In the absence of a contractual agreement for interest, parties are entitled only to a court-determined reasonable interest rate on delayed payments, which in this case was found to be 6% per annum.

JUDGMENT :

ANU SIVARAMAN, J.

1. These Regular First Appeals No.319/2021, 318/2021, 396/2021, 397/2021, 398/2021, 400/2021, 402/2021, 403/2021 and 404/2021 are filed challenging the judgment and decree dated 29.09.2020 passed by the XIV Additional City Civil Judge, Bengaluru (CCH.No.28) ('trial Court' for short) in OS No.968/2015, 969/2015, 979/2015, 978/2015, 972/2015, 973/2015, 980/2015, 977/2015 and 971/2015, respectively.

2. We have heard Shri. S.S. Naganand, learned senior counsel as instructed by Shri. Chandranath Ariga. K, learned counsel appearing for the appellants and Shri. Srinivasa Murthy S, learned counsel appearing for the respondents.

3. The plaintiffs were private limited companies, who supplied raw materials to the defendant - Society registered under the Karnataka Co-operative Societies Act, 1959, pursuant to an e-tender in which the plaintiffs' bids were accepted. Purchase orders stipulated that 80% of the invoice value is to be paid within 15 days from the date of receipt and acceptance of goods and the remaining 20% within 30 days. The plaintiffs contended that they were entitled to claim interest since the defendant delayed in making the payments. Legal notices demanding payment were issued by the plaintiffs, and the amounts due were paid by the defendant which was adjusted towards interest. Alleging that the defendant remained liable for the outstanding principal amount with current and future interest at the rate of 18% per annum, the plaintiffs instituted recovery suits before the trial Court.

4. The defendant appeared through the counsel and filed a written statement denying the averments in the plaint. It was specifically contended that the plaintiffs had paid the entire amounts towards supply of raw materials and that the defendant is not due to the plaintiffs in any sum. It was further contended that there was no contract for payment of interest between the parties and that the contention of the plaintiffs that the amounts paid have been adjusted towards interest is therefore completely without any basis. It was further contended that there was a complaint with regard to large scale misappropriation in the tender process of the defendant and that serious irregularities were pointed out by the auditor in his preliminary report. By order dated 04.09.2012, the Additional Registrar of Co-operative Societies had ordered an enquiry under Section 64 of the Karnataka Co-operative Societies Act, 1959. It is submitted that this was the reason for the delay in making the payment and that the full amount had admittedly been paid to the plaintiffs. It is stated that the claim of the plaintiffs which is based on the clear admission that the amounts paid have been adjusted towards interest and future interest at the rate of 18% per annum claimed is completely untenable and cannot be accepted under any circumstances.

5. Based on the pleadings of the parties and the materials on record, the trial Court framed the following issues:-

"1. Whether the plaintiff proves the defendant to be due to pay the suit claim amount?

2. Whether the plaintiff proves to be entitled for the interest on the amount as sought for?

3. What is the rate of interest to which the plaintiff is entitled?

4. Does the defendant prove that the amount as per the contract to be fully paid?

5. Whether the suit is in time?"

6. The representative of the plaintiff company was examined as PW.1 and documents were marked. The Additional Director, Finance of the defendant Society has been examined as DW.1 and the documents were marked.

7. The trial Court, after considering the pleadings and the evidence on record, answered issues No.1 to 3 are partly in the affirmative, issue No.5 in the affirmative and issue No.4 in the negative. It was held that the plaintiffs failed to prove the entitlement to the claim amount with interest at 18% per annum. However, it was found that the amounts due had been paid after a delay beyond the agreed period. Relying on Section 61 (2) of th