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A.K. Srinivasa Naidu Vs. S. Jayarama Reddiar Firm - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberAppeal No. 129 of 1972
Judge
Reported inAIR1977Mad56
ActsLimitation Act - Sections 19 - Schedule - Articles 1 and 14; Sale of Goods Act - Sections 61(2)
AppellantA.K. Srinivasa Naidu
RespondentS. Jayarama Reddiar Firm
Excerpt:
.....plaintiff himself as reflected in his account book and would point out that no interest has been claimed in such accounts as well. but by a closer scrutiny of the dealing and the payments respectively made by the parties, he came to the conclusion that the suit is not barred by limitation, as the defendant has paid well within the period of 3 years from the date of the suit an amount towards the suit debt and, therefore, the suit is saved by section 19 of the limitation act. on issue 2, whether the plaintiff is entitled to interest, the learned trial judge, on a curious reasoning, but after holding that the interest claimed by the plaintiff is exorbitant, and is also clearly untenable and unjust, found a case for the plaintiff on a memo of calculation filed by him at the time of the..........payment toward the same in december 1965 which are admitted and acknowledged by him. hence the suit claim is in time. the aforesaid letter of 7-11-1968 will be filed at the time of hearing'.2. in the written statement the defendant denied that there was any particular usage or custom to pay interest either compound or simple over all the transactions that had taken place between the plaintiff and the defendant and that he never paid or claimed interest till the date of the suit on the mutual dealings they had. he would, in particular, refer to the copy of the accounts given by the plaintiff himself as reflected in his account book and would point out that no interest has been claimed in such accounts as well. the defendant denied that he owed a sum of rs. 65,222-77. he, however,.....
Judgment:

Ramaprasada Rao, J.

1. The defendant is the appellant. The plaintiff, on the strength of dealings in cotton trade between himself and the defendant between December of 1961 and June of 1967, claimed the suit amount as per a statement of account, which consists of two parts, one a statement of account 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 said two accounts, the plaintiff claimed a sum of Rs. 65,222-77 in all. In paragraph 5 of the plaint he pleaded thus:--

'Though some of the items are more than 3 years from the date of suit the subsequent receipts were appropriated towards satisfaction of such items. Further by a notice issued on behalf of defendants on 7-11-1968, through their counsel and signed by defendant also, the defendant has acknowledged his liability and also a payment of Rs.60,000 made by him towards part of dues under deposit receipts dated 3-2-1966 aggregating for Rs. 60,000 issued by and through Vijaykumar Cotton Press to plaintiff. Besides defendants had made part payment toward the same in December 1965 which are admitted and acknowledged by him. Hence the suit claim is in time. The aforesaid letter of 7-11-1968 will be filed at the time of hearing'.

2. In the written statement the defendant denied that there was any particular usage or custom to pay interest either compound or simple over all the transactions that had taken place between the plaintiff and the defendant and that he never paid or claimed interest till the date of the suit on the mutual dealings they had. He would, in particular, refer to the copy of the accounts given by the plaintiff himself as reflected in his account book and would point out that no interest has been claimed in such accounts as well. The defendant denied that he owed a sum of Rs. 65,222-77. He, however, claimed that he deposited a sum of Rupees 20,000 with the plaintiff and he reserved his right to take separate steps to recover the amount. The question as to whether the deposit of the said amount with the plaintiff is true or not does not arise for consideration in the instant case. The defendant also pleaded that on 15-12-1965 and 27-12-1965, he paid sums of Rs.300 and Rs.500 to the plaintiff's agent and that he had also paid Rs.300 on 30-11-1966. The plaintiff in his reply statement would deny the above three payments and would sustain his pleadings otherwise. The following issues were framed--

1. Whether the payments alleged in the written statement are true?

2. Whether the plaintiff is entitled to interest?

3. Whether the suit is barred by limitation?

4. To what relief is the plaintiff entitled?

The learned trial Judge found that the payments alleged by the defendant in the written statement are not true. On the question whether the suit is barred by limitation, he was invited to render his opinion as to whether the account in question as reflected in the plaintiff's books of account could be treated as a mutual, open and current account. On this the learned Judge held that it was not and, therefore, he felt that it was unnecessary to go into the question as to whether the suit is barred or not under Article 14 of the Limitation Act. But by a closer scrutiny of the dealing and the payments respectively made by the parties, he came to the conclusion that the suit is not barred by limitation, as the defendant has paid well within the period of 3 years from the date of the suit an amount towards the suit debt and, therefore, the suit is saved by Section 19 of the Limitation Act. On issue 2, whether the plaintiff is entitled to interest, the learned trial Judge, on a curious reasoning, but after holding that the interest claimed by the plaintiff is exorbitant, and is also clearly untenable and unjust, found a case for the plaintiff on a memo of calculation filed by him at the time of the arguments and held that the defendant was bound to suffer the claim for interest to the tune of Rs. 16,401-50. In the result, therefore, he decreed the suit for a sum of Rs. 12,636-71, towards principal and Rs. 16,401-50 towards interest. It is as against this, the present appeal has been filed.

3. In our view, it is not necessary to go into the question whether the account in the instant case is governed by Article 1 of the Schedule to the Limitation Act of 1963 on the foot that it is a mutual, open and current account. The learned counsel for the appellant-defendant is unable to show any particular instance where at, the balance have tilted from one side to other. This tilting of balances at least at one point of time in a regular account is a relevant indicia to accept it as a mutual, open and current account. This not having been done and demonstrated before us, it is not necessary to harp on this aspect of the case to find whether the suit claim is not barred or the reason that the plaintiff's account should be characterised as a mutual, open and current account.

4. It is, therefore, for consideration whether the contention of the learned counsel for the appellant that the suit is barred by limitation is acceptable or not. Before the filing of the suit the plaintiff gave a notice of demand, Ex. A-26 dated 28-10-1968. He claimed a sum of Rs. 62,726-41, as the amount due by the defendant towards the dealings and claimed interest at 12% per annum on the said amount. To this the defendant sent a reply through his counsel which reads as under:

'To 7-11-1968Sri S. R. Sakthivel M. A. B. L.Advocate, 7/18 State Dank Road, Coimbatore-18 Sir,

We are instructed by Sri A. K., Srinivasalu Naidu, residing at 111 N. G. Narayanaswami St, New Siddapudur, P. N. Palayam Post, Coimbatore, to give the following reply to your notice, dated 29-10-1968, and received by our client on 6-11-1968. issued on behalf of Sri Jayaram Reddiar, B. A. M. L. C., Cotton merchant, 30 Kandapuram St, Virudhunagar.

Your client's claim of Rs. 62,726-41 is preposterous and false. Your client has given a statement of account on 31-12-1965 and as per that statement Rs. 72,986-71 was stated to be due by our client. But in that statement your client has not given credit to amounts of Rs. 300 and Rs. 500 paid on 15-12-1965 and 27-12-1965 respectively to your client's agent. A. Andiyappa Thevar. This omission was immediately brought to notice of the Agent of your client who promised to rectify it.

Vijayakumar Cotton Press owed our client large sums of money. Out of such amount at the request of your client, our client asked Vijayakumar Cotton Press to issue a fixed deposit receipt aggregating to Rs. 60,000 in partial discharge of our client's due. Your client has accepted these receipts and a cash voucher was passed to that amount to our client on 20-11-1966. Rs. 300 was paid in cash to your client's agent. Besides these payments, our client has advanced to your client Rs. 20,000 carrying interest at the rate of 12% per annum. All these amounts have to be adjusted by your client. After adjusting all these amounts it would be found that yours client himself owes money to our client. The claim made in your notice is unsustainable. Please advise your client to settle the mutual claims without resorting to court.

Sd......

Advocate.'

It is seen from the expressed recitals in the reply notice that the appellant acknowledged his liability towards the claim made by the plaintiff though not in full, but at least in part. According to the defendant, he has paid a sum of Rs. 60,000 in partial discharge of his dues to the plaintiff. This by itself is sufficient to bring the recitals made in Ex. A-26 within the meaning of Section 19 of the Limitation Act. This section reads as follows---

'19, Where payment on account of a debt...... is made before the expiration of the prescribed period by the person liable to pay the debt....... a fresh period of limitation shall be computed from the time when the payment was made'.

Undoubtedly, the sum of Rs. 60,000, which as it transpired, was given credit to by the plaintiff on 3-2-1966 is a payment made on account of a debt payable by the person liable to pay the debt within the meaning of Section 19 of the Limitation Act. Therefore, this payment towards the debt due, but which has not been solved on the date when Ex. A-27 was written, is sufficient acknowledgment of liability so as to extend the period of limitation to a further period of three years from the date of such payment. The learned counsel for the appellant does not raise any controversy as to the date on which the said sum of Rs. 60,000 has been credited by the plaintiff in his books. It can therefore, safely be presumed that the above sum of Rs.60,000 was paid towards the debt due by the defendant to the plaintiff as on 3-2-1966. After giving credit to a sum of Rs. 60,000, the plaintiff arrives at the balance at the end of that year at Rs. 12,686-71. Ultimately he gives credit to a further sum of Rs. 50 and claims the balance of Rupees 12,636-71 as principal in the present suit. Whatever may be the force in the contention of the appellant-defendant as to the claim for interest made by the plaintiff, we are unable to agree with the appellant that the principal amount of Rs. 12,636-71 was not payable by him on the date when the suit was instituted.

5. The next question is whether the plaintiff is entitled to the interest as claimed by him. It is very significant that even in the plaint, the plaintiff does not give a break up of the principal and the interest due. It is equally significant that the account books regularly, kept by the plaintiff does not disclose that at any time there was an understanding as between the plaintiff and the defendant to claim interest. It is not in dispute and as a matter of fact it was agreed before us that the ledgers produced in support of the suit claim do not support the claim for interest. But what has been very dexterously done by the plaintiff is he introduced along with the plaint what is known as 'interest account'. In the interest account he claimed 'rasi interest' i.e. interest payable on the price of goods sold and delivered till another supply is made by the plaintiff and latter supply is again taken into consideration for calculation of interest until another supply is made and so on. Obviously, this is a very clever way of claiming not only compound interest, but interest on compound interest As we said, the plaintiff did not reflect such a claim in his regular books of accounts. but he tried to usher in a self serving statement of account and called it 'an interest account' and claimed a large sum, such as Rs. 52,586-06 as and towards interest payable by the defendant. To this the learned counsel for the appellant takes an objection and contends that the interest as claimed is not only usurious and excessive, but cannot be claimed at all by the plaintiff under any known principle of law. The learned Judge himself finds that the method of calculation adopted by the plaintiff resulting in the claim of Rs. 52,586-06 is an unusual one and such exhorbitant claim of interest is clearly untenable and unjust. We agree with him on the ground that the interest as claimed by the plaintiff is usurious and indeed unsustainable, we are bound to relieve the defendant from such a claim.

6. The question, however, is whether the plaintiff is entitled to any interest at all. We have already referred to the account books, which is silent about the payment of interest. Even in the notice of demand, Ex. A. 26, the break up as to the principal amount and the interest amount have not been given. It is only at the time of arguments and that too at the request of the court, a memo of calculation was filed by the plaintiff, which showed that the plaintiff was calculating interest for each debit at 12% per annum. Being conscious of the fact that such interest ultimately worked out to Rs. 5,91,856 the plaintiff wanted to generously give counter interest to the defendant for all the payment made by him and for all the supplies also admittedly made by him in the course of their mutual dealings. On his own showing the interest which was claimed by the plaintiff and as shown in the memo of calculation worked out to Rs. 5,91,853, and the interest towards the credits in favour of the defendant came to about Rs. 5,59,053; the learned Judge was tempted to discover the difference between these two items and by a curious reasoning again reduced the rate percent to 6% and thereafter found that a sum of Rs. 16,401-50 could be awarded as interest towards the sum of Rs. 12,636-71. Mr. Lakshminarayana Reddi, Learned Counsel for the plaintiff, wants to sustain this claim on the ground that under Sec. 61(2) of the Sale of Goods Act, he would be entitled to such interest, because there was no contact to the contrary and as the liability to pay interest on the part of the defendant has statutorily arisen under Sec. 61(2)(a) of the Act. The learned counsel for the appellant however, would show that in the absence of any contract or understanding in the course of dealings as between the parties to pay interest by one to the other, the claim for interest is unsustainable

7. It is no doubt true that a seller is entitled to the award of interest on the price of the goods provided there was no contract to the contrary as between himself and the buyer. Obviously, therefore, this liability on the part of the buyer to suffer interest is a statutory liability arising under Section 61(2) of the Act. We shall, of course, consider the dealings of the parties presently and the inferences that have to be dawn by reason of such course of dealings. To this entitlement of the seller to ask for interest from a court in which he has filed a suit for the recovery of the price, there is a marked exception made in Section 62 of the Sale of Goods Act. That section reads as under--

'62. Exclusion of implied terms and conditions where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties, or by usage if the usage is such as to bind both parties to the contract.'

Mr. Lakshminarayana Reddi would rely upon Section 62 and say that there was an usage as between the parties for the payment of interest. The concept of an usage has a special significance as it is to be understood as 'custom' which is often pleaded in common law litigations. To establish custom, there should be such clinching and appealing material for the court to support the case of the litigant to propound such a custom; usage and custom are often pleaded, but not proved. That proof of such usage could easily be negatived or falsified by the conduct of the parties themselves, is an accepted principle. The instant case before us is one of such a case.

8. The ledgers produced by the plaintiff showing the course of dealings between himself and the defendant during the years 1961 to 1967 admittedly do not contain any entry touching on the liability on the part of the defendant to pay interest. If the usage, which is now put in the forefront by Mr. Reddy is true, then there is no explanation as to why the plaintiff did not include the claim for interest in his regularly kept account books and treat it as his taxable income. Again, the dealings between the plaintiff and the defendant obviously are mutual, the plaintiff was sometimes supplying goods to the defendant and the defendant in turn was supplying goods to the plaintiff. That such supplies and dealings were almost of the equal weight is seen from the facts that in the memo of calculation filed by the plaintiff the ultimate interest to which the plaintiff was entitled to is shown as Rs. 5,91,856, whereas the interest which he should suffer in favour of the defendant was shown as Rs. 5,59,053. For the purpose of appreciation of the point we can reasonably take it that the dealings as between the plaintiff and the defendant were on a par and almost on a level. Probably it is this significant feature in the transactions and in the course of dealings which prompted both the parties not to claim any interest by one from the other. On the ground that the plaintiff's accounts do not reflect any such liability to pay interest, and also on the ground that the implied understanding possibly between the parties could not be to project such a claim by one against the other, we are inclined to accept the case of the defendant that the course of dealings between the parties negatives the liability to pay interest towards the transactions between the parties. This is provided for under Section 62 of the Sale of Goods Act. The liability to pay interest is not express in this case. Mr. Reddy himself puts it on the ground that it is assumed by implication of law and particularly under Section 61(2)(a) of the Sale of Goods Act. Such implied legal liability could be negatived by the course of dealings between the parties. We have held that the course of dealings between the plaintiff and the defendant clearly negatives the claim now put forward by the plaintiff on the ground that huge sum is payable towards interest. For the foregoing reasons, we are of the view that the sum claimed by the plaintiff as and towards interest is not payable by the defendant. We have expressed ourselves that the learned Judge was wrong in having adopted methods unknown to law to afford relief to the plaintiff in the matter of the award of the interest in his favour. The memo of calculation filed at the time of the arguments is but a self-serving document produced by the plaintiff to subserve its own interest. Such self-serving document cannot be the cause of action for the grant of a relief by a court of justice. We, therefore, disagree with the court below that the plaintiff would be entitled to a sum of Rs. 16,401-50 towards interest.

9. 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 Intererst 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 much a demand under Ex. A-26. It, therefore, follows that under the said Act the plaintiff would be entitled to interest on the suit claim, which is not dispute before us, viz., Rs. 12,636-71 at 6% per annum from the date of demand viz., 28-10-1968 to the date of suit and thereafter on the decree amount at the same rate till date of realisation. The plaintiff would be entitled to proportionate costs.

10. The appeal is partly allowed. But in the circumstances of the case there will be no order as to costs on the balance disallowed.

11. Appeal partly allowed.


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