ORDER
S. Ashok Kumar, J.
1. The petitioner is the defendant in the suit O.S. No. 7280 of 2000 on the file of the XV Assistant Judge, City Civil Court, Chennai. The respondent/plaintiff filed the suit for recovery of a sum of Rs.34,504.90 towards principal and interest by the petitioner/defendant.
2. The brief facts of the plaint are as follows:-
The plaintiff is a manufacturer of steel strips. On 11.11.1997 under Invoice No. 333/97-98, rolled steel strips for the value of Rs.20,297/- were supplied to the defendant and as per the terms of payment, seven days credit was also allowed. The defendant failed to pay the amount within seven days from the date of invoice, and he issued a cheque to the plaintiff on 28.01.2000. When presented, the cheque bounced with an endorsement 'insufficient funds' on 10.05.2000. A statutory notice was issued to the defendant and its Director on 25.05.2000 demanding the payment of above referred cheque amount within 15 days from the date of receipt of the notice. The defendant sent a belated replay on 10.07.2000, wherein he not only admitted the dishonor of the cheque, but also denied his liability to pay the entire suit amount. Hence the suit for recovery of Rs.20,297/- towards principal amount of value of the goods sold and interest at 24% p.a. which works out to Rs.14,207.90 from 11.11.1997 to 10.10.2000 and thus, a total sum of Rs.34,504.90.
3. The defendant filed I.A. No. 14523 of 2001 under Order 37 Rule 4 C.P.C. praying for grant of leave to defend the suit, wherein he has mentioned that the plaintiff had supplied defective materials and not according to the specifications of the order of purchase and as such the plaintiff was asked to take back the materials, that cheque dated 28.01.2000 was not honored by the defendant, that as for as the statutory notice under Section 138 of the Negotiable Instruments Act is concerned, the defendant has sent a reply denying his liability, and that the plaintiff is not entitled for interest at the rate of 24% p.a., since there was no contract in this regard, and if at all the plaintiff can claim interest from the date of decree under Section 34 C.P.C.
4. The plaintiff filed counter stating that triable issue in this case is whether the suit claim is due or not, that the defendant has not averred even a single point to demonstrate how the suit claim is not due except making a blank statement that the suit claim is disputed and nothing is due, that the defendant neither denied the supply of goods nor denied the consideration under the supply of goods, and that the defendant has issued a cheque for the value of the goods, but the cheque bounced and in the belated reply to the statutory notice sent by the plaintiff, the defendant has stated that the goods supplied were not according to the specifications of the order of the purchase by the defendant and it is only an invention for the purpose of the case and has prayed to dismiss the application to leave to defend.
5. The learned Assistant Judge, City Civil Court has dismissed the application filed by the defendant for grant of leave to defend on the ground that prima facie case has been established by the plaintiff by producing documentary evidence and the application to leave to defend has been filed only to protract the proceedings.
6. The learned Counsel appearing for the revision petitioner/defendant would contend that there are triable issues like whether the goods sold to the defendant were defective in nature and not according to the specifications required by the defendant and whether the plaintiff is entitled to claim interest at the rate of 24% p.a.
7. The learned Counsel appearing for the respondent/plaintiff would contend that under the usage and custom in trade, the creditor who supplied the goods, is entitled for interest at 24% p.a. and also the defendant did not question the quality of the goods for nearly three years.
8. I gave my anxious consideration to the rival contentions of both the sides and also perused the materials available on record.
9. The fact that the plaintiff supplied rolled steel strips for the value of Rs.20,297/- under Invoice No. 333/97-98 on 11.11.1997 is not denied by the defendant. Neither the supply nor the value of the goods is denied by the defendant. According to the defendant, the goods supplied were defective and not according to the specifications as required by the defendant. If the contention of the defendant that the goods were not according to the specifications and were also defective, is true, the defendant should have returned the goods immediately or at least sent a communication to the plaintiff to take back the goods. But, on the other hand, he had kept silent till 28.01.2000, on which date, he issued a cheque to the plaintiff for a sum of Rs.20,291/-. When the said cheque was presented by the plaintiff, the same was dishonored with an endorsement 'insufficient funds' on 10.05.2000. On 25.05.2000, a statutory notice under Section 138 of the Negotiable Instruments Act was issued to the defendant and its director, claiming the cheque amount within fifteen days from the date of receipt of the notice. The defendant issued a belated reply notice on 10.07.2000 whereby not only the defendant admitted the dishonor of the cheque, but also denied their liability to pay the entire suit amount. If really the goods supplied to the defendant were defective and not according to the specifications required by the defendant, the defendant would not have kept silent from 11.11.1997 to 28.01.2000, the day on which he issued the cheque for the value of the goods received by him. It is not the case of the defendant that the said cheque, which was dishonored, was for any other purpose and not for the transaction made in the suit. The defendant has admitted the receipt of the goods on terms of payment of seven days credit as per invoice No. 333/97-98. Having admitted the liability and also the dishonor of the cheque, there is no triable issue in the case, which will give a right to the defendant to apply for leave to defend. Therefore, the order of the learned Assistant Judge, City Civil Court refusing to grant leave to defend is justified and needs no interference by this Court.
10. The next contention of the learned Counsel appearing for the revision petitioner/defendant is that there is no agreement between the parties to pay interest much less at the rate of 24%. Under Section 34 C.P.C. when there is no contractual rate of interest between the parties, the interest will be at the rate at which the monies are lent or advanced by nationalised bank in commercial transaction.
11. On the other hand, the learned Counsel for the respondent/plaintiff would contend that under the custom and usage in the trade, interest at 24% is normal practice and therefore, the interest awarded by the trial Court is just and necessary.
12. Section 61 of the Sale of Goods Act, 1930 deals with the interest payable in a suit for recovery of value of goods sold. This Section recites as under:-
'61. Interest by way of damages and special damages
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any case whereby law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the court may award interest at such rate as it thinks fit on the amount of the price-
(a) to the seller in a suit by him for the amount of the price-from the date of the tender of the goods or from the date on which the price was payable;
(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the seller-from the date on which the payment was made.
As far as this case is concerned, there was no contract agreement with regard to interest payable by the party.
13. In Gopalakrishna Pillai v. K.M. Mani it has been held in paragraphs 12 and 13 as follows:
'12. It was also submitted before us on behalf of the respondent that there being admittedly no agreement as to any payment of interest the trial Court was not justified in awarding interest to the appellant. The amount of interest claimed by the appellant in his plaint was not based on an agreement but was claimed by way of damages. Section 61 of the Sale of Goods Act provides for interest by way of damages and special damages. The relevant provisions of sub-section (2) of that section are as follows:-
(2) In the absence of a contract to the contrary, the court may award interest at such rate as it thinks fit on the amount of the price-
(a) to the seller in a suit by him for the amount of the price-from the date of the tender of the goods or from the date on which the price was payable; 13. According to the averments in the plaint it was by his letter dated October 26, 1976, that the respondent had agreed to pay the amount of the price. The appellant had accordingly made a claim for interest from the said date. Under the provisions of Section 61(2) of the Sale of Goods Act, the appellant was clearly entitled to such interest by way of damages.'
14. In S. Balasubramanian Chettiar v. Arvind Enterprises, Tirunelveli AIR 2001 MAD 86, this Court has held as under:-
'14. On a overall study of the materials made available on record, it comes to be known that Ex.A.11 bill book contains the version that 'from that day onwards, the amount would carry interest at Re.1/- per mensum per Rs.100/-' thereby making it very clear that the amount that is due to the seller carries the interest at 12% p.a. Even according to the judgments cited above, the seller is always entitled to the award of interest on the price of the goods sold. But, according to the Sale of Goods Act, the only condition for denying the interest for the seller is that there should be a contract contrary to the above perception. In this matter, since there is no express or implied contract for the amount not carrying any interest, it goes without saying that the seller is entitled to the award of interest on the price of the goods sold and this legal perception has been rightly appreciated by the first appellate Court and no such misinterpretation has been given by the first appellate Court, as alleged by the appellant herein.'
15. In Gujarat Agro Oil Enterprises Ltd., Ahmedabad v. Arvind H. Pathak it has been held that in a suit for recovery of amount which is decreed in favour of plaintiff, when the plaintiff claimed for interest on total amount viz. principal amount and amount by way of interest, interest at the rate of 12% p..a. upto date of suit can be awarded, however, such interest is to be calculated only on principal sum and not on total amount.'
16. In M/s. Bangalore W.S. and Sewerage Board v. M/s. Sugesan & Co. (P) Ltd. AIR 1999 MAD 49, it has been held that in commercial transaction, where rate of interest was not mentioned in terms of agreement or in correspondence between parties, but notice to defendant and the bills were given demanding interest at rate of 24% p.a. from date of bill until its realisation, and no evidence was led by the defendants to show that current rate of interest in commercial transaction is below 24%, the plaintiff was entitled to claim interest at rate of 24% p.a. till date of filing of suit. It has also been held as under:-
'Section 34 of CPC leaves it to the discretion of the Court as to what interest is to be decreed by way of pendente lite interest. So far as future interest or further interest is concerned, that too also is left entirely to the discretion of the Court but subject to a limit of 6%. However, the added proviso would remove the limit to the future interest in a case arising out of a commercial transaction. But, the proviso does not take away the discretion left to the Court, nor does it limit the scope of exercise of such discretion. The judicial discretion in this regard must depend upon consideration of all the attending facts and circumstances including the circumstance that the amount decreed was in respect of a liability arising out of a commercial transaction. The exercise of such discretion shall necessarily be judicial and reasonable.
It has also been held as under:- 'Where the liability had arisen out of commercial transaction and though in the agreement, the rate of interest was not mentioned, it is mentioned in the bills, the letters and the legal notice which was sent by the plaintiff and received by the defendant, at the rate of 24% per annum, it was held that plaintiff was entitled to claim interest at the rate of 24% per annum till the date of filing of the suit, however, that the interest of justice would be met by fixing the rate of interest at 12% per annum from the date of the suit till the date of realisation of the suit amount.'
17. Under Section 34 of C.P.C. when there is no contractual rate of interest between the parties, the interest will be at the rate at which monies are lent or advanced by nationalised bank in relation to commercial transaction. The rate of interest claimed by the banks in commercial transactions varies from year to year and from bank to bank. The defendant has not produced any evidence as to what was the rate of interest claimed by the nationalised bank in commercial transactions from 1997 to the date of the suit, i.e., October, 2000. In the absence of any proof that the nationalised banks were lending or advancing money at 12% interest in relation to the commercial transaction, the custom and usage of interest at 24% in trade or business or commercial transactions is just and reasonable, especially in a case of this nature where the defendant failed to pay and discharge his liability for more than five years. I do not find any reason to interfere with the order of the learned Assistant Judge, City Civil Court. Hence, this revision petition is dismissed. Consequently, C.M.P. No. 16570 of 2002 is also dismissed. No costs.