Reliance Industries Limited v. Oil and Natural Gas Commission
2017-04-04
B.N.KARIA, M.R.SHAH
body2017
DigiLaw.ai
JUDGMENT : M.R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and decree passed by the learned Judge, Commercial Court, Vadodara (hereinafter referred to as "learned Commercial Court") in Commercial Civil Suit No. 10/2016 by which the learned Commercial Court has partly decreed the said suit preferred by the respondent herein - original plaintiff (hereinafter referred to as "original plaintiff") and has held that the original plaintiff is for the recovery of a sum of Rs. 9,97,43,298.97 paise from the appellant herein - original defendant (hereinafter referred to as "original defendant") along with interest at the rate of 12% per annum from the date of filing of the suit till the date of decree and at the rate of 9% per annum from the date of decree till realization of the amount, the original defendant has preferred the present First Appeal. 2. Facts leading to the present First Appeal in nut-shell are as under: 2.1 That the original plaintiff - Oil & Natural Gas Corporation, Vadodara instituted Special Civil Suit No. 426/1993 initially before the learned Civil Court for the recovery of Rs. 9,97,43,298.97 paise with interest at the rate of 21% per annum from the date of filing of the suit till realization of the decreetal amount. That on establishment of the Commercial Court, Vadodara, the aforesaid Special Civil Suit No. 426/1993 came to be transferred to the Commercial Court, Vadodara which was numbered as Commercial Civil Suit No. 10/2016. 2.2 It was the case on behalf of the original plaintiff that the original defendant was in need of natural gas as fuel for its Unit at Naroda, Ahmedabad and therefore, the original plaintiff and the original defendant executed a Contract on 03.10.1985 at Vadodara for the period of 5 years i.e. commencing with effect from 01.06.1986 to 31.05.1991 containing the terms and conditions, definitions and interpretations therein. As per the said Agreement, the natural gas was to be supplied from the field of the original plaintiff to the Unit of original defendant at Naroda, Ahmedabad. That the defendant agreed to purchase 50,000 Standard M3 of gas per day and it was also agreed that if the original defendant purchase the gas less than 45,000 Standard M3 per day on any day, it shall have to pay to the original plaintiff for this minimum quantity.
That the defendant agreed to purchase 50,000 Standard M3 of gas per day and it was also agreed that if the original defendant purchase the gas less than 45,000 Standard M3 per day on any day, it shall have to pay to the original plaintiff for this minimum quantity. Thus, quantity of 45,000 M3 of gas was termed as minimum guaranteed off-take for the each day. The price of the gas was to be charged and payable as provided in Annexure-I to the Agreement and according to that the price of 1000 M3 of gas delivered at the Central Gas Metering Station, shall be Rs. 2878.87 paise inclusive of Royalty and exclusive of sales tax, duties, levies, cess, fees etc. as applicable and payable. It was also mentioned in the Annexure-I of the said Agreement that the price of the gas mentioned will automatically be adjusted and stand revised on pro-rata basis from the date of Ex Refinery price of furnace oil for non-fertilizer use charges which was considered as Rs. 2903.06 per Kilo Liter. It was also the case on behalf of the original plaintiff that as per Annexure-I of the said Agreement, the price agreed upon was subject to revision in accordance with the principles as may be laid down by the Hon'ble Supreme Court in Civil Appeal No. 8530/1983 filed by the ONGC against the Association of Natural Gas consuming industries of Gujarat. In the said appeal, the Hon'ble Supreme Court passed an interim order to recover price at Rs. 1000 per 1000 M3 for the gas supplied to those industries. It was the case on behalf of the original plaintiff that thereafter the issue of the price was decided by the MoP, NG and by its Notification dated 10.01.1987, the price of the gas was declared at Rs. 1400 per 1000 M3 of the gas at landfall Points and for onshore gas was fixed. That the said price was exclusive of Royalty, taxes, duties and other statutory levies and the said price was applicable with immediate effect from the date of the Notification.
1400 per 1000 M3 of the gas at landfall Points and for onshore gas was fixed. That the said price was exclusive of Royalty, taxes, duties and other statutory levies and the said price was applicable with immediate effect from the date of the Notification. 2.3 It was the case on behalf of the plaintiff that as provided in the Agreement dated 03.10.1985 the supply of gas was to be commenced from 01.06.1986, but due to certain reasons the said supply was not affected and the gas supply was started from 22.04.1989 and therefore, a new Agreement was executed on 29.07.1988 between the parties, amending only certain Clauses of the original Contract and all other terms and conditions of the Agreement dated 03.10.1985 remained unchanged. It was the case on behalf of the original plaintiff that when the supply of gas was started to the original defendant, the Notification of the Government of India, fixing the price of natural gas was in force and even the Civil Appeals pending before the Hon'ble Supreme Court were also not decided and therefore, the original defendant made the payment of the gas supplied to them at the price fixed by the Government. According to the original plaintiff it was clearly provided in the Notification that for expired contract between the ONGC and the consumer with specified price, the consumers will have to pay the price mentioned in the Agreement and price notified in the Notification will be applicable on expiry of the said contract/ Agreement. 2.4 According to the original plaintiff, on 04.05.1990 the Hon'ble Supreme Court delivered the verdict in Civil Appeal No. 8530/1983 and other Civil Appeals and upheld the right of the ONGC to fix the price and also upheld that for fixing the price the ONGC can also consider the price of the furnace oil. That according to the original plaintiff, therefore the original plaintiff was entitled to charge the price of gas as mentioned in the Agreement dated 03.10.1985 and the original defendant was also required to make payment of the gas at the price agreed in the said Agreement.
That according to the original plaintiff, therefore the original plaintiff was entitled to charge the price of gas as mentioned in the Agreement dated 03.10.1985 and the original defendant was also required to make payment of the gas at the price agreed in the said Agreement. It was the case on behalf of the original plaintiff that despite number of Telex messages and the communication dated 23.08.1990 to the original defendant to make the payment at the contractual rates and also informed regarding the outstanding huge amount because of difference in the government rates and the contractual rates, but the original defendant neglected their request to make the payment. Therefore, the plaintiff instituted the aforesaid suit for recovery of Rs. 9,97,43,298.97 paise (To recover Rs. 6,02,83,113.44 paise towards amount of difference between the contractual price and the actual payment made by the original defendant and Rs. 3,94,60,185.53 paise towards amount of interest at the rate of 21% from the original defendant). 2.5 The suit was resisted by the original defendant by filing the Written Statement at Exh. 22. It was the case on behalf of the original defendant that the suit for recovery in respect of the amount alleged to be due was barred by law of limitation. 2.6 It was the case on behalf of the original defendant that as per the contract the original plaintiff was to start the gas supply from 01.06.1986, but plaintiff did not supply the gas to the original defendant from the said date and thereby committed breach of fundamental terms thereof. It was also contended on behalf of the original defendant that as the original plaintiff commenced the supply of natural gas to the original defendant on 22.04.1989 and on that day the Notification dated 31.01.1987 issued by the Government of India was in force, the price of the natural gas chargeable from the original defendant to the original plaintiff and payable to the original plaintiff by the original defendant was Rs. 1400 for 1000 Standard M3. It was also denied by the original defendant that under the new Agreement dated 30.07.1988, the provisions relating to price contained in the said original Contract or unamended Agreement dated 03.10.1987 remained unchanged.
1400 for 1000 Standard M3. It was also denied by the original defendant that under the new Agreement dated 30.07.1988, the provisions relating to price contained in the said original Contract or unamended Agreement dated 03.10.1987 remained unchanged. It was contended that the jurisdiction to fix the prices of the natural gas came to be vested in or exercised by the Government of India from 30.01.1987 and therefore, no power, authority or jurisdiction vested in the original plaintiff to charge or recover with effect from 30.01.1987 or in respect of natural gas supplied from 30.01.1987, any price other than that fixed by the Government of India by the said Notification dated 30.01.1987 and which may be fixed thereafter by the Government of India from time to time. Therefore, it was contended on behalf of the original defendant that as the plaintiff started supplying gas to the original defendant with effect from 22.04.1989, the original defendant was liable to pay the price for supply of natural gas as per the Notification dated 30.01.1987 only and therefore, the only price which the original plaintiff could charge or recover from the consumer including the original defendant was as per the Notification dated 30.01.1987 issued by the Government of India. The original defendant also disputed the liability to pay the interest on the delayed payment. Therefore, it was requested to dismiss the suit. 2.7 That the learned trial Court framed the following issues at Exh. 25. "1. Whether the plaintiff proves that he is entitled to get relief prays for? 2. Whether the plaintiff proves that he is entitled to get interest as prays for ? 3. Whether the defendant proves that the plaintiff's suit is barred by the provisions of the Limitation Act ? 4. What order and decree ?" 2.8 That both the parties led the oral as well as documentary evidence as under: "(A) Evidence led by the plaintiffs' side: ORAL EVIDENCE: Exh. No. Particulars 34 & 65 Deposition in form of affidavit in lieu of Examination in Chief and further affidavit under Order-18 Rule-4 of Code of Civil Procedure, 1908 tendered by Mr. K.N. Venkatesh, C.M. (Marketing) and cross examination. DOCUMENTARY EVIDENCE: Exh.
No. Particulars 34 & 65 Deposition in form of affidavit in lieu of Examination in Chief and further affidavit under Order-18 Rule-4 of Code of Civil Procedure, 1908 tendered by Mr. K.N. Venkatesh, C.M. (Marketing) and cross examination. DOCUMENTARY EVIDENCE: Exh. No. Particulars 39 Original Contract executed between ONGC Ltd. And Reliance Industries Ltd. Dated 29/07/1988 40 Original Contract executed between ONGC Ltd. And Reliance Industries Ltd. Dated 03/10/1985 41 Office copy of letter written by ONGC to defendant dated 23/08/1990 70 & 71 Office copy of the provisional bills given by the plaintiff to the defendant for April, 1989 and May, 1989. 72 & 73 Office copy of the revised provisional bills given by the plaintiff to the defendant for April, 1989 and May, 1989 74 to 80 Office copies of the provisional bills for the period from June, 1989 to December, 1989. 81 to 88 Office copies of the provisional bills for the period from January, 1990 to August, 1990. 89 Office copy of the revised bill for August, 1990 90 & 91 Office copy of the provisional bill and revised bill for September, 1990. 92 & 93 Office copy of the provisional and revised bill for October, 1990. 94 Office copy of the provisional bill for November, 1990. 95 Office copy of the provisional bill for December, 1990. 96 to 98 Office copy of the provisional bills for the period from January, 1991 to March 1991 99 Office copy of the bill for April, 1991. 100 Office copy of the provisional bill for May, 1991 101 Xerox copy of the B/G given by Syndicate Bank on behalf of RIL dated 21/10/1985. 102 Xerox copy of extension of validity of B/G dt. 04/11/1986. 103 Original letter written by RIL to ONGC dtd.
100 Office copy of the provisional bill for May, 1991 101 Xerox copy of the B/G given by Syndicate Bank on behalf of RIL dated 21/10/1985. 102 Xerox copy of extension of validity of B/G dt. 04/11/1986. 103 Original letter written by RIL to ONGC dtd. 20/05/1988 104 Original B/G given by Syndicate bank on behalf of RIL dtd.19/05/1988 105 Xerox copy of amendment of above B/B dtd.01/08/1988 106 Original B/B given by Syndicate bank on behalf of RIL for extension of B/B dated 19/05/88 107 Letter written by RIL to ONGC, Vadodara dtd.25/05/1989 108 Original B/G given by Syndicate bank on behalf of RIL dated 14/08/1989 109 Original letter written by RIL to ONGC, Vadodara dated 14/08/1989 110 Xerox copy of the FAX sent by Dy.GM of RIL to ONGC dated 16/08/1989 111 Office copy of internal letter written by SE(P) to FAO, Baroda dated 21/08/1989 112 Original letter written by RIL to ONGC dated 08/08/1990 113 Original B/G given by Syndicate bank on behalf of RIL for extension of validity B/G 23/89 dated 03/08/1990 114 Office copy of internal letter written by CE(P) to FAO, Baroda dated 17/08/1990 (B) Evidence led by the defendant’s side: ORAL EVIDENCE: Exh. No. Particulars 125 Deposition in form of affidavit in lieu of Examination in Chief under Order-18 Rule-4 of CPC tendered by Mr. Pankaj Bhogilal Chovatia and cross examination. DOCUMENTARY EVIDENCE: Exh. No. Particulars 57 Copy of Govt. Order/Notification/ Letter dated 30/01/1987 58 Copy of Govt. Order/Notification/ Letter dated 27/03/1989 59 Copy of Govt. Order/Notification/ Letter dated 09/11/1990 60 Copy of Govt. Order/Notification/ Letter dated 21/01/1991 61 Copy of Govt. Order/Notification/ Letter dated 31/12/1991 2.9 That thereafter, after the constitution of the Commercial Court, at Vadodara, the aforesaid suit came to be transferred to the Commercial Court, Vadodara. That the original plaintiff submitted the written submissions at Exh. 139 and the original defendant also filed the written submissions at Exh. 140.
Order/Notification/ Letter dated 21/01/1991 61 Copy of Govt. Order/Notification/ Letter dated 31/12/1991 2.9 That thereafter, after the constitution of the Commercial Court, at Vadodara, the aforesaid suit came to be transferred to the Commercial Court, Vadodara. That the original plaintiff submitted the written submissions at Exh. 139 and the original defendant also filed the written submissions at Exh. 140. 2.10 That after considering the submissions made by the learned Counsel for respective parties and on appreciation of evidence, both oral as well as documentary the learned Commercial Court has held that the original defendant is liable to pay the price for the natural gas supplied as per the original Contract entered into between the parties and as per the specified terms and conditions mentioned in the Contract/Agreement entered into between the parties and the price fixed as per the said Government of India Notification dated 30.01.1987 shall not be applicable with respect to the unexpired contracts/ Agreements. The learned Commercial Court also held that the suit filed by the original plaintiff is not barred by law of limitation as contended on behalf of the original defendant. That, by impugned judgment and decree the learned Commercial Court has partly decreed the suit and has passed a decree of Rs. 9,97,43,298.97 paise, however with interest at the rate of 12% per annum from the date of filing of the suit till the date of decree and 9% per annum from the date of decree till realization of the amount. 2.11 Feeling aggrieved and dissatisfied with the impugned judgment and decree passed by the learned Commercial Court, Vadodara the original defendant has preferred the present First Appeal. 3. Shri Mihir Thakore, learned Senior Advocate has appeared on behalf of the appellant herein - original defendant and Shri Ajay Mehta, learned Advocate, who is on caveat, has appeared on behalf of the respondent herein - original plaintiff. Record & Proceedings of the case is received from the learned Commercial Court. Learned Counsel appearing on behalf of the original defendant has also placed on record separate paper-book. 4. Shri Mihir Thakore, learned Senior Advocate appearing on behalf of the original defendant has vehemently submitted that in the facts and circumstances of the case the learned Commercial Court has materially erred in decreeing the suit.
Learned Counsel appearing on behalf of the original defendant has also placed on record separate paper-book. 4. Shri Mihir Thakore, learned Senior Advocate appearing on behalf of the original defendant has vehemently submitted that in the facts and circumstances of the case the learned Commercial Court has materially erred in decreeing the suit. 4.1 It is vehemently submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the learned Commercial Court has materially erred in holding that the original defendant is liable to pay the price for supply of natural gas as per the original Contract and not as per the Notification issued by the Government of India dated 30.01.1987. 4.2 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that admittedly as per the original Contract dated 03.10.1985 the ONGC was required to supply the natural gas at the price mentioned in the said Agreement from 01.06.1986. However the plaintiff did not start the supply of gas as per the Agreement dated 03.10.1985 and gas supply was started from 22.04.1989. It is submitted that in the meantime the Government of India determined the price for supply of gas vide Notification dated 30.01.1987 to be supplied at the rate of Rs. 1400 and therefore, the ONGC could have charged for supply of gas at the rate of Rs. 1400 only and therefore, the original defendant was liable to pay the price for supply of gas at Rs. 1400/- for 1000 Standard M3 only, which the original defendant paid. It is submitted that therefore the learned Commercial Court as such ought not to have decreed the suit. 4.3 It is submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the learned Commercial Court has materially erred in not properly appreciating the fact that the original Contract dated 03.10.1985 (Exh. 40) never came into effect or commenced, since ONGC did not commence supply of gas from 01.06.1986. It is submitted that even the ONGC did not commence supply of gas until much after the Price Order dated 30.01.1987 (Exh. 57). It is submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that therefore as such the original contract/Agreement did not come into effect, more particularly when the Price Order dated 30.01.1987 was issued.
57). It is submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that therefore as such the original contract/Agreement did not come into effect, more particularly when the Price Order dated 30.01.1987 was issued. It is submitted that therefore, the original Contract could not have been termed as an "unexpired contract" as on the date of the Price Order dated 30.01.1987. It is submitted that therefore Clause 4 of the Price Order shall not be applicable to the present case and the gas price would be governed by the Price Order. 4.4 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that as such the intent and purpose of the Clause 4 of the Price Order dated 30.01.1987 was only to allow ONGC to charge the contractual price where it was already supplying gas under a contract which was already in effect. It is submitted that intention behind the aforesaid Clause in the Price Order dated 30.01.1987 was to allow ONGC to complete its contracts which were in the course of being performed at the time of issuance of the Price Order. It is submitted that in the present case the original Contract was not in effect as on the date of the Price Order dated 30.01.1987 and therefore, it would be de hors the intent and purpose of the Price Order dated 30.01.1987 to allow ONGC to charge any price over and above the Government of India fixed price in respect of the supplies made under a contract which did not come into effect until much after the said Price Order. It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the term "unexpired contracts" in the context in which it has been placed in Clause 4 of the Price Order dated 30.01.1987 has to mean only those contracts which were, as on 30.01.1987, being performed or in other words under performance or in the course of the performance and some period of performance was still remaining to be completed. It is submitted that the words "unexpired contracts" cannot refer to the period remaining in the total period of contract even when such contract and its performance had actually not commenced.
It is submitted that the words "unexpired contracts" cannot refer to the period remaining in the total period of contract even when such contract and its performance had actually not commenced. 4.5 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that even otherwise in view of and by virtue of the subsequent contract dated 29.07.1988, original Contract cannot be said to have been in existence and/or the same was not to be acted upon. It is submitted that the original Contract executed was for the sole purpose of supplying natural gas by ONGC to the original defendant from the field Ramol - Baola and in the manner stipulated therein. It is submitted that consideration for the same was the price payable to ONGC by the original defendant in terms of Clause 10 read with Annexure-I thereto. That the gas price in the original Contract was mutually agreed upon as consideration for the duration, place and manner of supply of gas under the original Contract and the said gas price agreed upon cannot be delinked from what it stood for in the original Contract. It is submitted that by virtue of the subsequent Contract dated 29.07.1988 (Exh. 39), the terms of the original Contract underwent substantial and fundamental changes going to the root of the contract. It is submitted that as per the subsequent Contract dated 29.07.1988 (Exh. 39), (a) duration of supply of gas, i.e., instead of supply commencing from 01.06.1986, it was to commence from 31.12.1988, and by virtue of this change, more than 2 and 1/2 years of gas supply got canceled; (b) the gas field from which gas was to be supplied underwent a complete change, i.e. from Ramol - Baola field, it was changed to Kalol field; (c) the manner and place of delivery of gas changed, by virtue of which the passing of the title to the gas would get altered; (d) the provisions regarding gas transportation were changed. It is submitted that therefore considering Section 62 of the Indian Contract Act, on account of alteration or substitution in the original Contract, the original Contract does not continue or remain in existence anymore and need not be performed and therefore, the original Contract could not have been said to be an "unexpired contract" as contained in Clause 4 of the Price Order dated 30.01.1987.
It is submitted that therefore Clause 4 of Price Order dated 30.01.1987 which applies only to "unexpired contract", would not apply in the present case, once the original Contract got substituted or altered. 4.6 It is submitted that therefore the learned Judge has materially erred in treating the term "unexpired contracts" as meaning "contracts in existence" and in holding, in effect, that the contracts which were merely in existence by virtue of their having been signed by the parties, even though not in effect and not being performed, were to be neglected within Clause 4 of the Price Order dated 30.01.1987. It is submitted that therefore, the learned Commercial Court has materially erred in not properly appreciating the applicability of principle of Section 62 of the Indian Contract Act and hence, has failed to appreciate that, when a contract is substantially and fundamentally altered, it is a case of novation and the original Contract cannot be treated as valid and existing. 4.7 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that even otherwise part of the plaintiff's claim was clearly barred by law of limitation. It is submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the suit was filed on 02.05.1993 in regard to a claim in respect of the gas supply period from 22.04.1989 to 31.05.1991. It is submitted that the invoices in respect to the said period were issued from 13.05.1989 to 04.06.1991 (Exh. 70 to Exh. 100). It is submitted that as per the terms of the contracts the payment was to be made within 10 days of the receipt of the said invoices. It is submitted that as such the learned Commercial Court has rightly held that Article 15 of the Limitation Act would not apply to the claim, as there was no stay or injunction against the original plaintiff restraining it from instituting the suit. It is submitted that therefore as on the date of the suit i.e. as on 02.05.1993, all the invoices issued prior to 22.04.1990 were certainly barred by limitation. It is submitted that therefore the invoices from Exh. 70 to Exh. 83 were clearly time barred.
It is submitted that therefore as on the date of the suit i.e. as on 02.05.1993, all the invoices issued prior to 22.04.1990 were certainly barred by limitation. It is submitted that therefore the invoices from Exh. 70 to Exh. 83 were clearly time barred. 4.8 It is vehemently submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the learned Commercial Court has materially erred in holding that the extension of Bank Guarantee on 03.08.1990 and the letter dated 17.08.1990 amounts to acknowledgment of liability in writing by the original defendant and therefore, would extend the period of limitation. 4.9 It is vehemently submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the learned Commercial Court has overlooked the fact that section 18 of the Limitation Act which pertains to extension of limitation on account of the acknowledgment would not apply in the present case. It is submitted that section 18 of the Limitation Act would apply only if there is an "acknowledgment of liability" in respect of any property and right. It is submitted that an "acknowledgment of liability" means a conscious admission of a jural relationship between parties and a subsisting liability (of the person making such acknowledgment) flowing from the same. Moreover, such acknowledgment or liability has to be made in writing, signed by the party against whom the right is claimed or by an agent duly authorized in this behalf. In support of his above submission, Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant has relied on the decision of the Hon'ble Supreme Court in the case of Krishnappa Chettiar v. Somiali reported in AIR 1964 SC 227 (Para 14) and in the case of Tilak Ram v. Nathu reported in AIR 1967 SC 935 (Para 10) and in the case of State of Kerala v. T.M. Chacko reported in (2000) 9 SCC 722 (Para 10). 4.10 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that insofar as the Bank Guarantee on 03.08.1990 (Exh.
4.10 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that insofar as the Bank Guarantee on 03.08.1990 (Exh. 113) is concerned, it was issued under specific terms of the contract which required issuance of a Bank Guarantee and hence, (1) it cannot constitute an "acknowledgment of liability", (2) if the said Bank Guarantee is perused, it, in fact, does not contain any "acknowledgment of liability", (3) it was issued guaranteeing payment in respect of 62 days of gas supply and not for the full contract and hence, it cannot constitute "acknowledgment of liability" in regard to the full claim under the contract, (4) it was issued by Syndicate Bank (Guarantor) to the original plaintiff on a principle to principle basis and is recognized in law as an independent contract and therefore, it is not an acknowledgment of liability made in writing and signed by the original defendant or its agent duly authorized in this behalf. In light of the aforesaid it is submitted that the said Bank Guarantee cannot extend the period of limitation. 4.11 Now, so far as the letter dated 17.08.1990 (Exh. 114) is concerned, it is submitted that it only encloses the Bank Guarantees to be sent to the original plaintiff and does not contain any "acknowledgment of liability" and it is not issued by any person authorized on behalf of the original defendant to issue an "acknowledgment of liability" and hence, it is submitted that it does not contain any words which can be considered as an "acknowledgment of liability". It is submitted that the said letter is still not an acknowledgment of liability made by the original defendant or its agent duly authorized in this behalf. 4.12 Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant has further submitted that it is not the case (as pleaded or as proved) of the original plaintiff that any documents on record constitutes an acknowledgment of liability or that the period of limitation got extended under Section 18 of the Limitation Act. It is submitted that therefore the learned Commercial Court could not have arrived at such a finding which was not supported by pleadings and evidence.
It is submitted that therefore the learned Commercial Court could not have arrived at such a finding which was not supported by pleadings and evidence. 4.13 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that even the learned Commercial Court has materially erred in awarding the interest at the rate of 21% per annum till the date of the suit even though no evidence was led in this regard by the original plaintiff. It is submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that the principal sum claimed was Rs. 6,02,83,113.44 paise and the total claim of Rs. 9,97,43,298.97 paise is made in the suit inclusive of interest at the rate of 21% per annum on the principal sum of Rs. 6,02,83,113.44 paise. 4.14 It is submitted that as per Clause 11.02 of the original Contract (Exh. 40), the original defendant was required to pay the interest on delayed payment at the rate of 1% higher than the rate of interest payable by the original plaintiff on its cash credit agreement with State Bank of India from time to time. It is submitted that however the original plaintiff had not led any evidence as to what was the rate of interest chargeable by State Bank of India. 4.15 It is submitted that therefore the learned Commercial Court has materially erred in awarding interest at the rate of 21% till the filing of the suit, as claimed by the original plaintiff. It is submitted that as such the Court has no jurisdiction to award pre-suit interest. It is submitted that in any case, even assuming without admitting the Court has jurisdiction to award pre-suit interest even though as no evidence was led, the pre-suit interest awarded by the learned Commercial Court is grossly excessive. 4.16 It is further submitted by Shri Thakore, learned Senior Advocate appearing on behalf of the original defendant that even otherwise the learned Commercial Court has materially erred in awarding the interest on interest. 4.17 It is vehemently submitted that section 34 of the Code of Civil Procedure, 1908 confers jurisdiction on the Court to only award the interest on the principal sum adjudged and not interest on interest. It is submitted that in the present case the principal sum claimed was Rs. 6,02,83,113.44 paise and the total claim of Rs.
4.17 It is vehemently submitted that section 34 of the Code of Civil Procedure, 1908 confers jurisdiction on the Court to only award the interest on the principal sum adjudged and not interest on interest. It is submitted that in the present case the principal sum claimed was Rs. 6,02,83,113.44 paise and the total claim of Rs. 9,97,43,298.97 paise as made in the suit was inclusive of the interest at the rate of 12% per annum on the principal sum of Rs. 6,02,83,113.44 paise. It is submitted that as such there was no provision in the original Contract or the Contract 29.07.1988 for capitalization interest so as to make it part of the principal sum. It is submitted that therefore the learned Commercial Court has materially erred in awarding interest on interest more particularly interest on Rs. 3,94,60,185.53 paise. Making above submissions and relying upon the above decisions, it is requested to allow the present appeal. 5. Present First Appeal is vehemently opposed by Shri Ajay Mehta, learned Advocate appearing on behalf of the original plaintiff. 5.1 It is submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that in the facts and circumstances of the case, the learned Commercial Court has not committed any error in decreeing the suit (partly). It is submitted that the finding recorded by the learned Commercial Court that the original defendant is liable to pay the price for supply of gas as per the original Contract dated 03.10.1985 and that the original Contract dated 03.10.1985 can be said to be "unexpired contracts" and therefore, considering Clause 4 of the Price Order dated 30.01.1987, the price mentioned in the Government Notification Price Order dated 30.01.1987 shall not be applicable, is based on appreciation of evidence more particularly on interpretation of the documentary evidence on record more particularly the original Contract dated 03.10.1985 (Exh. 40); the Government Notification/Price Order dated 30.01.1987 and the modified Contract dated 29.07.1998. It is submitted that therefore, finding recorded by the learned Commercial Court cannot be said to be either perverse and/or contrary to the evidence on record. 5.2 It is further submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that the learned Commercial Court has rightly directed the original defendant to pay the price for the gas supplied as per the original Contract dated 03.10.1985.
5.2 It is further submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that the learned Commercial Court has rightly directed the original defendant to pay the price for the gas supplied as per the original Contract dated 03.10.1985. It is further submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that even the learned Commercial Court has rightly decreed the suit by awarding the interest (pre-suit) at the rate of 21%. It is submitted that awarding the interest at the rate of 21% at pre-suit is absolutely in consonance with the terms and conditions of the original Contract dated 03.10.1985. It is submitted that as such the original defendant never disputed before the learned Commercial Court that the rate of interest at the rate of 21% would be 1% more than the rate of interest charged by the State Bank of India. It is submitted that when there were specific pleadings in the suit claiming the interest at the rate of 21% for pre-suit period and the same was not disputed and/or denied by the original defendant and/or no other contrary evidence was led, the learned Commercial Court has rightly awarded the interest at the rate of 21% for pre-suit period. 5.3 It is vehemently submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that in the facts and circumstances of the case, the learned Commercial Court has rightly held the suit within the period of limitation. It is submitted that the learned Commercial Court has rightly held that the suit is not barred by law of limitation as contended on behalf of the original defendant. 5.4 It is further submitted by Shri Mehta, learned Advocate appearing on behalf of the original plaintiff that in the facts and circumstances of the case the learned Commercial Court has not committed any error in awarding the interest at the rate of 12% per annum from the date of filing of the suit till the judgment and decree and at the rate of 9% per annum from the date of judgment and decree till the realization of the amount. Making above submissions, it is requested to dismiss the present First Appeal. 6. Heard learned Counsel appearing for respective parties at length. We have perused and considered the impugned judgment and decree passed by the learned Commercial Court.
Making above submissions, it is requested to dismiss the present First Appeal. 6. Heard learned Counsel appearing for respective parties at length. We have perused and considered the impugned judgment and decree passed by the learned Commercial Court. We have also re-appreciated the entire evidence on record from the Record & Proceedings received from the learned Commercial Court as well as from the paper-book produced by the learned Counsel appearing on behalf of the original defendant. 6.1 The main dispute between the original plaintiff and the original defendant is whether the original plaintiff is entitled to recover and/or whether the original defendant is liable to pay the price for supply of Natural Gas at the rate of Rs. 2903.06 per 100 Standard M3 as per the original Contract dated 03.10.1985 (Exh. 40) or as per the Price Order/Government of India Notification dated 30.01.1987 (Exh. 57). It is not in dispute that as per the Contract/Agreement executed between the original plaintiff and original defendant (Exh. 40) the price for supply of Natural Gas was fixed at Rs. 2903.06 paise per kilo liter. As per Clause 2.01 of the original Contract dated 03.10.1985 the contract shall commence into force from 01.06.1986 i.e. the date of commencement of supply of gas and the validity period was 5 years ending upto 31.05.1991. However, subsequently, the Government of India issued the notification/Price Order dated 30.01.1987 determining the price for supply of Natural Gas on Rs. 1400 per kilo liter. However, as per Clause 4 the determination of price as per the Price Order/Notification dated 30.01.1987 shall not be applicable to the "unexpired contracts". Clause 4 of the Price Order dated 30.01.1987 reads as under: "4. There are some unexpired contracts between ONGC/OIL and some consumers with specified prices. These contracts will have to run their course and the prices now fixed will apply after the contract period expires." It is true that as per the original Contract the date of commencement of the supply was 01.06.1986 (as per clause 2.01 of the original Contract). It is also true that there was no supply of gas from 01.06.1986 and infact the supply of gas started from 22.04.1989.
It is also true that there was no supply of gas from 01.06.1986 and infact the supply of gas started from 22.04.1989. However, it is required to be noted that some terms and conditions mentioned in the original Contract dated 03.10.1985 came to be modified/substituted by the subsequent Contract dated 29.07.1988 and in Article 2.01 the words i.e. "date of commencement of supply" was substituted by "gas supply shall commence from 31.12.1988". There were other some changes in para 2. Therefore, it is the case on behalf of the original defendant that in view of the subsequent Contract dated 29.07.1988, the original Contract dated 03.10.1985 was not acted upon and there was no supply of gas even on the date of on which the Price Order dated 30.01.1987 was issued by the Government of India and therefore, it cannot be said that the original Contract was unexpired contract as per Clause 4 of the Price Order and therefore, the original defendant was liable to pay the price for supply of Natural Gas at the rate of Rs. 1400 per 1000 Standard M3 as per the Price Order dated 30.01.1987. It is also the case on behalf of the original defendant that considering Section 62 of the Indian Contract Act there was novation of contract more particularly in view of the subsequent Contract dated 29.07.1988 and therefore, the original Contract/Agreement was not to be acted upon and therefore, it cannot be said to be a continued contract more particularly at the time when the Price Order dated 30.01.1987 was issued by the Government of India. The aforesaid submission seems to be attractive but has no substance. At the outset it is required to be noted that by the subsequent Contract executed on 29.07.1988 it cannot be said that a new Contract came into existence and/or the original Contract (Exh. 40) came to be an end and/or was not to be acted upon. By the subsequent Contract dated 29.07.1988, some of the terms and conditions only came to be substituted and the rest of the terms and conditions mentioned in the original Contract continued to operate.
40) came to be an end and/or was not to be acted upon. By the subsequent Contract dated 29.07.1988, some of the terms and conditions only came to be substituted and the rest of the terms and conditions mentioned in the original Contract continued to operate. In para 12 of the subsequent Agreement/Contract dated 29.07.1988, it is specifically mentioned that the amendment in the Contract dated 29.07.1988 shall form part of the original Contract dated 03.10.1985 and that all other terms and conditions of the Contract dated 03.10.1985 shall remain unchanged and binding on the parties. Clause 12 of the Contract dated 29.07.1988 reads as under: "12. The above amendment shall form part of the contract dated 3rd day of October, One thousand nine hundred and eighty five and all other terms and conditions of the contract dated 3rd day of October, One thousand nine hundred and eighty five shall remain unchanged and binding on the parties." In light of the above it cannot be said that the case will fall under section 62 of the Indian Contract Act and it cannot be said that there was novation of the original Contract, in light of the subsequent Contract dated 29.07.1988 as sought to be contended on behalf of the original defendant. 6.2 Under the circumstances, it cannot be said that the original Contract/Agreement dated 03.10.1985 shall come to an end and/or was not to be acted upon and/or the same can be said to be a fresh Agreement/Contract. Under the circumstances, as on 30.01.1987, i.e. when the Price Order came to be issued by the Government of India the original Contract/Agreement can be said to be "unexpired Agreement/contract" and therefore, as per Clause 4 of the Price Order dated 30.01.1987, the price determined/mentioned in the Price Order shall not affect the price mentioned in the original Contract dated 03.10.1985 and therefore, the original defendant was liable to pay the price for supply of gas as per the original Contract/Agreement dated 03.10.1985 and the parties shall be governed by the original Contract dated 03.10.1985.
6.3 Now, so far as the submission on behalf of the original defendant that as, as per the original Contract dated 03.10.1985, the date of commencement of supply was 01.06.1986 and admittedly the gas supply was commenced much later i.e. on 22.04.1989 after two years of the Price Order dated 30.01.1987 and the ONGC did not start supplying gas on 31.12.1988 (as per the subsequent Contract dated 29.07.1988) and therefore, there was a breach of the terms of the original contract and the submission on behalf of the appellant that as the day on which the Price Order was issued on 30.01.1987, there was no supply of Natural Gas and consequently the contract was not performed and therefore, the original Contract cannot be said to be "unexpired contracts" is concerned, the aforesaid has no substance. As per the original Contract dated 03.10.1985 more particularly Clause 2.01, the period of contract mentioned is for a period of 5 years commencing from 01.06.1986 ending upto 31.05.1991. Therefore, as per Clause 2.01, the contract shall come into force from 01.06.1986, which was the date of commencement of the supply of gas and shall remain in force over a period of 5 years ending upto 31.05.1991. As per the subsequent Contract dated 29.07.1988, the date of commencement of supply of gas was substituted from 01.06.1986 to 31.12.1988. Clause 4 of the Price Order, which is reproduced hereinabove, provides that the prices mentioned in the said Price Order/Notification shall be applicable after existing contract period expires. If the submission on behalf of the original defendant as mentioned hereinabove is accepted, it would be adding something in para 4 of the Price Order, which is not there. Under the circumstances, Contract/Agreement executed between the original plaintiff and the original defendant can be said to be "unexpired contracts" within Clause 4 of the Price Order dated 30.01.1987 and therefore, the price determined/mentioned in the Price Order dated 30.01.1987 shall not be applicable with respect to the contract dated 03.10.1985 and the original defendant is liable to pay the supply of Natural Gas at the rate mentioned in the original Contract/Agreement dated 03.10.1985.
Under the circumstances, no error has been committed by the learned Commercial Court in holding so more particularly in holding that the original defendant is liable to pay the price or supply of gas as per the original Contract dated 03.10.1985 and not as per the Price Order dated 30.01.1987. We are in complete agreement with the view taken by the learned Commercial Court. 6.4 Now, so far as the submission on behalf of the original defendant that part of the ONGC's claim was barred by law of limitation more particularly the invoices from Exh. 70 to Exh. 83 were time barred is concerned, it is required to be noted that applying section 18 of the Limitation Act, which pertains to extension period of limitation on account of acknowledgment, the learned Commercial Court has held the claim in the suit within the period of limitation. While applying section 18 of the Limitation Act and holding that the suit claim is within the period of limitation, the learned Commercial Court has considered the extension of Bank Guarantee/s which were furnished as per the original Contract and/or subsequent Contract, as an acknowledgment of the dues and therefore, considering the date of extension of Bank Guarantee as an acknowledgment of the dues, applying section 18 of the Limitation Act, the learned Commercial Court has held the suit within the period of limitation. While deciding the issue with respect to the limitation and while dealing with issue No. 3, the learned Commercial Court has observed in paras 17 and 18 as under: "17. I have considered the rival submissions of the Ld. Counsel for the parties. The plaintiff herein claimed payment of bills with effect from the date of 13/05/1989 till 04/06/1991. Admittedly, the suit has been instituted on 03/05/1993. Now the question arises as to whether the cause of action to file the present suit arose when the Hon'ble Supreme Court declared the judgment in Civil Appeal No. 8530/1983 on 4.5.1990. At this juncture, it would not be out of context (at the cost of repetition) to refer the clauses of Annexure-I of the agreement-contract at Exh. 40. PRICING "1. The price of 1000 (one thousand only) standard cubic meters of GAS delivered at the Central GAS Metering Station/Sub Station located in the SELLER's premises shall be 2878.87. (Rupees Two thousand eight seventy eight and paise eighty seven only). 2.
40. PRICING "1. The price of 1000 (one thousand only) standard cubic meters of GAS delivered at the Central GAS Metering Station/Sub Station located in the SELLER's premises shall be 2878.87. (Rupees Two thousand eight seventy eight and paise eighty seven only). 2. The price of the GAS mentioned above will automatically be adjusted and stand revised on pro-rata basis from the date of the Ex. Refinery Price of Furnace Oil considered is Rs. 2903.06 per KL as advised by the Govt. of India. 3. The price now agreed upon is subject to the revision in accordance with the principle as may be laid down by the Hon'ble Supreme Court in Civil Appeal No. 8530/83 ONGC v. Association of Natural Gas Consuming Industries of Gujarat and others pending disposal before the Supreme Court." 17.1 Considering all the three clauses, it is apparent that the price of the Gas was already fixed by the parties and the said price had to be adjusted in accordance to the judgment in Civil Appeal No. 8530/83. Meaning thereby, if the price fixed between the parties is higher than the price approved by the Hon'ble Supreme Court in the aforesaid appeal, then defendant to made to additional payment to the Plaintiff on account of differential amount but if the Hon'ble Supreme Court determined the price below the price fixed by the Contract, than plaintiff has to made the adjustment of the excess amount paid by the defendant. Thus, the judgment of the Hon'ble Supreme Court has nothing to do with the right of the plaintiff to recover the price of the Gas in accordance to the aforesaid clause 1 of the Annexure. Thus, the cause of action had arisen in the favour since the date of each bill and not from the date of pronouncement of the judgment of the Hon'ble Apex Court on 4.5.1990. 17.2 As far the plea as to whether in the present case, the Article 1 or the Article 15 the Limitation Act shall be applicable is concerned, the plaintiff has not filed any statement of account on records, however, the suit has been instituted on the basis of the Bills/Invoices placed on paper book at Exh 70 to 101. Article 1 of the Limitation Act applies in the cases where the parties maintained the running account, therefore, in the present case, Article 1 of the Limitation Act is not applicable.
Article 1 of the Limitation Act applies in the cases where the parties maintained the running account, therefore, in the present case, Article 1 of the Limitation Act is not applicable. As per agreement, the period of credit was 10 days to make the payment of the amount due and payable under the invoices. Article 15 deals with the cases where the goods sold on credit. As per Article 15 of the Limitation Act, the period of limitation in respect of payment due against the bills is 3 (Three) years from the date of period of credit expires. The Article 15 of the Limitation Act is reproduced herein for the sake of convenience. Description of Suit Period of Limitation Time from which period begins to run 15. For the price of goods sold and delivered to be paid for after the expiry of a fixed period of credit Three years When the period of credit expires, 17.3 In the present case, the Clause 11.01 deals with the period of Credit. The same is reproduced herein. "11.01. The Seller shall issue and send to the Buyer invoices covering the total quantity of gas delivered by the Seller in accordance with relevant provisions of this contract during each fortnight for payment. The Buyer shall pay in full within ten (10) days of the receipt of such invoices the amount so mentioned in such invoices. For this purpose the fortnight would commence at 0700 hours of first (1st) day to 0700 hours of sixteenth (16th) day and 0700 hours of sixteenth (16th) day to 0700 hours of 1st day of the succeeding calender month. In case there is any dispute regarding billing the Buyer shall not withhold payment. After making full payment, the Buyer shall lodge the claims to the Seller giving full particulars within a period of fourteen days (14) from the date of making the payment, and such claims if found correct, the Seller shall adjust against the next invoice of supply of gas. No interest shall accrue on such refunds by the Seller to the Buyer." The perusal of the aforesaid Clause of the agreement at Exh. 40 clearly transpires that the period of credit was 10 days. The case of the plaintiff falls under Article 15 of the Limitation Act.
No interest shall accrue on such refunds by the Seller to the Buyer." The perusal of the aforesaid Clause of the agreement at Exh. 40 clearly transpires that the period of credit was 10 days. The case of the plaintiff falls under Article 15 of the Limitation Act. I have also considered the judgment of the Hon'ble Madras High Court in the case of A. L. A. R. R. M Arunachallam Chetti (supra), wherein the Hon'ble Court held that in ordinary suit upon accounts the limitation period to recover the money is three years. 18. In the present case, the defendant had also furnished the bank guarantee at Exh. 101, in pursuance to the terms and conditions of the Agreement-contract at Exh. 40, for a sum of Rs. 89,24,497/-. The said Bank Guarantee was extended by the defendant time to time and lastly extended on 03.08.1990 vide Exh. 113. Not only this, the defendant sent the said Extension of Bank Guarantee to the plaintiff alongwith the Letter dated 17.08.1990 at Exh. 114. The said extension of Bank Guarantee took place within the period of limitation at the behest of the defendant. Thus, in view of section 18 of the Limitation Act, said extension of bank guarantee and letter dated 17.08.1990 at Exh. 114 amounts the acknowledgement of liability in writing by the defendant with in the period of limitation, therefore it extend the period of limitation. Thus, I am of the considered view that the suit of the plaintiff is not barred by limitation. Thus, the present issue is decided against the defendant and in favour of the plaintiff." 6.5 From the aforesaid it appears that extension of Bank Guarantee on 03.08.1990 (Exh. 113) is considered to be the "acknowledgment of liability" in writing by the original defendant. There the learned Commercial Court has committed an error. The extension of Bank Guarantee which was furnished earlier as per the original Contract, subsequently after the validity period of the Bank Guarantee had expired, by no stretch of imagination can be said to be "acknowledgment of the liability" in writing by the original defendant. Extension of the original Bank Guarantee which was initially furnished as per the original Contract cannot be said to be "acknowledgment of the liability" and it will not extend the period of limitation as per Section 18 of the Limitation Act.
Extension of the original Bank Guarantee which was initially furnished as per the original Contract cannot be said to be "acknowledgment of the liability" and it will not extend the period of limitation as per Section 18 of the Limitation Act. Therefore, we are of the opinion that the learned Commercial Court has committed a grave error in applying section 18 of the Limitation Act treating and/or considering the extension of the Bank Guarantee on 03.08.1990 as an "acknowledgment of the liability" in writing by the original defendant and in holding the suit claim within the period of limitation and consequently has materially erred in holding that the suit of the plaintiff is not barred by limitation. 6.6 As observed by the Hon'ble Supreme Court in the case of Tilak Ram v. Nathu reported in AIR 1967 SC 935 (1), mere statement expressing jural relationship between the parties does not constitute acknowledgment. Therefore, the extension of the Bank Guarantee cannot be said to be one made with intention of admitting the jural relationship and/or acknowledging the debt. In the case of State of Kerala v. T.M. Chacko reported in (2000) 9 SCC 722 while considering the scope and ambit of section 18 of the Limitation Act and while considering the issue with respect to acknowledgment vis-à-vis section 18 of the Limitation Act, it is observed by the Hon'ble Supreme Court in para 10 as under: "10. It may be noted that for treating a writing signed by the party as an acknowledgment, the person acknowledging must be conscious of his liability and the commitment should be made towards that liability. It need not be specific but if necessary facts which constitute the liability are admitted an acknowledgment may be inferred from such an admission." 6.7 It is the case on behalf of the original plaintiff that as the dispute with respect to the pricing was pending before the Hon'ble Supreme court in Civil Appeal No. 8530/1983 and therefore, the cause of action to file the suit can be said to have arisen when the Hon'ble Supreme Court declared the judgment in Civil Appeal No. 8530/1983 on 04.05.1990 which was in favour of the ONGC and therefore, the suit can be said to be within the period of limitation.
However, the aforesaid is not accepted by the learned Commercial Court by observing that considering section 15 of the Limitation Act, as there was no injunction restraining the original plaintiff from filing the suit for recovery, the original plaintiff cannot get the benefit of the dispute pending before the Hon'ble Supreme Court. However, it is required to be noted that while deciding the issue with respect to limitation, what has been mainly weighed with the learned Commercial Court is the extension of Bank Guarantee and treating the extension of Bank Guarantee as "acknowledgment of liability" in writing by the original defendant within the period of limitation and applying section 18 of the Limitation Act, the learned Commercial Court has decided the issue of limitation in favour of the original plaintiff and against the original defendant. No other discussion is there with respect to the case on behalf of the original defendant that claim with respect to some of the invoices more particularly invoice at Exh. 70 to Exh. 83 were barred by limitation, more particularly considering specific terms and conditions of the original Contract dated 03.10.1985, that the payment was required to be made within a period of 10 days from the date of issuance of the invoices. Under the circumstances, while quashing and setting aside the finding recorded by the learned Commercial Court on the issue of limitation, the matter is required to be remanded to the learned Commercial Court to consider the issue with respect to the limitation afresh and in accordance with law and on merits and on the basis of the evidence already led. Therefore, the finding recorded by the learned Commercial Court holding the issue with respect to the limitation in favour of the original plaintiff deserves to be quashed and set aside and is accordingly quashed and set aside and the matter is remanded to the learned Commercial Court to decide the issue with respect to the limitation afresh in accordance with law and on merits and on the basis of the evidence already led.
6.8 Now, so far as the submission on behalf of the original defendant that the learned Commercial Court has materially erred in awarding interest at the rate of 21% per annum for the pre-suit period is concerned, at the outset it is required to be noted that as per the terms and conditions mentioned in original Contract dated 03.10.1985, on delayed payment the ONGC was entitled to the interest at the rate of 1% higher than the rate of interest payable by the ONGC on its cash credit agreement with the State Bank of India from time to time. Clause 11.02 of the Contract/Agreement reads as under: "11.02 - The Buyer shall pay interest on all delayed payments at the rate of one percent (1%) higher than the rate of interest payable by the Seller on its cash credit arrangement with the State Bank of India from time to time. Delayed payment means any payment not received within the period provided in Clause 11.01 above. The right of Seller will be independent to the right as per Clause 11.04 hereinabove." 6.9 In the examination in chief the witness examined on behalf of the original plaintiff has specifically deposed that as per clause 11.02 of the Agreement, the original plaintiff is also entitled for interest on all the delayed payment @ 1% over and above the rate of interest payable by the ONGC on its cash credit agreement with the State Bank of India and that the original plaintiff has calculated the interest on the principal amount till the date of filing the suit. No question is asked by the original defendant in the cross. Even in the written statement also there is no specific denial with respect to the charging of the interest for the pre-suit period, at the rate of 21% as claimed by the original plaintiff. Under the circumstances and in the facts and circumstances of the case and more particularly, considering the evidence on record, it cannot be said that the learned Commercial Court has committed any error in allowing the claim of the original plaintiff claiming interest at the rate of 21% per annum i.e. at the rate of 1% over and above the interest payable by the ONGC on its cash credit agreement with the State Bank of India for pre-suit period.
Under the circumstances, the learned Commercial Court has rightly decreed the suit awarding the interest on the delayed payment for the pre-suit period as claimed by the original plaintiff. 6.10 Now, so far as awarding interest at the rate of 12% per annum from the date of suit till the judgment and decree and at the rate of 9% per annum from the date of passing the decree till the amount is realized on the entire amount of Rs. 9,97,43,298.97 paise is concerned, learned Counsel appearing on behalf of the original defendant is justified in making a grievance that the learned Commercial Court ought not to have awarded the interest on interest. It is required to be noted that in the suit the claim of Rs. 9,97,43,298.97 paise was bifurcated into two parts i.e. Rs. 6,02,83,113.44 paise towards amount of difference between the contractual price and the actual payment made by the original defendant and Rs. 3,94,60,185.53 paise towards amount of interest at the rate of 21% from the original defendant and therefore, considering section 34 of the Code of Civil Procedure, 1908, the learned Commercial Court has committed an error in awarding interest at the rate of 12% per annum on the entire amount of Rs. 9,97,43,298.97 paise. Considering section 34 of the Code of Civil Procedure, 1908, the learned Commercial Court ought to have awarded the interest at the rate of 12% per annum only on the principal sum of Rs. 6,02,83,113.44 paise towards amount of difference between the contractual price and the actual payment made by the original defendant only. To the aforesaid extent, the impugned judgment and decree passed by the learned Commercial Court is required to be modified. 7. In view of the above and for the reasons stated above, present First Appeal succeeds in part. Impugned judgment and decree passed by the learned Commercial Court, Vadodara insofar as holding that the party shall be governed by original Contract dated 03.10.1985 (Exh. 40) and that the original defendant is liable to pay price for supply of Natural Gas at the rate mentioned in the original Contract dated 03.10.1985 and not as per the Price Order dated 30.01.1987 treating the original Contract/Agreement as "unexpired contracts" is hereby confirmed.
40) and that the original defendant is liable to pay price for supply of Natural Gas at the rate mentioned in the original Contract dated 03.10.1985 and not as per the Price Order dated 30.01.1987 treating the original Contract/Agreement as "unexpired contracts" is hereby confirmed. However, for the reasons stated above, the finding recorded by the learned Commercial Court on the issue of limitation is hereby quashed and set aside and the matter is remanded to the learned Commercial Court, Vadodara to consider the issue with respect to limitation afresh in accordance with law and on merits and on the basis of the evidence already led. For the reasons stated above the impugned judgment and decree passed by the learned Commercial Court awarding the interest at the rate of 21% per annum on the delayed payment for pre-suit period is hereby confirmed. For the reasons stated above, the impugned judgment and decree passed by the learned Commercial Court, Vadodara awarding interest at the rate of 12% from the date of filing of the suit till the date of the decree, on the entire amount of Rs. 9,97,43,298.97 paise is hereby modified to the extent and it is held that the original plaintiff shall be entitled to the interest at the rate of 12% per annum on the principal sum of Rs. 6,02,83,113.44 paise. Present First Appeal is partly allowed to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs. Civil Application No. 3091/2017 In view of disposal of main First Appeal, Civil Application No. 3091/2017 also stands disposed of.