowers the court to award interest in a suit by the seller for the amount of the price, and this provision is not limited to suits for the recovery of the unpaid price of goods sold. The court interpreted the provision to include suits for the recovery of interest only, as it would be unjust to deny the seller relief due to technical defenses raised by the purchaser.
Issues: Whether interest can be awarded under Section 61(2) of the Sale of Goods Act, 1930, in a suit filed by the seller for the recovery of interest only, even if the suit does not seek the recovery of the unpaid price of goods sold.
Ratio Decidendi: The court interpreted Section 61(2) of the Sale of Goods Act, 1930, to include suits for the recovery of interest only, as it would be unjust to deny the seller relief due to technical defenses raised by the purchaser. The court reasoned that the intention of the legislature in enacting this provision was to prevent the seller from suffering loss due to the purchaser's default in payment, and that this intention would be frustrated if the seller were precluded from suing the purchaser for interest only.
Final Decision: The court dismissed the appeal and upheld the trial court's decree for the recovery of interest at 12% per annum under Section 61(2) of the Sale of Goods Act, 1930.
( 1 ) THIS appeal is against the judgment and decree passed by the Subordinate judge, Guntur ino. S. No. 309/1980 dt 30-6-1982. The defendant is the appellant.
( 2 ) THE facts which are no longer in controversy before me, in short are that on 9-8-1977 the appellant-defendant had purchased 50 bales of cotton, the net weightof which is 84 quintals 79 kgs. 500 grams,at the rateofrs. 1,251-62ps. per quintal for a total sum of Rs. 1, 06, 131-12 ps. through invoice No. 2/19. On the same day, the appellant-defendant also purchased 28 borems of cotton, the net weight of which is 38 quintals 57 kgs. and 500 grams, at the rate of Rs. 1, 406-28 ps. per qunital for a total sum of Rs. 54, 247-25 ps. through invoice No. 2/18. The invoices were prepared on 9-8-1977. The sold bales of cotton were delivered to the appellant-defendant on the same day. He had purchased the cotton on credit. The payment was agreed upon to be made after one week therefrom. But the appellant-defendant paid Rs. 1,60,000/- in instalments after two years, leaving a balance of Rs. 378-37 ps. towards the unpaid price of the cotton sold.
( 3 ) THE respondent-plaintiff brought a suit for recovery of Rs. 373-37ps. towards principal and interest at the rate of 18% per annum on the total price of cotton sold on credit and thus he claim for a decree of Rs. 49,010-05 ps. from the defendant-appellant, alleging that he did not pay the agreed interest as also the price of the cotton sold within the stipulated time.
( 4 ) THE appellant-defendant denied the allegations made in the plaint and pleaded that no agreement for payment of interest was ever made between the parties to the suit. In fact, the market position of cotton in the year 1977 was dull and therefore, the respondent - plaintiff had pursuaded the defendant- appellant to purchase the cotton under an oral agreement, in which it was agreed that payment would be made in instalments as per the convenience of theappellant-defendant. The respondent-plaintiff did notclaim interest before 19-12-1979 because it was agreed upon the parties to the suit that no interest should be paid till then by the appellant-defendant. He had sent a cheque for rs. 378-37 ps. on 6-2-1980 in full and final satisfaction of the claim of the respondent-plaintiff. Therefore, no cause of action for the suit has arisen.
( 5 ) THE learned lower Court, on assessment of the evidence adduced by the parties to the suit, reached the conclusion that the respondent-plaintiff has failed to prove that the defendant-appellant had an agreement for payment of interest. It is further concluded that the respondent-plaintiff has also failed to prove that there was trade usage and custom for the payment of interest. It is. further concluded that the respondent-plaintiff has failed to prove the agreement for payment of interest on the price of the cotton sold by him. The learned lower court, however, granted interest at the rate of 12% per annum under Section 61 (2) of the Sale of Goods Act, 1930 (for short the Act ) amounting to Rs. 24,064-28 ps. It has also passed a decree for the balance amount of Rs. 378-37 ps. Thus, a decree for Rs. 24,442-65 ps. has been passed against the appellant-defendant.
( 6 ) FEELING aggrieved by the impugned judgment and decree, the defendant has preferred this appeal. It has been urged on behalf of the appellant that interest under Section 61 (2) of the Act can be awarded by the court, only when itisa suit by the seller for the amount of price of the goods sold. If defendant (sic. plaintiff) has not instituted the suit regarding the price of goods sold, he is precluded from suing the purchaser only for the amount of interest on unpaid price of goods sold.
( 7 ) THE plaintiff-respondent in para 4 of the plaint has pleaded that the appellant-defendant has paid Rs. 1,60,000/- in instalments leaving a balance of rs. 378-37 ps. towards principal amount. It is not disputed before me that though this amount of Rs. 378-37 ps.
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