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2011 Supreme(Mad) 4255
Madurai Bench of Madras High Court
M. VENUGOPAL
T. Ali M/s Kohinoor Roller Flour Mills represented by its Managing Director
Versus
M/s Koodal Industries Ltd., Through one of its Directors Thiru B.Sundarapandian
S.A.(MD)No. 648 of 2006
Decided On :Decided on: 19-10-2011
For the Appellant:A.R. Sethupathy, Advocate.
For the Respondent:J. Barathan, Advocate.
The main legal point established in the judgment is the interpretation and application of Section 34 of the Civil Procedure Code and Section 73 of the Indian Contract Act in the context of a commercial transaction and the recoverability of compound interest.
Headnote:
Interest Claim - Commercial Transaction - Section 34 of Civil Procedure Code - Section 73 of Indian Contract Act - Main Legal Point
Fact of the Case:
The Respondent/Plaintiff filed a suit against the Appellant/Defendant for the recovery of a sum of Rs.1,73,535.85 with subsequent interest and costs. The Appellant/Defendant denied the claim of interest and asserted that no oral agreement for interest existed. The trial Court dismissed the suit, but the First Appellate Court decreed the suit for a reduced amount with future interest. The Second Appeal was filed by the Appellant/Defendant challenging the decree.
Finding of the Court:
The Court found that the claim of interest without a balance of principal was not maintainable in the absence of a memo of calculation. The suit claim was not barred by limitation. However, the Respondent/Plaintiff was not entitled to claim compound interest in a commercial transaction as the plea of oral interest was not proved. The Second Appeal was allowed, and the suit was dismissed.
Issues: Claim of interest without a balance of principal, Limitation of the suit claim, Recoverability of compound interest in a commercial transaction
Ratio Decidendi: The Respondent/Plaintiff's claim of interest without a balance of principal was not maintainable. The suit claim was not barred by limitation. However, the Respondent/Plaintiff was not entitled to claim compound interest in a commercial transaction as the plea of oral interest was not proved.
Final Decision: The Second Appeal was allowed, and the suit filed by the Respondent/Plaintiff was dismissed.
1. The Appellant/Respondent/Defendant has filed the instant Second Appeal as against the Judgment and Decree dated 29.06.2004 in A.S.No.140 of 2000 passed by the Learned Principal District Judge, Madurai in reversing the Judgment and Decree dated 20.03.2000 in O.S.No.1227 of 1995 passed by the Learned II Additional Subordinate Judge, Madurai.
2. Plaint Facts:
(i) The Respondent/Appellant/Plaintiff is a limited Company incorporated under the Indian Companies Act. One of the Directors of the Respondent/Plaintiff Company B.Sundarapandian, is empowered to sue and be sued on behalf of the Company as per resolution of meeting of the Board of Directors of the Respondent/Plaintiff Company dated 27.04.1993.
(ii) The Respondent/Plaintiff is a manufacturer of wheat flours at Madurai City. The Appellant/Defendant is running a flour mill at Kottayam, Kerala State. The Appellant/Defendant for the purpose of its business approached the Respondent/Plaintiff at Madurai Town for the supply of Wheat, which is the raw material for the flour mill of the Respondent/Plaintiff.
(iii) According to the Respondent/Plaintiff it was willing to supply Wheat to the Appellant/Defendant on the specific oral agreement that the Appellant/Defendant should pay interest at the rate of 30% per annum, compounded with Annual rests. (even though 18% per annum interest was collected as per bill in other cases for the purchase of Wheat products.)
(iv) The Appellant/Defendant had dealings with the Respondent/Plaintiff at Madurai Town by purchasing from 06.10.1992 till 16.02.1993. The Appellant/ Defendants agent one R.Duraisamy acted on behalf of his principal. The Appellant/ Defendant made part payments, which the Respondent/Plaintiff had credited towards the balance amount due from the Appellant/Defendant. Even these payments were to be extracted from the Appellant/Defendant by the Respondent/Plaintiff by repeated personal visits to the Appellant/Defendants place to collect the amounts, as letters and telegrams sent from Madurai proved futile. At the end of the accounting year on 31.03.1994, the Respondent/Plaintiff sent a statement of account with calculation of interest at 30% per annum along with a covering letter, requiring the Appellant/Defendant to pay the balance amount without further delay. The Appellant/Defendant had kept quiet without sending any reply. However it made some periodical part payments. The last payment made by the Appellant/Defendant was realised by the Respondent/Plaintiff on 17.03.1995. As per the statement of account sent to the Appellant/Defendant as on 15.02.1995, there was a balance of Rs.2,02,340/-. As regards the travelling expenses for collecting the amount from the Appellant/Defendant, the Respondent/Plaintiff sent a total sum of Rs.3,597.85/- from 20.09.1993 to 04.01.1995, the details of which were furnished to the Appellant/Defendant along with the statement of accounts.
(v) The Appellant/Defendant made a part payment of Rs.36,179/-on 17.03.1995. Interest due on the balance amount of Rs.1,42,932/- till 16.03.1995 came to Rs.3,407/-. The further cheque collection charge of Rs.121/- and travelling expenses of Rs.249/-incurred on 06.03.1995 were also liable to be paid by the Appellant/Defendant. As on 18.03.1995, a sum of Rs.1,73,535.85P.(Rupees One Lakh Seventy Three Thousand Five Hundred and Thirty Five and Paise Eighty Five only) was still due from the Appellant/Defendant on account of the dealings which the Appellant/Defendant had with the Respondent/Plaintiff at Madurai. The Respondent/Plaintiff sent letters to the Appellant/Defendant on 21.03.1995 and 05.05.1995 demanding the balance amount immediately. The Appellant/Defendant neither paid the balance amount nor sent any reply.
(vi) The Respondent/Plaintiff caused a lawyers notice dated 07.08.1995 to the Appellant/Defendant. The Appellant/Defendant received the notice on 10.08.1995 and sent a reply on 21.08.1995 to the Respondent/Plaintiffs Counsel. In reply notice,
