Privity of contract and commercial rates upheld where advertisements were accepted and part payment extended limitation.

Limitation was extended by part payment under Section 19 of the Limitation Act, making the suit timely. Privity and contractual liability were found with the second defendant because the invoices were addressed to it, it made part payment and issued a TDS certificate, and the plaintiff dealt with it directly. The plaintiff was entitled to commercial rates, as the defendants did not notify any restriction to DAVP rates before publication and had accepted the benefit of the advertisements; the claim for damages failed for lack of proof. Simple interest at 6% per annum was awarded on the balance principal for the relevant periods.

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Issues: (i) Whether the suit was barred by limitation; (ii) whether there was a concluded contract and privity of contract with the second defendant, and whether the second defendant alone was liable to pay; (iii) whether the plaintiff was entitled to payment at commercial rates rather than DAVP rates and whether damages were payable; and (iv) what rate of interest, if any, was payable.

Issue (i): Whether the suit was barred by limitation.

Analysis: The invoices were raised in November 1995 and February 1996, but a part payment was made on 30 January 1997. That part payment extended limitation under Section 19 of the Limitation Act, 1963, and the suit filed on 25 January 2000 was within time.

Conclusion: The suit was not barred by limitation.

Issue (ii): Whether there was a concluded contract and privity of contract with the second defendant, and whether the second defendant alone was liable to pay.

Analysis: The bills and invoices were addressed to the second defendant, which did not object that they were wrongly sent to it. The second defendant made part payment and issued a TDS certificate, both of which indicated acceptance of liability. The correspondence and internal notes showed that, as between the defendants, the project was controlled by the first defendant, but the contractual dealing with the plaintiff was through the second defendant. The Court held that the plaintiff's privity was with the second defendant, not the first defendant.

Conclusion: A concluded contract existed with the second defendant, and the second defendant was liable to the plaintiff.

Issue (iii): Whether the plaintiff was entitled to payment at commercial rates rather than DAVP rates and whether damages were payable.

Analysis: The second defendant had a past practice of getting advertisements issued through agencies at commercial rates and was not confined to DAVP rates. The publications also included outlets not covered by DAVP arrangements. The defendants never informed the plaintiff, before publication, that payment would be restricted to DAVP rates. Having taken the benefit of the advertisements, the second defendant was bound to pay at commercial rates under Section 70 of the Contract Act, 1872. The claim for damages failed because the dispute was one for unpaid contractual dues and no credible evidence of damages was proved.

Conclusion: The plaintiff was entitled to commercial rates, and the claim for damages was rejected.

Issue (iv): What rate of interest, if any, was payable.

Analysis: In the circumstances of the case, pre-suit, pendente lite and future interest was considered appropriate at 6% per annum simple on the balance principal amount from 1 February 1997 until payment.

Conclusion: Interest at 6% per annum simple was awarded for the relevant periods.

Final Conclusion: The suit was decreed for the balance principal amount with interest at 6% per annum simple, while damages were declined and the liability was fastened on the second defendant alone.

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