Sizer Metals Private Limited vs. Vir Electro Engineering PVT. LTD. And Ors.

Held

The Court held that the Trial Court's reasoning for not granting the contractual rate of interest, citing present bank rates and the nature of transactions, was specious and contrary to its own finding in paragraph 7 of its judgment. Paragraph 7 of the Trial Court's judgment indicated that under Order XXXVII, Rule 3 of the Code of Civil Procedure, the Plaintiff was entitled to interest at the specified rate. Therefore, the Court found that the Trial Court should not have departed from the contractual rate of interest agreed between the parties. The impugned judgment was set aside to the limited extent of awarding interest at 9% p.a. The Court modified the judgment by awarding the Appellant the contractual rate of interest of 18% p.a. from the due date of each invoice till its full realization. The decree was to be drawn up accordingly.

Facts

The Appellant, Sizer Metals Pvt. Ltd., filed a Commercial First Appeal challenging an ex-parte judgment dated January 17, 2025, passed by the Trial Court. The appeal specifically contested the award of interest at 9% per annum instead of the contractual rate of 18% per annum on a principal amount of Rs. 56,43,169/-. The Trial Court had decreed the suit ex-parte against the Respondents, VIR Electro Engineering Pvt. Ltd. and its Directors, who had failed to appear. The Appellant argued that the Trial Court, despite acknowledging the Plaintiff's entitlement to the principal amount and interest, erroneously awarded a lower interest rate than contractually agreed upon in the purchase order.

Key Issues

1. Whether the Trial Court erred in awarding interest at 9% per annum, contrary to the contractual rate of 18% per annum agreed upon between the parties, in light of Order XXXVII, Rule 3 of the Code of Civil Procedure? The Appellant contended that the Trial Court's decision to award interest at 9% p.a. was erroneous and required modification to reflect the contractual rate of 18% p.a. as stipulated in the purchase order. The Appellant relied on the fact that the Trial Court had found the Plaintiff entitled to the principal amount and interest based on pleadings and evidence. The Respondents, despite service, did not appear before the High Court, and had also failed to appear before the Trial Court, thus no arguments were recorded on their behalf.