SANJAY KISHAN KAUL, J. ( 1 ) THE plaintiff has filed a suit for recovery of Rs. 14,70,095. 00. The plaintiff is a company incorporated and registered under the Companies Act, 1956. The suit has been instituted by Shri K. V. Soorianarayanan, who is the Vice-President (Corporate) and Company Secretary of the plaintiff Company in pursuance to the board resolution in his favour. Mr. K. V. Soorianarayanan has also appeared in the witness box as PW-1. ( 2 ) THE defendant is a corporation incorporated under the Mines and Minerals trading Corporation Act. The defendant inter alia carried on business as a canalising agent for imports in terms of the Import and Export Policy of the country. The plaintiff claims that it was engaged in the manufacture of asbestos Cement Products with the use of Raw Asbestos which was mainly imported from other countries. Raw Asbestos was at all relevant periods one of the designated canalised items for import by the defendant. Thus all manufactures of asbestos products used to source their raw asbestos from the defendant being the sole canalising agent. ( 3 ) IT is the case of the plaintiff that in order to find out the likely requirement of raw asbestos for a particular year, the defendant used to follow the practice that in the beginning of April every year information used to be sought in respect of the grade and price of raw material and in the month of november-December, the actual users were required to register their requirement of raw asbestos. The plaintiff used to accordingly register its requirement. The defendant used to contract with various foreign sellers for purchase of canalised item on a principal to principal basis and in turn the defendant used to enter into independent agreements with raw asbestos users like the plaintiff. The sale used to take place on high seas sales price and the defendant issued telegrams intimating the allotted quantity and used to call upon the plaintiff/actual users to pay the amount as specified in the proforma invoice. On the payment being made in pursuance to the proforma invoice, the defendant used to endorse the original bill of lading in favour of the actual user to enable it to receive the goods, pay duties, warehouse the same and arrange for marine insurance etc. On the payment being made in pursuance to the proforma invoice, the defendant used to endorse the original bill of lading in favour of the actual user to enable it to receive the goods, pay duties, warehouse the same and arrange for marine insurance etc. The documentation and payment of various dues used to be done before the vessel enters custom frontiers. ( 4 ) THE defendant thereafter used to raise final invoices for each shipment as per the quantity sold. The final invoice used to cover any fluctuation in exchange rate between the date of raising the proforma invoice and date of payment by the plaintiff. Such final invoices used to be raised within a few months from the date of the proforma invoice. It is the case of the plaintiff that normally refund used to be found due and the amount used to be refunded to the plaintiff. ( 5 ) THERE is really no dispute in respect of the aforesaid procedure and the defendant has explained that the proforma invoice used to include a four per cent extra amount over the CIF price to cover the exchange rate fluctuations. The refund thus used to normally take place as there was not much fluctuation in the exchange rate. ( 6 ) THE subject matter of dispute is the shipments in the year 1990-91 whereby the plaintiff received nine shipments from Bombay port and four shipments from madras port. The plaintiff made payment as per the proforma invoices. It is the case of the plaintiff that a sum of Rs. 8,56,302. 00 is liable to be refunded to the plaintiff, which has not been so refunded. The plaint explains that apparently the defendant has not refunded the amount on the basis that the defendant was entitled to certain credit facilities under Government instructions and that the exchange rate fluctuation was more which was liable to be debited to the plaintiff. It is the case of the plaintiff that there were no such alleged instructions ever brought to the notice of the plaintiff and the contract price between the parties could not be affected by any such instructions. The plaintiff also claims that it borrows money from commercial banks and thus the plaintiff is entitled to interest on this amount at commercial lending rates. ( 7 ) THE defendant has contested the suit and has further filed a counter claim. The plaintiff also claims that it borrows money from commercial banks and thus the plaintiff is entitled to interest on this amount at commercial lending rates. ( 7 ) THE defendant has contested the suit and has further filed a counter claim. It is the case of the defendant that the price of the material used to be quoted as per the proforma invoice which was in turn based on the high seas sale price plus (+) four per cent of the CIF price as buffer for exchange rate fluctuation. It is alleged that the plaintiff also followed the same practice as other consumers and used to take even refunds on the same basis as set out in the plaint. ( 8 ) IN the year 1990 owing to the unfavourable balance of payment situation and the economic situation of the country, spot payment of foreign exchange to the supplier became difficult and as such the Ministry of Finance, Government of india issued instructions to the defendant to allow "deferred payment arrangement" and arrange remittance to the overseas supplier under Banks acceptance Scheme (hereinafter referred to as BAS ). The defendant claims it was the said scheme which is stated to be known to all consumers which was applicable and since payment had to be made as per the final invoice, the fluctuation in the currency rate was to be debited to the plaintiff. The defendant states that the high seas sale price was provisional as informed to the purchasers and the plaintiff is liable for the differential between the provisional and final sale price. The defendant has denied there being any delay on the part of the canalising agency and the exchange rate is required to be calculated in terms of the final invoice. The defendant claims that it is, in fact, the defendant, who is liable to recover from the plaintiff a sum of rs. 16,17,553. 00 towards balance price along with interest amounting to rs. 9,22,215. 00. ( 9 ) ON the pleadings of the parties the following issues were framed on 29. 8. 2000: "1. Whether the suit is barred by limitation" 2. Whether the counter claim of the defendant is barred by limitation" 3. Whether proper court fee has not been paid by the defendant on the counter filed" If so, to what effect" 4. ( 9 ) ON the pleadings of the parties the following issues were framed on 29. 8. 2000: "1. Whether the suit is barred by limitation" 2. Whether the counter claim of the defendant is barred by limitation" 3. Whether proper court fee has not been paid by the defendant on the counter filed" If so, to what effect" 4. Whether the transactions between the plaintiff and the defendant were governed by the alleged 'deferred payment arrangement' under the Bankers Acceptance scheme issued by the Government of India, Ministry of Finance" If so, to what effect" 5. To what amount the plaintiff is entitled from the defendant" 6. Whether the plaintiff is entitled to interest" If so, for what part and at what rate" 7. Whether the defendant is entitled to interest" If so, for what part and at what rate" 8. Whether the defendant is entitled to interest" If so, at what rate and for which period" 9. Relief. " ( 10 ) THE plaintiff in support of its case examined Shri K. V. Soorianarayanan as pw-1 to affirm to his authorisation to institute the suit in pursuance to the board resolution dated 20. 3. 1994. The affidavit of examination-in-chief more or less affirms to what is stated in the plaint. The witness deposed that in violation of the usual practice the final invoice was not raised within a few months of the proforma invoice for the purchase made during 1990 and the first final invoice was raised on 31. 3. 1991 in respect of the proforma invoice dated 16. 4. 1990,. e. almost a year later. The final invoices are stated to have been delivered to the plaintiff vide letter dated 9. 1. 1991 and 11. 1. 1991. For the ones which were not delivered, the details have been set out as under: DATE OF PROFORMA INVOICE DATE OF FINAL INVOICE BOMBAY 16. 04. 1990 31. 03. 1991 04. 06. 1990 05. 09. 1991 15. 06. 1990 25. 09. 1991 03. 07. 1990 31. 10. 1991 11. 07. 1990 02. 09. 1991 02. 07. 1990 28. 10. 1991 20. 09. 1990 31. 03. 1991 04. 09. 1990 22. 07. 1991 14. 02. 1991 31. 03. 1991 MADRAS 30. 05. 1990 not received till filing of suit 09. 07. 1990 17. 09. 1991 26. 06. 1990 26. 09. 1991 19. 09. 1990 31. 08. 10. 1991 11. 07. 1990 02. 09. 1991 02. 07. 1990 28. 10. 1991 20. 09. 1990 31. 03. 1991 04. 09. 1990 22. 07. 1991 14. 02. 1991 31. 03. 1991 MADRAS 30. 05. 1990 not received till filing of suit 09. 07. 1990 17. 09. 1991 26. 06. 1990 26. 09. 1991 19. 09. 1990 31. 08. 1991 ( 11 ) THE plaintiff addressed a letter dated 11. 7. 1991 to the defendant calling upon the defendant to furnish the bases of calculation of final invoice which is stated to have been fixed at the exchange rate on the response of the defendant. The liability is stated to have been denied only vide letter dated 31. 7. 1991. ( 12 ) THE witness has stated that the correct contract exchange rate that is to be reckoned is the rate as prevailing as on the date of payment made by the plaintiff Company to the defendant and not as on the date on which the payments are made by the defendant to the foreign sellers. It may be noticed that in cross-examination the said witness does admit that this is only a practice that is being followed and there is no written document in this behalf. In para 9 of the affidavit, the rates of exchange prevalent on different dates have been mentioned. ( 13 ) THE witness has categorically stated that the alleged instructions of deferred payment arrangement were never within the knowledge of the plaintiff nor were they communicated to the plaintiff. The rise in the exchange rate is stated to be due to the late payment by the defendant to the sellers and not by any action of the plaintiff who had paid in excess of the existing exchange rates. Not only that the plaintiff is also burdened with the interest element payable on account of such deferred payment and thus while on the one hand the plaintiff has paid the amount the defendant has not forwarded the amount to the supplier, it is the plaintiff who is burdened with exchange rate increase as also for interest on account of delayed payment. ( 14 ) THE cross-examination of the aforesaid witness shows that insofar as the aspect of deferred payment arrangement was concerned, the plaintiff categorically denied the same. ( 14 ) THE cross-examination of the aforesaid witness shows that insofar as the aspect of deferred payment arrangement was concerned, the plaintiff categorically denied the same. There is no cross-examination on the exchange rate as set out in the affidavit or in respect of really any other matter other than questions to state that the witness was not directly dealing with the defendant. ( 15 ) THE defendant also examined one witness, Shri S. B. Mathpal, Deputy General manager (DW-1 ). The affidavit states that global tenders used to be floated by the defendant for purchase of raw asbestos after taking into account the requirements of raw asbestos of the end-users. The allotment used to be on high seas sale price and the allotment letter used to indicate that the price of the material quoted in the proforma invoice was a provisional high seas sale price. The final sale price payable depended on the exchange rate prevailing on the date on which the defendant's banker debited the account of the defendant with the value of remittance made to the foreign supplier. The date and rate of exchange was not known to the defendant at the time of allotment of the asbestos to the consumers. In order to cover the exchange rate fluctuations the price of raw asbestos a margin of four per cent of the CIF price used to be kept by the defendant which was included in the proforma invoice and the amount, if any, found due for refund was paid to the purchaser at the stage of final invoice. ( 16 ) THE witness states that the plaintiff has debited the account of the defendant on the basis of the exchange rate prevalent at the stage of remittance to the foreign supplier. The witness relies on the BAS scheme under which the defendant was required to make payment to the foreign supplier within a period of 180/360 days. It is admitted that the amount both of the principal and interest payable on the exchange rate prevalent used to be debited and it is averred that the BAS scheme was in the knowledge of various asbestos consumers. The counter claim is thus stated to be based on the higher amount due to the defendant on the basis of the final invoice. The counter claim is thus stated to be based on the higher amount due to the defendant on the basis of the final invoice. ( 17 ) IN the cross-examination, the witness states that he was not posted in the division for import of raw asbestos and thus can only answer questions on the basis of the records. The witness expressed his ignorance even about the fact that the Indian consumers were not part of the purchase contract with foreign suppliers. On a specific query being put about the relationship between the foreign suppliers and the defendant being on a principal to principal basis the witness again expressed lack of knowledge. The same is the position with respect to questions about the trade notice issued to Indian consumers by the defendant not containing the basis on which the final invoice would be raised. It would be useful to reproduce the answer by the witness to some relevant questions as under: "ques. In cases of import these empaneled suppliers are only the foreign suppliers. What do you have to say" ans. It is correct. Ques. The raw asbestos procured from such foreign suppliers would be on the basis of purchase contracts" ans. Probably it may be. Volunteered: Since I was not posted in the said division for the import of the asbestos I cannot depose on this point without going through the records. Ques. Is it correct that your Indian consumers were not part of the purchase contract with the foreign suppliers" ans. I cannot say about this during the relevant period from 1987 to 1995. Ques. I put it to you that your relationship with the foreign suppliers of raw asbestos was on principle to principle basis" ans. I cannot say. Ques. The trade notices issued to Indian Consumers by the defendant does not contain the basis on which the final invoice would be raised" ans. I cannot say. But on the basis of record which I found it states that the final payment has to be realised from the buyer on the basis of actual exchange rate which is being debited from the defendants account while releasing payment to the foreign supplier. Ques. Does your provisional bill mention this fact about the final bill raised on the basis of rate of exchange prevailing on the date which the defendant makes payment to the foreign suppliers" ans. Ques. Does your provisional bill mention this fact about the final bill raised on the basis of rate of exchange prevailing on the date which the defendant makes payment to the foreign suppliers" ans. I am not aware about the provisional bills. I have to check from the records. Ques. Your mode of communication with Indian Consumers is in writing. Is it correct" ans. Sometimes in writing sometimes may be telephonically. Ques. Do the defendant have document to show as to on which the defendant made payment to the foreign suppliers of raw asbestos between 1989 to 1991" ans. May be. Ques. I put it to you that the bankers acceptance scheme was not communicated to the plaintiff" ans. I cannot say. Ques. I further put it to you that the plaintiff is not bound by the bankers acceptance scheme" ans. I cannot say. Ques. I put it to you that the bankers acceptance scheme does not say that the final invoice should be raised on the basis of the rate of exchange prevailing on the date when the defendant makes payment to its foreign suppliers" ans. I cannot say. I have been authorised by the defendant to depose on its behalf. My affidavit has been drafted in consultation with Legal Department. Ques. I put it to you that the plaintiff is not bound by any communications between the defendant and the Government or its agencies" ans. I cannot say. " ( 18 ) ON perusal of the pleadings, documents and submissions of the parties, the findings arrived at on the issues are as under: issue No. 1: Whether the suit is barred by limitation" ( 19 ) THE suit has been filed on 30. 7. 1994. The final invoice for the year 1990-91 raised from the earliest dated 31. 3. 1991 to the last date of 31. 10. 1991. The final settlement in respect of the amount to be refunded to the plaintiff or that would be payable to the plaintiff on the basis of the testimony on record used to be arrived at when the final invoice used to be sent. Thus to the extent that the suit is filed beyond the period of three years even from the date of final invoice, the suit would be clearly barred by time. There are three final invoices each dated 31. 3. Thus to the extent that the suit is filed beyond the period of three years even from the date of final invoice, the suit would be clearly barred by time. There are three final invoices each dated 31. 3. 1991, which are clearly beyond the period of three years from the date of institution of the suit and the claim for refund based on the said invoices is clearly barred by time. The rest of the claim is within time. Issue No. 2: Whether the counter claim of the defendant is barred by limitation" ( 20 ) THE defendant must base its counter claim on its own strength and must bring the counter claim within three years from the date of cause of the action being the claim for recovery of amount. The counter claim has been originally filed on 19. 10. 1995 and was thereafter refiled on 12. 4. 1996. If the date of the final invoice is taken into account all the invoices were raised more than three years before the date of the counter claim and thus the counter claim is clearly barred by time. Issue No. 3: Whether proper court fee has not been paid by the defendant on the counter filed" If so, to what effect" ( 21 ) LEARNED counsel for the plaintiff has not been able to point out as to why the counter claim is not valued properly for the purposes of court fees. Thus the issue is answered against the plaintiff. Issue No. 4: Whether the transactions between the plaintiff and the defendant were governed by the alleged 'deferred payment arrangement' under the Bankers acceptance Scheme issued by the Government of India, Ministry of Finance" If so, to what effect" ( 22 ) INSOFAR as the merits of the controversy are concerned, this is the crucial issue. The pleadings of the parties, the documents and evidence make it abundantly clear that the arrangement between the parties was that global tenders used to be floated by the defendant for importing raw asbestos to be supplied to the purchasers in India. This was after obtaining estimates of the requirements of the purchasers in advance. The goods were sold on high seas sales price and the allotment used to be made on the basis of a provisional price. This was after obtaining estimates of the requirements of the purchasers in advance. The goods were sold on high seas sales price and the allotment used to be made on the basis of a provisional price. Such provisional price included a component of four per cent over the cif value to take into account the exigencies of foreign exchange fluctuation since the documents used to be handed over to the purchaser to complete the necessary formalities. This four per cent amount was like a cushion available with the plaintiff on account of there being a time gap between high seas sales and the actual remittances by the defendant to the sellers abroad. ( 23 ) IT is also really not in dispute that on most occasions there used to be a refund made to such purchasers as there were never major exchange rate fluctuations. The problem arose in 1990 on account of foreign exchange rate fluctuation. The purchasers like the plaintiff continued to pay in advance as per the practice. The payment was however not remitted by the defendant to the supplier but it is claimed that in terms of the policy of the Government of india known as the BAS there were deferred payment arrangements made with the foreign suppliers for a period of 180/360 days. Thus according to the defendant in terms of BAS they were not remitting the amount forthwith on receipt from the plaintiff but were remitting the amount belatedly under BAS. In the mean time, there were foreign exchange rate fluctuations. ( 24 ) THE first aspect is whether the plaintiff can be burdened for such foreign exchange rate fluctuations while the second aspect is whether such a BAS would apply to the plaintiff. ( 25 ) IT is no doubt true that the accepted arrangement between the parties provides for a price chargeable as per the final invoice. This final invoice used to be raised within a couple of months of the proforma invoice. For the invoices in question the delay is of almost one year. The only reason has been the BAS. In my considered view, if the defendant entitled to avail of this BAS scheme, the burden for the same cannot be put on the plaintiff. It cannot be lost sight of that the plaintiff has already remitted the payment to the defendant as per the proforma invoice. The only reason has been the BAS. In my considered view, if the defendant entitled to avail of this BAS scheme, the burden for the same cannot be put on the plaintiff. It cannot be lost sight of that the plaintiff has already remitted the payment to the defendant as per the proforma invoice. Not only that since the defendant was paying interest on this deferred payment, even this interest was sought to be burdened on the plaintiff who was already out of pocket in pursuance to the proforma invoice. Such a practice would not be permissible under any law. The object of having a proforma invoice and a final invoice was to cover any fluctuations during the period of import and for a reasonable time period till remittance of the amount by the defendant to the seller abroad. The object is not that the defendant can take the money from the plaintiff, keep it with itself for long time and then remit the same to the sellers abroad. Another important aspect is that the plaintiff was denied knowledge of BAS. There is no document placed on record by the defendant informing the plaintiff about the said scheme. The only document referred to is exhibit DW-1/4, which is dated 5/1/1991 and addressed by the Asbestos Cement Products Manufacturers' association to the defendant. The letter reads as under: No. ACPMA/10 (4)/90/964 Dated 5th January 1991 The Minerals and Metals trading Corporation of India Ltd. , Express Building , Bahadur Shah Zafar Marg , NEW delhi-110002. Kind Attn: Shri S. R. Gupta, General Manager Sub: Fixation of final prices for shipments of Raw Asbestos Dear Sirs, We have to bring to your kind notice that in spite of letters from members and personal discussions with you, the fixation of final invoices for various shipments since April 1990 are still pending. We understand that MMTC is getting credit for six months and payment to the Bank is made after this period. However, MMTC does not pass on this benefit to end users. Due to this arrangement between MMTC and the Bank the Bank does not advice the rate of exchange until the payment is made by MMTC. As such, MMTC is not fixing final price until then. This delay is resulting in blocking of huge amounts for above shipments and financial loss by way of interest on this amount. Due to this arrangement between MMTC and the Bank the Bank does not advice the rate of exchange until the payment is made by MMTC. As such, MMTC is not fixing final price until then. This delay is resulting in blocking of huge amounts for above shipments and financial loss by way of interest on this amount. In view of the above, we request you to fix the rate of exchange ruling either on the date of provisional invoice or on the date when actual payment is made to MMTC and issue final bill accordingly. This procedure will help to settle the account without delay and avoid unnecessary loss to the industry. Thanking you, Yours faithfully, For THE ASBESTOS CEMENT product MANUFACTURER's ASSOCIATION Sd /- (M. L. DABRAL) SECRETARY ( 26 ) THE letter only shows that the association was aware of some practice being followed by the defendant. The letter does not even state as to what is this bas or whether the association has knowledge of the BAS. Another important aspect is that the defendant has not even proved this BAS in Court. The result is that this Court does not even have the BAS to consider the same and rely on it. Learned counsel for the defendant states that the document has been filed. The document has not been proved and is not exhibited. The document cannot be relied upon. ( 27 ) THE witness who appeared for the defendant, from the testimony produced aforesaid is clearly at sea insofar as the dealing between the parties is concerned. He has practically denied knowledge of most aspects of the transactions and has thus been unable to support any part of the case of the defendant. ( 28 ) I am thus of the considered view that the plaintiff cannot be burdened with the foreign exchange rate fluctuation and interest on account of the admitted delay on the part of the defendant in remitting the payment to the foreign suppliers. Issue No. 5: To what amount the plaintiff is entitled from the defendant" ( 29 ) THE plaintiff had to prove its case for recovery of amount. Thus, if issue no. 4 is decided in favour of the plaintiff it is for the plaintiff to establish as to what would be the consequences of delay on foreign exchange rate fluctuations. The plaintiff has made certain averments in the affidavit. Thus, if issue no. 4 is decided in favour of the plaintiff it is for the plaintiff to establish as to what would be the consequences of delay on foreign exchange rate fluctuations. The plaintiff has made certain averments in the affidavit. There is no cross-examination in respect of the same. However, the plaintiff has filed nothing on record to show the prevalent foreign exchange rates. The whole suit is based on the violation of foreign exchange rates and yet the plaintiff has not considered it appropriate to establish the foreign exchange rates as on the date when the final invoice ought to have been raised and the date when the final invoice was actually raised. In the absence of any evidence, the plaintiff cannot succeed on the issue. Issue No. 6: Whether the plaintiff is entitled to interest" If so, for what part and at what rate" ( 30 ) THE plaintiff cannot be granted interest since the plaintiff has not succeeded on the claim for the principal amount. Issue Nos. 7 and 8: Whether the defendant is entitled to interest" If so, for what part and at what rate" whether the defendant is entitled to interest" If so, at what rate and for which period" ( 31 ) THE claim of the defendant is time barred. In view of decision in issue no. 4, the defendant is also not entitled to any amount. There can be thus no question of award of any interest to the defendant. Issue No. 9: Relief. ( 32 ) THE result of the aforesaid finding on the issues is that though part of the claim is within time, the plaintiff has failed to establish its claim. The counter claim of the defendant is time barred as a whole and is also without merit in view of the findings on issue No. 4. ( 33 ) THE suit and the counter claim are both dismissed leaving the parties to bear their own costs. ( 34 ) IN the end it is stated that there were certain exhibited documents, which have not been discussed since they had no relevance insofar as deciding the merits of the controversy is concerned.