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Judgment
Sri M.S. Ramachandra Rao, J. - This appeal is filed challenging the judgment and decree dated 26-04-1996 in O.S.No.24 of 1996 of the Subordinate Judge, Adilabad.
The appellant herein is the defendant in the suit. The respondent-plaintiff filed the said suit for recovery of a sum of Rs.19,28,960.15 ps with interest @ 21.5% per annum on the said amount from the date of suit till realization.
The plaintiff is a registered partnership firm doing business in cotton, grain and cotton seed. The respondent is a company registered under the provisions of the Companies Act, 1956 and accepts goods of others for safe custody in its regular course of business and collects charges for the said storage.
The parties will be referred to as per their array in the trial Court.
The plaintiff entrusted 1150 fully pressed cotton bales of four different varieties (MECH-1, 1007, H4 and LK) to the defendant for safe custody during the period 08-02-1991 to 28-05-1991 which were accepted by the defendant for storage in their godown in the ordinary course of their business. The bales were returnable on demand. There was appreciation in the value of the cotton bales of MECH-1 variety and the rate which was Rs.2,300/- per quintal on 08-02-1991 rose to Rs.2,900/- per quintal by 11-04-1991.
The plaintiff entrusted 50 bales of MECH-1 on 11-04-1991 to the defendant and on that day, and according to plaintiff, the defendant altered the value of the cotton bales of MECH-1 variety entrusted previously from Rs.2,300/- per quintal to Rs.2,900/- per quintal.
There was a fire in the godown of the defendant on 08-06-1991 and 850 bales out of 1150 bales of cotton of the four varieties entrusted by the plaintiff to the defendant were completely destroyed. The suit is filed essentially for recovery of the value of the said bales of cotton destroyed on 08-06-1991.
According to the plaintiff, the details of the destroyed bales, their weight and value on the date of fire was mentioned in the schedule to the plaint. According to it, a sum of Rs.35,79,707/- was their value. The plaintiff contended that the bales had been deposited by it with the defendant for the purpose of sale in future; sales tax is levied on the last purchaser in the State; since the bales were destroyed in the fire, the plaintiff would be deemed to be the last purchaser in the State and thus subjected to payment of 4% sales tax on their value amounting to Rs.1,43,188/-. Thus, according to the plaintiff, the total amount of the value of the cotton bales which it lost in the fire including sales tax thereon would be Rs.37,27,895/-.
According to the plaintiff, the defendant only paid Rs.18.00 lakhs on 25-01-1992, Rs.12,33,000/- on 19-01-1992 and Rs.1,59,413/- on 14-05-1993 amounting to Rs.31,92,413/-. After giving credit to these amounts, the plaintiff claimed that it is entitled to Rs.19,28,960-15 ps with interest @ 21.5% per annum. The plaintiff contended that there was a breach of contract on the part of the defendant and the fire had taken place due to negligence and carelessness of the defendant and since the defendant had failed to take care of the goods entrusted to it, it is liable to pay the plaintiff for the above amounts.
A written statement has been filed by the defendant denying the plaint allegations. The defendant admitted that 1150 cotton bales of the four varieties mentioned supra were given to it for safe custody by the plaintiff between 08-02-1991 and 28-05-1991 and that subsequently on 14-04-1991, 50 more bales of cotton of MECH-1 variety were also entrusted to it. It stated that the value of these 50 bales of cotton was shown as Rs.2,900/- per quintal by plaintiff and at the request of the plaintiff, and on condition of the plaintiff agreeing to pay additional premium, the defendant paid additional premium to the insurance company showing the rate @ Rs.2900/- per quintal without making any alteration in the value of the goods in the warehouse receipts issued prior to 11-04-1991. The defendant admitted that there was a fire accident in the godown of the defendant on the intervening night of 7th and 8th June 1991 because of which 850 bales of cotton deposited by the plaintiff with the defendant were gutted along with cotton and other articles of other depositors. It also admitted that the schedule annexed to the plaint showing number of bales, their variety, weight, old rate and value is correct, but the additional rate and value and 4% GST on the value of the goods shown, is not correct. It put the plaintiff to strict proof about it being deemed to be last purchaser in the State and being subjected to Rs.1,48,188/- towards 4% sales tax by the State Government. It contended that it had nothing to do with this liability and the same cannot be fastened on it since it had not undertaken to take on the said liability. It denied that there was any breach of contract on its part or that the fire occurred on account of any negligence or carelessness on part of it�s employees or that it had failed to take proper care of goods entrusted to it. It contended that it is not liable to compensate the plaintiff over and above the value of the goods on the date of the deposit for which the goods were insured with the insurance company through the agency of the defendant. It contended that its godowns at Adilabad, where the goods of the plaintiff had been stored, were constructed with stone walls, asbestos roofing and were fitted with all provisions for prevention of damage to the goods from the fire and rain but in spite of all such care, the accident occurred due to sparks emanating from the friction between cotton bales as per the report of the fire office dated 09-06-1991. It contended that the terms and conditions for deposit of goods and agreed upon by the parties are printed on the back of the warehouse receipts which are in the nature of negotiable instruments; that these were well within the knowledge of the plaintiff who obtained the warehouse receipts after depositing the goods; that the goods were insured with the insurance company under a floaters policy with the knowledge and consent of the plaintiff; that it collects the premium from the plaintiff for insuring the goods and it acted only as the plaintiff�s agents. It contended that it never agreed to pay interest on the value of the goods in the event of damage or loss to the goods. It stated that it collects the insured amount from the insured company in the event of damage or loss to the goods and pays the amounts to the plaintiff without any delay and that as and when the insurance company made payments to it, it had promptly paid the same to the plaintiff. It also contended that there was no delay on its part in making such payments to the plaintiff and contended that after the personnel of the insurance company visited the godowns and conducted necessary inquiry and released payments, the same were paid to all persons whose goods were destroyed on pro rata basis. It also pleaded that the plaintiff claimed interest @ 21.5% which is exorbitant and its claim as regards General Sales Tax is not maintainable in law. It contended that as per terms and conditions of the contract, plaintiff is not entitled to claim any interest in excess of the value of the goods on the date of deposit for which they were insured with the insurance company and which was reflected in the warehouse receipts.
On the basis of the above pleadings, the trial Court framed the following issues:
Whether the plaintiff firm is a registered partnership firm and Vishnuprasad is it�s partner?
Whether the plaintiff is entitled to interest, to what rate?
Whether the plaintiff is entitled to recover A.P.G.S.T., amount from the defendant?
Whether the plaintiff is entitled to recover Rs.19.28.960-15 ps from the defendant?
Before the trial Court, the plaintiff examined P.Ws.1 and 2 marked Exs.A-1 to A-21. The defendant examined D.W.1 and marked Exs.B-1 to B-31.
By judgment and decree dated 26-04-1996, the suit was partly decreed by the trial Court. As per the decree:
"i) the defendant was directed to pay an amount of Rs.3,87,294.00 with interest @ 12% per annum from 18-07-1994 till realization.
ii) that, the defendant was also directed to pay an amount of Rs.2,01,248/- being interest on the amount of Rs.35,79,707-00 from 08-08-1991 to 25-01-1992, an amount of Rs.1,74,362/- being the interest from 26-01-1992 to 19-11-1992 on the amount of Rs.17,79,707-00, an amount of Rs.31,634/- being the interest from 20-11-1992 to 14-05-1993 on the amount of Rs.5,46,707-00 and an amount of Rs.54,751-00 being the interest from 15-05-1993 to 18-07-1994 on amount of Rs.3,87,294-00. The total interest comes to Rs.4,61,995/-
iii) and, the defendant was also directed to pay Rs.16,284/- being proportionate costs of the suit to the plaintiff."
The trial Court held that the plaintiff firm is a registered firm. It noted that there was appreciation in the value of MECH-I variety of cotton from 11-04-1991 onwards; that prior thereto, the value of this variety of cotton was only Rs.2300/- per quintal, but after the said date it became Rs.2900/- per quintal; that plaintiff informed the defendant about the increase in value of this variety of cotton and agreed to pay the enhanced rate of insurance premium on the difference amount and requested the defendant to alter the market rate; that the total valuation of the bales of this variety of cotton was changed and the defendant collected insurance premium @ Rs.2900/- per quintal; there was no change in the valuation of the other varieties of cotton deposited with the defendant; that the plaintiff�s claim is confined only with regard to MECH-I variety of cotton and not the other varieties mentioned in the schedule appended to the plaint; the plaintiff had given the valuation mentioned in the warehouse receipts and the enhanced amount claimed by it; and that this schedule shows a difference between the valuation mentioned in the warehouse receipts and the amount claimed by plaintiff in respect of 400 bales of this variety of cotton amounting to Rs.3,87,294/-. Although the defendant had pleaded that as per conditions 5 (b) and 6 (c) of the conditions for storage printed on the back of the warehouse receipts, its liability is limited to the value of the goods on the date of deposit and contended it is not liable to pay more than the said amount, the trial court rejected the said contention. It held that the conditions for storage including these two conditions were printed on the back of the warehouse receipts; the signatures of the plaintiff were not taken under the conditions for storage printed on the back of the warehouse receipts; and the representative of the plaintiff had signed only on the back of the duplicate receipts (Exs.B-18 to 25) where the conditions for storage were not mentioned. It took note of the evidence of the Warehouse Manager, Adilabad (examined as D.W.1) that there was no practise of obtaining signatures of depositors on the original receipts and that the terms and conditions for storage of goods are not displayed outside the godown and came to the conclusion that prior to receipt of goods deposited by the plaintiff, the conditions for storage were not brought to the notice of the plaintiff and that they were not explained to plaintiff and it�s consent was not taken. It rejected the contention of defendant that plaintiff was aware of the conditions of storage since it was a business enterprise and that if such conditions were not agreeable to the plaintiff, it should have returned the original receipt immediately after sometime and ought to have taken back it�s goods; that it was the duty of the defendant to bring those conditions to the plaintiff�s knowledge and accept the goods only if the plaintiff gives his consent. It held that the defendant should have also obtained the signature of the plaintiff under those conditions for storage in order to bind plaintiff, and without bringing them to the plaintiff�s notice before receiving the goods, and without obtaining signature of the plaintiff�s officials underneath those conditions, those conditions cannot be made part of the contract between them or bind the plaintiff. It held that the conditions for storage printed on reverse of warehouse receipts issued by defendant do not form part of the contract between them and Section 73 of the Contract Act 1872 is applicable. It therefore rejected the plea of the defendant that plaintiff is entitled to only the valuation mentioned in the warehouse receipts and not the subsequent appreciation of price not only on the ground that the warehouse receipt is not an agreement, but also because after 11-04-1991 additional insurance premium was collected by the defendant from the plaintiff for insuring the cotton bales of MECH-1 variety @ Rs.2900/- per quintal. It therefore concluded that the rate of the cotton bales of this variety as on the date of the fire was Rs.2900/- per quintal and the plaintiff is entitled to claim damages at this rate for 400 bales of MECH-1 variety of cotton deposited by it with the defendant from 08-02-1991 to 09-03-1991 i.e. Rs.3,87,294/- which is the appreciation of the price of this variety of cotton. It rejected the claim for payment of sales tax as a remote and indirect loss or damage.
Coming to the claim of interest @ 21.5% per annum from 08-06-1991, the trial Court held that there was no agreement between the parties for payment of interest on damages; when the cotton bales deposited by the plaintiff with the defendant were destroyed, the plaintiff is entitled to receive compensation from the defendant immediately on demand and merely because the cotton bales deposited by the plaintiff were insured and this fact was mentioned in the warehouse receipts, the defendant cannot postpone payment of compensation to the plaintiff till he receives the amount from the insurance company. It noted that the plaintiff had issued a letter dated 24-07-1991 (Ex.A-2) to the defendant requesting to pay the amount claimed by it within 15 days from the date of receipt of the claim, failing which the defendant had to pay interest at the bank rate from the date of loss till the date of payment; Section 73 of the Contract Act would therefore be attracted apart from Section 3 of the Interest Act, 1978; as per the evidence of P.W.2, Branch Manager of Bank of Maharashtra and as per Ex.A-20 Certificate issued by the said bank, the interest on deposits from 09-10-1991 was 12% up to three years and since the term �current rate of interest� is defined in Section 2 (3) of the Interest Act, 1978 as �interest paid on deposits�, the plaintiff is not entitled to interest @ 21.5% per annum but only at 12% p.a. It rejected the plea of the plaintiff that it is entitled to recover interest@ 21.5% p.a since this is the rate of interest collected by banks on amounts lent by them. It held that 21.5% per annum cannot be said to be "current rate of interest" as per the definition of the said term in the Interest Act, 1978. It therefore held that plaintiff is entitled to interest @ 12% per annum from 15 days after 24-07-1991 under Section 3 (1) (b) of the Interest Act, 1978. It rejected the contention of the defendant that since the entire amount was paid before filing of the suit, as per proviso to sub-Section (1) to Section 3 of the said Act, interest need not be paid to the plaintiff. It further held that the plaintiff is entitled to interest @ 12% p.a on the amount of Rs.3,87,294/- from the date of filing of the suit till realization under Section 34 CPC.
Challenging the same, this appeal is filed.
Cross Objections (SR) No.3434 of 1997 were filed by the plaintiff questioning the grant of interest @ 12% p.a. only and also questioning the alleged appropriation of payments made towards principal instead of towards interest in calculating liability of the defendant.
Heard Sri G.Ramachandra Rao, learned counsel for the appellant-defendant and Sri V. Ravikiran Rao, learned counsel for the respondent-plaintiff.
The following points arise for consideration in this appeal:
(i) Whether the respondent is entitled to claim compensation @Rs.2900/- per quintal for the 400 cotton bales of MECH-I variety ?
(ii) Whether terms and conditions printed on the reverse of the warehouse receipts form part of the contract between the parties?
(iii) Whether the negligence of the officials of the defendant is the cause for the fire which destroyed the goods of the plaintiff?
(iv) Whether the trial Court�s conclusion that the plaintiff is entitled to a sum of Rs.3,87,294/- is correct ?
(v) Whether the plaintiff is entitled to interest and if so at what rate ?
Point (i) and (ii):
The learned counsel for the appellant contended that warehouse receipts issued by the defendant to the plaintiff contain the terms printed on their reverse; the warehouse receipts were negotiable; the goods covered by the warehouse receipts were insured with the National Insurance Company; the defendant had paid to the plaintiff a sum of Rs.18.00 lakhs on 25-01-1992, Rs.12,33,000/- on 19-11-1992 and Rs.1,59,403/- on 24-05-1993 i.e. in all Rs.31,92,413/- representing the value of the goods on the date of their deposit; since the full value as shown in the warehouse receipts was paid, the plaintiff is not entitled to anything more. He contended that Clause 5 (b) and 6 (c) of the conditions of storage printed on the reverse of the warehouse receipts provided that the defendant�s liability would be limited to the value of the goods on the date of its deposit; therefore, since the value of the MECH-1 type of cotton bales was shown in the warehouse receipts admittedly as only Rs.2300/- per quintal, and not as Rs.2900/- per quintal, the plaintiff is entitled to only the value @ Rs.2300/- per quintal and not @ Rs.2900/- per quintal.
The learned counsel for the respondent-plaintiff on the other hand contended that although the value of MECH-1 variety prior to 11-04-1991 was only Rs.2300/- per quintal, there was an increase in their value by 11-04-1991; that after 11-04-1991, the plaintiff informed the defendant with regard to enhancement in the rates of the MECH-1 variety and this was admitted by D.W.1; and DW1 also admitted that insurance premium on this variety of cotton was collected from plaintiff @ Rs.2900/- per quintal from April to June 1991.
D.W.1 clearly stated that Exs.A-3 to A-19 receipts were issued by Adilabad Branch of the defendant; in these receipts the rental charges and insurance premium were mentioned; in Ex.A-3 to A-12 and A-14, the rental charges and insurance premium for MECH-1 type of cotton were collected @ Rs. 2900/- per quintal for the period from April to June 1991 and lesser charges were collected for prior period; the difference amount was collected after April 1991 for the cotton that was deposited prior to April 1991 also and thus, for the entire period, the rentals and insurance premium of this type of cotton was collected @ Rs.2900/- per quintal. This evidence of D.W.1 clinchingly proves that the defendant was aware that the value of this variety of cotton bales from 11-04-1991 was Rs.2900/- per quintal since this information was conveyed to it by plaintiff and on that basis, the defendant had collected extra insurance premium for this variety of cotton @ Rs.2900 per quintal even in regard to cotton bales of this variety which had been deposited prior to April 1991.
It is not open to the defendant to insist that the conditions printed on the reverse of the warehouse receipt form part of the contract of bailment between it and the plaintiff since admittedly there is no signature of the plaintiff�s representative underneath the conditions of storage printed on the reverse of the warehouse receipts.
D.W.1 has admitted that the signature of the plaintiff was not obtained under the conditions of storage and that it was only on the back of the duplicate receipts Exs.B-18 to B-25, the signature of the plaintiff was obtained. He also admitted that on the back of the duplicate warehouse receipts, conditions for storage were not printed and that there is no practise to obtain signatures of the depositors on the original receipts.
In Special Secretary to Government of Rajasthan (Finance), Jaipur, Rajasthan and Others v. Vedakantara Venkataramana Seshaiyer and Others AIR 1984 AP 5, a Division Bench of this Court dealing with conditions printed on the reverse of the lottery ticket and as to whether they were binding on the purchaser of the lottery ticket observed:
"30. From the aforesaid rulings it follows that unless the terms of the contract are arrived at after due negotiation, they cannot be held binding merely because a ticket is later issued containing the said terms. There must also be proof that the terms were meant to be contractual. The said terms must have been brought to the notice of the contracting party at or before the time when the contract was entered into. If the printed terms on the ticket do not, as aforementioned, become part of the contract they cannot be enforced unilaterally, for otherwise, it will amount to an alteration of the terms of the original contract.
Bearing these principles in mind, let us examine the facts of the case. The plaintiff purchased the ticket from P. W. 2 who is the salesman of the Agent, P.W. 1 (the 3rd defendant). The material on the reverse of the ticket, already referred to, is in small print. There is nothing in the evidence of D. W. 1, the Assistant Director, Small Savings, Rajasthan or in the evidence of P. W. 1 or P. W. 2 saying that the printed mater on the reverse of the ticket is part of any negotiation. Nor is there any other contract signed between the parties. There is nothing in the evidence to show that the attention of the plaintiff was drawn to the said matter at or before the time when the plaintiff paid rupee one for purchasing the lottery ticket. There is therefore nothing to suggest that the plaintiff bound himself by what is printed on the backside of the lottery ticket."
In my opinion, the trial Court has rightly followed this decision and held that the conditions for storage printed on the back of the warehouse receipts were not brought to the notice of the plaintiff before the deposit of the goods by the plaintiff; that the signature of the plaintiff was not taken on the conditions of storage; and therefore they do not form part of the contract.
Therefore Clause 5 (b) and Clause 6(c) forming part of terms and conditions for storage printed on the reverse of the ware house receipts would not apply and the plaintiff would be entitled to compensation for this variety of cotton bales @ Rs.2900/- per quintal and not at Rs.2300/- per quintal.
Points(i) and (ii) are therefore answered accordingly in favour of the plaintiff and against the defendant.
Point (iii):
The plaintiff in the plaint had clearly alleged that the fire took place on account of the negligence of the defendant. The defendant denied it by referring to a report of a Fire Officer dated 09-06-1991. But the defendant had neither filed the said report nor did it examined the said Fire Officer. So I am unable to agree with the submission of the learned counsel for the appellant-defendant that there was no negligence on the part of the employees of the defendant in causing the fire. Under Section 151 of the Indian Contract Act, 1872, in all cases of bailment, the bailee is bound to take as much care of goods bailed to him as a man of ordinarily prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed. The burden of proving this degree of care is on the defendant and since it has failed to prove that it has taken such care or that fire accident had occurred only on account of sparks emanating from friction of the cotton bales, under Section 152 of the Contract Act, as a bailee, the defendant is responsible for the loss and destruction of plaintiffs cotton bales.
The decision in M/s. Milap Carriers, Transport Contrs. and Commission-Agents, Hyderabad v. National Insurance Company Ltd. rep. by its Senior Divisional Manager, Hyderabad and Another, 1993 (3) ALT 647, sought by the learned counsel for the appellant is not applicable to the present case. That was a case of loss of goods which had been entrusted to a common carrier/transporter which came to be looted by flood affected people. This Court held that the defendant in that a case being a common carrier as defined under the Carriers Act, 1865 was liable for loss of damage. This Court held that the consigner signed the lorry receipt Ex.A-3 which specifically mentioned that the goods were carried at "owner�s risk" and one of the conditions also provided that the carrier will not be liable for loss or damage due to theft, riots, political disturbances and weather conditions. It held that the looting of the transport vehicle carrying the goods therein by flood victims is a circumstance beyond the control of the common carrier and was not a situation that could have been visualized by the common carrier and has to be equated to an act of God or vis major and therefore, the carrier is absolved of all liability.
Although in the said case also the conditions were printed on the reverse of the lorry receipt, no contention appears to have been advanced by the plaintiff therein that such terms and conditions printed on the reverse of the lorry receipt do not form part of the contract with the parties. Therefore, the decision in Special Secretary to Government of Rajasthan (Finance), Jaipur, Rajasthan and Others (1 supra) which specifically dealt with the said issue would apply and not the decision in M/s.Milap Carriers, Transport Contrs. and Commission-Agents (2 supra).
Point (iii) is answered accordingly in favour of the plaintiff.
Point (iv) :
In the Union of India v. The West Punjab Factories Ltd., AIR 1996 S.C. 395, where cotton bales had been entrusted to the railways for transport and were destroyed in a fire which took place on a railway platform, the Supreme Court has held that market price at the time the damage occurred is the correct measure of damages to be awarded and not the contract price between the consigner and consignee.
In the present case, the plaintiff had confined its claim only to the MECH-1 variety cotton bales which had been entrusted by it to the defendant and which had been destroyed in the fire which had taken place on 08-06-1991 and the plaintiff had given in the schedule to the plaint the details of 400 bales of this variety of cotton in respect of which, it had made the claim. In my opinion, the trial court rightly held that the plaintiff is entitled to the sum of Rs.3,87,294/-. This point is answered accordingly in favour of the plaintiff.
Point (v):
Coming to the rate of interest payable, it is true that the terms and conditions of storage printed on the warehouse receipts did not specify the rate of interest to be paid in case of loss or damage of the goods. But there is also no provision therein which excluded the payment of interest. In any event, as held by me supra, the conditions printed on the reverse of the warehouse receipts are not binding on the plaintiff.
There is no dispute that under Ex.A2 dated 24-07-1991, the plaintiff had demanded the defendant to pay the amount claimed by it within 15 days from the date of it�s receipt failing which the defendant would have to pay interest at bank rate form the date of loss to the date of payment. Thus, the plaintiff had invoked the provisions of the Interest Act, 1978. Section 3 (1) of the said Act states:
"Section 3 - Power of court to allow interest:
(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,--
(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings:
Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings interest shall not be allowed under this section for the period after such repayment."
The term �current rate of interest� mentioned in Section 3 (1) of the Interest Act has been defined in Section 2 (b) of the said Act as "the interest paid on deposits". Although the plaintiff claimed interest @ 21.5%, P.W.2, the Branch Manager of Bank of Maharashtra who was examined by the plaintiff filed Ex.A-20 certificate issued by the said bank showing that the interest on deposits from 09-10-1991 was 12% up to 3 years and 13% for the deposits for more than three years. Although 21.5% was the rate of interest collected by banks on the loans advanced by them, it is not the rate of interest on deposits. So, in my opinion, plaintiff was rightly held entitled to interest @ 12% per annum from the date of expiry of 15 days from 24-07-1991 as provided under Section 3 (1) (b) of the Interest Act, 1978.
The learned counsel for the Cross Objector/respondent in the appeal contended that the defendant is entitled to grant of interest at the rate at which Nationalized Banks lend or advance monies in relation to commercial transactions and therefore the Court below should have awarded interest @ 18% p.a. which P.W.2 had stated was the rate of interest at which amounts were lent or advanced by Nationalized Banks. This contention has already been considered and rejected in the previous para.
He further contended that the definition of the term "current rate of interest" under Section 2 (b) of the Interest Act is wide enough to include the rate of interest @ 18% p.a. and that Section 80 of the Negotiable Instruments Act, 1881 would override the provisions of the Interest Act, 1978. He contended that Exs.B-1 to B-18 are negotiable documents and therefore Section 80 of the Negotiable Instruments Act would apply. In my opinion the said contention is not tenable because although Exs.B-1 to B-18 are negotiable, they are not negotiable instruments within the meaning of the said term defined in Section 13 of the said Act. Therefore, Section 80 of the said Act has no application.
Coming to the issue of appropriation of amounts raised in the Cross Objections filed by the respondent/plaintiff, it is settled law that in case of a debt due with interest, any payment made by the debtor is in the first instance to be applied towards satisfaction of interest and thereafter to the principal, Meghraj v. Bayabai�. AIR 1970 SC 161.
But since the amount in question is not a "debt", but damages for breach of contract of bailment, the above principle would not apply. The trial Court had rightly rejected the contention of the Cross Objector that amounts received from defendant by plaintiff could not be adjusted towards principal first and balance towards interest. It rightly held that the amount claimed by the plaintiff is not a debt due to the plaintiff with interest.
For all the foregoing reasons, I do not find any error in the judgment of the trial Court warranting interference by this court and I am satisfied that it has correctly appreciated facts on record and rendered its judgment.
Therefore, the appeal and Cross Objection both fail and are accordingly dismissed. No costs.
As a sequel, the miscellaneous petitions, if any pending, shall stand closed.