Madras High Court
Pers Enterprises Private Limited vs /
Author: G.Jayachandran
Bench: G.Jayachandran
O.S.A.(CAD).Nos.39, 40 & 54 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on: 08.10.2025 Delivered on: 24.10.2025
CORAM
THE HONOURABLE Dr.JUSTICE G.JAYACHANDRAN
and
THE HONOURABLE MR.JUSTICE MUMMINENI SUDHEER KUMAR
O.S.A.(CAD).Nos.39, 40 & 54 of 2024
& C.M.P.Nos.8810 & 8816 of 2024
O.S.A.(CAD).Nos.39 & 40 of 2024:
PERS Enterprises Private Limited,
Represented by its Authorised Signatory,
Mr.B.Anandakrishnan,
Having office at No.3, Veerasamy Street,
West Mambalam,
Chennai - 600 033. ... Appellant
in both OSAs
/versus/
Aavanor Systems LLP,
Represented by its Partner,
Mr.M.Vennimalai,
S - 60, 20th Street, Anna Nagar,
Chennai - 600 040. ... Respondent
in both OSAs
Prayer in O.S.A.(CAD).No.39 of 2024: Original Side Appeal filed under
Section 13 of the Commercial Courts Act, to set aside the common judgment
and decree dated 19.02.2024 in C.S.(Comm.Div)No.128 of 2021 and allow the
appeal.
Prayer in O.S.A.(CAD).No.40 of 2024: Original Side Appeal filed under
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O.S.A.(CAD).Nos.39, 40 & 54 of 2024
Section 13 of the Commercial Courts Act, to set aside the common judgment
and decree dated 19.02.2024 in Tr.C.S.(Comm.Div).No.63 of 2022 and allow
the appeal.
For Appellant : Mr.Satish Parasaran, Senior Counsel,
in both OSAs for Mr.Vijayan Subramanian
For Respondent : Mr.H.Karthik Seshadri,
in both OSAs for Mr.C.Suraj
O.S.A.(CAD).No.54 of 2024:
Aavanor Systems LLP,
(Formerly known as Aavanor Systems Private Limited),
Represented by its Partner Sarada Vennimalai,
S - 60, 20th Street, Anna Nagar,
Chennai - 600 040. ... Appellant/Plaintiff
/versus/
PERS Enterprises Private Limited,
No.3, Veerasamy Street,
West Mambalam,
Chennai - 600 033. ... Respondent/Defendant
Prayer in O.S.A.(CAD).No.54 of 2024: Original Side Appeals filed under
Section 13 (1) of the Commercial Courts Act, 2015 read with Clause 15 of the
Letters Patent and Order 36 Rule 1 of the Original Side Rules, to modify the
Judgment and Decree dated 19.02.2024 in C.S.No.128 of 2021 passed by the
Learned Single Judge of this Hon'ble Court to the extent of enhancing the
interest from 6 % p.a. to 15 % p.a. from 19.01.2018 till date of realisation of
payment with respect to the outstanding amount of Rs.61,28,320/- (Rupees
Sixty One Lakhs Twenty Eight Thousand Three Hundred and Twenty only)
payable by the Respondent to the Appellant.
For Appellant : Mr.H.Karthik Seshadri,
for Mr.C.Suraj
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O.S.A.(CAD).Nos.39, 40 & 54 of 2024
For Respondent : Mr.Satish Parasaran, Senior Counsel,
for Mr.Vijayan Subramanian
***
COMMON JUDGMENT
The intra-court appeals under consideration are against the common judgment dated 19/02/2024 passed by the Learned Single Judge in C.S.No.128 of 2021 and C.S.(Comm.Div).No.63 of 2022.
2. Genesis of the dispute leading to the appeals:-
The dispute is in respect of the execution of the work order dated 18.03.2017 issued by PERS Enterprises Private Limited (For the sake of brevity, hereinafter to be referred as ‘PERS’ in short) in favour of Aavanor Systems Private Limited, later renamed as Aavanor Systems LLP (For the sake of brevity, hereinafter to be referred as ‘Aavanor’ in short).
3. ‘PERS’ is operating Multi-Speciality Hospitals under the name of “SRM Institutes of Science (SIMS Hospital)”. Aavanor is a software developer. “DOC 99” is a software developed by Aavanor providing clinical engines which allows creating of multiple templates for the hospitals administration to capture the clinic data at different interfaces in the clinics and diagnostic centres. ______________ Page Nos.3/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 Shortly, it is a Hospital Information System with an advanced Electronic Medical Record Modules.
4. After negotiations, PERS issued the work order to Aavanor on 18.03.2017 consenting to pay Rs.40,00,000/- (Rupees Forty Lakhs only) towards the license fees for the use of the software at SRM Institutes of Science (SIMS) Hospital, Vadapalani and Rs.9,90,000/- towards implementation, training and customisation services. It was agreed by the parties that the payments would be made in instalments. The work to be completed within 120 days.
5. At the time of negotiation and on the date of issuing the work order, the “DOC 99” software was designed by default to be operated on an Oracle database. However, after issuance of the work order, PERS considering the high costs involved in installing Oracle Database on its servers, sought for a cost-effective database which will support the “DOC 99” software. Accordingly, the parties decided to make the necessary migration from Oracle database to Postgre SQL database which operates on an Open Source Platform in LINUX Operating System. Obviously, there was delay in completing the ______________ Page Nos.4/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 customisations as well as effective operation of the software modules due to migration from Oracle software to Postgre SQL.
6. Aavanor raised the invoices dated 11.09.2017 for Rs.22,65,000/- and 13.01.2018 for Rs.26,62,080/- but PERS did not pay the bills. Consequently, Aavanor has informed PERS that they may not be able to continue their services any further without clearing the dues. Thereafter, the parties have exchanged notices blaming other party and ultimately the dispute has culminated in instituting Corporate Insolvency Resolution Process (CIRP) by Aavanor against PERS before the National Company Law Tribunal (NCLT), Chennai Bench, in IBA No.1436 of 2019.
7. Pending CIRP proceedings, PERS filed O.S.No.2545 of 2019 before the City Civil Court, Chennai, against Aavanor, seeking recovery of Rs.37,45,000/- advanced to Aavanor pursuant to the work order dated 18.03.2017, along with 18% interest and an additional sum of Rs.25,00,000/- towards damages. Being a disputed claim, IBA No.1436 of 2019 was dismissed by National Company Law Tribunal, Chennai Bench on 05.05.2020. ______________ Page Nos.5/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024
8. Alleging that, PERS after issuing the work order dated 18.03.2017, wanted migration to Postgre SQL and through e-mail dated 07.04.2017, agreed to pay additional cost of Rs.6 lakhs for the migration. Subsequently, on various dates, PERS sought for additional customisation work, which was carried by Aavanor. However, PERS failed to pay the invoices raised for training and customise. A sum of Rs.1,04,52,423/- remains outstanding and payable by PERS. Hence, the suit in C.S. (Comm.Div).No.128 of 2021 was instituted in the High Court, Madras by Aavanor against PERS.
9. O.S.No.2545 of 2019, instituted by PERS on the file of City Civil Court, Chennai, after framing issues and examining one witness on the side of the plaintiff, was transferred to the High Court, Madras and re-numbered as Tr.CS.(Comm.Div).No.63 of 2022 in the midst of the trial, On transfer, both suits were tried together and decided by a common judgment on 19/02/2024. The said common judgment is impugned in these three Intra-Court Appeals:
O.S.A.(CAD).No.39 of 2024 O.S.A.(CAD).No.40 of 2024 by PERS and O.S.A.(CAD).No.54 of 2024 by Aavanor.
10. Issues and findings of the Learned Single Judge:
Based on the pleadings, the issues framed are:-
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“a) Whether PERS is entitled to recover the suit amount with interest as prayed for?
b) Whether PERS is entitled to recover damages as prayed for?” C.S.No:128 of 2021:
a) Whether the suit is barred by limitation?;
b) Whether Aavanor completed 28 modules as per the work order dated 18.03.2017?
c) Whether the invoices dated 11.09.2017, 13.01.2018, 30.04.2018 pertain to work carried out by Aavanor for PERS?;
d) Whether Aavanor was required to obtain the consent of PERS in respect of deploying resources for the installation and customization of the "DOC 99" software and, if so, whether such consent was obtained?;
e) Whether Aavanor has established that manpower corresponding to 2000 man days was deployed?;
f) Whether there was delay in provision of services by Aavanor to PERS and if so, whether such delay is attributable to Aavanor?;
g) Whether Aavanor is entitled to the balance license fee?;
h) Whether Aavanor is entitled to the amount claimed in the suit?;
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i) Whether the parties are entitled to any other relief?"
11. On behalf of Aavanor, its Managing Partner Mr.M.Vennimalai (D.W.1) examined. 22 documents (Ex.D1 to Ex.D22) marked as Exhibits. On behalf of PERS, its authorised signatory Mr.B.Anandakrishnan (P.W.1) was examined and 4 documents (Ex.P1 to Ex.P4) marked as Exhibits.
12. On appreciating, the evidence both oral and documentary, the Learned Judge answered the issues as under:-
(i) Tr.C.S.(Comm.Div).No.63 of 2022:
a) Whether PERS is entitled to recover the suit amount with interest as prayed for?
Since the breach of contract has been committed only by PERS and PERS has also not paid for the additional customisation service done by Aavanor on their request, PERS is not entitled for the suit claim.
b) Whether PERS is entitled to recover damages as prayed for ?
Since the breach of contract has been committed only by PERS, they are not entitled for any damages from Aavanor, more so. the admitted claim of Rs.25,00,000/- claimed in Tr.C.S.(Comm.Div.)No.63 of ______________ Page Nos.8/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 2022.
(ii) C.S.No.128 of 2021:
a) Whether the suit is barred by limitation?
The suit filed by Aavanor is well within the period of limitation. The last invoice raised by Aavanor on PERS was on 30.04.2018 and only for the first time in its reply dated 05.05.2018, PERS had denied its liability to Aavanor by raising frivolous dispute as an afterthought. C.S. No.128 of 2021 having been filed before this Court on 05.01.2021 is well within the three year period from the date when the cause of action arose and hence, the suit is within the y period of limitation.
b) Whether Aavanor completed 28 modules as per the work order dated 18.03.2017?
As seen from the evidence available on record, Aavanor has proved that as per the Work Order, 28 modules were completed. The disputes raised by PERS are all afterthoughts to deprive payment of the legitimate dues of Aavanor.
c) Whether the invoices dated 11.09.2017, 13.01.2018, 30.04.2018 pertain to work carried out by Aavanor for PERS?
As seen from the oral and documentary evidence, Aavanor has proved that the invoices dated 11.09.2017, 13.01.2018, 30.04.2018 pertain to the work carried out by Aavanor for PERS.
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d) Whether Aavanor was required to obtain the consent of PERS in respect of deploying resources for the installation and customization of the "DOC 99"
software and, if so, whether such consent was obtained?
As seen from the oral and documentary evidence available on record, PERS has given its implied consent for the deployment of additional resources of Aavanor for the installation and customisation of the "DOC 99" software and only at the request of PERS, Aavanor did the additional customisation works.
e) Whether Aavanor has established that manpower corresponding to 2000 man days was deployed ?
Aavanor has proved through oral and documentary evidence that 2000 man days are required to be deployed and were indeed deployed for completing the additional customisation work given by PERS.
f) Whether there was delay in provision of services by Aavanor to PERS and if so, whether such delay is attributable to Aavanor?
As seen from the evidence available on record, the delay is attributable only on account of PERS and only due to their frequent request for change of their requirements, there was a delay and the delay was not on ______________ Page Nos.10/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 the part of Aavanor.
g) Whether Aavanor is entitled to the balance license fee?
Having not committed any breach of contract, Aavanor is certainly entitled to the balance license fee as claimed in the plaint.
h) Whether Aavanor is entitled to the amount claimed in the suit?
Yes, Aavanor is entitled to the amount claimed in the suit minus 18% interest, which is on the higher side and instead the same is reduced by this Court to 6% per annum, considering the present banking rate of interest. Appeals:
(i) O.S.A.(CAD).39 of 2024 is filed by PERS seeking to set aside the judgment and decree, allowing the C.S.(Comm.Div).No.128 of 2021, filed by Aavanor.
(ii) O.S.A.(CAD).No.40 of 2024 is filed by PERS, being aggrieved by dismissal of its suit, Tr.C.S.(Comm.Div).No.63 of 2022, filed against Aavanor.
(iii) O.S.A.(CAD).No.54 of 2024 is filed by Aavanor, seeking enhancement of the rate of interest on the principal amount of Rs.61,28,320/-
from 6% p.a to 15% p.a. ______________ Page Nos.11/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024
13. Submissions by the Learned Counsels:
Mr.Satish Parasaran, Learned Senior Counsel appearing for the PERS, the appellant in O.S.A.(CAD).Nos.39 & 40 of 2024, pegged his arguments as under:
The e-mail correspondence between PERS and Aavanor from 01.03.2017 to 06.03.2017, marked as Ex.D-1, would show without any doubt that Aavanor and PERS deliberated over the usage of the software “DOC 99” for nearly a month and then the work order dated 18.03.2017 was issued by PERS. Only after meetings with representatives from different departments of SIMS Hospital, Aavanor gave its revised quotation with promise to provide 28 modules and the same will 'go-live' on PERS servers within 120 days. In the work order, dated 18.03.2017, marked as Ex.D-2, it is specifically stated that the license fee for the software “DOC 99” would be Rs.40 lakhs and the charge for implementation, training and customization will be Rs.9,90,000/- [Rs.300 per man-day x 330 days]. The charge for implementation, training and customization were understood by both the parties as a fixed charge and there is no ambiguity in this regard. While so, though as per the work order, 50% of the ______________ Page Nos.12/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 invoice amount was paid on the date of work order and balance 25% of the invoices paid after 60 days of the work order as agreed, the balance 25% was withheld by the PERS, since Aavanor failed to show any sign of going live in the server on the expiry of 120 days. Aavanor in breach of its commitment not even complete one module out of 28 modules without completing the work, Aavanor raised the invoices which is under dispute, as if, 8 resource persons worked for 80 days from 07.06.2017 to 07.09.2017 and for 94 days from 08.09.2017 to 06.01.2018. The said claim is false. No evidence placed before the Court to substantiate the fact that Aavanor engaged 2000 man-days for implementation, training and customisation at the premises of PERS. As per the terms of the work order (Ex.D-2), the fees for implementation and training is fixed as Rs.9,90,000/- at the rate of Rs.3000/- for 330 days. There is no evidence to show that Aavanor engaged 8 resource for 80 days and 94 days respectively, in two spells for it to claim the amounts shown in invoices dated 11.09.2017, 13.01.2018 or in the invoice dated 30.04.2018. These invoices are contrary to the terms of the work order dated 18.03.2017. Hence, Aavanor not entitled for the alleged additional work without the written consent of PERS.
Contrarily it is bound to repay the advance money received along with interest. ______________ Page Nos.13/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024
14. According to Mr.Satish Parasaran, Aavanor had not produced proof that it has made the modules go-live. No proof to show additional customization was carried out by Aavanor between 07.01.2018 and 18.01.2018. In spite of absence of documentary evidence, the Learned Judge had erroneously allowed the suit filed by Aavanor in C.S.(Com.Div).No.168 of 2021.
15. He further contended that the Learned Judge selectively picking few e-mail correspondence between the parties and a stray answer given by the witness for PERS in the cross-examination in out of contest, wrongly held that PERS had consented to pay for additional customization, hence liability to pay the invoices dated 11.09.2017 and 13.01.2018. The Learned Judge failed to take note the invoices silent about basic details such as the names of the resource, the dates on which they came to the hospital to impart training and the salaries paid to them. Neither in the pleadings nor through documentary or oral evidence these particulars were disclosed by PERS. While so, invoices unsupported by the necessary details ought not to have been relied by the Learned Judge to allow the suit C.S.(Comm.Div).No.128 of 2021.
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16. He further contended that, the Learned Judge misapplied the principle of unjust enrichment to favour Aavanor. In spite of the undisputed fact that, PERS had paid Rs.37,45,000/- which is 75% of the total agreed amount as per the terms of the work order and Aavanor evidently failed to prove installation, training and customization within the time prescribed and not a single module out of 28 modules expected to go-live even after the expiry of several months. While so, PERS having advanced Rs.37,45,000/- and invested on Hardware as per the request of Aavanor, is entitled for the return of the advance money along with damages. Whereas, the Learned Judge, had come to a wrong conclusion that by implied consent, Aavanor had carried on the additional customization by deploying manpower and therefore entitled to claim as per the invoices Ex.D-8 and Ex.D-10. These two invoices do not contain even the fundamental details which are required for a valid invoice. For the work not asked for and not carried invoices raised and unsustainable judgment is passed in C.S.No.(Comm.Div).No.128 of 2021, by wrongly holding that Aavanor had clearly established the usage of 2000 man-days for additional customization.
17. The sum and substance of the submissions made on behalf of ______________ Page Nos.15/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 PERS is that, though it paid 75% of the contract amount as advance, it did not enjoy the benefit of the software. Aavanor failed to complete the installation, training and customization within the time agreed. Not a single module went- live. The changes in customization was not on the request of PERS but the frequent changes were initiated at the instance of Aavanor. PERS agreed to pay only Rs.9,90,000/- towards installation, training and customization as a fixed fees and it is not flexible. The work order (Ex.D-2) clearly mentions that the fees for 330 man-days at the rate of Rs.3000/- per day and nothing more. However, without any piece of evidence to substantiate the request of additional deployment of resources for 2000 man-days or evidence of actual deployment, the invoices Ex.D-8 and Ex.D-10 were raised without furnishing the fundamental basic particulars. The Learned Judge had ignored the admission of PERS that it stopped the process of customization before ‘go-live’ of the 28 promised modules. Consequently, the suit filed by PERS for refund of the money advanced and damages for mental agony and loss of reputation, was wrongly dismissed.
18. In response, Mr.H.Karthik Seshadri, Learned Counsel for the appellant/Aavanor in O.S.A.(CAD).No.54 of 2024, filed for enhancement of ______________ Page Nos.16/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 interest from 6% p.a to 15% p.a., and Respondent/Aavanor in the other two appeals [O.S.A.(CAD).Nos.39 & 40 of 2024] filed by PERS, submitted that the various e-mail correspondences between the parties, both prior to the work order, dated 18.03.2017 and subsequent to the work order will speak about the fact that, PERS agreed to pay Rs.40 lakhs towards the license fees for the Software “DOC 99” and also agreed to pay Rs.9,90,000/- towards implementation, training and customization of the software for 330 man-days at the rate of Rs.3000/- per man-day.
19. As per the work order dated 18.03.2017, the payment to be made in three tranches:
a) 50% to be paid on the date of contract.
b) 25% payment after 60 days of the contract and
c) the balance after 120 days.
On 21.03.2017, PERS paid the first tranch of 50% (Rs.22,45,500/-) through Fund Transfer, deducting Rs.2,49,500/- towards TDS. Thereafter, Aavanor immediately commenced the work.
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20. “DOC 99” is the software of Aavanor, which by default runs on the Oracle database. While so, PERS felt it is not cost-effective to install an Oracle database in their servers. Hence, requested for migration from Oracle database to cost-effective Postgre SQL database. Aavanor considered this request through e-mail dated 04.04.2017 (Ex.D-4), informed PERS that migration to Postgre SQL database would require significant effort from the Aavanor team and will take approximately 3 to 4 months to complete. In this e- mail it gave two options to PERS either to purchase the necessary hardware and install open source Linux OS with Postgre SQL database, for which it may cost around Rs.12.5 lakhs plus 15% Service Tax or in alternate Aavanor itself will purchase appropriate servers, install the software and database and lease it to PERS for a period of 5 years. This option will cost around Rs.25 lakhs plus 15% Service Tax. In response to this e-mail, PERS, in its reply e-mail dated 07/04/2017 expressed it option to go ahead with migration to Postgre SQL database in their own servers. PERS negotiate the cost for conversion and reduced it from Rs.12.5 lakhs to Rs.6 lakhs. It further agreed to pay the second trenche of 25% upon installation of the “DOC 99” software in the servers of SIMS hospital. PERS specifically agreed to compensate the additional costs involved in the migration to an extent of Rs.6 lakhs and pay it along with the ______________ Page Nos.18/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 last payment.
21. Based on the assurance given by PERS, the migration work commenced. Installation, training and customization was also carried out by Aavanor as per the requirement of PERS. Whereas, PERS after paying the second trenche of Rs.12,50,000/- on 28.06.2017 failed to pay the balance 25% along with the additional cost of Rs.6,00,000/- agreed to be paid as compensation for migration. Ex.D4 and Ex.D5 are proof for the request to migrate and consent to pay additional costs. Hence, the argument of Mr.Satish Parasaran, that there was no written request for migration or written consent to pay the additional costs incurred for migration and customization, is incorrect.
22. Regarding the argument putforth by PERS about charge of Rs.9,90,000/- for installation, training and customisation is a fixed one as per the work order dated 18/03/2017, the response of Aavanor is that the 330 man- days mentioned in work order came to an end by 06.06.2017. This amount is not claimed by Aavanor the invoices are for the period subsequent to 06.06.2017. This was due to the request of PERS for migration and in view of frequent changes in customisation, training and customisation process continued engaging 8 resources for two different spells. For the said additional costs, ______________ Page Nos.19/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 PERS is liable to pay in pari materia at the rate mentioned in Ex.D-2. The invoices Ex.D-8 and Ex.D-10 relate to the deployment of 8 resources for the period beyond 120 days. During this time, most of the modules have come into operation and went live. The e-mail from one Mr.Parthiban, an employee of PERS sent on 16.07.2017 (Ex.D-9) is a proof that various modules of “DOC 99” software were installed in the servers of SIMS hospital.
23. Mr.Karthik Seshadri, Learned Counsel appearing for the respondent/Aavanor, referring to the email correspondence between PERS and Aavanor subsequent to 07.06.2017, submitted that these communications would clearly show that PERS, without any demur, been enjoying the benefits of the software and services rendered by Aavanor, even without paying the outstanding balance of Rs.2,50,000/- for the software license and the agreed compensation of Rs.6 lakhs for migration. Moreover, additional costs were incurred for customizations provided at the request of PERS after 07.06.2017, which does not cover the period mentioned in the work order. Only under the said circumstances, Aavanor sent an e-mail to PERS expressing difficulty in extending the service further without payment of the invoices raised earlier. The e-mail dated 19.01.2018, marked as Ex.D11 is the consequence of the ______________ Page Nos.20/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 earlier communications between the parties. Even after, Aavanor had clearly indicated that it has become economically infeasible to continue the customisation work without payment of Rs.49,27,680/- (less Rs.4,17,600/- deducted as TDS), PERS wantonly remained silent. Hence, another e-mail dated 10.02.2018 was addressed to PERS in continuation of the earlier e-mails and meetings held in connection with payment of invoices raised for customisation. Aavanor had specifically informed PERS that the work on the project will be suspended from 19.01.2018, if the payment is not forthcoming.
24. After remaining stoic silent for the distress e-mails sent by the Aavanor, the appellant/PERS had thought fit to file a suit for recovery of the alleged advance paid, only after Aavanor System LLP, caused lawyer notice dated 30.04.2018 to PERS Enterprises Private Limited, intimating that if the outstanding bill of Rs.61,28,920/- along with 24% interest was not paid within 15 days, appropriate legal action will be taken. Not stopping with causing notice, Aavanor also initiated proceedings under Insolvency and Bankruptcy Code. Thereafter, to pre-empt action under the Insolvency and Bankruptcy Code the suit O.S.No.2545 of 2019 filed by PERS. In the impugned common judgment, the Learned Judge has allowed the suit filed by Aavanor and ______________ Page Nos.21/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 dismissed the suit filed by the PERS. However, while allowing the suit filed by Aavanor, though 15% interest prayed only 6% interest awarded. Hence, for enhancement of interest, Aavanor has filed O.S.A.(CAD).No.54 of 2024, contending that, being a commercial dispute and the transactions in respect of services rendered engaging resource persons, Aavanor is entitled for interest at the rate of 15% p.a., which will be commensurating to the RBI interest rates and within the power of the Civil Court to award cost under Section 34 of the C.P.C.
25. Heard Mr.Satish Parasaran, Learned Senior Counsel appearing for the appellant in O.S.A.(CAD).Nos.39 & 40 of 2024 and as respondent in O.S.A(CAD).No.54 of 2024 and Mr.H.Karthik Seshadri, Learned Counsel appearing for the appellant in O.S.A(CAD).No.54 of 2024 and as respondent in O.S.A.(CAD).Nos.39 & 40 of 2024.
26. The main contention of Mr.Satish Parasaran, Learned Senior Counsel appearing for PERS, is that the software installed by Aavanor was of no use. Though Aavanor had promised automation of the Hospital Information System within a period of 120 days and received 75% of the contract value, it had not provided the installation, training and customisation even for a single ______________ Page Nos.22/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 module.
27. To test the said submission, it is appropriate to examine the correspondence between the parties.
28. The first e-mail communication is in month of March 2017. This e-mail contains the dates of meetings with representatives of PERS to discuss about their requirements and templates. After interaction with representatives of PERS over a period of one month, Aavanor had forwarded a quotation for the software “DOC 99”. Subsequently, there were few more meetings between the representatives and on 04.03.2017 through e-mail, Vennimalai, representing Aavanor had informed PERS that within four weeks from the date of receipt of the purchase order and 50% down payment, the modules for (i) Registration, (ii) O.P Billing, (iii) I.P. Billing (iv) Pharmacy, (v) Purchase and (vi) General Stores will be operational and 'go-live' at SIMS Hospital. Thereafter, list of 28 modules available in “DOC 99” software been informed to PERS through e-mail dated 06.03.2017. Ex.D1 are the copies of those communications.
29. Being satisfied with the offer given by Aavanor, PERS had issued ______________ Page Nos.23/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 the work order dated 18.03.2017. From the entire correspondence between the parties marked as exhibits, we do not find even a single communication from PERS expressing that the “DOC 99” software installed in the server of PERS had not gone live. Only on receiving the legal notice (Ex.D12) issued by Aavanor on 30.04.2018, for the first time PERS had come out with a reply dated 05.05.2018, marked as Ex.D13 protesting about alleged deployment of resource persons. If the content of Ex.D13 is to be accepted as true, PERS ought not to have been communicating with Aavanor, requesting to customise the modules at various departments/points for interface. At that point of time itself, it would have demanded the return of money which it had advanced on 20.03.2017 and 28.06.2017. Having issued the work order and promised to pay Rs.40 lakhs towards license fees and Rs.9,90,000/- towards installation, training and customisation, PERS admittedly paid only Rs.25 lakhs on 20.03.2017 and Rs.12,50,000/- on 28.06.2017 and balance not paid PERS had also expressly committed to pay Rs.6 lakhs as compensation for migrating from the Oracle database to the Postgre SQL database. The said migration been carried out by Aavanor and same been acknowledged by e-mail of PERS dated 03.07.2017 marked as Ex.D9. This e-mail is the nail in the coffin, which clearly discloses that the “DOC 99” software installed by Aavanor on the servers of SIMS ______________ Page Nos.24/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 hospital was running and some of the modules had even gone-live.
30. As rightly contended by the Learned Counsel appearing for Aavanor, the two invoices marked as Ex.D8 & Ex.D10 are in connection with the service provided by Aavanor by deploying resource for training and customization. PERS, want to harp on the work order dated 18.03.2017, wherein fixed fees of Rs.9,90,000/-, agreed to be paid towards installation, training and customisation. It had conveniently suppressed about its own request for migration from one database to another database and the promise to compensate by paying Rs.6 lakhs. The fact that PERS failed to pay the balance costs for the license fees as well as the agreed compensation of Rs.6 lakhs for the migration, which was completed as early as 07.06.2017, would clearly show that there is a gross breach of contract by PERS.
31. It is suffice to extract two communications between the parties to show why PERS liable to pay the suit claim.
(i) The e-mail dated 07.04.2017, sent by V.S.Ravi, the representative of SIMS Hospital reads as below:-
______________ Page Nos.25/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 “Dear Mr.Vennimalai, In view of the cost involved in terms of additional Servers and Cost of Oracle Database and the AMC cost involved, we have decided to go ahead with your development by utilising Postgre database IN ORDER NOT TO LOSE ANY FURTHER TIME we mutually agree for the following:
1) Aavanor will complete the HIS DOC 99 using Postgre Database in 60 days from today.
2) Rs.25 lacs being 50% of the package cost already paid as advance against PERS P.O dated 16.3.2017.
3) 25% payable 60 days from date of P.O is now payable on your installing DOC 99 in our server and commencing implementation.
4)We agree to compensate you for the additional cost involved in converting to Postgre to the extent of Rs.6 lacs along with the last payment.
I request you to close the issue and commence the work on war footing.
We are looking forward to long association with Aavanor considering our future expansion plans as SIMS is looking to add for hospitals in near future.” Regards.
V.S.Ravi.
(ii) The response of Vennimalai through e-mail dated 10.04.2017, marked as Ex.D5 reads as under:-
______________ Page Nos.26/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 “We agree to your email and will assign maximal resources to complete the migration to PostgreSQL at the earliest possible, We accept that the next payment of Rs. 12.5 lakhs + Service tax will be paid on delivery of our application customised for use with the PostgreSQL database.
We accept that the final payment of Rs.12.5 lakhs + Rs.6 lakhs + service tax will be paid 60 days from the installation of our application with PostgreSQL on your servers.
I look forward to a long and mutually beneficial relationship with SRM institutions.” Best wishes, Vennimalai.
32. If we read the e-mail dated 07.09.2017, which form part of Ex.D9, it would clearly show that the software supplied by Aavanor to PERS was made ready for implementation from 08.09.2017 and same was informed to PERS through this e-mail.
33. By applying the principle of novation, the work order issued on 18.03.2017 had undergone a change by substituting the terms as found in the e- mail communications marked as Ex.D5. Subsequently, there had been several communications from PERS to Aavanor providing information necessary for ______________ Page Nos.27/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 customization and the same been carried out by Aavanor as and when such request made. In the said circumstances, on 11.09.2017, Aavanor has raised the invoice marked as Ex.D8 to pay the charges for software customization from 07.06.2017 to 07.09.2017, engaging 8 resources for 80 days at the rate of Rs.3000/- per day. On receiving this invoice, PERS had not paid the money neither denied the claim nor sought for details of persons deployed for imparting training and the dates of training.
34. On 12.09.2017, another e-mail sent to SIMS Hospital, marking copy to the Assistant Manager, IT of SIMS Hospital reveals that fitter version of the Item Master for Housekeeping, Letter Head, Linen, Printer Stationary, Stationary, Uniform and Visiting Card for a total of 2679 items, were including under the new department “Housekeeping Stores”. This indicates that PERS been requesting customization of the modules to suit their requirement and Aavanor been responding to those request. Therefore, it is incorrect and false to plead that the Aavanor had not completed the work as per the undertaking. In fact, it is PERS which has completely breached the terms and continuously extracting work from Aavanor by making request of changes in the modules to suit their requirements. PERS had not paid neither the full costs for the software ______________ Page Nos.28/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 nor for the agreed compensation for migration from the Oracle database to Postgre SQL database, nor paid a rupee towards installation, training and customisation. They were in continuous conversion in person and through e- mail even after receipt of the invoice Ex.D8 dated 11.09.2017 prompting Aavanor to continue the customisation. One such e-mail communication, dated 05.10.2017, sent by Mr.Parthiban, Assistant Manager IT, SIMS Hospital, reads as follows:
“As per our conversation regarding PERS Stores go live. I am attaching the final master data with current stock (refer attachment) • 06-10-2017 and 07-10-2017 Aavanor will do data migration in the Production Server. • 09-10-2017 SIMS will start indenting online to the PERS stores • 09-10-2017 PERS Stores will go live.
• Attention Ms.Indu Mam: During Data Migration period (06-10-2017 and 07-10-2017) PERS will do the process manually, if any emergency situation arises.”
35. Yet another communication, dated 10.10.2017 goes to show that PERS had requested for changing the Intent process from four tire to three tire system to ensure free flow of work. As a result, Mr.Sankar, General Manager ______________ Page Nos.29/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 (Finance) been excluded from the Intents final approval process insofar as SIMS stores.
36. Thus, PERS had been extracting service from Aavanor but had not paid the agreed amount and the invoices raised for the service rendered. This has forced the Aavanor to express its inability to continue the service without receiving the balance payment. The overwhelming documentary evidence, in the nature of e-mail communications, adequately disproves the case of PERS that the “DOC 99” software modules installed in the server of PERS were not functional and it was of no benefit to them. The contention of PERS that there was no request for additional customization found to be an utter falsehood, contrary to their own written communications which are marked as exhibits.
Hence, we hold the suit filed by PERS is only an afterthought to counterblast the drastic action attempted by Aavanor under the Insolvency and Bankruptcy Code.
37. In view of the overwhelming evidence which prove that Aavanor has installed its software “DOC 99” in the servers of PERS with the Postgre SQL database and most of the modules, after customization on the request of ______________ Page Nos.30/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 PERS were made operational, the Learned Single Judge has rightly dismissed the suit in Tr.C.S.No.63 of 2022 and allowed the suit filed by Aavanor in C.S.No.128 of 2021.
38. Therefore, the point for determination in these two appeals in O.S.A(CAD).Nos.39 & 40 of 2024; Whether the work order dated 18.03.2017, marked as Ex.D2 was breached by Aavanor? This Court answers in negative.
39. Regarding the O.S.A.(CAD) No.54 of 2024, filed by Aavanor Systems LLP, seeking enhancement of the interest from 6% p.a to 15% p.a, it is evident that the transaction is a commercial transaction and the parties are entitled for Commercial rate of Interest. In the present case, there is no express agreement specifying the rate of interest for delayed payment. In the said circumstances, either the provision of the Interest Act or Trade Customs are the Benchmark Prime Lending Rate fixed by nationalised bank in accordance with the guidelines of the Reserve Bank of India can be taken into account.
40. Regarding interest, recently the Hon'ble Supreme Court in ______________ Page Nos.31/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 I.K.Merchants Pvt. Ltd and others vs. State of Rajasthan and others reported in 2025 SCC Online SC 692, held that:
"13. Pertinently, it is to be pointed out at this juncture that there was no agreement between the parties relating to grant of interest for the delayed payment. Even the exchange of communications between the parties remains silent on this aspect. In the absence of any agreement or contract, the provisions of Section 34 of the Code of Civil Procedure dealing with ‘interest’ would come into play, and the same is extracted below, for ready reference:
“34. Interest.—(1) Where and insofar 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 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 ______________ Page Nos.32/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
(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 therefor shall not lie.” 13.1. The above provision empowers the court to grant interest at three different stages of a money decree viz., (i) the court may award interest on the principal sum claimed at a rate it deems reasonable, for the period before the suit was filed. Such interest is generally governed by agreements between the parties;
(ii) The court may award interest on the principal amount from the date of filing the suit until the date of the decree, at a reasonable rate. Here, the court has full discretion to determine the interest rate based on fairness, commercial usage and equity; and (iii) the court may grant interest on the total decretal amount (principal + interest before decree) from the date of the decree until payment, at a rate not exceeding 6% per annum unless otherwise specified in contractual agreements or statutory provisions. However, if the claim arises from a commercial transaction, courts may allow interest at a ______________ Page Nos.33/36 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 02:47:09 pm ) O.S.A.(CAD).Nos.39, 40 & 54 of 2024 higher rate based on agreements between the parties."
41. In this case, the Learned Single Judge, having considered the facts had fixed interest at the rate of 6% p.a, since there is no written agreement for payment of interest. On giving anxious consideration, this Court is of the view that the facts and circumstances of the case in the light of the Hon'ble Supreme Court in I.K.Merchants Pvt Ltd cited supra, it is appropriate to follow the Principles of law as laid down by the Hon'ble Supreme Court. The transaction being Commercial in nature, interest at 12% p.a., is ordered from the date of invoice, till the date of suit. From the date of suit till the date of realisation interest at the rate of 6% p.a., is ordered. Accordingly, O.S.A.(CAD).No.54 of 2024 is partly allowed.
42. In fine, O.S.A.(CAD).Nos.39 & 40 of 2024 stands dismissed with costs and O.S.A.(CAD).No.54 of 2024 is partly allowed with costs. Consequently, connected Miscellaneous Petitions closed.
(Dr.G.J, J.) & (M.S.K, J.)
24.10.2025
Index :Yes.
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Neutral Citation :Yes/No.
Internet :Yes.
bsm
Dr.G.JAYACHANDRAN, J.
&
MUMMINENI SUDHEER KUMAR, J.
bsm
Pre-delivery common judgment made in
O.S.A.(CAD).Nos.39, 40 & 54 of 2024
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24.10.2025
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