Case Note & Summary
The plaintiff, State Trading Corporation of India Ltd., a wholly owned Government of India undertaking designated as a canalising agency under the Import and Export Policy, filed a suit for recovery of Rs.21,38,603.56 along with interest at 19.75% p.a. on the principal amount of Rs.10,76,053.56 against the defendant, Jayantilal J. Mody, a sole proprietor of Indian Textile Agencies. The dispute arose from a transaction in 1970 where the plaintiff had a stock of 2,50,000 yards of Grey Taffeta. The defendant expressed willingness to purchase the goods for export at Rs.7.50 per metre, with 50% payment against shipment and the balance at delivery and replenishment. The plaintiff delivered the goods, but the defendant failed to pay the balance amount. The court examined the evidence, including letters and invoices, and found that the defendant had acknowledged the debt. The court held that the plaintiff was entitled to recover the principal amount with contractual interest at 19.75% p.a. from the date of the suit until payment. The court rejected the defendant's argument that the interest rate was penal, noting that it was agreed upon by the parties. The suit was decreed in favor of the plaintiff with costs.
Headnote
A) Contract Law - Sale of Goods - Recovery of Price - The plaintiff, a canalising agency, sold grey taffeta to the defendant for export. The defendant failed to pay the balance price. The court held that the plaintiff is entitled to recover the principal amount with contractual interest at 19.75% p.a. from the date of the suit till payment. (Paras 1-10) B) Interest - Contractual Interest - Section 34 CPC - The court upheld the contractual rate of interest at 19.75% p.a. as agreed between the parties, rejecting the defendant's contention that the rate was penal. (Paras 8-10)
Issue of Consideration
Whether the plaintiff is entitled to recover the principal amount of Rs.10,76,053.56 along with contractual interest at 19.75% p.a. from the defendant for goods sold and delivered.
Final Decision
Suit decreed in favor of the plaintiff for recovery of Rs.10,76,053.56 with interest at 19.75% p.a. from the date of suit till payment, with costs.
Law Points
- Contractual interest rate upheld
- Sale of goods for export
- Recovery of price
- Interest under Section 34 CPC
- Canalising agency
