IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE TWENTY SIXTH DAY OF OCTOBER TWO THOUSAND AND TEN PRESENT HON’BLE SRI JUSTICE G.V.SEETHAPATHY A.S.No.1483 OF 1994 Between:- Central Warehousing Corporation, Rep. by its Warehousing Manager, Central Warehouse Manager, Adilabad …Appellant A n d M/s Raghunath & Company, Adilabad, Rep. by its Partner Raghunath …Respondent HON’BLE SRI JUSTICE G.V.SEETHAPATHY A.S.No.1483 OF 1994 JUDGMENT: This appeal is directed against the judgment and decree dated 08-04-1994 in O.S.No.28 of 1992, on the file of the District Judge, Adilabad, wherein the said suit was decreed-in-part for a sum of Rs.2,33,008/- with interest at 12% per annum from 08-04-1994 till the date of payment. 2. Heard the learned counsel for the appellant. None appeared for the respondent, though served with notices. Perused the record. 3. The respondent herein filed the suit for recovery of a sum of Rs.11,59,625/- with interest at 18% per annum on Rs.10,13,026/- from 01-07-1992 till the date of realization. 4. The plaintiff is a firm dealing in cotton, cottonseed, cottonseed oil cake etc. The defendant-Central Ware Housing Corporation is a corporate body. The defendant accepted the goods of the plaintiff for storage in their godown for reward. The plaintiff initially deposited 600 fully processed cotton bales with defendant for safe custody and subsequently withdrew 200 bales, leaving 400 bales with the defendant. On 08-06-1991, there was a fire accident in the godown of the defendant wherein all the 400 bales of cotton got burnt. The plaintiff was intimated of the same. The plaintiff lodged a claim for Rs.17,85,291/-, which comprised the market value of the cotton bales in a sum of Rs.17,16,626/- and APGST at 4% in a sum of Rs.68,665/-. The plaintiff demanded payment of the said amount within 15 days by way of a notice. On persistent demands, the defendant paid Rs.9,00,000/- to the plaintiff on 25-01-1992. For recovery of the balance amount with interest at 18% per annum, the suit is filed. 5. The defendant filed written statement inter alia contending that subsequent to filing of the suit, a further sum of Rs.7,31,000/- was paid to the plaintiff on 20-11- 1992 and the balance amount of Rs.85,626/- will be paid, as soon as the amount is received from the insurance company. The defendant also disputed their liability to pay any interest on the ground that there was no negligence or delay on their part and as and when the amount is released by the insurance company, the same was paid to the plaintiff. The defendant further contended that the National Insurance Company was also a proper and necessary party to the suit. 6. On the strength of the pleadings, the trial Court framed the following issues: i) Whether the plaintiff is a registered partnership firm? ii) Whether the plaintiff is entitled to APGST amount and interest? iii) Whether the National Insurance Company, New Delhi is a necessary and proper party to the suit? iv) To what relief? 7. P.W.1 was examined and Exs.A-1 to A-10 were marked on behalf of the plaintiff. D.W.1 was examined and Exs.B-1 to B-26 were marked on behalf of the defendant. 8. On issue No.1, the trial Court held that the plaintiff is a registered firm. On issue No.3, the trial Court held that the insurance company is neither necessary nor proper party to the suit. On issue No.2, the trial Court held that the plaintiff is entitled to claim interest at 12% per annum on the value of the goods from 27-07-1991 to the date of institution of the suit and the plaintiff is not entitled to claim any amount towards APGST. Accordingly, the suit was decreed-in-part as stated above. Aggrieved by the same, the defendant-Central Warehousing Corporation filed the present appeal. 9. The learned counsel for the appellant would mainly contend that as per the terms and conditions stipulated and which were printed on the back of warehouse receipts Exs.B-1 to B-4, there is no stipulation for payment of any interest and the defendant was liable only for payment of value of the goods stored with the defendant and the defendant paid the same as and when the amounts were released by the insurance company and, therefore, there was no liability cast upon the defendant to pay any interest, as there was neither delay nor negligence on the part of the defendant. 10. The only point that arises for consideration in this appeal is – whether the appellant/defendant is liable to pay any interest and if so for what period and at what rate? 11. It is not disputed that as against the total claim of Rs.17,16,626/- made by the plaintiff towards the value of the 400 bales of cotton that were gutted in fire, the defendant paid a sum of Rs.9,00,000/- on 25-01-1992 i.e., prior to filing of the suit and subsequently after filing of the suit, the defendant paid a further sum of Rs.7,31,000/- on 20-11-1992. It is also in the evidence of P.W.1 that on 10- 02-1992, the defendant paid a sum of Rs.85,626/-. Thus, the entire principal amount was paid by the defendant. The suit claim includes interest component in a sum of Rs.1,96,400/- on the principal amount Rs.17,16,626/- at 18% from 08-06-1991 to 25-01-1992 and another interest component of Rs.77,934/- on the outstanding amount of Rs.10,13,026/- at 18% per annum from 26-01-1992 to 30- 06-1992 and APGST amount at 4% in a sum of Rs.68,665/-. The trial Court had rejected the claim of the plaintiff for the APGST amount and no appeal is filed by the plaintiff regarding the same. The trial Court, however, allowed the interest as claimed in the plaint and also future interest at 12% per annum from the date of decree i.e., 08-04-1994. 12. It is not disputed that the goods were insured with the National Insurance Company. Clause 5 of the terms and conditions stipulated on the back of the warehouse receipts Exs.B-1 to B-4 would show that the warehouseman’s liability is limited to the value of goods on the date of deposit. The National Insurance Company with whom the goods are insured is not made a party. No doubt, the terms and conditions do not stipulate that the discharge of the liability by the defendant for payment of the value of the goods is contingent upon the release of the insurance claim by the insurance company, as observed by the trial Court. However, there is nothing on record to show that there has been any willful negligence or lapse on the part of the defendant in making the payment to the plaintiff. In that connection, certain dates are relevant. The fire took place on 08-06-1991. The defendant informed the plaintiff about the same promptly. To the notice issued by the plaintiff, the defendant gave a reply stating that their liability is limited to the value of the goods, as per the terms and conditions printed on the warehouse receipts. It is not the case of the plaintiff that the accident occurred due to negligence on the part of the defendant. Even as per the report of the Station Fire Officer, the fire accident occurred because of short circuit. Within six months of the claim, the defendant made substantial payment of Rs.9,00,000/- on 25-01- 1992. The balance amount was admittedly paid by the defendant immediately after filing of the suit in 1992 itself. Admittedly, there is no stipulation for payment of any interest either in the terms and conditions printed on the receipt Exs.B-1 to B-4 or by way of any separate agreement. The trail Court invoking the provisions of Section 3 of the Interest Act, 1978 allowed the claim for interest at the rate claimed by the plaintiff. 13. As per Section 3 of the Interest Act, in any proceedings for recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the Court may allow interest at a rate not exceeding the current rate of interest. The present suit is not one for recovery of any debt or damages. The claim made by the plaintiff is for recovery of the value of the goods deposited by them. Even otherwise, the facts of the present case would disclose that there has been no negligence on the part of the defendant in making the payment and as and when the amounts were released by the insurance company, the same were paid to the plaintiff and about half of the claim was paid away even before filing of the suit and the remaining half shortly after filing of the suit. It is, therefore, not a case where there has been inordinate or unreasonable delay in settling the claim of the plaintiff, warranting award of interest by invoking the provisions of the Interest Act, in the absence of any contract for payment of interest. The decree passed by the trial Court allowing the claim for interest for the period from 08-06-1991 till the date of filing of the suit i.e., 30-06-1992 at 18% per annum, is held unsustainable. The plaintiff is, however, held entitled for interest at 12% per annum from the date of suit i.e., 01-07-1992 till the date of payment on 20-11-1992 on the amount of Rs.7,31,000/-. 14. The judgment and decree of the trial Court are modified accordingly. 15. In the result, the appeal is allowed-in-part as stated above. There shall be no order as to costs. ____________________ G.V.SEETHAPATHY, J 26th October, 2010 Lrkm