Absent an agreed interest rate, courts may award reasonable interest on commercial debts.

The plaintiff supplied LLDPE reprocessed granules, plastic granules, floor sweepings, PP regrind and similar goods to the defendant through high-sea sales and from the plaintiff’s warehouses.

The parties maintained an open, running and continuous account, under which payment was to be made within 30 days and the outstanding balance was to be carried forward annually; the plaintiff claimed contractual interest at 12% per annum in case of default.

Between 2016 and 2020, the plaintiff supplied goods and received various part-payments, leaving an outstanding balance that was periodically carried forward and confirmed by the defendant in written balance confirmations, including confirmations dated 1 April 2019, 1 April 2020, 1 April 2021, 1 April 2022 and 1 April 2023.

The last balance confirmation recorded an amount of Rs. 3,06,56,535 as outstanding as on 31 March 2023.

The plaintiff issued a demand notice dated 7 June 2023 and thereafter initiated pre-institution mediation, which failed because the defendant did not participate.

The defendant did not file its written statement and forfeited its right to do so under the amended Order VIII of the Code of Civil Procedure applicable to commercial disputes.

The plaintiff’s witness filed evidence on affidavit and proved the relevant invoices, e-way bills, balance confirmations, demand notice and related documents.

Although the defendant had a restricted right of cross-examination in the undefended suit, it did not cross-examine the plaintiff’s witness.

Whether the plaintiff proved the sale and delivery of goods and the defendant’s outstanding principal liability under the open, running and continuous account maintained between the parties?

Whether the written balance confirmations and other documentary evidence established the amount payable by the defendant to the plaintiff?

Whether the plaintiff was entitled to interest at the claimed rate of 12% per annum, or at such other rate as the Court considered appropriate?

What relief, including interest and costs, should be granted to the plaintiff?

The Court applied the amended provisions of Order VIII of the Code of Civil Procedure, 1908, under the Commercial Courts Act, 2015, concerning forfeiture of the defendant’s right to file a written statement in commercial suits.

The plaintiff was required to prove its claim through admissible documentary and oral evidence; the Court relied on the Evidence Act and the corresponding provisions of the Bharatiya Sakshya Adhiniyam, 2023, including the provisions governing electronic records and the plaintiff’s Section 65B affidavit, treated as an affidavit under Section 63 of the BSA.

The Court recognised the legal effect of an open, running and continuous account and written acknowledgments or balance confirmations in determining the subsisting liability.

Although the plaintiff invoked the Interest Act, the Sale of Goods Act and the CPC, the Court held that where the contractual rate of interest is not proved or otherwise agreed, the rate of interest is within the Court’s discretion, particularly in a commercial transaction.

The invoices, e-way bills, evidence of supply, part-payments and written balance confirmations established that goods had been supplied and accepted and that the defendant had repeatedly acknowledged the outstanding liability.

The defendant neither filed a written statement nor cross-examined the plaintiff’s witness, and therefore offered no evidentiary challenge to the plaintiff’s documents or computation.

The final balance confirmation dated 1 April 2023 was treated as establishing the principal sum due, namely Rs. 3,06,56,535.

However, the Court found that the plaintiff had not proved any agreed rate of interest of 12% per annum.

Exercising its discretion in the context of the commercial transaction, the Court awarded interest at 8% per annum from 1 April 2023, being the date following the last relevant balance confirmation, until payment.

The operative decree directed payment of Rs. 3,06,56,536, together with interest at 8% per annum from 1 April 2023 until realization or actual tender of payment.

The judgment records the principal balance elsewhere as Rs. 3,06,56,535, creating a one-rupee numerical inconsistency between the findings and the operative decree.

There was no order as to costs, and the suit and connected applications were disposed of accordingly.