Rajasthan HC Dismisses Appeal Seeking Interest from 2008, Holds Three-Year Silence Bars Pre-Notice Claim

A Division Bench of the Rajasthan High Court upheld a Commercial Court's decision to award interest only from the date of legal notice, rejecting the supplier's claim for interest from 2008 due to prolonged inaction.

The Rajasthan High Court's Bench at Jaipur has dismissed a civil first appeal filed by M/s Shalimar Electrical, Bhilwara, which sought interest on a commercial debt from October 2008 rather than from the date of a legal notice issued in December 2011. Acting Chief Justice Sanjeev Prakash Sharma and Justice Bipin Gupta, sitting as a Division Bench, found that the supplier had remained dormant for over three years after the goods were delivered and had offered no explanation for that delay. The bench applied the maxim vigilantibus non dormientibus jura subveniunt and held that the Commercial Court, Ajmer, had rightly exercised its discretion in pegging the interest start date at 01.12.2011. The judgment, authored by Justice Bipin Gupta, was pronounced on 21 May 2026.

The Commercial Dispute and the Trial Court's Decree

M/s Shalimar Electrical, a dealer of M/s Schneider Electric India Pvt. Ltd., received a purchase order from M/s Kanchan India Limited on 18.03.2008 for supply of electric switchgear worth Rs. 60,43,356/-. Supplies were effected between 22.04.2008 and 19.05.2008. The defendant-respondent, however, refused to take delivery, stating that its requirements had changed and a fresh purchase order would follow.

A fresh purchase order for Rs. 44,51,000/- was issued on 13.08.2008. Material worth Rs. 44,00,000/- was supplied between 20.08.2008 and 10.12.2008. Against this, the defendant paid only Rs. 40,00,000/-, leaving Rs. 4,00,000/- outstanding. The plaintiff-appellant also claimed Rs. 1,93,243/- as penalty paid to M/s Schneider Electric India Pvt. Ltd. because the defendant had refused to take delivery under the original purchase order. The total suit claim was Rs. 10,24,017/-.

The defendant-respondent admitted the purchase orders but contended that the material supplied under the second order was substandard, and accordingly issued a debit note of Rs. 4,00,000/-. It also denied any liability for the Schneider penalty, arguing there was no privity of contract between itself and Schneider.

The Commercial Court, Ajmer, framed eleven issues. After examining oral and documentary evidence from two witnesses for the plaintiff and one for the defendant, it partly decreed the suit on 23.10.2019. The plaintiff was held entitled to recover Rs. 4,00,000/- with interest at 24% per annum, but only from 01.12.2011 — the date of the legal notice — not from October 2008. The claim for the Schneider penalty of Rs. 1,93,243/- was rejected.

The Narrow Question Before the Division Bench

By the time the appeal was argued on 06.05.2026, the plaintiff-appellant had confined its grievance to a single point: the date from which interest at 24% per annum should run. Counsel for the appellant, Mr. Nirmal Solanki, did not press the rejection of the Schneider penalty claim or the quantum of the principal decree. The sole contention was that interest ought to have been awarded from October 2008, when the goods were delivered and the payment obligation arose, rather than from the notice date of 01.12.2011.

The appellant's counsel pointed to the Commercial Court's own finding on Issue No. 3 — that the defendant had failed to pay Rs. 4,00,000/- despite receiving the goods in 2008 — and to the invoices (Exhibits 13 and 15) which reflected delivery in that year. He argued that awarding interest only from the notice date was internally inconsistent with the trial court's factual findings.

Counsel for the respondent, Mr. Rajendra Sharma, supported the trial court's approach. He submitted that the amount had remained disputed throughout, given the defendant's quality objections and the debit note. He argued that no written agreement or concluded contract had been produced to show that the parties had agreed to interest from the date of supply. The invoices, he contended, were unilateral documents prepared by the plaintiff-firm, and there was no evidence that the defendant had accepted any interest clause contained in them. In the absence of a contractual stipulation, the Commercial Court had correctly exercised its discretion to run interest from the date of formal demand.

The Bench's Reasoning on Pre-Suit Interest and Inaction

Justice Bipin Gupta, writing for the bench, identified the governing principle at the outset: the grant of interest for the pre-suit period is discretionary and equitable unless governed by a contractual stipulation or statutory mandate. A party seeking equitable relief must approach the court with diligence and promptness.

The bench found it significant that the transactions dated to 2008, yet the plaintiff-appellant issued its legal notice only on 01.12.2011 — a gap of over three years. No plausible explanation was offered for this prolonged inaction. The bench applied the maxim vigilantibus non dormientibus jura subveniunt — “the law assists those who are vigilant, not those who sleep over their rights” — and held that a party cannot take advantage of its own inaction to burden the opposite side with interest for a period during which it remained inactive.

The bench also addressed the standard for appellate interference with a discretionary order. It reiterated that an appellate court ought not to disturb such an order unless the discretion was exercised arbitrarily, capriciously, or contrary to settled legal principles. On the facts, the bench found no perversity or illegality in the Commercial Court's determination. The trial court had already granted substantial relief by decreeing Rs. 4,00,000/- with 24% interest; the only question was the start date, and that had been fixed on a defensible equitable basis.

The bench further noted that the defendant had raised consistent objections about quality and had issued a debit note, meaning the liability was never admitted and remained disputed. In that context, restricting interest to the period after formal demand was made was both legally sustainable and equitable.

The judgment also cross-referenced D.B. Civil First Appeal No. 152/2020, directing that the rate of interest and the commencement date determined in that appeal shall apply mutatis mutandis to the present case as well.

Outcome

D.B. Civil First Appeal No. 318/2020 was dismissed as devoid of merit. The Commercial Court's decree of Rs. 4,00,000/- with interest at 24% per annum from 01.12.2011 stands undisturbed. Pending applications, if any, were disposed of.