In the High Court of Judicature at Madras Dated: 10.7.2008 Coram The Honourable Mr.Justice A.C.ARUMUGAPERUMAL ADITYAN A.S.No.892 of 1997 1.M/s M.Ganesan and Bros (set exparte in the lower Court) 2. M.Ganesan 3. M.Senthurpandian ..Appellants/Defendants 2and 3 v. Vimala Devi Sole Proprietrix Bajrang Textile Traders 71.Godown Street Madras-600 001 ..Respondent/Plaintiff This appeal is filed under Section 96 and Order XLI Rule 1 of CPC against the decree and Judgment of the II Additional Judge, City Civil Court, Chennai dated 14.3.1997 in O.S.No.9590 of 1996. For Appellants : Mr.D.Vijay,Advocate For respondent : Mr.K.Bakthavatchalu,Advocate JUDGMENT This appeal has been directed against the Judgment and Decree in O.S.No.9590 of 1996 on the file of II Additional Judge, City Civil Court, Chennai. 2. The averments in the plaint sans irrelevant particulars are as follows: The defendants 2 and 3 are the partners of first defendant Firm who had purchased the goods from the plaintiff between 14.9.1987 and 23.6.1989 under various invoices. The amount due from the defendants under the said invoices comes to Rs.2,38,407.30ps. The defendants have agreed to pay the interest at the rate of 24% p.a. for the delayed payment. 29 Cheques drawn by the defendants in favour of the plaintiff in respect of the above said transactions were dishonoured by the Bank, on https://hcservices.ecourts.gov.in/hcservices/ presentation. The plaintiff, thereafter, issued suit notice dated 3.10.1989, which was received by the defendants on 12.10.1989. But in the letter dated 18.11.1989, the defendants have acknowledged the liability and undertook to clear the entire dues on or before 1.12.1989. Since the defendants have failed to fulfill their promise, the plaintiff issued another suit notice dated 19.12.1989 to the defendants demanding the suit amount . As per the letter of undertaking dated 30.12.1989, third defendant on behalf of the other defendants, had acknowledged the liability and undertook to pay the amounts due before April 1990,but even thereafter, the defendants have failed to discharge their liabilities. As per the letter dated 1.2.1990,the defendants have reiterated their stand and undertook to pay the entire arrears on or before 30.4.1990. Since the defendants have failed to repay the dues before 30.4.1990, the plaintiff had issued suit notice dated 21.12.1991, for which the defendants have issued notice contending false and frivolous allegations. As per the acknowledgment dated 1.2.1990 and 30.4.1990, the suit is not barred by time. Hence the suit. 3. The first defendant remained exparte. The third defendant has adopted the written statement filed by the second defendant which runs as follows: The suit is not maintainable and the same is barred by limitation. The goods were supplied through a middleman by name Sekar. The defendants have returned the goods which were defective in quality. There was no agreement between the plaintiff and the defendants to pay any interest for the amounts due. For the suit notice, the defendants have sent a suitable reply. Hence the suit is liable to be dismissed. 4. On the above pleadings, the learned trial Judge has framed as many as five issues for trial. Before the trial Court, the husband of the plaintiff was examined as PW.1 and exhibited Exs A1 to A23. The third defendant has examined himself as D.W.1. No document was marked on the side of the defendants. After scanning the evidence both oral and documentary , the learned trial Judge has come to a conclusion that the suit is not barred by limitation and accordingly decreed the suit awarding 24% interest till the date of the suit for the amount due and 12% future interest from the date of the suit till the date of realisation on the principal amount of Rs.2,38,407.36ps. Aggrieved by the findings of the learned trial Judge, the defendants have preferred this appeal. 5. The points for determination in this appeal are (1) Whether the suit is barred by limitation and whether Ex A8 and Ex A10 will amount to acknowledgment of the liability to save the suit barred from Limitation? (2) Whether the interest awarded by the trial Court is correct? https://hcservices.ecourts.gov.in/hcservices/ (3) Whether the decree and Judgment in O.S.No.9590 of 1996 on the file of the second Additional Judge, City Civil Court, Chennai is to be set aside for the reasons stated in the memorandum of appeal? 6. Point No.1: According to P.W.1, the plaintiff is the Proprietrix of Bajrang Textile Traders, Madras with whom the defendants M/s M.Ganesan and Bros under Ex A1 series had entered into a contract to purchase the goods and the goods were supplied to the defendants but the defendants have failed to pay the amount due under ExA1 series on the due dates mentioned in the invoices. Hence as per agreement, the defendants according to P.W.1 are liable to pay 24% interest for the arrears due. According to P.W.1, 29 cheques were drawn in favour of the plaintiff by the defendants to discharge the amounts due under Ex A1 transactions. But all the 29 cheques were dishonoured by the bank on presentation. 6a) The learned counsel appearing for the respondent would contend that under Exs A8 and A10, the defendants have acknowledged their liability and undertook to discharge the amounts due to the plaintiff by the end of April 1990 and Ex A8 is dated 30.12.1989 and Ex A10 is dated 1.2.1990. Admittedly, the last date of supply of goods under Ex A1series is 23.6.1989. Now we have to see whether Ex A8 and Ex A10 will amount to acknowledgment of liability to save the claim of the plaintiff from limitation. Section 18 of the Limitation Act 1963 runs as follows: " Before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. Explanation: For the purpose of this Section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to https://hcservices.ecourts.gov.in/hcservices/ pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) the word"signed" means signed either personally or by an agent duly authorised in this behalf; and'(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right". Since admittedly, the last date of supply of goods by the plaintiff to the defendants was on 23.61989, the last date of limitation is 22.6.1992. Under Ex A8, the date has been mentioned as 30.12.1989. The third defendant has signed in ExA10 under which he has undertaken to pay the amounts due to the plaintiff by bi-monthly instalments and to discharge the same before April 1990. Ex A8 has been followed by Ex A10 dated 1.2.1990, letter in the letter pad of the first defendant firm signed by the third defendant on behalf of the defendants. Under Ex A10, the defendants have reiterated that they will discharge the amount due to the plaintiff for the suit transactions before April 1990. So as rightly held by the learned trial Judge that Ex A8 and Ex A10 will amount to acknowledgment of liability to save the suit barred from limitation. Point No.1 is answered accordingly. 7.Point No.2: When coming to the question of interest, the learned counsel appearing for the respondent would contend that under Section 34 of CPC, the plaintiff is entitled to claim contractual rate of interest which in this case is 24% p.a. The learned counsel for the respondent further would contend that even though the plaintiff is entitled to 24% interest from the date of the suit till the date of realisation, the learned trial Judge has awarded 24% interest from the date of the suit till the date of decree and has awarded only 12% p.a.interest from the date of decree till the date of realisation against which the plaintiff has not preferred any cross appeal. As per Section 34 of CPC, the plaintiff is entitled to claim the contractual rate of interest since the transactions between the plaintiff and the defendants is admittedly a commercial one. Section 34 of CPC reads as follows: (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period https://hcservices.ecourts.gov.in/hcservices/ prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum as the Court deems reasonable on such principal sum from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit: Provided that 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. Explanation I.—In this sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 (5 of 1970). Explanation II.—For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.] (2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie. 7a. Even though the learned counsel appearing for the appellant relying on a decision reported in A.K.Srinivasa Naidu-v- S.Jayarama Reddiar Firm by its registered Partner, S.Jayarama Reddiar(1976, MLJR 166) would contend that since the suit transactions between the plaintiff and the defendants is in respect of the supply of textile goods, the provisions under Section 61 of the Sale of Goods Act will apply and as decided by a Division Bench of this Court on the said ratio, the plaintiff cannot claim more than 6% interest. But the facts of the said case is that the plaintiff in that case on the strength of dealings in cotton trade between himself and the defendants between December 1961 and June 1967, claimed the suit amount on the basis of the statement of accounts which consists of two parts, one a statement of account https://hcservices.ecourts.gov.in/hcservices/ as reflected in their account books kept in the regular course of business and another account said to be interest account, which was arrived at after calculation by the plaintiff himself. On the basis of the above two said accounts, the plaintiff claimed a sum of Rs.65,222/77 in all. The defence taken by the defendants in his written statement was that there was no usage or custom to pay interest either compound or simple over all the transactions which took place between the plaintiff and the defendant and there was no mutual agreement between the parties to pay any interest. The learned trial Judge has decreed the suit on the basis of the calculation memo filed by the plaintiff. Aggrieved by the findings of the learned trial Judge, the said appeal was preferred before this Court wherein the relevant observation runs as follows: " But the question is whether the plaintiff is not entitled to any interest at all. We do not think so. Even in the absence of the contract to the contrary, the provisions of the Interest Act would come to the rescue of the creditor, whereby he could claim interest at 6% per annum on the net debt due provided he makes a demand for that purpose. It is not in dispute that the plaintiff made such a demand under Exhibit A-26. It, therefore, follows that under the said Act the plaintiff would be entitled to interest on the suit claim, which is not in dispute before us, viz., Rs.12,336/71 at 6% per annum from the date of demand viz., 28th October,1963 to the date of the suit and thereafter on the decreed amount at the same rate till date of realisation." 7b. In the said case, there was no agreement or contract between the parties in respect of payment of interest. But in the case on hand, even in Ex A1 series, the rate of interest has been mentioned as 24% p.a. for default in payment. Even under Ex A21, the third defendant had agreed to pay interest at the rate of 24% p.a in case of default in payment of dues. Under such circumstances, it cannot said that the rate of interest awarded by the learned trial Judge is exorbitant or against the provisions of law. Point No.2 is answered accordingly. 8. Point No.3: In view of my findings and discussions in the earlier paragraph, I hold on point No.3 that the decree and Judgment in O.S.No.9590 of 1996 on the file of Second Additional Judge, City Civil Court, Chennai,need not be set aside for the reasons stated in the memorandum of appeal. https://hcservices.ecourts.gov.in/hcservices/ 9. In fine, the appeal is dismissed confirming the decree and Judgment in O.S.No.9590 of 1996 on the file of Second Additional Judge, City Civil Court, Chennai. It is seen from the order passed in C.M.P.No. 15902 of 1997 dated 6.11.1997, 50% of the decree amount has already been deposited and withdrawn by the respondent. The plaintiff is liable to pay the remaining 50% of the decree amount with costs within one month. No Costs. Sd/- Deputy Registrar. /true copy/ Sub Asst. Registrar. sg To 1. The Registrar, City Civil Court, Chennai 2. The Record Keeper, V.R.Section, High Court, Madras 1 cc to Mr.K. Bakthavachalu, Advocate, sr. 36274 1 cc to Mr. Dharmakkan, Advocte, SR. 36319 A.S.No.892 of 1997 SS (CO) kk 22/7 https://hcservices.ecourts.gov.in/hcservices/