Karnataka High Court
Trident Architectural vs Messrs Jindal Steels on 22 October, 2021
Author: Jyoti Mulimani
Bench: Jyoti Mulimani
1
R
IN THE HIGH COURT OF KARNATAKA BENGALURU
DATED THIS THE 22ND DAY OF OCTOBER, 2021
BEFORE
THE HON'BLE MS. JUSTICE JYOTI MULIMANI
REGULAR FIRST APPEAL NO.500 OF 2017 (MON)
BETWEEN:
1. TRIDENT ARCHITECTURAL
ALUMINIUM PRIVATE LIMITED
NO.13/2, 2ND FLOOR, R K COMPLEX
RAGHUVANAHALLI
KANAKAPURA MAIN ROAD
BANGALORE - 560 062
REPRESENTED BY ITS
MANAGING DIRECTOR.
2. MR.M.V.RAMU
MANAGING DIRECTOR
TRIDENT ARCHITECTURAL
ALUMINIUM PRIVATE LIMITED
NO.13/2, 2ND FLOOR, R K COMPLEX
RAGHUVANAHALLI
KANAKAPURA MAIN ROAD
BANGALORE - 560 062. ...APPELLANTS
(BY SRI.SIBU GOPINATHAN ADVOCATE FOR
SRI.BALARAM.M.L - ADVOCATE)
AND:
1. MESSRS. JINDAL STEELS
A PARTNERSHIP FIRM
NO.110/7, KRISHNAPPA LAYOUT
LALBAGH ROAD
BANGALORE - 560 027
REPRESENTED BY ITS PARTNER
MR.MOHANLAL JINDAL.
2
2. MR.IRFAN AHMED
EXECUTIVE DIRECTOR
M/S. TRIDENT ARCHITECTURAL
ALUMINIUM PRODUCTS PRIVATE LIMITED
NO.13/2, 2ND FLOOR
R K COMPLEX
RAGHUVANAHALLI
KANAKAPURA MAIN ROAD
BANGALORE - 560 062. ...RESPONDENTS
(BY SRI.MADHUKAR DESHPANDE - ADVOCATE FOR R1;
R2 - SERVED)
THIS RFA IS FILED UNDER SECTION 96 OF CIVIL
PROCEDURE CODE, 1908.
THIS RFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THROUGH VIDEO CONFERENCING THIS DAY, SITTING AT
DHARWAD, THIS COURT DELIVERED THE FOLLOWING:
JUDGMENT
Sri.Sibu Gopinathan learned counsel on behalf of Sri.Balaram.M.L for appellants and Sri.Madhukar Deshpande learned counsel for respondent No.1 have appeared in person.
This is an appeal from the Court of IX Additional City Civil and Sessions Judge, Bangalore.
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2. For the sake of convenience, the parties are referred to as per their rankings before the Trial Court.
3. The facts of the case are simply stated as under:-
It is stated that the first defendant has got business association with the plaintiff partnership firm Jindal Steels and as per purchase orders placed by the first defendant, the plaintiff supplied goods to the first defendant. As per the terms of the agreement, it was mutually agreed that the first defendant has to pay the invoice amount within thirty days from the date of receipt of goods from the plaintiff and in failure, the first defendant was liable to pay interest at the rate of 21% per annum calculated from the date of respective materials supplied till the date of payment.
The first defendant maintained a running account with the plaintiff.4
The first defendant made a purchase worth Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five only) for the period commencing from August 2011 to February 2013 and defendants have also paid the major portion of outstanding amount to the plaintiff.
It is averred that when the plaintiff instructed that the defendants were liable to pay outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only) as on 27.06.2014, the defendants returned long time retained beam-stalk purchased from other suppliers wherein plaintiff helped the defendants in recovery of Rs.7,36,095/- (Rupees Seven Lakhs Thirty-Six Thousand and Ninety-Five only). Accordingly, the defendants issued a cheque in favor of plaintiff for the remaining sum of Rs.1,77,857/- (Rupees One Lakhs Seventy-Seven Thousand Eight Hundred and Fifty-Seven only) on 25.11.2014 drawn on Bank of Baroda. The plaintiff presented the aforesaid cheque with its 5 banker which came to be dishonored for want of sufficient funds in the first defendant's account.
The fact that the cheque was dishonored, was brought to the notice of defendants over phone and also by way of legal notice. The defendants received the legal notice and they paid only the value of the cheque i.e., Rs.1,77,857/- (Rupees One Lakh Seventy-Seven Thousand Eight Hundred and Fifty-Seven only) but did not pay the entire outstanding amount as aforesaid.
The plaintiff sent legal notice on 07.01.2015 calling upon the defendants to pay the entire outstanding amount. The notice was received by the defendants but they did not pay the said amount. Therefore, plaintiff filed the suit for recovery of money, contending that the cause of action for the suit arose on the date of placing orders by the defendants for supply of goods, on the date of supplies of goods to the defendants, on the date of payments, on the date of issuance of cheque dated 25th November 2014, on the date of dishonor of the cheque, when the defendants 6 have paid the value of cheque, on 7th January 2015 and 9th February 2015, 5th March 2015, 25th March 2015 when the plaintiff has issued legal notices, on the date of receipt of the legal notice, issuance of reply to the legal notice, the rejoinder and also on various dates where the parties are carrying their respective business within the territorial jurisdiction of this Hon'ble Court.
After the issuance of the suit summons, defendants 1 and 2 appeared through their counsel and filed written statement. They denied the plaint averments. They contended that there is no cause of action to file the suit and the suit is barred by time.
It is contended that the first defendant company had made the purchase worth of Rs.52,50,755/- (Rupees Fifty- Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five only) for the period commencing from August 2011 to January 2013 and also paid the major portion of outstanding amount to the plaintiff. There was no 7 agreement or oral understanding between the plaintiff and defendants to pay the interest on supply of goods.
They further contended that the crystallized outstanding liability was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty Two only) and the plaintiffs recovered a sum of Rs.7,36,095/- (Rupees Seven Lakhs Thirty-Six Thousand and Ninety-Five only) and defendants have paid the balance amount of Rs.1,77,857/- (Rupees One Lakh Seventy-Seven Thousand Eight Hundred and Fifty-Seven only) on 13.01.2015 through RTGS of Bank of Baroda to the account of plaintiff. Hence, they contended that they are not liable to pay the amount as claimed by the plaintiff. Accordingly, they prayed for the dismissal of the suit.
On the basis of the rival pleadings of the parties, the Trial Court framed the following issues:-
1. Whether plaintiff firm proves that defendants 1 to 3 are still due an amount of Rs.5,31,398/-?8
2. Does the plaintiff firm proves that liability of defendants 1 to 3 is joint and several and they are liable to pay interest at the rate of 21% p.a. from the date of suit till the date of payment?
3. Whether defendants 1 to 3 prove that they are not liable to pay any amount to the plaintiff firm?
4. Whether plaintiff is entitled for relief as prayed for?
5. What order and decree?
Plaintiff examined one witness V.Karthik as PW1 and produced seventeen documents which were marked at Ex.P.1 to Ex.P.17. The second defendant got examined as DW1 and no documents were produced.
On the trial of the action, the suit came to be decreed holding that plaintiff is entitled to recover Rs.5,31,398/- (Rupees Five Lakhs Thirty-One Thousand Three Hundred and Ninety-Eight only) from defendants 1 9 and 2 with cost and interest at the rate of 6% p.a from the date of suit till realization. The liability was joint and several. Hence, this Regular First Appeal is filed Under Section 96 of CPC.
Sri.Sibu Gopinathan learned counsel on behalf of Sri.Balaram.M.L for appellants submitted that the Judgment and decree of the Trial Court is opposed to facts and law.
Next, he submitted that there was no cause of action to initiate action against the defendants.
A further submission was made that the suit is barred by time. He submitted that plaintiff did not make any claim of interest from August 2011 till January 2015.
He submitted that it is the specific case of the plaintiff that as on 27.06.2014, the entire liability was crystallized for a sum of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only) and the defendants were liable to pay the crystalized 10 outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only). The same was paid by the first defendant. Hence, the defendants are not liable to pay any amount much less as claimed by the plaintiff.
Counsel submitted that it is common knowledge that when a claim is made as outstanding amount, it would mean all amount including interest and costs thereof. In the present case, the pleading and legal notice clearly evinces that the original intent of the plaintiff as on June 2014 was to receive the crystallized outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only). But the Trial court has failed to consider the same and has erroneously decreed the suit.
In this context Sri.Sibu Gopinathan learned counsel for appellants has drawn the attention of the Court to the definition of "Outstanding" as defined in "Black's law dictionary" which defines as follows;
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"Unpaid: uncollected, outstanding debts"... Debt is further defined in the dictionary as "the aggregate of all existing claims against a person".
As on 27.06.2014, the plaintiff made a clear claim of crystallized outstanding amount as Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only) in which there was no component of interest. Hence the plaintiff had clearly waived its purported right to claim interest.
It was argued that the plaintiff did not make any claim of interest from August 2011 till January 2013. It waived of its right. The waiver binds the plaintiff against the enforcement of such a right in 2015.
It was also argued that having made first defendant act on such waiver to come back after more than four years to claim interest is illegal and against the specific understanding arrived at between the parties. 12
To substantiate the said contention counsel placed reliance on Sec.63 of Indian Contract Act, 1872. It was submitted that the conduct of the plaintiff in not exercising its right to claim interest under the contract, accruing from August 2011, and the outstanding crystallized liability as on June 2014, as claimed by the plaintiff as Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only) meant that the plaintiff had waived its right to enforce any interest on the principal amount.
Lastly, counsel submitted that there was a clear understanding between the parties that once the liability is settled as computed as on June 2014 there was nothing pending to be paid. If at all there was any intent to enforce the contractual right of interest, the same should have been evinced in some manner of whatsoever nature from 2011 to 2015. Therefore, it is submitted that not having done so, there is a legal presumption Under Sec.115 of Indian Evidence Act, 1872 in favor of first defendant that the liability was duly discharged and was settled as on 13 June 2014 and plaintiff did not make any attempt to rebut the said presumption in favor of first defendant.
In this regard counsel strenuously urged that this is a clear case of promissory estoppel, wherein the plaintiff made a final claim towards its outstanding and forced the first defendant to redress and determine the said claim and acted on it by receiving certain articles and accounting its value towards the total liability. Further accepting the remaining sum in the form of cheque which was dishonored and further reiterating its claim that the said sum which was issued vide cheque which was due, was again received by the plaintiff through RTGS payment, clearly evinces the fact that the plaintiff had represented that it will not insist upon its strict rights under the contract to enforce interest as against the total payment and therefore the plaintiff should not be allowed to now resile from that position.
Learned counsel also submitted that the plaintiff has not produced any document to show its status as a 14 partnership firm or its registration, therefore the plaintiff under Section 69 of the Indian Partnership Act, 1932 is non-suited. The Trial Court in complete ignorance of these contentions of the defendant conducted the trial, in violation of the mandate of law.
Lastly, he submits that the judgment and decree of the Trial Court lacks judicial reasoning. Accordingly, he prayed that the appeal may be allowed and the judgment and decree of the Trial Court may be set-aside. Learned counsel for appellants has placed reliance on the following judgments:-
1. (1950) 1 KB 616 - CHARLES RICKARDS LD. VS. OPPENHAIM.
2. (1965) 3 ALL ER 837 : (1965) 2 QBD 617 - D & C BUILDERS LIMITED VS. REES.
3. (1877) 2 APP CASE 439 : (1875) 1 CPD 120 -
HUGHES VS. THE METROPOLITAN RAILWAY COMPANY.
4. (1956) 1 ALL ER 256 : (1947) KBD 130 -
CENTRAL LONDON PROPERTY TRUST LIMITED VS. HIGH TREES HOUSE LIMITED.
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5. (2012) 11 SCC 1 - MONNET ISPAT & ENERGY LTD. VS. UNION OF INDIA.
6. (1977) 1 SCC 379 - SETH LOONKARAN SETHIYA AND OTHERS VS. MR.IVAN E.JOHN AND OTHERS.
Sri.Madhukar Deshpande learned counsel for respondent No.1 justified the judgment and decree of the Trial Court.
Next, he submitted that the plaintiff company received a sum of Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five only) at an interval period.
He submitted that as per the terms of the agreement, it was mutually agreed that the first defendant has to pay the invoice amount within thirty days from the date of receipt of goods from the plaintiff and in failure, the first defendant was liable to pay interest at the rate of 21% per annum calculated from the date of respective materials supplied till the date of payment which in fact 16 finds its place in the invoice itself. In this regard, learned counsel Sri.Madhukar Deshpande has drawn attention to Ex.P.16.
A further submission was made that the first defendant was maintaining a running account with the plaintiff. The first defendant has made purchase worth of Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five only) from the plaintiff for the period commencing from August 2011 to February 2013. The defendants also paid major portion of the amount to the plaintiff.
It is submitted that as on 27th June 2014, the crystallized outstanding amount was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only). Out of the total crystallized outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only), a sum of Rs.7,36,095/- (Rupees Seven Lakhs Thirty-Six Thousand and Ninety-Five only) was recovered from the purchase of 17 beam-stalk and the remaining amount of Rs.1,77,857/- (Rupees One Lakhs Seventy-Seven Thousand Eight Hundred and Fifty-Seven only) was paid by cheque. The cheque was dishonored. Subsequently, the amount was recovered from the defendant.
Counsel, therefore, submits that there was a delay on the part of first defendant to make payment of the invoice amount. Accordingly, as per the contract, the plaintiffs were entitled to claim interest as and when there is a delay in payment of the invoice amount. Therefore, he submitted that the plaintiff's partnership firm is justified in initiating action against the defendants to recover the interest.
It was argued that to claim waiver of interest, there should be a contract to the contrary, but in the instant case there is no contract between the plaintiff and the first defendant for the waiver of the interest. 18
Counsel urged that accord and satisfaction demands consensus ad idem between the Plaintiff and Defendants and conclusive agreement to that effect must be entered into by the parties regarding satisfaction of the claim. He also submitted that Section 63 of the Contract Act, requires an agreement resulting in satisfaction of the claim of the plaintiff and discharging the defendants from the liability. None of the requirements of Sec.63 are forthcoming in the pleadings as well as the evidence of the defendants. Insofar as the contention regarding estoppel under Sec.115 of the Evidence Act is concerned, counsel submitted that it has no application.
It is also submitted that the contention of the defendants that only a registered partnership firm has a right to claim, is only urged before this Hon'ble Court for the first time. It is however submitted that the plaintiff has placed the necessary records i.e., partnership registration certificate, to show that it is a partnership firm along with the memo dated 23.09.2021.
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Lastly, he submitted that the Trial Court in extenso referred to the oral and documentary evidence on record and was justified in concluding that the defendants are liable to pay the interest. The appellants have not made out any good grounds to interfere with the judgment and decree of the trial court. Accordingly, he submitted that the appeal may be dismissed.
Learned counsel for respondent No.1 has placed reliance on the following judgments:
1. AIR 1962 CAL 166 - DIPCHAND GOLENCHA VS. MESSRS. M.ABHECHAND AND CO.
2. AIR 1961 PAT 37 - TATA LOCOMOTIVE AND ENGINEERING CO. LTD. VS. SARDAR KARTAR SINGH.
3. (2001) 2 SCC 41 - TATA IRON & STEEL CO. LTD. VS. UNION OF INDIA AND OTHERS.
4. AIR 2003 SC 4630 - CITI BANK N.A. VS.
STANDARD CHARTERED BANK AND OTHERS.
CANARA BANK AND OTHERS VS. CITI BANK N.A. AND OTHERS.
20Heard the contentions urged on behalf of the parties and perused the record with care.
The points that arise for consideration are:-
1. Whether the material facts disclosed in the plaint constitutes a cause of action so as to initiate action against the defendants for recovery of interest?
2. Whether the suit is barred by time?
3. Whether the conduct of the plaintiff in acceptance of delayed payment without interest would constitute waiver on his part to enforce the interest clause as envisaged in the invoice?
4. Whether the acceptance of crystallized outstanding liability of Rs.9,13,095/- (Rupees Nine Lakhs Thirteen Thousand and Ninety-Five only) by the plaintiff would affect his legal right to initiate action for recovery of interest? 21
The facts in this case are few and simple, but they raise a question which may be of some general importance.
Before discussing as to whether the plaint in question discloses a cause of action against the defendants, I would like to make a mention of the established principles of law relating to cause of action. CAUSE OF ACTION CAUSE OF ACTION is not defined in the Code. The term "Cause of action" used in Section 20(c) of the Code of Civil Procedure denotes the whole bundle of material facts which are necessary for the plaintiff to prove, in order to entitle him to the reliefs claimed in the suit.
The expression "cause of action", has acquired a judicially settled meaning. In the restricted sense "cause of action" means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense it means the necessary conditions for the 22 maintenance of the suit, including not only the infraction of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact by which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises "cause of action".
In REED V. BROWN reported in [1888] 22 QBD 128, P 131 Lord Esher M.R., defined "cause of action" to mean "every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."
Fry L.J., agreed and said: --
"Everything which, if not proved, gives the defendant an immediate right to judgment, must be part of the cause of action."23
The aforesaid passages have received the approval of the Privy Council in AIR 1949 PC 78 and also of the Supreme Court in AIR 1960 SC 1309. To put it in a concise form, the words "cause of action" means the whole bundle of material facts which are necessary for the plaintiff to prove, in order to entitle him to the reliefs claimed in the suit.
Order 6, Rule 2 of C.P.C requires that every pleading shall contain and contain only, a statement in a concise form of the material facts on which the party pleading relies for his claim or defence as the case may be, but not the evidence by which they are to be proved.
Reading Order 6, Rule 2 of C.P.C it is clear that the words "material facts" occurring in Order 6, Rule 2 of C.P.C with reference to a plaintiff means the facts necessary to form a complete cause of action. It is imperative that the facts constituting the cause of action must find place in the plaint. Material facts means all facts upon which the 24 plaintiffs cause of action or the defendant's defense depends.
A suit is always based on cause of action. There can be no suit without a cause of action. A cause of action is a bundle of facts which taken with the law applicable, gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of an act, no cause of action can possibly accrue. It is not limited to actual infringement of right sued on, but includes all the material facts on which it is founded. It does not comprise of evidence necessary to prove such facts, but every fact is necessary for the plaintiff to prove to enable him to obtain a decree.
It is a medium upon which the plaintiff asks the Court to arrive at a conclusion in his favor. In legal parlance, the expression "cause of action" is generally understood to mean a situation or a state of facts that entitles a party to maintain an action in a court or a Tribunal; a group of operative facts giving rise to one or 25 more basis for suing; a factual situation that entitles one person to obtain a remedy in court from another person.
It is true that a plaint which does not disclose any cause of action should be rejected. But it would be relevant to note that there is a clear difference between the non-disclosure of cause of action in the plaint and the absence of cause of action for the suit. What is required to be disclosed by the plaintiff is a clear right to sue.
In the words of Krishna Iyer J. as stated in T.ARIVANDANAM case (AIR 1977 SC 2421); To ascertain whether a plaint does or does not disclose a cause of action, plaint must be read in a meaningful manner. What is excluded indeed is a frivolous plaint or one which merely pretends to have a cause of action which merely creates an illusion of a cause, where there is none.
Bearing these principles, let me see what facts I have here.
26
The plaintiff has pleaded that the first defendant was maintaining a running account with the plaintiff. The first defendant has made purchase of Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty- Five only) from the plaintiff for the period commencing from August 2011 to February 2013. The defendants also paid the major portion of the amount to the plaintiff.
As on 27th June 2014, the crystallized outstanding liability was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only). Out of the total crystallized outstanding amount of Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only), a sum of Rs.7,36,095/- (Rupees Seven Lakhs Thirty-Six Thousand and Ninety-Five only) was recovered from the sales proceeds of beam-stalk and the remaining amount of Rs.1,77,857/- (Rupees One Lakhs Seventy-Seven Thousand Eight Hundred and Fifty-Seven only) was paid by cheque. The cheque was dishonored. 27 Subsequently, the amount was recovered from the first defendant.
It is also pleaded that there was a delay on the part of first defendant to make payment of the invoice amount. Accordingly, as per the contract, the plaintiffs were entitled to claim interest as and when there is a delay in payment of the invoice amount.
As could be seen from the plaint, the cause of action pleaded (para No.13 of the plaint) is the entire course of business between plaintiff and the defendants and also the legal notices dated 07.01.2015 and 09.02.2015 respectively. The prayer sought is directing the defendants to pay the outstanding amount of Rs.5,31,398.41/- (Rupees Five lakhs Thirty-One Thousand Three Hundred Ninety-Eight and Forty-One paise) along with interest at the rate of 21% per annum from the date of the suit till the date of payment.
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The question for consideration is whether there is any cause of action against defendants in support of the relief claimed in this suit.
The cause of action pleaded at para No.13 of the plaint is as under:
"The plaintiff humbly submits that the cause of action for this suit on the date of placing orders by the defendants for supply of goods, on the date of supplies of goods to the defendants, on the date of payment, on the date of issuance of cheque dated 25th Nov.2014, on the date of dishonour of the cheque, when the defendants have paid the value of cheque, on 7th Jan.2015 and 9th Feb.2015, 5th March 2015, 25th March 2015 when the plaintiff has issued legal notices, on the date of receipt of the legal notice, issuance of reply to the legal notice, the rejoinder and also on various dates where the parties are carrying their respective business within the territorial jurisdiction of this Honourable Court."29
The material facts which require to constitute a complete cause of action against defendants in this case, according to this court would be are:
a) The circumstances forming the infraction of the right.
b) The immediate occasion for the action.
c) The facts which give rise to a plaintiff to assert a claim for interest.
d) The factual situation that entitles plaintiff to obtain a remedy.
e) The particulars so as to enable the defendant and the court to ascertain whether in facts and in law the cause of action did arise.
f) The facts constituting the cause of action for recovery of the interest.
I have carefully perused the pleadings. In the plaint, there is absolutely no mention of the aforesaid material facts except a vague allegation thereof to the effect that defendants are liable to pay the interest. 30
On a careful consideration of the plaint, the material facts which are necessary to constitute a cause of action against defendants have not been pleaded by the plaintiff. Hence, I have no hesitation in holding that the plaint does not disclose the material facts constituting a cause of action so as to initiate action against the defendants for the claim of interest. On this ground alone, the Trial Court ought to have dismissed the suit. LIMITATION Let me answer the next point for consideration i.e., whether the action brought by the plaintiff is well within time?
While addressing the argument, Sri.Sibu Gopinathan learned counsel for the defendants submitted that the suit is barred by time. I have given my anxious consideration to the said contention. Let me examine whether the suit is in time or is barred by limitation.
31
It is not in dispute that the transaction between the plaintiff and the first defendant commenced during 2011. The plaintiff supplied materials to the first defendant. The transaction was a credit sale, where, on supply of materials, the first defendant was required to make the payment within the credit period of 30 days from the date of issuance of invoice. A sale with a stipulation to charge interest after 30 days is a sale on credit for the period stipulated, and not cash sale.
For the price of goods sold and delivered to be paid for after the expiry of a fixed period of credit, the time is three years, when the period of credit expires. Under such circumstances, Article 15 of the Limitation Act is applicable.
A careful perusal of the plaint depicts that the transaction between the plaintiff and the defendant commenced in the year 2011, whereas the suit was filed in the year 2015. Admittedly, the transaction having commenced from the month of August 2011, the plaint 32 averments and also the evidence on record depicts that the plaintiff received the amount without insisting on the interest prior to 08.01.2013. Hence, the period of credit has long expired during the year 2011. Despite there being a breach of the credit period, the plaintiff has accepted payment of principal amount. The time period stipulated under Article 15 of the Limitation Act being three years (3 years), bars the plaintiff from claiming remedy in the year 2015. Hence, the suit is barred by time.
An appeal is the continuation of the proceedings of the Lower Court and is in the nature of re-hearing. This Court being the first court of appeal is fully within its power to re-examine and re-appreciate the documentary and oral evidence. In light of the same, this Court proceeds to answer the other contentions. WAIVER, ESTOPPEL OR FORBEARANCE Having held that there is no cause of action and that the suit is barred by time, the next point to be answered is whether the conduct of plaintiff in accepting the 33 crystallized outstanding liability of Rs.9,13,095/- (Rupees Nine Lakhs Thirteen Thousand and Ninety-Five only) without interest would amount to waiver of its right to claim interest as per the invoice.
To answer this contention, this Court finds it necessary to address the law on the principle of waiver.
Waiver. Where one party voluntarily accedes to a request by the other that he should not insist on the precise mode of performance fixed by the contract, the Court will hold that he has waived his right to insist that the contract be performed in this respect according to its original tenor.
It appears that the genesis of the doctrine of waiver is attributable to the difficulties which arose out of a strict application of the provisions of the Statue of Frauds 1677. It has been noticed that any variation of a contract required to be evidenced by writing must itself be in writing. If it is merely oral, it is of no effect. Thus, any oral 34 forbearance or concession made by one party to the other should also strictly be unenforceable. Nevertheless, the courts showed themselves reluctant to apply this rule in its full severity. Accordingly they established a distinction between a variation (for which writing will be necessary in the case of a contract required by the Statute to be evidenced by writing) and a waiver (which may be oral in any event). This distinction is most difficult to apply in practice, although it has become much less important since the almost total repeal of the Statute by the Law Reform (Enforcement of Contracts) Act 1954.
A waiver may be oral or written or inferred from conduct even though the provision is found in a contract required to be evidenced by writing.
In the landmark case of PLEVINS V. DOWNING (R), along with BESSLER, WAECHTER, GLOVER & CO. V. SOUTH DERWENT COAL CO. LD., It was observed that:
35
"...If the defendant, as he did, led the plaintiffs to believe that he would not insist on the stipulation as to time, and that, if they carried out the work, he would accept it, and they did it, he could not afterwards set up the stipulation as to the time against them. Whether it be called waiver or forbearance on his part, or an agreed variation or substituted performance, does not matter. It is a kind of estoppel. By his conduct he evinced an intention to affect their legal relations. He made, in effect, a promise not to insist on his strict legal rights. That promise was intended to be acted on, and was in fact acted on. He cannot afterwards go back on it."
In CHARLES RICKARDS LD. VS. OPPENHAIM reported in (1950) 1 KING'S BENCH DIVISION 616 = [(1950) All ER 420], the King's Bench Division while answering the question of what constitutes waiver, Denning L.J. has observed as under:
"...Upon this point I would say that in order to constitute a waiver there must be conduct which leads the other party 36 reasonably to believe that the strict legal rights will not be insisted upon. The whole essence of waiver is that there must be conduct which evinces an intention to affect the legal relations of the parties."
In JAGAD BANDHU CHATTERJEE V. NILIMA RANI reported in (1969) 3 SCC 445, the Hon'ble Supreme Court held: (SCC pp. 446-47, para 5)
5. In India the general principle with regard to waiver of contractual obligation is to be found in Section 63 of the Contract Act. Under that section it is open to a promisee to dispense with or remit, wholly or in part, the performance of the promise made to him or he can accept instead of it any satisfaction which he thinks fit. Under the Indian law neither consideration nor an agreement would be necessary to constitute waiver. This Court has already laid down in Waman Shriniwas Kini v. Ratilal Bhagwandas & Co. [Waman Shriniwas Kini v. Ratilal Bhagwandas & Co., 1959 Supp (2) SCR 217 : AIR 1959 SC 689] , SCR p. 226 that: (AIR p. 694, para 13) 37
13. ... waiver is the abandonment of a right which normally everybody is at liberty to waive. "A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right".
It is also pivotal to observe that under the Indian Law, waiver can occur without consideration in exchange for waiving off the right or an agreement to the effect of waiving off of such a right, the conduct of the party is sufficient in construing whether he has waived of his right.
Reverting to the facts of the case, the defendants have specifically contended that the plaintiff by their conduct has waived of their right to seek the relief of interest.
In this regard, it would be relevant to refer to the evidence of PW1 - Karthik, the Marketing Head of the plaintiff's partnership firm, who was examined as PW1, he 38 has deposed in paragraph 4 of his chief examination as under:
"I submit that the first defendant is maintaining a running account with the plaintiff for couple of years. The first defendant has made a purchase worth Rs.52,50,755/- (Rupees Fifty Two Lakhs Fifty Thousand Seven Hundred and Fifty Five only) from the plaintiff for the period commencing from August 2011 to February 2013 and the defendants have also paid the major portion of the outstanding amount to the plaintiff."
In the cross examination, he has further deposed that the plaintiff has received a sum of Rs.52,50,755/- (Rupees Fifty-Two Lakhs Fifty Thousand Seven Hundred and Fifty-Five only) without interest and that as on 27.06.2014, the crystallized liability of the first defendant was Rs.9,13,952/- (Rupees Nine Lakhs Thirteen Thousand Nine Hundred and Fifty-Two only).
"gÀÆ.52,50,755/-gÀ LgÀ£ï ¥ÉèÃmïì EvÁå¢ ¥ÀæwªÁ¢UÉ ¥ÀÆgÉʹzÉÝêÉ. F PÀÄjvÀÄ ¥ÀæwªÁ¢AiÀÄjAzÀ EAlgɸïÖ ºÉÆgÀvÁV ºÀt ¥ÀqÉ¢zÉÝêÉ. gÀÆ.52,50,755/- 39 ºÀtªÀ£ÀÄß ¥ÀqÉ¢zÉÝêÉ. ¢:27-06-2014 gÀAzÀÄ gÀÆ.9,13,952/- ªÀiÁvÀæ ¥ÀæwªÁ¢AiÀÄgÀÄ Qæ¸ÀÖ¯ÉʸïØ ®AiÀÄ©°n ºÉÆA¢zÀÝgÀÄ, ¤d. vÀzÀ£ÀAvÀgÀ JµÀÄÖ ºÀtªÀ£ÄÀ ß CªÀjAzÀ ¤ÃªÀÅ ¥ÀqÉ¢j JA§ ¥Àæ±ÉßUÉ ¸ÁQëAiÀÄÄ CªÀgÀÄ AiÀiÁªÀÅzÉ ºÀtªÀ£ÀÄß ¸ÀAzÁ¬Ä¸À°®è DzÀgÉ £ÁªÉà CªÀjAzÀ £ÁªÀÅ ¥ÀÆgÉʹzÀ ªÉÄnÃjAiÀÄ®ì£ÀÄß ªÀÄgÀ½ ¥ÀqÉzɪÀÅ. D PÀÄjvÀÄ ¸ÁPÀëöåzÀ°è ºÉýzÉÝãÉ. CzÀÄ gÀÆ.7,36,095/- PÉÌ JA§ÄzÀÄ ¤d. vÀzÀ£ÀAvÀgÀ ¥ÀæwªÁ¢¬ÄAzÀ gÀÆ.1,77,857/- ZÉPï ªÀÄÆ®PÀ ¥ÀqÉzÀgÀÆ ¸ÀzÀj ZÉPï £ÀUÀzÁUÀ°®è. vÀzÀ£ÀAvÀgÀ ¸ÀzÀj ºÀtªÀ£ÀÄß ¥ÀæwªÁ¢AiÀÄjAzÀ DgïnfJ¸ï ªÀÄÆ®PÀ ¥ÀqÉ¢zÉÝêÉ. ¢:27-06-2014 gÀAzÀÄ ¥ÀæwªÁ¢AiÀÄgÀÄ gÀÆ.9,13,952/- Qæ¸ÀÖ¯ÉʸïØ ®AiÀÄ©°n ºÉÆA¢zÀÝPÉÌ CzÀgÀ ªÉÄÃ¯É §rØ ¸ÀAzÁ¬Ä¸À¨ÉÃPÉA§ zÁR¯É EzÉAiÉÄà JA§ ¥Àæ±ÉßUÉ ¸ÁQëAiÀÄÄ D ¢£À CAvÀºÀ AiÀiÁªÀÅzÉ zÁR¯É EgÀ°®è JAzÀÄ £ÀÄrAiÀÄÄvÁÛgÉ."
The above deposition makes it evident that the transaction between plaintiff and defendant commenced from August 2011 and there was a pre-existing contractuality between them prior to 08.01.2013. This being the state of affairs, the conduct i.e., the acceptance 40 of the principal amount by the plaintiff without interest prior to the said date, depicts the conduct that he evinced an intention to affect their legal relationship.
It is needless to say that from the material available on record, the conduct of the plaintiff in acceptance of payment of the principal amount over a period of different transactions, without the claim of interest from the defendants amounts to waiver of his right to claim such interest, as this conduct of the plaintiff, led the first defendant to believe that they would not insist on such claim and that they would merely accept the principal amount. Therefore, by its conduct, the plaintiff evinced an intention to affect their legal relations, and in effect made a promise not to insist on its strict legal right to claim interest. That promise was intended to be acted on, and was in fact acted on, when they accepted the payments made by the defendants post the credit period, without raising a claim for interest. Hence, they cannot now go back and claim the interest.
41
In the last resort, Sri.Madhukar Deshpande learned counsel for the first respondent vehemently urged that though the plaintiff received in total the crystallized outstanding, the same was not in full and complete satisfaction of the liability of the defendants. He also submitted that such a satisfaction of discharge of liability has to be in writing. In the absence of such a discharge in the instant case, the defendants are liable to pay the interest in full and complete satisfaction of their liability as per the invoice.
I have considered the aforesaid contention. This Court is unable to accept it for the simple reason that a waiver may be oral or written or any be inferred from conduct even though the provision waived is found in a contract required to be evidenced by writing. Further, the law on this point is well settled by the Hon'ble Apex Court in JAGAD BANDHU CHATTERJEE's case referred to supra that, Under the Indian Law neither consideration nor an agreement would be necessary to constitute waiver. 42 Therefore, a written agreement discharging liability is not a mandate of law, hence this contention fails.
In conclusion, the action initiated by the plaintiff against the defendants must necessarily fail for the following reasons:
1. Non-disclosure of facts constituting the cause of action to claim interest.
2. Non-disclosure of the circumstances forming the infraction of the right.
3. Action is barred by time.
4. Waiver of right to claim interest.
Accordingly, the points are answered.
Counsel for appellants and respondent have cited a number of cases, but I do not think that the law is in doubt. Each decision turns on its own facts. The present case is also tested in the light of the aforesaid decisions. 43
For the reasons stated above, this Court is of the view that there is no justification in confirming the judgment and decree of the Trial Court.
In the result, the appeal is allowed. Accordingly, the Judgment and decree dated 27.10.2016 passed by the court of IX Addl. City Civil and Sessions Judge, Bangalore in O.S.No.3204/2015 is hereby set-aside.
Parties to bear their own costs.
Sd/-
JUDGE TKN