1. This is a suit for recovery of unpaid sale price amounting to Rupees 3,813.24 ps. together with interest thereon amounting to Rs. 3,68,530.99 ps. for delayed payment aggregating Rs. 3,72,344.23 ps.

2. Plaintiffs case is that pursuant to an agreement entered into by and between the plaintiff and the defendant, the plaintiff sold and delivered to the defendant 50 metric tonnes of tea of agreed specification at the price at Rs. 32 per k.g. Deliveries were completed by 3rd June, 1985 and the defendant accepted the deliveries without raising any objection. After the supplies were effected the plaintiff raised and submitted to the defendant two bills both dated 27th June, 1985 for Rs. 16 lacs in total. In the bills the plaintiff indicated the prompt date, that is to say, the date for making payment of the price of the said supplies and the defendant accepted the said bills. The defendant from time to time paid the aggregate sum of Rs. 15,96,186. 76 to the plaintiffs and the balance Rs. 3813.24 ps. remained and is still due. By a letter dated 4th Feb., 1988, the defendant admitted its liability towards the plaintiff on account of the sale of tea and promised to pay the balance sum in terms of the agreement. The plaintiff is entitled to claim interest @ 18 per cent per annum on and from due date of the said bills until realisation thereof. Due notice under the Interest Act, 1978 has been served upon the defendant. There is now due and owing by the defendant to the plaintiff the total sum of Rs. 3,72,344,23 ps. inclusive of interest calculated up to April 7, 1991. But in spite of demand the defendant having not paid the sum or any portion thereof, the present suit had to be instituted.

3. The defendant contests the suit by filing a written statement admitting that the plaintiff supplied 50 metric tonnes of tea valued at Rs.16,00,000/- as alleged in the plaint. The defendant alleges that the supplies were obtained from the plaintiff to meet the agreed supplies to the Tea Trading Corporation of India in accordance with the terms and conditions as set forth in paragraph 1 of the written statement. It is stated that none of the formalities for checking the tea supplied as provided in the agreement was observed by the plaintiff. It transpired that the entirety of the tea supplied was not as per sample. However, the defendant somehow managed to supply only 23.056 metric tonnes of tea to the Tea Trading Corporation of India by picking up the best quality, and the remaining 24.944 metric tonnes of tea could not be supplied to the TTCI. The defendant by its letters 27th July, 1985, 7th August, 1985 and 20th Nov., 1985 informed the plaintiff of the said deficiency in the quality of tea which was not in accordance with the sample provided and called upon the plaintiff to replace the same at the remaining 25 metric tonnes to the TTCI. The plaintiff by its letter dated 18th Nov., 1985 duly acknowledged the deficiency in the quality of tea supplied as indicated by the defendant and promised to replace the same. But plaintiff did neither forward a sample of the tea nor replaced the said inferior quality of tea. In the premises the defendant had to commit a breach of agreement with the TTCI and the TTIC after failing to obtain delivery of the remaining 25 metric tonnes of tea expressed its unwillingness to take any further tea from the defendant and terminated the contract. In spite of this and to keep up good business relations, the defendant from time to time paid to the plaintiff several sums as the price of the tea supplied but all along requested the plaintiff to replace the inferior quality of tea supplied and in such circumstances there was not the full payment and in fact, there were some deferred payment which the defendant was constrained to make by reason of plaintiffs failure to supply the tea as per sample provided and as the plaintiff all along promised to replace the inferior quality but failed to do so. The defendant could not take steps for disposing of the inferior quality of tea lying in their godown and in the meantime the market price came down. However, when the market price went up to Rs. 21.31 ps. k.g. and there being the possibility of the market rate going further up, the defendant sold the said inferior quality of tea at Rs. 21.31 ps. per kg. which was below the contractual price of Rs. 37 per kg. as defendant had contracted to sell to TTCI. The defendant thus suffered a loss of Rs. 15.69 per kg. aggregating Rs. 3,91,371. 36 ps. The defendant has made the counter-claim against the plaintiff in respect of the said sum.

4. Upon pleadings of the parties the following issues have been framed.

(1) Is the suit barred by limitation

(2) Is the plaintiff entitled to claim interest for delayed payment by the defendant

(3) Is the plaintiff entitled to get a decree for Rs. 3,72,344.23 ps. and interest and other reliefs as claimed in the plaint

(4) Did the plaintiff supply any inferior quality of tea to the defendant

(5) Did the defendant ever reject any tea of the suit consignment

(6) Is the defendant entitled to recover Rs. 3,72,344.23 ps. or any sum by way of counter-claim

(7) Is the counter-claim of the defendant barred by limitation and by the principles of waiver; estoppel and acquiescence

(8) To what reliefs are the parties entitled to

Issue No. 1 :

The admitted position is that the supplies were completed by 3rd June, 1985 and bills thereof submitted on 27th July, 1985. There is also no denying that during the period between 8th Nov., 1985 and 7th April, 1988, the defendant paid to the plaintiff by instalments an aggregate sum of Rs. 15,96,186.76 ps. leaving the balance of Rs. 3813.24 ps. as unpaid purchase price. In paragraph 6 of the plaint it has been alleged that by a writing dated 4th Feb., 1988, the defendant duly and unconditionally admitted and acknowledged its liabilities towards the plaintiff on account of the sale of tea and expressly promised to pay the same. Apart from whether the part payments accompanied acknowledgment in the handwriting of or in writing signed by the person making the payment, in which case the period of limitation will be extended, there can be no doubt that according to plaintiffs own case, the period of limitation for maintaining action for realisation of the unpaid sale price would start from 4th Feb., 1988 and would expire three years thereafter, that is, on 3rd February, 1991.

5. In paragraph 12 of the written statement the defendant has alleged that the suit is barred by limitation. Under Section 3 of the Limitation Act every suit instituted after the prescribed period shall be dismissed whether or not limitation has been set up as a defence.

6. It appears that the suit has been filed on 8th April, 1991, that is, long after the period of limitation expired. Accordingly the suit, on the face of it, is barred by limitation. Under Order VII, Rule 11, Clause (d), Civil Procedure Code a plaint is to be rejected where from the statement in the plaint it appears to be barred by any law. From the statement in the plaint, it appears that the suit is barred by limitation and, accordingly, the suit is to be dismissed as being barred by limitation. The issue is answered in the affirmative.

Issues Nos. 2, 3, 4 and 5 :

Plaintiff has charged interest for the period from 18th July, 1985 to 7th April, 1991 of reducing balance @ 18 per cent per annum amounting to Rs. 3,68,530.99 ps.

7. In paragraph 7 of the plaint it is stated that the said interest has been charged in terms of the agreement and also under the provisions of the Sale of Goods Act, 1930 and Interest Act, 1978.

8. In paragraph 1 of the plaint it is plaintiffs case that the terms and conditions of the agreement would be evident from the letters of the plaintiff dated 6th May, 1985 and 13th May, 1985 and the letter of the defendant dated 31st May, 1985, copies whereof are annexed to the plaint marked A, B and C respectively. Office copies of plaintiffs letters dated 6th May, 1985 and 13th May, 1985 addressed to the defendant are marked exhibits A and B. But it does not appear from these office copies that their originals were served upon the defendant. No document has been exhibited showing service of the original letters upon the defendant. In absence of any evidence that the originals were delivered to the addressee, the copy letters carry little evidentiary value.

9. Exhibit C is the letter dated 31st May, 1985 written by the defendant to the plaintiff. In answer to question Nos. 98 and 100 plaintiffs only witness PW - 1, a partner of the plaintiff firm categorically admits that the written agreement relating to the subject matter of the suit was made by the letter dated 31st May, 1985. In cross-examination in answer to question No. 121 this witness again admits that exhibit C is the contract letter showing terms and conditions of the contract. This witness further says that the said document is the final contract document and there was no other document modifying the terms and conditions of the said contract. Now reading in between the lines of contents of exhibit C it does not appear that the parties made any agreement as to interest, far to say for delayed payment. In Exhibit C under the writing, General terms it is stated that payment is to be made within 45 days from the date of receipt of final delivery. It appears that the defendant by various letters addressed to the plaintiff made enquiries about how interest could be claimed by the plaintiff, viz. the defendants letters dated 14th March, 1987 (D.D.-19) and dated 4th February, 1988 (Exhibit-C) etc. which do not appear to have been replied to by the plaintiff.

10. Section 61 of the Sale of Goods Act runs as follows :

61.(1) Nothing in the Act shall affect the right of the seller or the buyer to recover interest or special damages in any case where by 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.

11. Under this section a party to a contract of sale in order to recover interest has to show that the interest is recoverable according to law or in terms of the contract. In absence of a contract to the contrary, the rate of interest which may be awarded by the Court has been left at the discretion of the Court. The period for which such interest can be granted is specified as from the date of tender of the goods or from the date on which the price is payable in the case of a suit by the seller for recovery of unpaid sale price. In the instant case, the contract document (Exhibit C) specifies that price is to be paid within 45 days from the date of receipt of the final delivery, but does not specify that interest shall be charged if no payment is made within this specified period. It has been argued on behalf of the defendant that the plaintiffs claim of interest on reducing balance is not tenable for the simple reason that the plaintiff accepted part payments without giving any notice that they would claim interest for delayed payment and that being so, the plaintiff is precluded from claiming interest on reducing balance on the principles of waiver and acquiescence. It has further been argued on behalf of the defendant that the plaintiff should not be allowed to make unjust enrichment, for the defendant had to delay payment for plaintiffs assurance that they would replace substandard quality of supplies but failed to do so and in spite of the same, the defendant paid almost the whole of the sale price and thus plaintiff has been reaping both the benefits; while supplying substandard tea, they are getting full price without making replacement and at the same time praying for penal interest on delayed payment. This is unjust and unfair. The Ld. Advocate for the defendant further submitted that the rate of interest being discretionary by virtue of Section 61 of the Sale of Goods Act, this Court, if at all holds that interest is chargeable, will grant the same on the principal of Rupees 3813.24 ps. for the period from 7th April, 1988, that is to say from the date of last part payment till recovery.

12. From the correspondence marked exhibits 6, 7, 9 and 10 there remains little doubt that the entire supply was not of the standard agreed upon and there was rejection by the TTCI which was the ultimate recipient of the subject supplies and in consequence the defendant had to reject a good quantity of tea supplied by the plaintiff, though in the process the defendant suffered loss because of TTCI having terminated the contract. It seems that this is the reason why there was delay in completing the supply and clearly that is the reason why the plaintiff cannot charge interest for the delayed payment. Where payment is delayed for no fault of the defendant question of paying penal interest by the defendant cannot also arise.

13. A plea has been raised on behalf of the plaintiff that interest is charged as per prevailing trade practice but no cogent evidence has been adduced to establish any such trade practice. On the contrary defence witnesses have negatived the contention, saying that such trade practice could be invoked in respect of auction - sales of tea and not for supplies made in terms of an agreement where there is no stipulation as to payment of interest on reducing balance.

14. In paragraph 7 of the plaint it is stated that due notice under the Interest Act, 1978 has been served upon the defendant but no such notice has been exhibited.

15. Upon considering the facts, circumstances and materials on record I am of the view that since there is no whisper in the contract letter, Exhibit-C as to payment of interest on reducing balance, and also as a substantial portion of the supplies was of inferior quality leading to rejection, question of granting interest as has been assessed by the plaintiff and shown in the plaint as being Rs. 3,68,530.99 p. cannot and should not arise.

16. However, on the admitted balance sale price of Rs. 3813.24 p. plaintiff would be entitled to get interest from the date of the last payment dated 7th April, 1988 and rate of interest is fixed at 10 per cent per annum till recovery.

17. The issues are answered as follows :

Issue No. 2:- No.

Issue No. 3:- Plaintiff is otherwise entitled to recover Rs. 3813.24 p. along with interest from 7th April, 1988 till recovery at the rate of 10 per cent per annum.

Issue No. 4:- Yes.

Issue No. 5:- Yes.

Issues Nos. 6 and 7 :

Admittedly supplies were completed by 3rd June, 1985 and during the period from 8th Nov., 1985 to 7th April, 1988 the defendant paid to the plaintiff by instalments the aggregate sum of Rs. 15,96,186. 76 p. It is defendants case that some portion of the supply was of inferior quality which was not replaced by the plaintiff in spite of repeated request and that as a result thereof the defendant could not keep its commitment to the TTCI for which the TTCI terminated the contract with the defendant and thereby the defendant suffered a loss of Rs. 3,72,344.23 p., to recover which the counter-claim has been made. The Ld. Advocate for the defendant had to agree with me that the counter-claim is hopelessly barred by limitation as for the first time in the written statement the same has been made and that too without serving a demand notice upon the plaintiff. Counter-claim on the face of it is barred by limitation.

18. Then again it is in evidence that the performance security that was submitted by the plaintiff in terms of the agreement in the form of bank guarantee was long released by the defendant. It is also in evidence that sales tax declaration forms were submitted by the defendant in respect of the instant supplies and payments. That being so, whatever fault was committed by the plaintiff in course of this supply has been condoned by the defendant and accordingly any attempt to recover compensation or damages for fault of the plaintiff in fulfilling the contract must be treated to have been waived or acquiesced by the defendant. The counter-claim is not sustained. The issues are answered accordingly.

Issue No. 8:

19. In the result the suit fails. Defendants counter-claim is not sustained.

Therefore, it is ordered that the suit as also the counter-claim stand dismissed on contest but in the circumstances without cost to either party.