IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA RFA No. 323 of 1992 Date of Decision: 28.2.2008 M/s Chemiplast Industries & anr. ...Appellants. Versus. H.P.Agro Industries ..Respondent. Coram: The Hon’ble Mr. Justice Jagdish Bhalla, Chief Justice. The Hon’ble Mr. Justice Deepak Gupta, Judge. Whether approved for Reporting? No For the Appellant(s): Mr.Anand Sharma, Advocate. For the Respondent(s): Mr. B.M.Chauhan, Advocate Per- Deepak Gupta, J. The appellants, hereinafter referred to as the plaintiffs, have filed this appeal against the judgment and decree dated 30th April, 1992 in Civil Suit No. 86 of 1983 in so far as the learned Single Judge has rejected the claim of the plaintiffs for grant of the interest. Since the dispute in the present appeal is only with regard to the interest, it is not necessary to give the detailed facts of the case. According to the plaintiffs, the respondent-defendant H.P. Agro Industries Corporation Limited, Shimla, hereinafter referred to as the defendant, placed an order for supply of one lac metres of polythene pipe with the plaintiffs on June 14, , 1981. The - 2 - defendant had agreed to made 100 per cent payment on delivery of pipes at Parwanoo. Admittedly, as against the order of one lac metres, only 45,000 metres of pipe was lifted by the defendant. The case of the plaintiffs was that though they were willing and ready to supply the balance goods and a notice was also served upon the defendant- company asking it to lift the balance quantity of 55,000 metres of pipe, the defendant failed to do so. Thereafter, the plaintiffs sold the remaining pipe for a sum of Rs. 33,000/- only after sending a notice to the defendant. The plaintiffs then filed a suit for recovery of Rs. 2,14,750/- on account of the cost of 55,000 metres of pipe along with interest at the rate of 9% per annum after adjusting the amount of Rs.33,000/- received by it. The suit was contested by the defendant- company. According to the defendant, the plaintiffs had not supplied the goods within the stipulated period and, therefore, it had cancelled the contract. On the pleadings of the parties, the following issues were framed by the learned Single Judge on 17.3.1984:- 1. Whether the plaintiffs firm is a partnership firm with Shri M.L.Gupta as its partner? OPP 2. Whether the plaintiffs have performed its part of the contract? OPP. - 3 - 3. Whether the defendant has performed its part of the contract? OPD 4. Whether the sale of goods vide invoice No.132 dated 31.7.1981 valued at Rs.64,000/- was not covered under the contract/supply order and was independent transaction? OPD. 5. To what amount, if any, the plaintiffs are entitled to? OPP. The learned Single Judge decided issues No.1 in favour of the plaintiffs. Issues No. 2, 3 and 4 were taken up together and the learned Single Judge came to the conclusion that defendant- Company had waived the stipulation making time of the essence of the agreement. The learned Single Judge further held that the plaintiffs were willing and ready to perform their part of the contract. Issue No.2 was decided in favour of the plaintiffs. Issue No.3 was decided against the defendant and in favour of the plaintiffs. As far as issue No.4 is concerned, it was held that the transaction was covered by the contract and was not an independent transaction. The learned Single Judge further went on to hold that the plaintiffs were entitled to balance cost of 55,000 metres of pipe along with cost of advertisement after adjusting the amount of Rs.33,000/- received by the plaintiffs from the sale of the pipe. Consequently a decree of Rs.1,76,800/- was passed in favour of the plaintiffs and - 4 - against the defendant. However, the claim of the plaintiffs for grant of interest was rejected on the ground that though the contract had been terminated by the defendant – company on 14.12.1981, no steps for re-sale of 55,000 metres of pipe were taken by the plaintiff till 4.12.1982. The learned Single Judge held that the goods could have deteriorated and, therefore, the plaintiffs were not entitled to interest. The defendant has not challenged the judgment of the learned Single Judge which has attained finality in all other respects. The reasoning of the learned Single Judge may be right to deprive the plaintiffs of the interest for the period anterior to the filing of the suit. However, once the suit had been filed, the defendant should have admitted the claim and paid the amount due. Once, it denied its liability to pay the suit amount and the suit was decided after 9 years, the plaintiffs could not have been disentitled to claim the interest pendente -lite. Section 34 of the Code of Civil Procedure, 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 prior to the institution of the suit, [with further interest at - 5 - 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 nationalized banks in relation to commercial transactions. Explanation I – In this sub-section, “nationalized 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.” Normally, any defendant who denies the legitimate claim of the plaintiff has to be held liable to pay interest pendente lite. No doubt, Section 34 is couched in discretionary terms. However, the discretion must be exercised by the Court in a judicious manner. The transaction in question was a commercial transaction. However, no contractual rate of interest was specified nor the same prevailing rate has been properly proved on - 6 - record. The claim of the plaintiffs has been adjudicated to be legal and valid. Therefore, we are of the considered view that the plaintiffs are entitled to recover the decretal amount along with interest @ 6% per annum as prescribed in Section 34 of the CPC. Keeping in view the aforesaid discussion, we partly allow the appeal of the plaintiffs and hold that the plaintiffs are entitled to interest @ 6% per annum on the decretal amount of Rs. 1,76,800/- with effect from 1.9.1983, i.e. the date of filing of the suit till payment/deposit of the said amount. The appeal is disposed of in the aforesaid terms. ( Jagdish Bhalla ), C.J. February 28, 2008. ( Deepak Gupta ), J. s.