Kerala High Court · 2009

The appellant is the defendant in a suit for realisation of money. Respondent/plaintiff had instituted the suit for recovery of a sum of Rs.1,75,382/- with 18% interest thereon from the date of suit till realisation. The court below decreed the suit with costs. The said decree and judgment are under challenge in this appeal.

2. The plaintiff which is a Government Company had been managing two rubber estates at Ariyanalloor and Kulathurpuzha in Kollam District. The Company was engaged in the production and marketing of latex. The defendant used to purchase different varieties of rubber from the plaintiff since 1988. Admittedly these purchases were being made after a process of tender and on the strength of agreements executed between the parties from time to time. Four such agreements viz., Exts.A6, A13, A24 and A32 were the subject matter of the suit. The plaintiff gave the particulars of the agreements in a tabular form in the plaint itself. It was contended by the plaintiff that the defendant had defaulted in making payment of the value of rubber supplied by it to the defendant including interest for delay in taking delivery, delay in payment of the dues, ground rent etc. Statements of accounts indicating the total amounts due from the defendant were also AS.18/97 : 2 : annexed to the plaint as Annexure A and B. It was further averred in the plaint that the Bank guarantee for the sum of Rs.2,50,000/- executed by defendant was invoked by the plaintiff on December 20, 1990. The plaint claim of Rs.1,75,382/- was reckoned after adjusting the sum covered under the Bank guarantee.

3. In the written statement the defendant denied his liability. But it was admitted that he had had business transactions with the plaintiff and that purchase of rubber had been made by him in terms of the agreements referred to in the plaint. According to the defendant the Company which was owned by the Government had colluded with the Rubber Board to defeat him. The defendant also raised a dispute about rubber content of 70% stipulated in the agreement. It was further contended that there was no mutual, open and current account between the plaintiff and the defendant as alleged in the plaint and therefore the plaint claim was not sustainable. In short, it was contended by the defendant that he was not liable to pay any amount to the plaintiff. The rate of interest claimed in the plaint was also disputed contending that it was exorbitant.

4. No oral evidence was adduced by either side. However Ext.A1 to A45 were produced and marked on the side of the plaintiff. The defendant did not produce any documentary evidence also. The court below framed the following issues: AS.18/97 : 3 : Is the suit barred by “1. limitation? 2. Whether the plaintiff is entitled to realise interest at the rate of 18% per annum on the price of goods sold? 3. Whether the agreement to pay ground rent is invalid? 4. Whether the plaintiff is entitled to realise the amounts claimed in the plaint? While dealing with issue No.1 relating to the question of bar of limitation, the court below found that the account maintained by the Plaintiff-Company in connection with the transaction with the defendant was not mutual. It was also found that sums of Rs.734.99, Rs.1193 and Rs.1300 were for the period beyond three years from the date of suit viz., October 17, 1992 and therefore they were barred by limitation.

5. It is pointed out by the learned counsel for the appellant that the plaintiff had not produced any books of account though a so called statement of accounts produced along with the plaint. Annexures A and B were pressed into service by them. He contends that in the absence of any proper books of accounts, no reliance ought to have been placed by the court below on Annexures A and B. He also submits that some of the entries shown in Annexures A and B will falsify the contentions raised by AS.18/97 : 4 : the plaintiff.

6. As has been mentioned already, the transactions between the plaintiff and defendant were governed by A6, A13, A24 and A32 agreements. Substantial quantities of scrap rubber (20 to 30 metric tonns) were purchased by the defendant on certain terms and conditions stipulated in the agreements. Defendant No.1 produced Bank guarantee to the extent Rs.2,50,000/- under each agreement for a period of 30 days towards the approximate value of rubber at the rate of 70% of dried rubber content (DRC) of wet scrap to be lifted. In addition to that, security to the tune of Rs.1,10,0000/- and 25% depending on the total purchase value was also furnished. It was further agreed that the defendant (purchaser) will pay sales tax due on the sale under the agreements. Defendant also undertook that he would pay ground rent of Rs.5/- per metric tonne per day, if there was any delay in lifting the stock. It was further agreed that the plaintiff would be entitled to recover from the defendant all amounts due with interest at 18% per annum from the date of default.

7. It may at once be noticed that the plaintiff had given all the particulars of transactions between it and the defendant, like date of agreement, quantity of rubber purchased, price agreed to be paid etc., in a tabular form in the plaint. It had also produced all the documents relating to those transactions along with the plaint. These documents, 45 in number, were ultimately marked in the AS.18/97 : 5 : suit when it was taken up for trial. As mentioned earlier, documents included not only the agreements referred to above, but also invoices, communications between the parties, debit notes and statement of accounts sent by the plaintiff to the defendant etc.

8. However in the written statement it was contended by the defendant that he was prevented from filing a detailed written statement since the plaintiff had not given him copies of the agreements and other documents. Stranger still, the defendant had not specifically adverted to any of the 45 documents produced by the plaintiff along with the plaint, nor had he specifically questioned the correctness of the various figures given in the table contained in the plaint with regard to quantity of rubber, date of delivery etc.

9. The thrust of the argument of the learned counsel before us is that the defendant had not been given sufficient opportunity to adduce evidence in the case. It is seen from the court proceedings that on the day when the suit was listed for trial, the plaintiff had reported that it did not intend to adduce any oral evidence. The documents produced by the plaintiff along with the plaint, were marked as Exts.A1 to A45. The evidence of the plaintiff was closed on that day and the case was adjourned for evidence of the defendant two days hence. On the next hearing date, an I.A was filed by the defendant praying for reopening the case, even though the court had not closed the evidence. It is seen AS.18/97 : 6 : from the proceedings of the court below that the case was adjourned to the next day and on that day the learned counsel for the parties were heard and the case was taken for judgment.

10. It is contended by the learned counsel that the defendant had been denied an opportunity to adduce evidence on his side. We are unable to understand how such a contention can be sustained. As we have already noticed, the defendant was represented by his counsel on the day when the suit came up for trial. The documents on the side of the plaintiffs were marked without any objection and the case was adjourned for evidence of the defendant two days hence. On that day an application was filed on behalf of the defendant praying to reopen the case, though it was totally not warranted. But still, the defendant did not adduce any evidence on the next date of posting. The case was again adjourned; but even then the defendant did not choose to either step into the box or produce any document. However his counsel was heard. In that view of the matter, the contention now raised on behalf of the defendant that he had not been given sufficient opportunity cannot be entertained.

11. There is yet another aspect of the matter, which is very crucial in the facts and circumstances of this case. The contentions raised by the defendant in his written statement were only very vague and evasive. He did not dispute the transaction between him and the plaintiff. He also did not specifically question AS.18/97 : 7 : the correctness or genuineness of the documents produced along with the plaint. His primary contention was that no mutual, open and current account had been maintained by the plaintiff in connection with the transaction with him. More importantly, he did not have a case that any amount paid by him had not been credited by the plaintiff. The court below had meticulously examined all the documents produced by the plaintiff and considered all his contentions. The court below had thus found that certain amounts claimed by the defendant, which we have referred to earlier, were not liable to be recovered from the plaintiff.

12. In this context it may also be noticed that the plaintiff had invoked the bank guarantee in December 20, 1990 itself. The suit was instituted only in the year 1992 when all attempts by the plaintiff to persuade the defendant to pay off the arrears failed. There is not even a whisper in the written statement about the invocation of the bank guarantee by the plaintiff. Obviously, the plaintiff had conceded and agreed that the bank guarantee was liable to be invoked against him since amounts were due from him.

13. The last of the transaction between the plaintiff and the defendant was evidenced by Ext.A44 invoice pursuant to Ext.A32 agreement. The amount covered under Ext.A44 invoice (dated 30/1/1990) is Rs.2,98,280/-. It is pointed out by the learned counsel for the appellant that statement of account produced by AS.18/97 : 8 : the plaintiff will show that the defendant had paid Rs.2,95,000/- in connection with Ext.A32 agreement (Agreement No.147) and thus there remained a balance of only around Rs.3,000/- . It is true that there is a reference to the payment of Rs.2,95,000/- in two instalments (Rs.95,000/- and 2 lakhs on 17/10/1989). It is also seen mentioned that these two payments were in relation to Ext.A32 agreement. The defendant had not disputed the purchase made by him prior to Ext.A44 invoice; nor did he have a case that no amounts were due from him to the plaintiff under the various sale transactions between him and the plaintiff.

14. It is true that the defendant had raised a contention that no amounts were due from him to the plaintiff. But in Ext.A40 reply dated August 13, 1990 in response to the letter dated July 31, 1990 of the plaintiff, the defendant had unambiguously undertaken to pay off the liability as soon as a copy of the statement of accounts received by him. In that communication the defendant had also requested the plaintiff not to invoke the bank guarantee. The plaintiff had thereafter requested the defendant yet again under Ext.A38 communication dated October 19, 1990 to pay off the balance. In the said letter the total amount shown was Rs.371354/-. Ext.A39 will show that the said demand notice was received by the defendant. But no reply was sent. It is revealed from the records that the plaintiff had invoked the bank guarantee thereafter in December 1990 when the AS.18/97 : 9 : defendant failed to pay off the liability despite repeated demands.

15. We have carefully perused the entire documents available on record. We do not find any illegality in the findings entered by the court below, which, in our view was justified in granting the decree. However the court below was not justified in awarding interest at the rate of 18% per annum from the date of suit till the date of realisation. Though the plaintiff may be entitled to recover interest at the contractual rate of 18% till the date of decree, in the facts and circumstances of the case it will not be just or proper to award interest to the plaintiff at that rate from the date of decree till realisation. In our view, the plaintiff will be entitled to get interest at the rate of 9% from the date of decree till realisation.

16. Therefore in partial modification of the decree and judgment, it is held that plaintiff shall be entitled to recover the principal amount from the defendant with interest thereon, at the rate of 9% from the date of decree till the date of realisation. AS.18/97 : 10 :

17. The decree and judgment are modified to the above extent. In all other respects the decree and judgment passed by the court below are sustained. The appeal is disposed of in the above terms. A.K. Basheer Judge P. S. Gopinathan Judge an.