CRIMINAL APPEAL 2061 of 1982 on 12 October 1981

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONSUMMARY SUIT NO.2061 OF 1982Vandana Enterprises.. PlaintiffvsAutomobile Production India Ltd.. DefendantMs.S.V.Sonawane for PlaintiffMr.Tushar Bhavsar i.b Crawford Bayley & Co.forDefendantCORAM : A.M.KHANWILKAR, JDATE : 15th March, 2007P.C.1. This suit for recovery of a sum ofRs.3,05,089.70 with further interest on theprincipal sum of Rs.2,30,780.77 at the rate of 18 %p.a. from the date of filing of the suit tilljudgment and thereafter at such rate as may beawarded by the Court until realisation of theamount and for costs of the suit,has been filed onthe basis of 11 hundis issued in favour of theplaintiffs between 31st February, 1980 till 13thNovember, 1980. Before institution of the suit theplaintiff filed a Company Petition before thisCourt claiming an amount of Rs.4,32,003.97 alongwith interest being Rs.13,532/-. In the CompanyPetition, total claim of Rs,.4,63,535.97 was set upagainst the defendants. In the said CompanyPetition, pursuant to an order of the Court, the defendants deposited an aggragate amount ofRs.2,99,259.20 in two instalments. The firstinstalment was deposited before 14th October, 1981in the sum of Rs.1,99,295.20 and the secondinstalment before 18th November,1981 in the sum ofRs.1,00,000/-. The plaintiffs were furtherpermitted to withdraw the entire amount depositedby way of first instalment in the sum ofRs.1,99,259.20. However, out of the secondinstalment deposited by the defendants, theplaintiffs were allowed to withdraw only a sum ofRs.5868.00. In other words, by order dated 12thOctober, 1981, this court permitted the plaintiffsto withdraw total sum of Rs.2,05,127.20 only.Remainder amount was ordered to be transferred tothe proposed suit account of the suit to beinstituted by the plaintiffs for recovery of balance principal amount of Rs.2,33,003.97.

2. In this background the present suit has beenfiled by the plaintiffs is for the recovery of theprincipal amount of Rs.2,30,780.77. In theparticulars of claim, the plaintiffs have claimedinterest at the rate of 18 % p.a. on the principalamount which has been shown as Rs.74,308.93. Onthat basis, by way of final reliefs, it is prayedby the plaintiffs that a judgment and decreeagainst the defendants in the sum of Rs.3,05,089.70be granted with further interest on the principalamount of Rs.2,30,780.77 at the rate of 18 % p.a.

3. It is not in dispute that no written statementhas been filed by the defendants in the presentsuit. The plaintiffs have produced an affidavit inlieu of the examination in chief and also therelevant documents to support their claim forrecovery of the principal amount of Rs,2,30,780.77.4. Counsel for the defendants in all fairnesssubmits that in so far as the claim of theplaintiffs for the recovery of principal amount ofRs.2,30,780.77 is concerned, that cannot becontested and the plaintiffs will be entitled forthe said relief. However, the contest is only inrelation to the grant of interest at the rate of 18% p.a. as claimed by the plaintiffs. According tothe defendants, in law, the plaintiffs are notentitled for that relief. It is submitted onbehalf of the defendants that as the suit isfounded on the hundis issued between the partiesand that the document makes no reference or specifyany rate of interest for the delayed payment, insuch a case, the plaintiffs would become entitledfor interest only in terms of section 80 of theNegotiable Instrument Act, 1881. It is submittedthat in the present case, the unamended provisionsof section 80 of that Act will come into playinterms whereof the plaintiffs will be entitled toclaim maximum 6 % p.a. by way of interest on theprincipal amount till the institution of the suit.

It is submitted that even with regard to theinterest to be awarded during pendency of the suitand after the date of judgment and decree, theCourt will be obliged to invoke the provisions ofsection 34 of C.P.C. Even that provision specifiesmaximum rate of interest at 6 % p.a. Counsel forthe defendants , thereforesubmits that assumingthat the principal amount became due and payablewith effect and from 29th June, 1980, theplaintiffs would be entitled to interest on thatamount from that date at the rate of 6 % p.a.only.5. Counsel for the plaintiffs on the other handwould submit that the plaintiffs would be entitledto 18 % interest p.a. on the principal amount. Inview of the statutory provision,it is not possibleto countenance this submission. I find substancein the arguments of the defendants that theplaintiffs will succeed in regard to claim forinterest on the principal amount only at the ratespecified by the unamended section 80 of theNegotiable Instrument Act, which is 6 % p.a. only.This is so because the hundis which are pressedinto service do not specify the rate of interestpayable for the delayed payment. In such a case,by virtue of section 80 as applicable at therelevant time, the plaintiffs would be entitled forinterest only at 6 % p.a. from 29th June, 1980onwards till institution of the suit i.e. 9th February, 1982. From 9th February, 1981 till thejudgment and decree which is the time spent forpendency of the proceedings in this Court, theplaintiffs will be entitled for the interest againat the rate of 6 % p.a. in terms of section 34 ofC.P.C. The plaintiffs would also be entitled forinterest at the rate of 6 % interest p.a. from thedate of judgment and decree till realisation of theamount in terms of section 34 of C.P.C.

6. The next question that needs to be addressed iswhether the defendants will have to pay interestcomponent disregarding the amount which is alreadydeposited in this Court by the defendants inCompany petition which was then transferred to thesuit account and later on invested pursuant to thedirections of the Court. In my opinion, thedefendants are entitled to claim adjustment fromthe said amount. If the decretal amount payable bythe defendants exceeds the maturity amount of theinvestment made in terms of the order of the Court(i.e original sum of Rs.94,132/- which stoodtransferred to the suit a/c along with accruedinterest thereon)in that event, the defendantswould be liable to pay the differential amount.However, if the decretal amount is less than thematurity amount of the said deposit and the accruedinterest thereon; in that case, the plaintiffswill be free to forthwith withdraw the decretalamount so as to satisfy the decree passed by this Court and the surplus amount will have to be made over to the defendant.

7. Accordingly, suit is partly decreed on thefollowing terms :

The defendants do pay principal sum ofRs.2,30,780.77 to the plaintiffs along withinterest at the rate of 6 % p.a. on andfrom 29th June, 1980 till realisationthereof.The plaintiffs are entitled to costs ofthe suit quantified at Rs.25,000/-.

(A.M.Khanwilkar, J)