- (1.) LEAVE granted.
(2.) WHETHER interest payable on the sum due would be a debt so as to attract the provisions of Sections 433 and 434 of the Companies Act, 1956 is the question involved herein. Before, however, adverting to the said question, we may notice the fact of the matter. Appellant is a small scale unit registered with the District Industries centre. Admittedly, it supplied Castor Oil to the respondent valued at Rs. 89,13,589/ -. A sum of Rs. 49,99,000/- had been paid by the respondent. The invoices of the credit bills attached with each of the supply contained a clause relating to payment of interest in the following terms: "amount must be paid within seven days or you are liable to pay 2% interest per month. " It is not in dispute that at the foot of each credit bill an officer of the respondent - company had put its signatures as a token of acceptance.
(3.) APPELLANT is said to have adjusted the amount first towards interest at the stipulated rate and balance against the principal amount. As despite demand the amount due and owed to it was not paid by the respondent, a legal notice was served upon it claiming interest on the said sum. It was stated that the appellant had appropriated account of payments made by it against the interest and balance, if any, against the principal amount. On the basis thereof, a demand for a sum of Rs. 64,58,457/- together with future interest at the rate of 2% per month was raised. The said legal notice was replied by the respondents, stating: "we have received a legal notice from Sri Rao raghunandan, Advocate dt. 06. 01. 2003. You are aware that after making payment of Rs. 10. 00 lakhs towards Castor Oil Supplies to our plant, we have received a notice under Section 226 (3) of the income Tax, 1961 from the Income Tax department. As per the notice, we are directed to pay the amounts due to you on account of Castor oil supplied directly to the department in view of your dues to the department to an extent of Rs. 25,43,737/ -. Subsequently, we have paid by way of cheques to Income Tax Officer Ward-8 (3) on account of supply of castor oil as detailed below:- JUDGEMENT_2089_TLPRE0_2008Html1.htm After adjusting the above amounts and our earlier payment of Rs. 10. 00 lakhs, the balance amount due to your company on account of oil supplies is only Rs. 27,40,882/ -. In view of the notice served by the Income tax Department, we could not arrange any payment directly to your company. This matter was brought to your notice and also advised you to obtain a direction from the Income Tax department to pay the dues directly to your company. In the circumstances, we have not intentionally defaulted in making arrangements for the payment of your dues on account of Castor Oil supplies from time to time. We request you kindly to obtain the clearance, so as to enable us to arrange payment of the outstanding amount due to you amounting to rs. 27, 40,882/ -. In the circumstances, we request you to kindly advice your advocate to withdraw the legal notice served on us forthwith. " Without disputing its liability, however, in view of the correspondence that exchanged between the parties, the respondent offered to pay a sum of Rs. 2,00,000/- per week to the appellant beginning from april, 2003. It is on that assurance the appellant is said to have agreed to restore supply of Castor Oil provided it deposited 50% of the outstanding dues and remaining 50% at the rate of Rs. 2,00,000/- per week.;