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SRI VENKATRAMA OIL INDUSTRIES COMPANY LIMITED, HUSSAINPURAM, N. S. B. V. CHOWDARY VERSUS THE UNION OF INDIA, REP. BY ITS GENERAL MANAGER, SOUTH CENTRAL RAILWAY, SECUNDERABAD

    A. S. 616 Of 1983

    Decided On, 29 September 1995

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE K.S. SHRIVASTAV

    For the Appearing Parties: N.V.Suryanarayana Murthy, Advocates.



Judgment Text

K. S. SHRIVASTAV, J.


( 1 ) THIS is plaintiff's appeal against the judgment and decree passed by the Subordinate Judge at Kakinada in O. S. No. 211 of 1981 dated 6-12-1982 where by the claim of the appellant-plaintiff for interest and damages has been dismissed.


( 2 ) HAVING regard to the limited scope of appeal, it is not necessary to traverse in detail the facts of the case. Suffice it to say, that on 8-9-1980 the appellant booked a consignment of rice bran oil weighing 13. 250 tonnes in wagon tanker no. S. R. T. M. 7081 at Samalkota Railway Station vide Railway Receipt Ex. A-6 to be transported to Railway Station Bombay and to be delivered to Tata Oil Mills limited, Bombay. The said goods was lost in transit. The wagon could not be located in spite of several letters and a telegram. The consignee, the Tata Oil mills Limited, Bombay cancelled the contract vide letter Ex. 30 dated 23-3-1981. On l4-4-1981 the appellant served a notice Ex. A-34 under Section 80 of the code of Civil Procedure claiming price of the rice bran oil amounting to rs. 1,05,735/-, bank interest amounting to Rs. 12,000/-, travelling expenses amounting to Rs. 3,000/-, and damages amounting to Rs. 25,000/-, totalling rs-1,45,735/- only. The respondents neither replied nor complied the notice and, therefore, the appellant brought the suit O. S. No. 211 of 1981 against the respondents alleging that the goods was lost due to the gross negligence of the respondents and thus the appellant is entitled to claim the price of the oil being rs. 1,06,000/-, bank interest at the rate of 18% per annum on Rs. 1,06,000/- from 8-9-1980 to 19-6-1981 amounting to Rs. 14,704/- Rs. 2,022/- being travelling expenses incurred by the appellant and Rs. 17,559/- being the damages for loss of business and reputation, totalling Rs. 1,40,285 /-, but abondoned its claim for an amount of Rs. 285/- and claimed a money decree for Rs. 1,40,000/ -.


( 3 ) THE respondents-defendants through separate written statements denied the claim of the appellant in toto. They denied that the wagon in question was lost due to the negligence of their employees. They denied every item of the claim of the appellant being false and exorbitant They claimed that the appellant is not entitled for interest, damages and travelling expenses, it being remote damages. They also pleaded that the suit is bad being premature. They also pleaded that the suit is barred by limitation and the appellant is incompetent to institute the suit.


( 4 ) THE learned lower Court reached the conclusion that the appellant- plaintiff has right to file the suit, that on 8-9-1980 rice bran oil weighing 13. 250 tonnes was loaded in wagon No. S. R. T. M. 7081 vide Railway Receipt No. 484821 dated 8-9-1980, that the suit is not premature, that the suit is within limitation, that the value of the consignment was Rs. 1,06,000/- and the appellant is entitled to claim that amount from the respondents, but, as regards the issue no. 6, the learned lower Court held that the appellant is not entitled to claim interest, travelling expenses and damages for loss of business and reputation because interest cannot legally be awarded and other two items fall within the category of remote damages. In result, the learned lower Court passed a decree for Rs. 1,06,000/- with proportionate costs and interest at the rate of 6% per annum from the date of suit till realisation of the amount.


( 5 ) FEELING aggrieved by the impugned judgment and decree of dismissal of the claim of Rs. 34,000/-, the appellant-plaintiff has come up in appeal.


( 6 ) RELYING on Union of India vs. S. S. H. Syndicate, Poona, it has been contended on behalf of the appellant-plaintiff that the goods was lost in transit due to the groos negligence of the employees of the respondent-railways and, therefore, the appellant is entitled to claim damages because the amount of rs. 1,06,000/- was locked up for a considerable time causing loss to the appellant who has claimed damages and with a view to assess the same has applied the yardstick of charging interest at the rate of 18% per annum. It has also been contended on behalf of the appellant that if damages are not awarded, the carrier may deliberately swallow the goods and utilise the same or its price until a suit is brought against it and claim discharge of their liability by making the payment of the price of the goods only and, thus, would gain wrongful profit putting owner of the goods in wrongful loss. In the alternative, it has been urged on behalf of the appellant that in such cases interest by way of damages on equitable grounds should be awarded.


( 7 ) ON the other hand, it has been contended on behalf of the respondents that interest as damages cannot be awarded because it is impermissible in law. Interest prior to the suit can be claimed either under an agreement or usage of trade under a statutory provision or under the Interest Act for a certain sum when notice is given. The appellant has claimed interest on the amount of rs. l,06,000/-because he had borrowed that amount from its banker on 9-9-1980 against the railway receipt Ex. A-6 without the knowledge of the respondents and, therefore, the appellant is not entitled to recover the amount of interest paid by him to its banker. It has also been urged on behalf of the respondents that damages for loss of reputation or business and travelling expenses cannot be claimed by the appellant for the reason that they are remote damages and, therefore, cannot be recovered from the respondents. It has been further urged on behalf of the respondents that the present case does not fall within those cases in which the Courts of equity grant interest.


( 8 ) THE learned Counsel of both the parties referred many decisions of various courts as also of apex Court, but, in deference to Counsel, I do not propose to discuss all those decisions, I have made my own discrete elimination of the matter of discussing some of the decisions to avoid making this judgment more elliptical.


( 9 ) RELYING on B. N. R/y. Co. , Ltd. , vs. Ruttanji Ramji-, it has been held that n. V, Joseph vs. Union of India that "under the Interest Act, the Court may allow interest to the plaintiff, if the amount claimed as a certain sum which is payable at a certain time by virtue of a written instrument. There is, however a proviso that "interest shall be payable in all cases in which it is now payable by law" and it applies to cases in which the Court of equity exercises jurisdiction to allow interest. In order to invoke a rule of equity, it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction. Ordinarily interest cannot be claimed merely because money has been detained as the result of the defendant's act or misconduct. But if it is possible to invoke a rule of equity by establishing the existence of a state of circumstances which attracts the equitable jurisdiction, there can be no doubt that interest can be allowed. "


( 10 ) IN the case of Mahabir Prasad vs. Durga Datta, it has been held that"interest for a period prior to the commencement of the suit is claimable either under a statutory provision or under the Interest Act, for a sum certain where notice is given. Interest is also awarded in some cases by the Courts of equity". (underlining is mine ). The case of B. N. R/y. Co. , Ltd. , vs. Ruttanji Ramji has been referred to in this case with approval.


( 11 ) IN Union of India vs. Watkins and Co. , it is held that: "it is well established that interest may be awarded for the period prior to the date of the institution of the suit when there is an agreement for the payment of interest at fixed rate or when interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance, under Sec. 80 of the Negotiable Instruments Act, 1881, when no rate of interest is specified in the promissory note or bill of exchange, the Court may award interest at the rate of 6percent per annum. Interest may be awarded under the Interest Act which contains a provision that "interest shall be payable in all cases in which it is now payable by law", but this provision only applies to cases in which the court of Equity exercises jurisdiction to allow interest. " (underlining is mine ).


( 12 ) IN the case of Union of India vs. Watkins and Co, the case of B. N. Rly. Co. , ltd. , vs. Ruttanji Ramji has been referred. The apex Court also quoted the principle laid down in the case of Thawardas Pherumal vs. Union of India, wherein the apex Court has rejected a claim for interest on the ground that interest could only be awarded if there was a debtor or a sum certain payable at a certain time or otherwise by virtue of written contract and written demand. The case of union of India vs. Rallia Ram has also been referred. In this case, it was held by the apex Court that the award of interest on sum refunded to the respondent (in that case) in respect of returned packets could not be sustained as the contract did not provide for payment of interest in respect of amounts paid by the respondent if the contract fell through.


( 13 ) RELYINGON Thawardaspherumal vs. Union of India (6supra),union Of lndia vs. Rallia Ram (7 supra), Union of India vs. Watkins and Co. (5 supra) and B. N. R/y. , co. , Ltd. , vs. Ruttanji Ramji (2 supra), it has been held in the case of Union of India vs. W. P. Factories that the contract price is no measure of damages to be awarded and it is well settled that it is the market price, at the time the damage occurred, which is the measure of damages to be awarded. No interest could be awarded for the period upto the date of the suit in view of the law laid down by this (apex court) in the aforementioned circumstances.


( 14 ) IN the case of Union of India vs. S. S. H. Syndicate, Poona (1 supra), it is held that when the plaintiff claims interest as pure and simple interest on a quantified amount of compensation or damages, the interest cannot be allowed in the absence of there being any contract justifying the charging of such interest, as also where interest by way of damages is claimed for wrongful detention of a debt or where the interest is claimed on a specified amount due or claimed against the debtor, but where the plaintiff merely claims damages pure and simple and in order to assess the same applies the yardstick of changing interest at a particular rate on the locked up capital due to the negligence of the defendants in causing inordinate delay in the delivery of goods, he is entitled to claim such damages because interest is calculated as a yardstick or measure only to assess the damages.


( 15 ) RELYING on Union of India vs. S. Kesar Singh, it has been held in the case of m/s. Gupta PVT. , Loan Committee vs. Sumitra Devi that the Courts of law and equity can grant interest for a period prior to the commencement of the suit even in cases where interest had not been claimed under an agreement or usages of trade or other statutory provision.


( 16 ) IN the case of Executive Engineer, Irrigation, Galimala vs. Abnaduta Jena, it is held that in cases to which the Interest Act, 1978 applies the award of interest prior to the proceeding is not open to question. The Interest Act, 1939 does not apply to the cases where there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants are entitled to recover interest. Again, if there are any other provisions of the substantive law enabling the award of interest. By way of an illustration, we may mention Section 80 of the Negotiable Instruments Act as a provision of the substantive law under which the Court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange. We may also refer Section 61 (2) of the Sale of Goods Act which provides for the award of interest to the seller or the buyer as the case may be under certain circumstances in suits filed by them. We may further cite the instance of the non-performance of a contract of which equity could give specific performance and to award interest. We may also cite a case where one of the parties is forced to pay interest to a third party, say on an overdraft, consequent on the failure of the other party to the contract not fulfilling the obligation of paying the amount due to them. In such a case also equity may compel the payment of interest. Loss of interest in the place of the right to remain in possession may be rightfully claimed in equity by the owner of a property who has been dispossessed from it.


( 17 ) DISCUSSING the proposition of law laid down in the aforementioned cases, the legal position appears to be that in the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest, interest by way of damages cannot be awarded. But, when damages pure and simple are claimed and in order to assess the same the yardstick of charging interest at a particular rate, on the locked up capital due to the negligence of the defendants, be applied for and interest is calculated as a yardstick or measure to assess the damages which the claimant is entitled to. And in such cases also where equity compels the payment of interest, interest may be awarded.


( 18 ) THE question that falls for determination is whether the appellant is entitled to claim Rs. 34,000/- from the respondents?


( 19 ) AT the out set, it is to be remarked that it is not the case of the appellant that he had entered into a contract with the respondents that in the event of default on their part they shall be liable to pay interest or there is any usage for payment of interest in such case or there was an implied contract or there is any provision of law to justify the award of interest.


( 20 ) THE appellant has claimed bank interest of Rs. 12,000/- in the notice ex. A-34 dated 14th April, 1981, but the appellant has not stated in its notice to have taken advance of Rs. 93,500/- being 90% of the price of the goods. The appellant-company pleaded in para-5 of the plaint mat it underwent loss of reputation and business transactions as also for the cost of the goods and interest but also business reputation and, therefore, it is entitled for the cost of the goods, bank interest payable by the appellant, damages, expenses and other reliefs against the respondents for their misconduct and negligence. Again in para-7 the appellant in item No. 2 has shown Bank interest at the rate of 18% on rs. l,06,000/-from 8-9-1980 to 19-6-1981 amounting to Rs. 14,704/-and in item no. 4 damages for loss of business and reputation amounting to Rs, 17,559/ -. It is pertinent to note that the appellant has not specifically mentioned either in the notice Ex. A-34 or in the plaint that he has claimed pure and simple damages for the breach of contract and has calculated interest at the rate of 18% per annum as a yardstick or measure to assess the said damages.


( 21 ) N. S. B. V. Chowdary P. W. 1 has not stated in his whole deposition that he has calculated interest at the rate of 18% per annum as a yardstick or measure to assess the damages for which he is entitled because of the breach of contract. On the other hand, he has stated that o n his demand his banker paid 90% of the value of the consignment, which comes to Rs. 93,500/-, on 9-9-1980 after the appellant-company had booked the consignment He has also stated that his banker has granted cash credit upo Rs. 22,00,000/- and had later adjusted the amount of interest charged by it against its running account. He has also stated that he has claimed price of the oil, T. A. bill, interest and damages for the loss of business and reputation. There is neither pleading nor proof that under the instructions of his purchaser he had obtained Rs. 93,500/- from its banker on handing over the railway receipt Ex. A-6 to it. The letter issued by the banker of the appellant Ex. A-31 dated 30th July, 1982 recites that the Bank had purchased the invoice and railway receipt for Rs. 93,500/- from the appellant, the letter issued by Raja Ramaniah and Company dated 24-4-1980, which is at ex. A-3, and the letter issued by the Tata Oil Mills Company Limited, which is at Ex. A-4, recites that advance of 90% of the value ot the goods against the railway receipt shall be paid and the balance would be remitted by the buyer after their acceptance and ascertainment of weight etc. , of the goods by their factory. But as noted above, there is no material on record that the railway receipt Ex. A-6 was ever tendered or received by the Tata Oil Mills Company limited or its banker and it is not the case of the appellant mat the amount was paid by him or on his instructions by the appellant's banker. The Tata Oil Mills company Limited, Bombay vide letter Ex. A-29 written to the appellant to advise its banker of Bombay not to charge interest for this undue delay as the same is not payable by them as per the terms of the contract.


( 22 ) FROM what is stated above, it appears that the appellant after booking the consignment had sold the railway receipt Ex. A-6 and the invoice Ex. A-7 to its banker for Rs. 93,500/ -. There is no evidence on record that the said sale was made on condition that in the event of default on the part of the Tata Oil Mills company Limited, Bombay, the appellant would be liable to pay interest at the rate of 18% per annum or at any rate to its banker.


( 23 ) THE case of Union of India vs. S. S. H. Syndicate, Poona (1 supra)is of no help to the appellant for the reason that in that case the plaintiff had deposited the amount of Rs, 27332. 44 paise with his banker and which due to rise in prices has swelled to Rs. 35,476-27 paise, which was locked up for a period about six months due to the gross negligence of the Railways and the plaintiff in that case had merely calculated interest as a yardstick or measure to assess the damages to which he was entitled to. Whereas, in the case in hand, the appellant did not deposit any amount with its banker and has not calculated the interest as a yardstick or measure to assess the damages. The appellant has sold the R. R. Ex. A-6 for Rs. 93,500/- and utilised that amount without the knowledge of the respondents as also without the consent or knowledge of the Tata Oil Mills company Limited, Bombay. The appellant-Company has claimed interest on the specified amount of Rs. 1,06,000/ -.


( 24 ) N. S. B. V. Chowdary PW-1 has stated that as the amount of rs. 1,06,000/- was locked up in this transaction, which sustained loss of business and could not earn profits by re-investing this amount and producing more oil and selling it, and, therefore, he has estimated the loss of Rs. 17,000/- at the time of filing the suit. This fact has not been pleaded in the plaint by the appellant- company. These allegations have not been mentioned in the notice Ex. A-34. This witness has not specifically stated in his deposition as to how he has estimated the loss of Rs. 17,000/ -. It would not be out of place to mention that on his own showing he had taken Rs. 93,500/- from its banker on 9-9-1980 only and it cannot be inferred that this amount must have been utilised in the business of the appellant-Company and, therefore, it cannot be said that the appellant-Company had suffered loss of business. It the appellant-Company has paid interest to its banker it would have also earned profit from utilising the amount of Rs. 93,500/- received from its banker. There is no iota of evidence on record that the appellant had suffered loss of reputation. If the respondents have committed breach of contract, how can it be said that the reputation of the appellant-Company had been lowered down in the eyes of the officers of the tata Oil Mills Company Limited, Bombay. Things would have been different in case due the negligence of the respondents the oil would have become adulterated.


( 25 ) THE appellant-Company has claimed travelling expenses of Rs. 2,022/- only. The appellant-Company has filed in proof certain vouchers evidencing payment of travelling allowance and dearness allowance to its employee. The tata Oil Mills Company Limited, Bombay had cancelled the contract on 23-3-1981 vide its letter Ex. A-30. Under these circumstances, there appears to be no point for his employee to have gone to Bombay to search the lost wagon on 24-3-1981 and again on 7-5-1981. From the letter issued by the respondents, it appears that the wagon had been despatched for onward journey from kazipet and, therefore, there was no point in going to Kazipet or to West Bengal to search for the wagon. The appellant appears to have done futile exercise to get the wagon searched by its employees because it was not in their competence to do so for the sim

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ple reason that in case wagon was detained some where between Kazipet to Bombay, how could its employee locate the same in bombay? It is also noteworthy that the respondents had written to the appellant that they were searching for the lost wagon and, under these circumstances, when the employees of the respondents were unable to locate the lost wagon it is not possible for a stranger to locate the same. The claim under this item as also under the item of loss of reputation appears to be remote damages and I hold that the appellant is not entitled to claim the same. Loss of business is not claimable, particularly, when it is not proved. ( 26 ) IN the case of Union of India vs. S. Kesar Singh (9 supra), the respondent cancelled the contract without any right and has illegally forfeited the secuirty deposit and deliberately had withheld the payment of price of the charpoys already supplied by the plaintiff. Under these circumstances, interest by way of damages on equitable grounds was awarded to the plaintiff. In the case of m/s. Gupta Pvt,, Loan Committee vs. Sumitra Devi (10 supra ), the defendant, without any just cause, had withheld the payment of Rs. 11,400/-, in spite of repeated demands for a considerable time, causing loss to the plaintiff and she was wrognfully deprived of the use of her own money and, therefore she was awarded equitable interest. Such is not the case here. It is not a case where due to the illegal, unauthorised and wilful act of the respondents the consignment in question had been loss. It is not a case where the appellant-Company was forced to pay interest to a third party on an over-draft. But, as noted above, the appellant had voluntarily sold the R. R. Ex. A-6 and had presumably utilised the amount for his business. Under these circumstances, the present case does not fall within those cases in which Court of equity grant interest. ( 27 ) FOR the foregoing reasons, agreeing with the learned lower Court, I reach to the conclusion that the appellant-Company is not entitled to claim interest, damages for loss of business and reputation and travelling expenses amounting to Rs. 34,000/- from the respondents. ( 28 ) IN result, the appeal fails and is hereby dismissed. However, in the circumstances of the case, I order the parties to bear their own costs.
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