TATA FINANCE LIMITED Vs. VINIYOG INTERNATIONAL LIMITED

JUDGEMENT

(1.) In this case the interest is being claimed in two forms: (i) 36% as discount charges on two bills of exchange and (ii) 36% per annum, future and pendente lite interest as is evident from paras 15, 17 and relief clauses (a), (b) and (c) of the plaint. Besides, it appears that the suit has been filed against defendant No. 2, the Chairman & Managing Director of the defendant company and defendant No. 3, the other company without there being any agreement about interest between the plaintiff and these two persons.

(2.) It appears that this part of the agreement is itself unconscionable and is opposed to the underlying public policy not to allow exorbitant rate of interest as is evident from Illustration (b) of Section 19A of the Contract Act deeming provisions in proviso to Section 34 Civil Procedure Code itself and Section 80 Negotiable Instruments Act, Art. 39(c) of the Constitution, and lack of any precedent awarding interest over and above the rate at which moneys are lent by banks on commercial transaction. 3. The plaintiff is a non-banking finance company. The defendant No.1 company got two bills of exchange dated 12.8.1996 and 11.10.1996 aggregating to Rs. 50 lacs discounted. Defendant No.1 company sent two letters dated 12.8.1996 and 11.10.1996 wherein the defendant has undertaken to pay overdue discount charges at the rate of 3% per month and all cost and expenses if for any reason such bills are not paid on the due date. Two post dated cheques were given by the defendant company in discharge of the liability towards said bills. On presentation of the two bills on 29.11.1996 and 9.1.1997 and the said cheques were dishonoured by non-payment of defendant company. Apart from two letters one dated 12.8.1996 and second dated 11.10.1996 (at page 1 of the document file) there is no otheror part of the month) and all incidental cost and expenses, if for any reason the Bill of Exchange is not paid on due date". None of these letters indicate that in addition to 3% discount charges the defendant would be paying further interest at the rate of 3% per month or part of the month over and ave the discount charges. The interest over and above the discount charges appears to have been claimed for the first time through notice dated 11th February, 1997 in following words: "You had further also undertaken to pay to my clients the due interest at the rate of 3% per month (or part of the month) over and above the discount charges till the time the said Bills of Exchange are paid and also costs and expenses if for any reason the Bills of Exchange were not honoured by you on the due dates."

(3.) But this is contrary to letter dated 12th August, 1996 and letter dated 11th October, 1996. However, in the end only Rs. 50,00,000.00 were demanded "together with further overdue discount charges at the rate of 3% per month charges thereof from 12.2.1997 till realisation on 53,13,150.68 within 21 days". This notice though refers but does not intend to claim the additional interest of 3% over and above the discount charges. As such neither there appears any agreement nor there is notice to claim interest.