Unilateral interest clauses in invoices are not binding without evidence of mutual agreement or consensus ad-item.

The plaintiff (respondent), a dealer for M/s Schneider Electric India Pvt. Ltd., received a purchase order from the defendant (appellant) in March 2008. After delivery issues and a subsequent fresh purchase order in August 2008, material worth ₹44,00,000 was supplied, but the defendant paid only ₹40,00,000.

The plaintiff filed a suit for recovery of the balance, including interest and penalties paid to the manufacturer.

The Commercial Court, Ajmer, partly decreed the suit, awarding the principal amount of ₹4,00,000 with 24% interest p.a. from the date of notice (01.12.2011) based on printed terms in the plaintiff's invoices.

The defendant appealed, limiting the challenge solely to the 24% interest rate.

1. Whether a printed stipulation regarding interest on a unilateral invoice, without express consent or a separate agreement, constitutes a binding contractual term.

2. Whether the award of interest at the rate of 24% per annum is excessive, penal, or contrary to statutory provisions under the Sale of Goods Act and the CPC.

Section 61 of the Sale of Goods Act, 1930, which empowers courts to award reasonable interest in the absence of a "contract to the contrary".

Proviso to Section 34 of the Code of Civil Procedure (CPC), 1908, which governs interest in commercial transactions, noting that where no contractual rate exists, the rate should align with those charged by nationalized banks for commercial loans.

Principle from M/S. Oriental Structural Engineers Pvt. Ltd. v. State of Kerala (2021) 6 SCC 150, which establishes that interest for delayed payment is compensatory, not punitive, and must be just and equitable.

The High Court observed that the foundational purchase orders were silent on interest.

The court ruled that invoices are unilateral documents; mere printing of an interest clause does not satisfy the requirement of consensus ad-idem (meeting of minds) unless the purchaser expressly accepted that specific term.

While acceptance of goods creates liability for the principal price, it does not imply acceptance of every onerous condition printed on an invoice.

Since the plaintiff failed to produce evidence of a negotiated agreement on interest, the court held that no "contract to the contrary" existed under Section 61 of the Sale of Goods Act.

Consequently, the 24% rate was deemed unconscionable and penal rather than compensatory.

The High Court exercised its discretion under Section 61 of the Sale of Goods Act and Section 34 CPC to reduce the interest rate from 24% to 9% per annum, effective from the date of the legal notice (01.12.2011) until realization.

The decree regarding the principal amount of ₹4,00,000 remained affirmed.