"Delay in Payment Breaches Hire Purchase Agreement": Calcutta High Court Orders Peermade Tea Co. to Pay Rs.to Tea Board

In a significant ruling, the Calcutta High Court, presided over by Justice Sugato Majumdar, has found Peermade Tea Co. Ltd. in breach of a hire purchase agreement with the Tea Board. The Court has ordered the company to pay Rs. 7,01,274.54 with an interest rate of 8% per annum from the date of the suit's initiation until full recovery.

The legal battle, marked by CS No. 273 of 1992, was resolved on 13th March 2024, involving the dispute over machineries and equipment supplied under the "Tea Machinery Hire Purchase Scheme." Justice Majumdar noted, "Plaintiff is able to establish the monetary claim against the Defendant," emphasizing the delayed payments and failure to adhere to the agreement's terms by Peermade Tea Co.

According to the judgment, the Tea Board, a statutory body under the Tea Act, 1953, had entered into a hire purchase agreement with the Defendant for providing machinery and equipment for their tea garden in Kerala. Despite irregular payments and disputes over the conditions of the delivered machinery, the Court found that Peermade Tea Co. did not fulfill their contractual obligations, leading to the current decree.

Justice Majumdar's decision elaborated that "the Defendant delayed in payment of instalments attracting additional rate of interest and neglected and failed to pay such amount which is a breach of the hire purchase agreement." This breach justifies the Plaintiff's claim for the outstanding amount and additional damages.

In addition to the financial decree, the court has directed that the title of the machinery and equipment will transfer to the Defendant only upon the complete payment of the decreed amount. Failure to satisfy the decree within sixty days will authorize the Tea Board to initiate execution proceedings for recovery of the amount or to take possession of the machinery.

This judgment sets a precedent in matters related to hire purchase agreements, emphasizing the importance of adherence to contractual terms and timely payments.

Date of Decision: 13-03-2024

TEA BOARD Vs. PEERMADE TEA CO. LTD.