Bangalore District Court
M/S. Trimurti Polychem vs M/S. Sri Aurobindo Packagers Pvt. Ltd on 6 July, 2022
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH-84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this 6th day of July 2022
COM.O.S.No.16/2020
Plaintiff M/s. Trimurti Polychem
Private Limited (Unit - II)
A private limited company, registered
under the provisions of the companies
Act, having its registered office at:
No.418/35, 33rd Cross, 7th 'B' Main,
4th Block, Jayanagar,
Bengaluru-560011.
Represented by its
Authorized Signatory Mr.V. Vijaykumar
(By Sri.S.R.P, Advocate)
// versus //
Defendants 1. M/s. Sri Aurobindo Packagers Pvt. Ltd.
A private limited company, registered
under the provisions of the Companies
Act, 1956 having its registered office at
Sy.No.364, 365 & 366,
Sirupuzhalpettai village, Gummipoondi
Taluk, Thiruvallur District,
Tamil Nadu-601201.
Represented by its Managing Director/
Director/Authorized Signatories.
2. Mr. Ramasamy Arivalagan,
Director/ Managing Director,
2
CT 1390_Com.O.S.16-2020_Judgment.doc
M/s. Sri. Aurobindo Packagers
Private Limited,
Factory at Sy.No.364, 365 & 366,
Sirupuzhalpettai village, Gummipoondi
Taluk, Thiruvallur District,
Tamil Nadu-601201.
3. Mr. Thangaraj Parthasarathy,
Director/ Managing Director,
M/s. Sri. Aurobindo Packagers
Private Limited,
Factory at Sy.No.364, 365 & 366,
Sirupuzhalpettai village, Gummipoondi
Taluk, Thiruvallur District,
Tamil Nadu-601201.
4. Mr. Ragavan Ramesh,
Director/ Managing Director,
M/s. Sri. Aurobindo Packagers
Private Limited,
Factory at Sy.No.364, 365 & 366,
Sirupuzhalpettai village, Gummipoondi
Taluk, Thiruvallur District,
Tamil Nadu-601201.
And also corporate office at:
M/s. Sri Aurobindo Packagers
Private Limited,
No.3/1, "Tejsri Apartment', 3rd Block,
Flat No.B4, 1st Floor, Mogppair West,
Chennai-600037, Tamil Nadu.
(By Sri.R.V.K, Advocate)
[
Date of Institution of the : 03/01/2020
suit
Nature of the suit : Recovery of Money
Date of commencement of : 17/2/2022
recording of the evidence
Date on which the : 06/07/2022
Judgment was pronounced.
3
CT 1390_Com.O.S.16-2020_Judgment.doc
: Year Month/ Day/s
Total duration /s s
02 06 03
JUDGMENT
This suit is filed by the plaintiff seeking decree against the defendant for Rs.45,59,000/- with interest @36% from the date of suit till realization of the entire amount.
2. The case of plaintiff in brief is as under:
The plaintiff is a private limited company and carrying on business of manufacturing and trading plastic materials like poly sheets, lamination plain sheets, lamination printed sheets etc. The defendant No.1 is also a private limited company and is manufacturer, supplier and exporter of a wide range of flexible, laminated packaging material used in FMCG industry for packing various products. The defendants have purchased LLD plain sheets of different sizes regularly from the plaintiff company by maintaining running account and agreed to pay value of the goods within 30 days from the date of purchase together with interest accrued thereon @36% from the date of respective invoices. The defendants have placed several purchase orders telephonically or by email of different dates, plaintiff has prepared the order of acceptance as per the POs. In the year 2015 the defendants have purchased the materials from the plaintiff by five invoices stated in the plaint. In respect of these transactions there is outstanding amount of Rs.14,24,523/-. The present suit is filed for recovery of this outstanding amount of 4 CT 1390_Com.O.S.16-2020_Judgment.doc Rs.14,24,523/- along with interest @36% per annum. Inspite of requests and reminders the defendants have failed to clear the outstanding amount. The defendants No.2 to 4 on behalf of defendant No.1 have issued cheques for different amount on behalf of 1st defendant company. Due to specific instructions of the defendants, the plaintiff has not presented the cheque for encashment. The defendants promised to settle the entire amount in one stretch after sale of their immovable property in Tamil Nadu. Since the payment is not made, plaintiff issued legal notice on 29/8/2019. Even after receipt of the legal notice, defendants have not made payment and in the legal notice, by oversight outstanding amount is shown as Rs.20,24,523/- instead of Rs.14,24,523/- with interest. Despite repeated requests and demands the defendants have not cleared the outstanding balance. The defendant No.1 is a private limited company and defendants No.2 to 4 are managing the day today affairs of the defendant No.1. Therefore all the defendants are collectively responsible for issuing the cheques and are individually and severally liable for payment of the due amount. Since the transaction is purely commercial transaction, plaintiff is entitle for interest @36%. Interest upto 31/12/2019 @36% comes to Rs.31,34,456/-. By including typing charges, outstanding total amount comes to Rs.45,59,000/-. Hence for recovery of this amount with interest, plaintiff has filed the present suit.
3. The defendants have filed written statement through authorized representative by denying various averments of 5 CT 1390_Com.O.S.16-2020_Judgment.doc the plaint. The defendants have stated that they placed certain orders with the plaintiff, on the representation made by the plaintiff that good quality of goods will be supplied. It is stated that the defendants are suppliers of goods to many renowned companies and the goods to be supplied by the plaintiff was to be of a good quality, otherwise the customers of the defendants would reject the goods supplied to them. The supply of goods by the plaintiff as stated in the plaint is admitted by the defendants. However the defendants denied their liability to pay Rs.14,24,523/- as claimed in the suit. It is stated that there is no cause of action for the suit. The defendants have stated that the defendants are having business relationship with the plaintiff since 2008 and in relation to the same there is running account maintained by the defendants. It is stated that defendants ordered for supply of LLD plain sheets of various sizes and thickness of the weight of 2026 Kgs and under invoice dated 2/11/2015 and 5/11/2015, plaintiff supplied the same and same was used in manufacturing process as the third sealing layer of the finished product and was supplied to the customer of the defendants. It is stated that their customer Raj Enterprises informed them that the material supplied by the defendants by using the LDPE film supplied by the plaintiff had sealing problems in the pouches made and created lots of issues in their production and the customer stated that they cannot use the defective material for their production. The defendants have stated that they have informed the plaintiff 6 CT 1390_Com.O.S.16-2020_Judgment.doc about the defect orally and also by email dated 10/12/2015. It is stated that the defendants have clearly informed the plaintiff that 10MT of material valuing about Rs.20 lakhs could not be used by the supplier due to the defect in sealing. It is stated that the sample roll were also sent to the plaintiff and plaintiff was requested to look into the defects and to respond immediately with solution and plaintiff came out with an explanation that the defect might have occurred during the process at the defendants' end. It is stated that the plaintiff deputed their technical person Sri. Rajaraman to the defendants customer's production unit to study the defects that occur during the packaging process and found that there were sealing problems in the materials. It is stated that thereafter, director of the plaintiff Sri. Punit and the Marketing Manager Sri. Robert visited the defendants office and had discussion with Sri. Arivalagan, the director of 1 st defendant. It is stated that, materials were also sent to M/s Henkel Academy Laboratory, associate of leading MNC M/s. Henkal who provided the test results after conducting laboratory tests, as per the standard specifications. It is stated that the test reports clearly stated that the LDPE supplied by the plaintiff was defective and had very poor sealing strength resulting in breaking up of the pouches at the customer's end during the packaging process. It is stated that the plaintiff accepted its mistake and agreed to waive a sum of Rs.12 lakhs as compensation, as against the loss of 10MT of the value of Rs.20 lakhs. It is stated that consequent 7 CT 1390_Com.O.S.16-2020_Judgment.doc upon the defective material supplied by the plaintiff, the defendants lost their valuable customer and sustained huge loss and the same was informed to the plaintiff in their email dated 3/3/2018. It is stated that the defendants have changed their banking facility from SBI, Nandambakkam Branch to SBI, Nolambur Branch and defendants made the payments to the plaintiff by issuing alternative cheques and also by means of RTGS. It is stated that the statement of account clearly show the payment. The defendants have stated that the plaintiff is not entitled to claim for the defective materials supplied under the aforesaid invoices and the total value of the supplies of 10 MT of the value of Rs.20 lakhs and as the defendants had already paid the amount under those invoices, same was required to be adjusted or given set off as regards the supplies made by the plaintiff under the 5 invoices, which is the subject matter of the present suit. It is stated that the suit is not maintainable as the suit ought to have been one on accounts. On all these grounds the defendants have prayed to dismiss the suit with costs.
4. On these pleadings, following issues are framed:
1) Whether the plaintiff proves that in respect of the materials purchased from the plaintiff there is outstanding balance of Rs.14,24,523/- from the defendants?8
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2) Whether the plaintiff proves that defendants are liable to pay Rs.31,34,456/- towards interest upto 31/12/2019?
3) Whether the defendants prove that the payments made in respect of goods which were found to be defective, is to be adjusted in the amount due under the invoice as claimed in the suit?
4) Whether the plaintiff is entitle for the reliefs prayed in the suit?
5) What decree or order?
5. In support of the plaintiff's case PW.1 is examined. Ex.P.1 to Ex.P.25 documents are marked. For defendants DW.1 is examined Ex.D.1 to D.13 documents are marked.
6. Heard arguments. Counsel for plaintiff filed written arguments also. Perused records.
7. My answer to the above issues are :
Issue No.1 : In the affirmative
Issue No.2 : Partly in the affirmative
Issue No.3 : In the affirmative.
Issue No.4 : Partly in the affirmative.
Issue No.5 : As per final order for the following:
REASONS
8. Issues No.1 to 4: Since all these issues are interlinked with each other, they are taken together for discussion, to avoid repetition.
9. The case of the plaintiff is that in the regular business transaction, plaintiff had supplied materials to the 9 CT 1390_Com.O.S.16-2020_Judgment.doc defendant and in this transaction, the suit claim amount of Rs.14,24,523/- is due in respect of 5 invoices of December 2015. According to the plaintiff, this outstanding amount of Rs.14,24,523/- is to be received from the defendants with interest @36% per annum as mentioned in the invoice. By calculating this interest, plaintiff has prayed for recovery of Rs.45,59,000/- in the present suit. The defendants have stated that in respect of the materials supplied by two invoices on 2/11/2015 and 5/11/2015 there were quality issues. The defendants have stated that after receiving the material from the plaintiff, finished products were supplied to the customer of the defendants and the defendants received complaint about these products and this was intimated to the plaintiff by email dated 10/12/2015 and defendants informed the plaintiff that 10 MT of material valuing about Rs.20 lakhs could not be used by the supplier due to the defect in sealing and it is stated that expert's analysis report was also obtained and was shared with the plaintiff. Defendants also stated that sample was also sent to the plaintiff and finally, plaintiff accepted its mistake and agreed to waive a sum of Rs.12 lakh as compensation as against loss of 10MT of the value of Rs.20 lakhs. It is also stated that the plaintiff is not entitle to claim for defective material and as the defendant had already paid the amount under the two invoices and such invoices required to be adjusted or given set off as regards the supply made by the plaintiff under 5 invoices. The defendants have 10 CT 1390_Com.O.S.16-2020_Judgment.doc also denied their liability to pay interest as claimed. It is also stated that the suit ought to have been on one of account.
10. For the plaintiff, PW.1 is examined. In his chief examination, PW.1 has reiterated the plaint averments. In the cross examination, witness has stated that on defendant sending the purchase order through email, plaintiff used to supply the goods and defendant was making payment. Witness has stated that the running account was maintained and the running account were sent every year to the defendants. Witness has stated that the ledger statement produced in the court are not shown as audited. Witness stated that they are selling semi finished product and has supplied LLD plain sheets through Ex.P.4 to Ex.P.8 invoices. Witness has stated that the suit is filed only in respect of these invoices. However, witness denied that the suit is not based on account. It is suggested to the witness that in respect of goods supplied by two invoices in 2015 November there were complaints and regarding that emails are sent to the plaintiff. Witness has stated his ignorance about knowledge of such email. Witness has stated that after filing of the written statement, he has checked the email and also about the two invoices by which the goods were sent and stated that in respect of those invoices payments are already received and the present suit is not in respect of that invoice and it is only in respect of 5 invoices mentioned in the plaint. In the cross examination of PW.1, printout of email sent by the defendant has been confronted to the witness and marked 11 CT 1390_Com.O.S.16-2020_Judgment.doc as Ex.D.1. Witness submitted that after receiving the email the marketing staff would report the same to the quality control section and they will examine the complaint. Witness has submitted that normally interest date for the delayed payment will be mentioned in the invoice. The witness denied that due to defect in the goods supplied by them, the defendant has suffered loss of 10 MT of value of containers for which plaintiff has agreed to waive Rs.12 lakhs. Witness denied that the defendant is not liable to pay any amount and also denied that the defendants are not liable to pay any interest. Witness has stated that at the time of this transaction, normal rate of interest charged by the bank was 24%.
11. Plaintiff has produced incorporation certificate, board resolution and authorization letter as Ex.P.1 to Ex.P.3. 5 invoices are produced as Ex.P.4 to Ex.P.8. Copy of ledger statement is marked as Ex.P.9. 6 cheques stated to have been given by the defendant and 3 cheque return memo are prdouced as Ex.P.10 to Ex.P.18. Ex.P.19 is the legal notice, Ex.P.20 is the postal receipt and Ex.P.21 to Ex.P.25 are the postal acknowledgements.
12. Authorized signatory of defendant has given evidence as DW.1. In the chief affidavit he has stated the contention taken in the written statement. DW.1 has stated about the material received in two invoices regarding which there were complaints and also stated that the plaintiff had agreed to compensate to an extent of Rs.12 lakhs as against 12 CT 1390_Com.O.S.16-2020_Judgment.doc loss of Rs.20 lakhs. In the cross examination questions are asked with regard to validity of the authorization given to PW.1. Witness has stated that from 12 years defendant is having business with the plaintiff and running account is maintained and admitted that the defendant was purchasing the material on credit. He has also admitted that the defendant was making payment in lumpsum. Witness has admitted that as per Ex.D.5 and Ex.D.6 there was outstanding balance of Rs.14,52,240/- from defendant company to the plaintiff and admitted that according to plaintiff's documents outstanding balance is Rs.14,24,523/-. Witness denied that goods supplied by the plaintiff were semi finished goods and stated that they are all raw materials for defendants' products. Witness has admitted that in Ex.P.9 there is reference to two invoices which are referred by the plaintiff and admitted that total of those two invoices is Rs.5,32,841/-. Witness has stated that on the next day of the invoice they might have received the goods. Witness has stated that they have not produced document to show that they have supplied the finished goods to Raj Enterprises. Witness has denied that the goods supplied were in good condition and they have not complained within 72 hours. Witness has stated that only after sending the finished products to their customers, they came to know about the quality of goods and then they have raised complaint. Witness denied that as goods supplied by those invoices were good and they have made payment. The witness stated that 13 CT 1390_Com.O.S.16-2020_Judgment.doc they have made lumpsum payment and not for particular invoices. Witness has stated that the goods sent by the plaintiff are used for lamination and they are having their printing facility and they buy adhesives from different companies and usually they adhesive from Huber and Henkel company and they also buy ink from Huber and from Brilliant polymers. The witness admitted that process of lamination and printing requires standard procedures like temperature, sealing, bonding. Witness admitted that Ex.D.11 test report is from one of their adhesive suppliers and the test is made of end product. Witness denied that Ex.D.11 and Ex.D.12 report are only on printing and lamination which is not concerned to the plaintiff. The witness denied that the plaintiff is not responsible for any kind of quality complaint reported on any kind of processing done on the materials supplied by the plaintiff. The witness stated that they have not made any payment for lab report in Ex.D.11 and Ex.D.12, since those companies as their suppliers. DW.1 has stated that they have no document to show that plaintiff accepted the mistake and agreed to waive sum of Rs.12 lakhs as compensation. The witness admitted that weight of goods of two invoices were not exceeding 4 MT and stated that after finished product it will be doubled. Witness admitted that they have received the legal notice and they have not given reply. Witness denied that plaintiff never supplied defective material. Witness has also denied that they are liable to pay interest of 36%.
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13. Printout of email sent by the defendant to the plaintiff on 10/12/2015 complaining about the material sent by two invoices dated 2/11/2015 and 5/11/2015 is marked by confronting to PW.1 as Ex.D.1. Authorization letter to DW.1 is produced as Ex.D.2. Printout of email dated 2/2/2016, in continuation of email dated 10/12/2015 is marked as Ex.D.3. Office copy of letter dated 3/3/2018 is marked as Ex.D.4. Copy of ledger account are produced as Ex.D.5 and Ex.D.6. Certificate under Section 65B of the Indian Evidence Act is marked as Ex.D.7. Printout of the screen shot of emails are marked as Ex.D.8 to Ex.D.10. Customer sample analysis report attached to Ex.D.10 and laminate analysis report attached to Ex.D.10 are produced as Ex.D.11 and Ex.D.12. Ex.D.13 is Certificate under Section 65B of the Indian Evidence Act with regard to Ex.D.8 to Ex.D.12.
14. On looking to the pleading, evidence and hearing the arguments of both the counsels and perusing the written arguments, there is no dispute that the plaintiff and defendants had transaction for many years and plaintiff was supplying LLD plain sheets and other items. These materials which the plaintiff supplied to the defendant are according to the plaintiff semi finished product, but according to the defendant are raw materials for the finished product of the defendant. However, evidence makes it very clear that after receiving the material supplied by the plaintiff, the defendant was required to make some printing, lamination etc and then 15 CT 1390_Com.O.S.16-2020_Judgment.doc the finished product used to come out and the same was being sold by the defendant to its customers. PW.1 has admitted in his cross examination para 5 that the defendant makes payments in lumpsum and not as per the invoices. Similarly in the cross examination of DW.1 it is suggested to DW.1 that the defendant company used to make payment in lumpsum and same is admitted. Therefore, it is clear that the defendant was not making payment on the bais of Invoice, but was making payment in lumpsum and such payment was to be adjusted for the dues of different invoices. However, in the plaint it is stated that present suit is for recovery of outstanding in respect of 5 invoices at Ex.P.4 to Ex.P.8. Even PW.1 in his cross examination has stated that, present suit is filed only in respect of these invoices. He has also stated that according to him defendants were liable to pay only amount covered by 5 invoices mentioned in this suit and nothing more or less. In the cross examination of DW.1 also, it is suggested for plaintiff that the present suit is in respect of Ex.P.4 to Ex.P.8 invoices only.
15. On considering these suggestions put to DW.1 and the contention of the plaintiff and also the evidence of PW.1, it appears that according to plaintiff, present suit is in respect of dues of 5 invoices and not based on running account. If the suit is based on invoices and not on the running account maintained by the plaintiff in the regular course of business, the plaintiff have to say what is the total sum of that invoice and what is the amount already paid and 16 CT 1390_Com.O.S.16-2020_Judgment.doc what is the outstanding. No such details are forthcoming in the plaint. If Ex.P.4 to Ex.P.8 invoices are the basis for present claim, total amount of these 5 invoices comes to Rs.20,24,523/-. Same was mentioned in legal notice issued by the plaintiff to the defendant as per Ex.P.19. However in the plaint and evidence, plaintiff has stated that this amount of Rs.20,24,523/- was wrongly mentioned in the legal notice and outstanding amount is Rs.14,24,523/-. How, this Rs.14,24,523/- is arrived is not made clear by the plaintiff in his evidence or in the plaint.
16. Ledger account produced by the plaintiff in Ex.P.9 give some details as to the outstanding amount. In Ex.P.9, details of all the invoices including the materials supplied by disputed invoices in November 2015 are clearly appearing. In Ex.P.9, outstanding balance is shown as Rs.14,24,523/- and this is the amount which according to the plaintiff is due. Therefore, as against the plaintiff's contention here and there that the suit is based on the invoice and not on running account maintained by the plaintiff, claim amount of Rs.14,24,523/- is itself arrived on the basis of running account that has been maintained and produced before the court. Interestingly the defendant has also produced copy of ledger account marked as Ex.D.5 and Ex.D.6. In Ex.D.5 for the year 1/4/2017 to 31/3/2018, payment of Rs.6 lakhs in 2017 has been appearing and the opening balance is shown as Rs.20,52,240/- and after deduction of this amount, payment due is shown as Rs.14,52,240/-. Same amount is 17 CT 1390_Com.O.S.16-2020_Judgment.doc appearing in Ex.D.6 of the year 1/4/2018 to 31/3/2019. Therefore even according to the defendant there are some payment of Rs.6 lakhs in 2017 and then the outstanding balance came down to Rs.14,52,240/-. Even in the cross examination of DW.1 this has been suggested to witness in para 2. Witness has admitted that in Ex.D.5 and Ex.D.6 there was outstanding balance of Rs.14,52,240/- from the defendant to the plaintiff and as per the plaintiff's document the outstanding is Rs.14,24,523/-. Therefore there is no much dispute between the parties that there is outstanding amount of Rs.14,24,523/- even if lesser among the two is considered. However, contention of the plaintiff that these payments are in respect of 5 invoices only cannot be accepted as how this figure is arrived out of 5 invoices is not made clear and the total of 5 invoices would be Rs.20,24,523/- and not Rs.14,24,523/-.
17. Moreover, as admitted by PW.1, defendant was making payment in lumpsum and not as per invoice. Whatever the payment made by the defendant in lumpsum was to be adjusted by the plaintiff for the due and the same is reflected in copy of ledger produced by the plaintiff. As such there is no clear evidence that out of Rs.20,24,523/- which is the total of 5 invoices in Ex.P.4 to Ex.P.8, there is outstanding as Rs.14,24,523/-. As against this, in the ledger account of plaintiff referred above there is even addition of debit of Rs.24,523/- towards interest on 30/4/2017 and also there is another invoice due of Rs.98,223/- on 17/12/2015.
18CT 1390_Com.O.S.16-2020_Judgment.doc Therefore, Rs.6 lakh payment in 2017 cannot be adjusted only for those 5 invoices. On considering all these facts, it is clear that in the business transaction had between the parties, plaintiff was supplying the material to the plaintiff on receiving the order and was raising invoice and defendant was making payment in lumpsum and same was to be adjusted in the account of the defendant maintained by the plaintiff. Even the defendant has maintained the ledger account which also show that there is outstanding balance, which is very near to the amount stated by plaintiff. The vague contention taken by PW.1 stated that the suit is based only on invoice and not on accounts etc will not come in the way of considering the dispute on merits, as, even as per the defendant's records produced at Ex.D.5 and Ex.D.6, there is outstanding balance of Rs.14,52,240/- and the same is even admitted by DW.1. When there is clear admission of DW.1 that as per their accounts, there is outstanding balance of Rs.14,52,240/-, plaintiff's claim of Rs.14,24,523/- cannot be rejected on the technical ground of plaintiff, not stating that suit is based on accounts or that ledger account produced is not audited or that it was not yearly communicated to defendant etc. Therefore, this maomut of Rs.14,24,523/- can be considered as principal amount due from the defendant to the plaintiff.
18. Ex.P.9 show that at several places, amount has been debited towards interest. There is latest entry of debiting interest of Rs.24,523/- on 30/4/2017 and after this 19 CT 1390_Com.O.S.16-2020_Judgment.doc debit entry of interest this principal amount of Rs.14,24,523/- is arrived as due from the defendants. Though, plaintiff has stated that this amount of Rs.14,24,523/- is the due in respect of the 5 invoices, for the discussion made above it is clear that they are not in respect of 5 invoices, but they are the outstanding balance as per the running account maintained in regular course of business and payment made by the defendant are admittedly made in lumpsum and then the same is adjusted for the outstanding. Therefore, outstanding balance payable by the defendant is established as Rs.14,24,523/-.
19. The defendant in the written statement has mentioned about the dispute with regard to two invoices dated 2/11/2015 and also 5/11/2015. As admitted by DW.1, total of these two invoices comes to Rs.5,32,841/-. In Ex.P.9 ledger statement of the plaintiff amount of these two invoices dated 2/11/2015 and 5/11/2015 is also entered in page No.3. One invoice is for Rs.2,97,294/- and another for Rs.2,35,547/- and total comes to Rs.5,32,841/-. According to the defendant, material supplied by these two invoices were used by the defendant for preparing finished product and then, same was sent to Raj Enterprises and the defendant has received information that those finished products are having defect. According to the defendant, on going through those alleged defective product and on examining of the same by the expert, it was found that the goods supplied by the plaintiff was having quality issue and due to that finished 20 CT 1390_Com.O.S.16-2020_Judgment.doc product also became defective and the customer of defendant has returned the same and the defendant has suffered loss of Rs.20 lakhs. The defendant has contended that this has been brought to the notice of the plaintiff and finally the plaintiff has agreed to pay compensation of Rs.12 lakhs which was to be adjusted in the outstanding balance. In the present suit the plaintiff has sought for adjustment or set off these amount of Rs.12 lakhs in the alleged claim of the plaintiff.
20. In the cross examination of PW.1, email sent by the defendant to plaintiff's representative is confronted and marked as Ex.D.1. Answers given by PW.1 about Emails sent by defendants to Plaintiff are vague and not satisfactory. PW.1 has stated that he is not aware or that he has not come across some email etc. Contention about quality issue in materials supplied by two invoices was taken by the defendant in the written statement itself. Thereafter, plaintiff has come to give evidence before the court. However in the evidence affidavit PW.1 has not given any explanation to the contention taken by the defendant regarding defect in the goods supplied by two invoices. Though the emails were sent by the defendant admittedly to the official of the plaintiff as per Ex.D.1 on 10/12/2015 stating about some issues with regard to the material supplied on 2/11/2015 and 5/11/2015 with specific invoice number, plaintiff has not given any satisfactory answer to this email and has also not produced any document to show that issue mentioned in Ex.D.1 has been attended and resolved. The defendant has 21 CT 1390_Com.O.S.16-2020_Judgment.doc also produced another follow up email dated 2/2/2016 as Ex.D.3 which refers to Ex.D.1 and also reference to the independent analysis of the material regarding the defect and states that huge some of payment has been held up to the defendant, due to this defect and the issue is to be resolved. Even for this email, there is no explanation from the plaintiff as to whether they have attended the issue on the material supplied through two invoices. The defendant has also produced some screen shot of the email and also two attachment which are the analysis report received by defendant from Henkal and Brilliant polymers. Ex.D.10 is the screen shot of the email sent to the plaintiff by defendant on 25/2/2016. This clearly show that these analysis report of Henkal and Brilliant Polymers were sent to the plaintiff with this email. In this report at Ex.D.11 and Ex.D.12 the issue raised with regard to these materials has been appearing.
21. These documents produced by the defendant at Ex.D.1, Ex.D.3 and also Ex.D.8 to Ex.D.12 clearly show that from 10/12/2015 the defendant has been sending email and has also sent report to the plaintiff raising the issue regarding quality of the material sent by two invoices dated 2/11/2015 and 5/11/2015 and requested the plaintiff to resolve the issue. Email at Ex.D.3 also say that the technical person of the plaintiff Rajaram has also visited the customer production unit and even the director of the plaintiff along with Robert has visited the office of defendant. Analysis report clearly 22 CT 1390_Com.O.S.16-2020_Judgment.doc show that there were some issues with regard to the material supplied by two invoices by the plaintiff to the defendant. Though the plaintiff contends that the materials sent by them to the defendant is semi finished product, defendant contends that it is a raw material for the product which the defendant makes and sends to its customer. Even if the contention of the plaintiff is accepted, still admittedly the material sent by the plaintiff is not a finished product and may be a semi finished which requires something to be done by the defendant to market it as finished product. When defendant marketed such finished product, customer of the defendant has raised some issue of quality and then the defendant has informed the plaintiff on 10/12/2015 and also then followed up with other email and also sent analysis report. Even the plaintiff's director and representative and technical person had visited the defendant as per the email Ex.D.3. However, plaint and also the evidence of PW.1 is totally silent on the same. Plaintiff has not even cared to produce any response given to email of the defendant. In the cross examination of DW.1 several questions are asked with regard to authenticity of analysis report and quality issue raised etc. However, when plaintiff received these emails and analysis report from the defendant, what action he has taken is not made clear. If plaintiff disputes such report in Ex.D.11 and 12 it is not the case of the palintiff that they have not received these Emails and report. Therefore adverse inference is to be drawn against the plaintiff, to the effect that the 23 CT 1390_Com.O.S.16-2020_Judgment.doc material sent by plaintiff to the defendant on 2/11/2015 and 5/11/2015 for total sum of Rs.5,32,841/- had some quality issue and those issues are not attended and due to that the defendant has suffered loss.
22. PW.1 has strangely stated that present suit is only in respect of 5 invoices and nothing more nothing less and has stated that supply made by invoice dated 2/11/2015 and 5/11/2015 are different and payment is already received in respect of those invoices. Therefore, contention of PW.1 appears to be that as plaintiff has not mentioned about these two invoices in the plaint and about those two invoices payments are already received, quality issue of materials supplied by those invoices cannot be raised now. In the cross examination of DW.1 by showing terms in the invoice, question is asked stating that after receiving the goods they have not complained within 72 hours and therefore, complaint subsequently raised cannot be accepted. However DW.1 has given a fitting answer by stating that, only after sending finished product to their customer, they came to know about the quality of the goods and then they have complained. Though it is suggested that the goods supplied were good and there was no issue etc, they are against the documentary evidence placed before the court and plaintiff has not produced any document to substantiate its contention that there was no such quality issue on the goods. Though the plaintiff and defendant had several transaction of crores of rupees, issue raised by the defendants is only with 24 CT 1390_Com.O.S.16-2020_Judgment.doc regard to two invoices that too with analysis report. When defendant came to know about such quality issue, he has sent sample of the product to plaintiff and also asked plaintiff to resolve the issue. What steps the plaintiff has taken to resolve the issue is not made clear.
23. Therefore, contention of the defendant that the plaintiff has accepted the defect and then agreed to pay compensation is to be accepted. However, defendant has stated that plaintiff has suffered loss of Rs.20 lakhs. Though DW.1 has admitted that weight of goods of two invoices were not exceeding 4 MT, witness has clearly stated that after becoming finished product it would be doubled. Therefore contention of the defendant that there is loss of 20 MT cannot be said to be exaggeration. However the defendant has not produced any document to show that the defendant had suffered such loss of Rs.20 lakhs. Defendant has produced Ex.D.4 which is an office copy of the letter dated 3/3/2018 in which it is mentioned that plaintiff has offered to waive Rs.12 lakhs as compensation to the loss incurred by the defendant. However there is no material to show that this letter is served on the plaintiff or that the plaintiff had agreed for the same. Defendant has stated that for the loss of Rs.20 lakhs suffered by the defendant, plaintiff has agreed to pay Rs.12 lakhs. Though there are several email sent by the defendant to the plaintiff, in none of these emails, such agreement by the plaintiff to make payment of Rs.12 lakhs is mentioned. Hence, contention of the defendant that plaintiff had agreed 25 CT 1390_Com.O.S.16-2020_Judgment.doc to pay compensation of Rs.12 lakhs and same was to be adjusted in the outstanding balance is not supported by any evidence. Interestingly even in the defendant's ledger account produced at Ex.D.5 and Ex.D.6 which are from 1/4/2017 to 31/3/2019 this adjustment of Rs.12 lakh is not appearing. As per the ledger account produced by the defendant, the outstanding is Rs.14,52,240/- and there is no such deduction of Rs.12 lakh. Therefore, contention of the defendant that there was understanding between the parties and plaintiff agreed to waive Rs.12 lakhs out of outstanding amount is not established. As rightly suggested by plaintiff to DW.1 the total of these two invoices itself is Rs.5,32,841/-. In the absence of any document showing that plaintiff had agreed to pay Rs.12 lakh as compensation by waiving off the same in the outstanding amount and by considering that goods supplied were by two invoices for Rs.5,12,841/- and there is no evidence produced by the plaintiff showing that those goods were not having defect and were not rejected by the customer of the defendant etc, plaintiff can give deduction of the value of these invoices of Rs.5,32,841/- in the outstanding amount as against the claim of the defendant for Rs.12 lakhs.
24. Contention of PW.1 that payment for those invoices are already made and no complaint received etc cannot be accepted as defendant was making payment in lumpsum and the payment used to be adjusted in the outstanding. As regards the complaint, DW.1 has specifically stated that only after their customer receiving the finished 26 CT 1390_Com.O.S.16-2020_Judgment.doc product and raising complaint they came to know about the defect and then they communicated with the plaintiff. Therefore out of the outstanding amount payable by the defendant, amount of two invoices one for Rs.2,97,294/- dated 2/11/2015 and one for Rs.2,35,547/- dated 5/11/2015 totaling Rs.5,32,841/- is to be given set off. As discussed above the total amount due to the plaintiff from the defendant is Rs.14,24,523/-. Out of this, value of two invoices totally Rs.5,32,841/- is necessary to be deducted as amount covered by two invoices dated 2/11/2015 and 5/11/2015. On such deduction, balance outstanding amount which is to be cleared by the defendant would be Rs.8,91,682/-. Therefore, plaintiff is entitle for recovery of principal amount of Rs.8,91,682/- after giving set off for Rs.5,32,841/- which is due to the defendant from the plaintiff as value of two invoices in which product delivered were having quality issue.
25. Plaintiff has calculated the outstanding amount of Rs.45,59,000/- on the basis of Rs.14,24,523/- towards invoice and Rs.31,34,456/- as interest accrued @36% and another Rs.21/- as typing charges. On the basis of entry in the invoice that 36% interest is chargeable, plaintiff is said to have claimed interest of Rs.31,34,456/-. However on what amount this interest is calculated is not clear. In the plaint in para 19 value of material is shown as Rs.14,24,523/- and interest accrued as Rs.31,34,456/-. On rough calculation of 36% interest on Rs.14,24,523/- from 1/12/2015, which is 27 CT 1390_Com.O.S.16-2020_Judgment.doc the first invoice amongst five, till 31/12/2019 as date taken in the plaint for calculation of interest, would come to Rs.20,94,048/-. Therefore, the interest calculated by the plaintiff is not on Rs.14,24,523/-. On what amount this interest is calculated is nowhere stated in the plaint. If suit is based on invoice, plaintiff can claim interest only on the due of the invoice, but the amount arrived towards interest in the plaint is about Rs.10 lakh to Rs.12 lakh excess, then the interest on Rs.14,24,523/-. In the first page of Ex.P.9 calculation has been given in which the interest has been mentioned. But on looking to this Ex.P.9 first page, showing the interest rate and credit rate etc, it cannot be made out as to how the interest has been calculated. On the invoice value of Rs.77,17,892/- interest appears to have been calculated. However, outstanding balance is only Rs.14,24,523/-. Even total of the 5 invoices mentioned in the plaint is not Rs.77 lakhs. Admittedly the total of 5 invoices is not even Rs.14,24,523/-. It is much more than that, but it is much less than the invoice value mentioned in Ex.P.9 first page. Therefore on what amount the interest has been calculated at 36% itself is not properly explained by the plaintiff.
26. On the other hand, in the ledger extract at different places there is debit towards interest received. It appears that when plaintiff calculated interest on the outstanding amount at particular period, interest is debited in the running account of the defendant. Accordingly the entries in October 2015 as interest received has been made.
28CT 1390_Com.O.S.16-2020_Judgment.doc Similarly on 30/4/2017 there is an entry as interest received as Rs.24,523/-. This is even added in the principal amount of Rs.14,24,523/- as appearing in Ex.P.9 in 2017-18. Therefore, upto 30/4/2017 plaintiff appears to have debited the interest due to it from the defendant. Therefore the defendant cannot claim the interest of this period upto 30/4/2017, as towards interest already there is a debit in the ledger report. Interest if any on the outstanding can be calculated only from 30/4/2017. Therefore, the calculation of interest made by the plaintiff in the present suit is without any basis and without any details and on what amount the interest is claimed itself is not clear. Therefore the plaintiff is not entitle for interest of Rs.31,34,456/- as claimed.
27. Apart from this, interest claimed is 36%. Upto filing of the suit and subsequently the plaintiff has claimed interest of 36%. Absolutely no material are produced to show that 36% interest is prevailing in any commercial transaction at a particular time. PW.1 in the cross examination has stated that at the time of this transaction normal interest of the bank was 24%. Even for that PW.1 has not produced document. Even if the evidence of PW.1 is accepted, then, plaintiff would be totally unjustified in claiming interest of 36% only on the ground that in the invoice, interest rate is printed as 36%. There is no any separate agreement entered between the parties for payment of interest. If 36% interest is accepted the amount would be doubled within 3 years which is not seen in recent past. Therefore interest of 36% claimed 29 CT 1390_Com.O.S.16-2020_Judgment.doc by the plaintiff is totally exorbitant. By considering reasonable interest prevailing in commercial transaction, it would be proper to award interest of 12% per annum to the plaintiff till the date of suit. Outstanding amount is calculated as Rs.14,24,523/-, out of which Rs.5,32,841/- has been deducted as given set off for the claim of the defendant. Balance amount of Rs.8,91,682/- is to be paid by the defendant to the plaintiff with interest of 12% per annum. Since in Ex.P.9 ledger statement of the year 2017-18 the interest of Rs.24,523/- is already debited to the account of the defendant and is already part of suit claim amount of Rs.14,24,523/-, plaintiff would be entitle for interest of 12% per annum on the amount of Rs.8,91,682/- from 30/4/2017 till date of filing of the suit on 3/1/2020.
28. For all these reasons, as against the claim of plaintiff for Rs.45,59,000/- in the suit, plaintiff is entitle for Rs,8,91,682/- with interest @12% per annum from 30/4/2017 till 3/1/2020. The plaintiff has calculated future interest @36% per annum. By considering the interest prevailing it is proper to award interest @9% per annum on the entire amount of Rs.8,91,682/- plus interest calculated @12% per annum from 30/4/2017 till 3/1/2020. This interest of 9% is payable by the defendant on this entire amount from the date of suit till realization of the entire amount. Since, defendant No.1 is the Company and Other defendants are its Directors etc., and as there is no personal 30 CT 1390_Com.O.S.16-2020_Judgment.doc allegations against defendant No. 2 to 4, liability to pay the amount would be on defendant No.1.
29. In the course of arguments the learned counsel for the defendant has raised issue of limitation. As rightly contended by the plaintiff, the issue of limitation was not raised in the written statement. However in view of Section 3 of Indian Limitation Act, suit instituted after prescribed period shall be dismissed, although limitation has not been set up as a defence. Therefore though the defendant has not raised this issue of limitation in the written statement, still if the suit is barred by limitation the court cannot grant the relief. Therefore, issue of limitation which is raised in the course of arguments can also be considered by the court. The basis for the contention of the defendant about limitation is that the suit is based on invoice and the invoice is dated 1/12/2015 and 15/12/2015 and all these invoices at Ex.P.4 to Ex.P.8 which are of December 2015 are more than 3 years old and therefore the suit filed for recovery of the amount due on the invoice after the period of 3 years is barred the limitation. Present suit is filed on 3/1/2020. As appearing in Ex.P.4 to Ex.P.8, these invoices are dated 1/12/2015, 13/12/2015 and 15/12/2015. The learned counsel for the defendant has submitted that as per Article 15 of Limitation Act, for the price of goods sold, within 3 years from the date fixed, the claim is to be made. It is argued that even if any credit period of 30 days is added, suit for recovery of invoice amount was to be filed within 3 years and 30 days. As per 31 CT 1390_Com.O.S.16-2020_Judgment.doc Article 14, if no time is fixed, within 3 years from date of delivery suit is to be filed. Therefore it is contended that the suit ought to have been filed by December 2018 and the suit filed on 3/1/2020 is clearly barred by limitation.
30. For the discussion made above, though the plaintiff contended at some place that the suit is for balance of the invoice amount, suit is one for recovery of the amount due in the running account of the defendant maintained by the plaintiff. Though PW.1 in the cross examination stated that there are no document to show that the statement of account were sent to the defendant every year etc, the ledger account produced by the defendant itself show the outstanding balance. Even otherwise, 5 invoices mentioned in the plaint are totally for rupees more than Rs.14,24,523/-. Therefore the claim is not for recovery of entire invoice amount of Rs.20,24,523/-. According to the plaintiff, some amount has been paid and there is outstanding balance. On which date such payment are made is not stated by the plaintiff. The suit is not one for recovery of entire invoice amount, but it is only part of the invoice amount by stating that part payment is already made. As per Section 19 of limitation Act, where payment of an amount of debt is made before expiration of prescribed period by the person liable to pay, period of limitation shall be computed from the date of such payemnt. Therefore when the amount is outstanding to the plaintiff, it can be considered as a debt and when the same is partly paid, from the date of such part payment there 32 CT 1390_Com.O.S.16-2020_Judgment.doc would be an extension of limitation. The account statement produced by both the parties clearly show that there are some payment made in 2017. From the date of this last payment, suit filed on 3/1/2020 is well within the period of limitation. As such the contention of the defendant that the suit is barred by limitation cannot be accepted. Hence, there is no bar to decree the suit. For all these reasons issues No.1 to 4 are answered accordingly.
31. ISSUE No.5 : For the discussion made on above issues, following order is passed:
ORDER Suit of the plaintiff is partly decreed with proportionate costs.
The defendant No.1 is liable and is directed to pay Rs.8,91,682/- to the plaintiff with interest @12%per annum from 30/4/2017 till 3/1/2020.
On the total amount so arrived by including interest upto 3/1/2020, the plaintiff is entitle for interest @9% per annum from the date of suit till realization of the entire amount.
Draw decree accordingly.
[Dictated to the Judgment Writer, transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 6th day of July 2022] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.33
CT 1390_Com.O.S.16-2020_Judgment.doc ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW.1 V. Vijaykumar
2. List of witnesses examined on behalf of Defendants:
DW.1 Adiaman
3. List of documents marked on behalf of Plaintiff:
Ex.P.1 : Copy of incorporation certificate. Ex.P.2 : Board Resolution. Ex.P.3 : Authorization letter. Ex.P.4 to 8 : Five invoices. Ex.P.9 : Copy of ledger statement Ex.P.10to 15: 6 cheques Ex.P.16to 18: 3 cheques.
Ex.P.19 : Copy of legal notice.
Ex.P.20 : Postal receipts.
Ex.P.21to 25: 5 postal acknowledgements.
4. List of documents marked on behalf of Defendant:
Ex.D.1 : Printout of email
Ex.D.2 : Authorization letter
Ex.D.3 : Printout of email dt.2.2.2016
Ex.D.4 : Office copy of letter dt.3/3/2018.
Ex.D.5 : Copy of ledger account from 1/4/2017
to 31/3/2018.
Ex.D.6 : Copy of ledger account from 1/4/2018
to 31/3/2019.
Ex.D.7 : Certificate U/S.65B of Indian Evidence Act
Ex.D.8 : Screen shot of email dt.2/2/2016.
Ex.D.9 : Screen shot of email dt.18/1/2016.
Ex.D.10 : Screen shot of email dt.25/2/2016
Ex.D.11 : Customer sample analysis report.
Ex.D.12 : Laminate analysis report.
Ex.D.13 : Certificate U/S.65B of the Indian Evidence
Act regard to Ex.D.8 to 12 & 13.
[Ravindra Hegde]
LXXXIII Additional City Civil Judge.
BENGALURU.
***
Digitally signed
by RAVINDRA
RAVINDRA SANTHARAMA
SANTHARAMA HEGDE
HEGDE Date: 2022.07.06
08:11:50 -0400