The main legal point established in the judgment is that a plaintiff's claim may be time-barred if final invoices are raised beyond the statutory period, and a defendant's counter claim must also be brought within the statutory limitation period. Additionally, a plaintiff cannot be burdened with foreign exchange rate fluctuations and interest due to a defendant's delayed remittance to foreign suppliers.

( 1 ) THE plaintiff has filed a suit for recovery of Rs. 14,70,095. 00. The plaintiff is a company incorporated and registered under the Companies Act, 1956. The suit has been instituted by Shri K. V. Soorianarayanan, who is the Vice-President (Corporate) and Company Secretary of the plaintiff Company in pursuance to the board resolution in his favour. Mr. K. V. Soorianarayanan has also appeared in the witness box as PW-1.

( 2 ) THE defendant is a corporation incorporated under the Mines and Minerals trading Corporation Act. The defendant inter alia carried on business as a canalising agent for imports in terms of the Import and Export Policy of the country. The plaintiff claims that it was engaged in the manufacture of asbestos Cement Products with the use of Raw Asbestos which was mainly imported from other countries. Raw Asbestos was at all relevant periods one of the designated canalised items for import by the defendant. Thus all manufactures of asbestos products used to source their raw asbestos from the defendant being the sole canalising agent.

( 3 ) IT is the case of the plaintiff that in order to find out the likely requirement of raw asbestos for a particular year, the defendant used to follow the practice that in the beginning of April every year information used to be sought in respect of the grade and price of raw material and in the month of november-December, the actual users were required to register their requirement of raw asbestos. The plaintiff used to accordingly register its requirement. The defendant used to contract with various foreign sellers for purchase of canalised item on a principal to principal basis and in turn the defendant used to enter into independent agreements with raw asbestos users like the plaintiff. The sale used to take place on high seas sales price and the defendant issued telegrams intimating the allotted quantity and used to call upon the plaintiff/actual users to pay the amount as specified in the proforma invoice. On the payment being made in pursuance to the proforma invoice, the defendant used to endorse the original bill of lading in favour of the actual user to enable it to receive the goods, pay duties, warehouse the same and arrange for marine insurance etc. The documentation and payment of various dues used to be done before the vessel enters custom frontiers.

( 4 ) THE defendant thereafter used to raise final invoices for each shipment as per the quantity sold. The final invoice used to cover any fluctuation in exchange rate between the date of raising the proforma invoice and date of payment by the plaintiff. Such final invoices used to be raised within a few months from the date of the proforma invoice. It is the case of the plaintiff that normally refund used to be found due and the amount used to be refunded to the plaintiff.

( 5 ) THERE is really no dispute in respect of the aforesaid procedure and the defendant has explained that the proforma invoice used to include a four per cent extra amount over the CIF price to cover the exchange rate fluctuations. The refund thus used to normally take place as there was not much fluctuation in the exchange rate.

( 6 ) THE subject matter of dispute is the shipments in the year 1990-91 whereby the plaintiff received nine shipments from Bombay port and four shipments from madras port. The plaintiff made payment as per the proforma invoices. It is the case of the plaintiff that a sum of Rs. 8,56,302. 00 is liable to be refunded to the plaintiff, which has not been so refunded. The plaint explains that apparently the defendant has not refunded the amount on the basis that the defendant was entitled to certain credit facilities under Government instructions and that the exchange rate fluctuation was more which was liable to be debited to the plaintiff. It is the case of the plaintiff that there were no such alleged instructions ever brought to the notice of the plaintiff and the contract price between