Case Note & Summary
The plaintiff, National Textile Corporation Ltd., filed a suit for recovery of Rs.3,18,876/- with interest at 21% per annum from the defendant, M/s S.D. Sobharam. The plaintiff claimed that under the Textile Undertakings (Taking over of Management) Act, 1983, it had taken over the management of M/s Kohinoor Mills Ltd., which was subsequently nationalised, and thus all assets and debts of the mill vested in the plaintiff. Prior to the takeover, the mill had delivered cloth to the defendant against orders, and the defendant had not paid for the goods. The defendant denied liability, contending that the suit was barred by limitation and that the plaintiff had no locus standi. The court examined the evidence, including invoices and delivery challans, and found that the goods were delivered between 1981 and 1982. The suit was filed in 1984, within three years from the last delivery, hence within limitation. The court held that the plaintiff, as the successor of the nationalised mill, was entitled to recover the debt. However, the court reduced the contractual interest rate of 21% to 6% per annum from the date of suit till realisation, as the higher rate was considered penal. The suit was decreed in favour of the plaintiff for the principal amount of Rs.3,18,876/- with interest at 6% per annum on Rs.2,48,081.31 from the date of suit till payment.
Headnote
A) Limitation Act, 1963 - Article 14 - Suit for price of goods sold and delivered - The suit was filed within three years from the date of last delivery of goods, hence within limitation. (Paras 5-6) B) Textile Undertakings (Taking over of Management) Act, 1983 - Section 16 - Vesting of assets - The plaintiff, as the successor of the nationalised mill, is entitled to recover debts due to the mill. (Paras 2-3) C) Interest Act, 1978 - Section 3 - Award of interest - The court awarded interest at 6% per annum from the date of suit till realisation, reducing the contractual rate of 21% as it was penal. (Para 7)
Issue of Consideration
Whether the plaintiff is entitled to recover the debt due from the defendant for goods supplied by the nationalised mill, and whether the suit is within limitation.
Final Decision
Suit decreed in favour of the plaintiff for Rs.3,18,876/- with interest at 6% per annum on Rs.2,48,081.31 from the date of suit till realisation.
Law Points
- Recovery of debt
- vesting of assets under Textile Undertakings (Taking over of Management) Act
- 1983
- interest rate on commercial transaction
- limitation period for suit
