Delhi District Court
Bindal Smelting Pvt. Ltd. Thr. Its Ar. ... vs Power And Energy Systems Thr Its ... on 29 January, 2024
IN THE COURT OF Dr. KAMINI LAU: DISTRICT JUDGE
(COMMERCIAL COURT)02, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
CS (COMM.) No. 616/2022
CNR No. DLCT010031472022
M/s. Bindal Smelting Pvt. Ltd.
Through its AR Ms. Komal Gupta
At 987, 1st Floor, Hardhian Singh Road,
Karol Bagh, Delhi110015
......Plaintiff
Versus
1. M/s. Power & Energy Systems
Through its Partners
2. Smt. Munni Devi Chauhan (Partner)
3. Sh. Akshay Chauhan (Partner)
All at Khasra No. 124, Raipur Industrial Area,
Bhagwanpur Roorkee, Haridwar,
Uttrakhand247661
......Defendants
Date of filing of suit: 17.02.2022
Judgment Reserved on: 09.01.2024
Date of Judgment: 29.01.2024
TABLE OF CONTENTS
Sr. No. Title Page No.
1 Brief Facts/ Case of the Plaintiff 23
2 Case of Defendant 36
3 Issues 7
4 Evidence & List of Documents 714
5 Findings & Observations 1427
6 Conclusions/ Relief 28
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors.
CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 1 of 28
Present: Sh. Amit Tewari Advocate for the plaintiff.
None for the defendant.
JUDGMENT:
(1) This is a Civil Suit filed by the plaintiff M/s. Bindal Smelting Private Limited against the defendant M/s. Power & Energy Systems seeking recovery of a sum of Rs.7,33,541/ only from the defendants along with pendentelite and future interest @ 18% per annum.
BRIEF FACTS:
Case of the plaintiff:
(2) The plaintiff M/s. Bindal Smelting Pvt. Ltd. is stated to be a company incorporated under the Companies Act having its registered office in Karol Bagh, Delhi and the defendant M/s.
Power & Energy is also a Partnership concern. The case of the plaintiff is as under: ➢ That the defendant purchased the material such as Lead Ingots & Lead Oxide from the plaintiff between 01.04.2018 to 31.03.2019 and accordingly several bills and invoices were generated.
➢ That after receiving the entire material and after making the last payment on 18.02.2019, the defendants failed to pay the balance payment of Rs.6,46,286/.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 2 of 28 ➢ That the defendants requested the plaintiff for extension of time for payment of balance amount and after considering the situation of the defendants, time was granted to the defendants for payment but despite the same, the defendant failed to fulfill his commitment for making the balance payment of Rs.6,46,286/ along with interest @ 18% per annum from 01.04.2019 and again kept the matter lingered by giving fake assurances.
➢ That the defendants with a view to cheat and defraud the plaintiff, had not handed over the cheques as committed, pertaining to the consolidated amount of principal as well as interest thereupon @18% per annum.
➢ That a Legal Notice for demand dated 11.01.2020 was issued to the defendants which was served upon the defendants.
➢ That the defendants have failed to make the payment of balance amount of Rs.6,46,286/ along with interest @ 18% per annum from 01.04.2019 and hence, the present suit.
Case of the defendant:
(3) Pursuant to the filing of the suit, summons were directed to be issued against the defendants vide order dated 07.03.2022 and later on 17.11.2022 the plaintiff moved an Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors.
CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 3 of 28 application under Order VI Rule 17 CPC for amendment of the plaint which application was allowed by this Court vide order dated 27.04.2023. Fresh summons were directed to be issued to the defendants who have filed their Written Statement on 31.07.2023. The case of the defendants is as under: ➢ That this Court has no Territorial Jurisdiction to entertain, try and decide the present suit of the plaintiff since the factory of the plaintiff is situated at F62 to F 65, UPSIDC Surajpur Industrial Area, Greater Noida, Gautam Buddh Nagar, Uttar Pradesh and the entire manufacturing/ production is being conducted at the said address.
➢ That the office/ factory of the defendant is situated at Khasra No. 124, Raipur Industrial Area, Bhagwanpur, Roorkee, District Haridwar, Uttrakhand and the material was supplied from the factory of the plaintiff to the factory of the defendant i.e. Roorkee to Uttrakhand and the invoices were also raised from Gautam Buddh Nagar.
➢ That no dealing was finalized at Karol Bagh nor the defendant ever visited the so called office of the plaintiff at Karol Bagh and hence, the suit of the plaintiff is liable to be dismissed in term of provisions of Section 20 (a), (b) and (c) CPC because neither the defendant is residing or carrying his business nor a single cause of action arose within the territorial jurisdiction of this Court.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 4 of 28 ➢ That the plaintiff has concealed the material facts and mislead the Court since the plaintiff has already settled the total amount amicably and nothing is due to be paid by the defendant.
➢ That the plaint has not been verified as per the provisions of Commercial Courts Act and the plaintiff has not filed the proper court fee while filing the suit. ➢ That the defendant has cleared the entire payment of the invoices/ bills in question and nothing is due to be paid by the defendant nor they have committed for any cheque as mentioned by the plaintiff.
➢ That no cause of action was ever in existence because the total payment has been settled in the month of February 2019 i.e. on 18.02.2019 and nothing was due to be paid.
➢ That the interest claimed by the plaintiff is baseless as there is no such agreement for 18% interest as claimed by the plaintiff.
➢ That the defendants never received any legal notice from the plaintiff.
➢ That the material sent by the plaintiff vide Bill/ Invoice No. BSPL 450 dated 12.08.2018 was totally sub standard and after having checked the material, the defendant called the representative of the plaintiff who checked the material and found the same substandard. ➢ That on the basis of oral compromise/ settlement between the parties, the defendant issued a Debit Note Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 5 of 28 dated 22.09.2018 since according to the plaintiff it will costs much to take the material back and hence, 50% payment was settled to be paid by the defendant to the plaintiff and for 50% amount it was decided to issue a Debit Note.
➢ That accordingly, the defendant issued a Debit Note dated 22.09.2018 for Rs.6,75,550/ with the consent of the plaintiff and the defendant has made the payment after having deducted the amount of Debit Note and in this way no amount is due to be paid by the defendant. ➢ That after having settled/ deducted the amount of 50% according to Debit Note from Invoice, the payment of balance amount was made by the defendant which was accepted by the plaintiff and the matter was resolved and no dispute was in existence.
➢ That the plaintiff has filed the present suit after a long time with ulterior motive just to extract illegal money from the defendant after having settled the entire account and payment.
➢ That the interest claimed by the plaintiff is baseless as there was no such agreement to charge 18% interest and the calculation of interest has not been sought as per the provisions of amendment in Order VII after Rule 2 i.e. as per amended Rule 2A the details o interest is to be notified as mentioned in Rule 2 A (1) (2) and (3) CPC.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 6 of 28 ➢ That the plaintiff has not filed the previous statement of accounts showing the balance amount of Rs.11,57,580/ shown on 26.04.2018 and has not filed the certificate under Section 65B of Indian Evidence Act.
ISSUES:
(4) The plaintiff has filed its Replication to the written statement filed by the defendant wherein they have reaffirmed what has been earlier stated in the plaint. (5) On the basis of the pleadings of the parties, vide order dated 13.09.2023 this Court has settled the following issues:
Issue No.1: Whether this court has no territorial jurisdiction to try the present suit, as alleged by the defendant in Para 1 (a), (b) & (c) of written statement? (OPD) Issue No.2: Whether the suit of the plaintiff is barred by limitation, as alleged by the defendant in Para 1(h) of written statement? (OPD) Issue No.3: Whether there is no cause of action in favour of the plaintiff to file the present suit, as alleged by the defendant in Para 9 of written statement? (OPD) Issue No.4: Whether the plaintiff is entitled to recovery of the principal amount, as asked for in plaint? (OPP) Issue No.5: In case if issue no. 4 is decided in affirmative, whether the plaintiff is entitled for any interest, as asked for in the plaint? (OPP) Issue No.6: Relief.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 7 of 28 EVIDENCE & LIST OF DOCUMENTS:
(6) Here, I may note that vide order dated 25.09.2023 this Court had appointed a Court Commissioner for recording the evidence of the parties, pursuant to which the Director of the plaintiff company namely Sachin Gupta has examined himself as its sole witness PW1 whereas the defendant company has examined its Accountant Rinkoo Singh as its sole witness as DW1.
(7) Before coming to the testimony of each witness, the documents relied upon them are hereby put in a tabulated form as under:
List of documents:
Sr. Exhibit No. Details of documents Document No. relied upon by Plaintiff's Documents:
1. Ex.PW1/1 Certificate under Section 65B of Sachin Gupta Indian Evidence Act dated (PW1) 21.08.2023
2. Ex.PW1/2 Copy of Tax Invoice (OSR)
3. Ex.PW1/3 Copy of Eway bill (OSR)
4. Ex.PW1/4 True copy of Ledger Account from 01.04.2018 till 12.02.2022
5. Ex.PW1/5 Original Legal Notice dated 22.01.2020
6. Ex.PW1/6 Copy of Tracker's Report
7. Ex.PW1/7 Non Starter Report issued by DLSA Defendant's Documents:
8. Ex.DW1/1 Debit Note dated 22.09.2018 against Rinkoo Singh invoice dated 12.08.2018 for (DW1) Rs.6,75,550/.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 8 of 28
9. Ex.DW1/2 Certificate under Section 65B of Indian Evidence Act.
(8) Now coming to the testimonies of individual witnesses examined by both the parties, which are put in a tabulated form as under:
Sl. Detail of Deposition
No. the Witness
Plaintiff's Evidence:
1. Sachin PW1 Sachin Gupta is the Partner of the plaintiff
Gupta company who in his examinationinchief by way of
(PW1) affidavit Ex.PW1/A has corroborated what has been
earlier stated in the main plaint in toto. He has placed his reliance on the following documents:
1. Certificate under Section 65B of Indian Evidence Act dated 21.08.2023 which is Ex.PW1/1.
2. Copy of Tax Invoice (OSR) which is Ex.PW1/2.
3. Copy of Eway bill (OSR) which is Ex.PW1/3.
4. True copy of Ledger Account from 01.04.2018 till 12.02.2022 which is Ex.PW1/4.
5. Original Legal Notice dated 22.01.2020 which is Ex.PW1/5.
6. Copy of Tracker's Report which is Ex.PW1/6.
7. Non Starter Report issued by DLSA which is Ex.PW1/7.
In his crossexamination on behalf of the defendant, the witness has deposed as under: ➢ That he has filed the Board Resolution dated 08.02.2022 to show that he is the Director of the company.
➢ That so far as he remembers, the business between the plaintiff and the defendant started from the accounting year 20182019 but he does not remember the exact date.
➢ That he does not remember the exact date of first supply and has voluntarily stated that as far as his knowledge is concerned, it would be April 2018.
➢ That he has not filed the bill bearing No. BSPL/63/1819 dated 26.04.2018 for Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 9 of 28 Rs.11,57,580/.
➢ That the used to make the payment through online.
➢ That there was no transaction in cash at all. ➢ That the material was dispatched from their factory situated at F62 to F65, UPSIDC, Surajpur, Greater Noida, District gautam Budh Nagar, Uttar Pradesh.
➢ That they have sent the material to the defendant at their factory situated in Roorkee, Uttrakhand.
➢ That they had told the defendant about the address of their office situated at Karol Bagh, New Delhi.
➢ That it is wrong that they have not told the defendant about their office situated at Karol Bagh, New Delhi and they met the defendant at their New Delhi office only.
➢ That it is wrong that the first meeting with the defendant was held at Greater Noida, District Gautam Budh Nagar, Uttar Pradesh.
➢ That they have filed the bills which are actually in dispute.
➢ That it is wrong that the material supplied by them was substandard.
➢ That it is wrong that a Debit Note dated 22.09.2018 for Rs.6,75,550/ was raised by the defendant in lieu of substandard material supplied by them.
➢ That the plaint was not signed by him and it was signed by the AR of the company.
➢ That he has carefully read the contents of the suit filed by the plaintiff.
➢ That there was no agreement in written with regard to the 18% interest to be charged for pending delayed payment (Witness has voluntarily explained that the clause for interest is mentioned in their invoice). ➢ That they have sent a legal notice to the defendant through Sh. Amit Tewari Advocate. ➢ That the payment was received by the plaintiff in their bank which is situated in Karol Bagh, Delhi.
➢ That it is wrong that the defendant had cleared/ made the entire payment of plaintiff and Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 10 of 28 nothing is due to be paid.
➢ That it is wrong that the matter was amicably settled between the parties during the meeting held with the management of plaintiff and defendant.
➢ That it is wrong that there was an oral compromise/ settlement according to which the plaintiff has compromised for taking 50% material back.
Defendant's evidence:
2. Rinkoo DW1 Rinkoo Singh is the Accountant of the defendant Singh company who in his examinationinchief by way of (DW1) affidavit Ex.DW1/A has corroborated what has been earlier stated in the written statement in toto. He has placed his reliance on the following documents:
1. Debit Note dated 22.09.2018 against invoice dated 12.08.2018 for Rs.6,75,550/ which is Ex.DW1/1.
2. Certificate under Section 65B of Indian Evidence Act which is Ex.DW1/2.
In his crossexamination by the Ld. Counsel for plaintiff, the witness has deposed as under: ➢ That all the contents of affidavit have been explained to him in his vernacular language i.e. Hindi by his counsel.
➢ That he was the Accountant of the defendant firm and last salary which he drawn from the defendant firm was Rs.28,000/ per month which was credited to his bank account. ➢ That he attended the office of the defendant firm at their Factory Unit situated at Khasra No. 124, Raipur Industrial Area, Bhagwanpur. Roorkee, Uttrakhand247661.
➢ That the defendant firm was created in February 2018 and was in the job of Accountant from day one.
➢ That on paper this company is still working and he is continuing in the said job but now he is not drawing any salary.
➢ That lastly he received the salary of Rs.28,000/ in March, 2020.
➢ That the defendant firm is a Partnership firm since its starting and at the time when the defendant firm was in business transactions Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 11 of 28 with the plaintiff company, the partners of the defendant firm were Smt. Munni Chauhan and Firz Khan.
➢ That since February 2018 till February 2019 the above Partners run the defendant firm. ➢ That earlier the defendant firm was the Proprietorship concern under the proprietorship of Smt. Munni Chauhan. ➢ That Sh. J.P. Chauhan who is the husband of Smt. Munni Chauhan used to take the decision of business on behalf of the defendant firm. ➢ That at the time of transactions between the parties, they were using the email [email protected].
➢ That he used to look after the accounting work and admin work to help his employer.
➢ That immediately when they receive the material at their factory, the store/ purchase department receive the material and immediately within a day or two the quality control department team check the material and give their report regarding the quality of the material.
➢ That he is not aware about the quality parameters but at the time quality control department confirmed that the material was not upto the quality control parameters.
➢ That he has not filed any document which shows the entry or exit of the material. ➢ That he cannot tell the exact date of knowledge of report of substandard material by the quality control department.
➢ That they informed the plaintiff company immediately after having the knowledge of sub standard material sent by the plaintiff company.
➢ That the plaintiff might be informed through telephone by Firoz Khan.
➢ That he is not aware whether the plaintiff agreed to the substandard of material or not. ➢ That Firoz Khan never informed him to whom he communicated about the substandard material (witness has voluntarily stated that Firoz Khan used to talk to some Sunil).
➢ That he was never concerned or connected with any of the plaintiff or their employee in respect Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 12 of 28 of business transactions.
➢ That he is having complete knowledge in respect of GST returns of the defendant firm as he used to provide the entire data to the Chartered Accounts for filing the GST Returns. ➢ That the defendant accepted the invoice Ex.PW1/2 but he cannot say whether they have availed the ITC (input Tax Credit) of Rs.2,06,100/ or not.
➢ That they never reversed any ITC to the GST Department.
➢ That he cannot tell how may Debit Notes were generated by the defendant firm in financial year 20182019.
➢ That they never forwarded this debit note to the plaintiff.
➢ That it is not in his knowledge that what are the quality standards which are required by the defendant firm to pass the material. ➢ That the quality department never informed about the quality parameters of the material of the plaintiff company (witness has voluntarily stated that he does not remember about the same exactly).
➢ That on the debit note Ex.DW1/1, no specific quality control parameters are mentioned due to which the material of the plaintiff was rejected.
➢ That he does not remember how many debit notes were issued prior to and after this debit note.
➢ That no acknowledgement was ever obtained upon the debit note or anywhere else, which shows that they have informed about the issuance/ preparation of the alleged debit note Ex.DW1/1.
➢ That he cannot say whether any lab test was performed before declaring the material of the plaintiff company as substandard.
➢ That they have not filed any lab test report or any other certificate duly issued by specialized technician in which it was mentioned that the material was substandard.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 13 of 28 ➢ That they have not informed the GST department or any other authority in respect of substandard material of the plaintiff company.
➢ That Balance Sheet was duly prepared in their firm and Audit was also conducted annually. ➢ That he does not remember how this figure of Rs.6,75,550/ was deducted and in which head it was settled.
➢ That the Auditor who conducted the Audit in the financial year 2018 till date is Sh. Devrat Rana.
➢ That he does not remember the amount of total turnover of defendant in respect of sales and purchase.
➢ That the difference of distance between the defendant factory at Roorkee and Greater Noida is approximately 160 to 170 KM.
➢ That he cannot tell as to what are the charges per Kg for transportation of material from Roorkee to Greater Noida.
➢ That it is wrong that the document Ex.DW1/1 is forged and fabricated.
➢ That it is wrong that the defendant firm had fraudulently grabbed the haredearned money of the plaintiff company.
FINDINGS AND OBSERVATIONS:
(9) I have heard the arguments advanced before me by the Ld. Counsel for the plaintiff and considered the oral arguments along with written memorandum of arguments filed on behalf of the plaintiff. My findings on the various issues are as under:
Issue No.1: Whether this court has no territorial jurisdiction to try the present suit, as alleged by the defendant in Para 1 (a), (b) & (c) of written statement? (OPD) Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 14 of 28 (10) Onus of proving the above issue was upon the defendant M/s. Power & Energy Systems who in its written statement has raised a preliminary objection that this Court has no Territorial Jurisdiction to entertain, try and decide the present suit of the plaintiff since the factory of the plaintiff is situated at F62 to F65, UPSIDC Surajpur Industrial Area, Greater Noida, Gautam Buddh Nagar, Uttar Pradesh and the entire manufacturing/ production is being conducted at the said address.
It is also the case of the defendant that the office/ factory of the defendant is situated at Khasra No. 124, Raipur Industrial Area, Bhagwanpur, Roorkee, District Haridwar, Uttrakhand and the material was supplied from the factory of the plaintiff to the factory of the defendant i.e. Roorkee to Uttrakhand and the invoices were also raised from Gautam Buddh Nagar. According to the defendant, not even a single dealing was finalized at Karol Bagh and the defendant never visited the office of the plaintiff at Karol Bagh and hence, the suit of the plaintiff is liable to be dismissed in term of provisions of Section 20 (a), (b) and (c) CPC because neither the defendant is residing or carrying his business nor a single cause of action arose within the territorial jurisdiction of this Court.
(11) On the other hand, the case of the plaintiff is that the dealings between the parties were finalized at the office of the plaintiff situated at Karol Bagh, Delhi from where the plaintiff is operating its work in Delhi.
(12) I have considered the rival contentions and the testimonies of the witnesses examined by the parties. I may Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 15 of 28 observe that the witness of the plaintiff namely Sachin Gupta (PW1) has in his crossexamination stated that the material was dispatched from their factory situated at F62 to F65, UPSIDC, Surajpur, Greater Noida, District Gautam Budh Nagar, Uttar Pradesh to the factory of the defendant situated at Roorkee, Uttrakhand. However, the witness of the plaintiff has specifically denied that the first meeting was held in District Gautam Budh Nagar and has deposed that they met the defendant at their New Delhi office only. A perusal of the Invoice Ex.PW1/2 would reveal that the Head Office of the plaintiff firm is situated at 987, 1st Floor, Hardhyan Singh Road, Naiwala, Karol Bagh, Delhi110005 to which there is no rebuttal. It is further evident from the crossexamination of Sachin Gupta (PW1) that the payment was received by the plaintiff in its bank which is situated at Karol Bagh, Delhi, which aspect has not been disputed by the defendant. Therefore, the Head Office of the plaintiff being situated at Karol Bagh, New Delhi and the payments having been received in account of the plaintiff at Karol Bagh, New Delhi which falls within the jurisdiction of this Court, I hereby hold that this Court has the Territorial Jurisdiction to entertain the present suit. (13) Issue is accordingly decided in favour of the plaintiff and against the defendant.
Issue No.2: Whether the suit of the plaintiff is barred by limitation, as alleged by the defendant in Para 1(h) of written statement? (OPD) Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 16 of 28 (14) Onus of proving the above issue was upon the defendant who in its written statement has raised a preliminary objection that the case/ claim of the plaintiff is time barred. (15) In this regard, I may note that the defendant has not explained how the case of the plaintiff is barred by limitation. Further, a perusal of the record shows that the last invoice raised by the plaintiff was on 12.08.2018 which is Ex.PW1/2 and as per the Ledger Account Ex.PW1/4 the defendant made the last payment of Rs.20,00,000/ to the plaintiff on 18.02.2019. Therefore, the limitation for filing the suit commenced on 19.02.2019 and ended on 18.02.2022. It is also evident from the record that during this intervening period, the plaintiff had moved an application for PreInstitution Mediation on 29.08.2020 and the Non Starter Report was issued on 23.12.2021, which period is liable to be excluded while calculating the limitation. Therefore, I hold that the present suit having been filed on 17.07.2022, is within the period of limitation.
(16) Issue is accordingly decided in favour of the plaintiff and against the defendant.
Issue No.3: Whether there is no cause of action in favour of the plaintiff to file the present suit, as alleged by the defendant in Para 9 of written statement?
(OPD) Issue No.4: Whether the plaintiff is entitled to recovery of the principal amount, as asked for in plaint? (OPP) Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 17 of 28 Issue No.5: In case if issue no. 4 is decided in affirmative, whether the plaintiff is entitled for any interest, as asked for in the plaint? (OPP) (17) All the above issues are clubbed together for sake of convenience involving common discussion. Onus of proving the Issue No.3 was upon the defendant and that of the Issues No.4 and 5 upon the plaintiff.
(18) The case of the plaintiff M/s. Bindal Smelting Pvt. Ltd. is that the defendant M/s. Power & Energy Systems had purchased the material such as Lead Ingots & Lead Oxide from the plaintiff between 01.04.2018 to 31.03.2019 and accordingly several bills and invoices were generated. According to the plaintiff, after receiving the entire material and after making the last payment on 18.02.2019, the defendants failed to pay the balance payment of Rs.6,46,286/. It is also the case of the plaintiff that the defendants requested the plaintiff for extension of time for payment of balance amount and after considering the situation of the defendants, time was granted to the defendants for payment but despite the same, the defendant failed to fulfill his commitment for making the balance payment of Rs.6,46,286/ along with interest @ 18% per annum from 01.04.2019 and again kept the matter lingered by giving fake assurances. According to the plaintiff, the defendant is liable to make the payment of balance amount of Rs.6,46,286/ along with interest @ 18% per annum from 01.04.2019 which they have not paid despite service of legal notice.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 18 of 28 (19) On the other hand, the case of the defendant is that the defendant has cleared the entire payment of the invoices/ bills in question and nothing is due to be paid by the defendant and no cause of action ever existed. According to the defendant, the material sent by the plaintiff vide Bill/ Invoice No. BSPL 450 dated 12.08.2018 was totally substandard and after having checked the material, the defendant called the representative of the plaintiff who checked the material and found the same sub standard after which on the basis of oral compromise/ settlement between the parties, the defendant issued a Debit Note dated 22.09.2018 since according to the plaintiff it will cost much to take the material back and hence, 50% payment was settled to be paid by the defendant to the plaintiff and for 50% amount it was decided to issue a Debit Note. The case of the defendant is that accordingly a Debit Note dated 22.09.2018 for Rs.6,75,550/ was issued with the consent of the plaintiff and the defendant has made the payment after having deducted the amount of Debit Note and in this way no amount is due to be paid by the defendant. According to the defendant, after having settled/ deducted the amount of 50% according to Debit Note from Invoice, the payment of balance amount was made by the defendant which was accepted by the plaintiff and the matter was resolved and no dispute was in existence. (20) In order to prove his case the Director of the plaintiff company namely Sachin Gupta has examined himself as its sole witness PW1 whereas the defendant company has examined its Accountant Rinkoo Singh as its sole witness as DW1.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 19 of 28 (21) I have gone through the records of the case and the testimonies of the witnesses examined by the parties. At the very Outset, I may observe that the plaintiff has filed the present suit against the defendants for recovery of Rs.7,33,541/ along with pendentelite and future interest on the ground that the defendant had purchased goods from the plaintiff. Reference is made to the provisions of Section 2 (1) (c) of Commercial Courts Act, 2015 which read as under:
(c) "commercial dispute" means a dispute arising out of
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 20 of 28 (xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and reinsurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
(22) The provisions of Section 2 (1) (c) of Commercial Courts Act as above are very much clear. Sale of goods are governed by Sale of Goods Act, they pertain to movable properties, any dispute of sale or agreement to sale of goods of specified value do come within the jurisdiction of Commercial Courts Act. The clause also includes the services and guarantee given for the goods sold. The service or guarantee may be oral or written. Therefore, the facts as alleged in the plaint fall under commercial dispute.
(23) Secondly, with regard to the Pecuniary Jurisdiction to adjudicate the matter which is in dispute, reliance is placed upon the provisions of Section 3 of Commercial Courts Act, 2015 which provides that:
Section 3: Constitution of Commercial Courts:
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 21 of 28 jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] (24) Admittedly, the Commercial Court Act was amended on 03.05.2018 and by virtue of the amendment and by virtue of the notification, the pecuniary value of the Commercial Courts Act shall not be less than Rs.3,00,000/. In the present case, the claim amount which shown in the plaint is of Rs.7,33,541/ and hence, this court has the pecuniary jurisdiction to adjudicate upon the issues in dispute.
(25) Thirdly, a perusal of the record shows that before filing the present suit, the preinstitution mediation proceedings were initiated by the plaintiff on 29.08.2020. The NonStarter Report dated 23.12.2021 shows that notice was issued to the defendant for 09.10.2020 and 10.11.2020. As per the Non Starter Report, the notices were undelivered as a result of which the Non Starter Report was issued. (26) Fourthly, in so far as the business relations between the parties is concerned, the same has been duly admitted. The defendant has duly admitted having received the goods from the plaintiff and has only denied that there was an outstanding Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors.
CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 22 of 28 balance of Rs.6,46,286/. The case of the defendant is that the goods supplied by the plaintiff were of substandard quality as a result of which the defendant firm had issued a Debit Note dated 22.09.2018 for Rs.6,75,550/ with the consent of the plaintiff and the defendant has made the payment after having deducted the amount of Debit Note and hence, no amount is due to be paid by the defendant.
(27) Fifthly, the witness of the plaintiff namely Sachin Gupta (PW1) has placed his reliance upon the certificate under Section 65B of Indian Evidence Act dated 21.08.2023 which is Ex.PW1/1; Copy of Tax Invoice (OSR) which is Ex.PW1/2; Copy of Eway bill (OSR) which is Ex.PW1/3; True copy of Ledger Account from 01.04.2018 till 12.02.2022 which is Ex.PW1/4; Original Legal Notice dated 22.01.2020 which is Ex.PW1/5; Copy of Tracker's Report which is Ex.PW1/6 and Non Starter Report issued by DLSA which is Ex.PW1/7. He has been crossexamined at length by the Ld. Counsel for the defendant during which he has specifically denied that the plaintiff company had sent the substandard material to the defendant or that the defendant company has issued any Debit Note dated 22.09.2018 for Rs.6,75,550/ in lieu of substandard material.
(28) Sixthly, in order to prove the aspect that the plaintiff had sent the substandard material, the witness of the defendant namely Rinkoo Singh (DW1) has placed his reliance upon the Debit Note Ex.DW1/1 and the certificate under Section 65B of Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 23 of 28 Indian Evidence Act which is Ex.DW1/2. However, when crossexamined by the Ld. Counsel for the plaintiff, the witness of the defendant has testified that they never forwarded this Debit Note to the plaintiff nor there is any document to show that they have informed the plaintiff about the issuance of this Debit Note. The relevant portion of the crossexamination of Rinkoo Singh (DW1) is reproduced as under:
"..... 24. I cannot tell the exact date of knowledge of report of substandard material by the quality control department.
25. We informed the plaintiff company immediately after having the knowledge of substandard of the material sent by the plaintiff company.
26. The plaintiff might be informed through telephone by Mr. Firoz Khan.
27. I do not know whether plaintiff agreed to the sub standard of material or not.
28. No, Mr. Firoz Khan never informed me that to whom he communicated about the substandard of material (Vol. He used to talk to some Mr. Sunil).
29. I was never concerned or connected with any of the plaintiff or their employee in respect of business transactions.
30. Yes, I am having complete knowledge in respect of GST returns of the defendant firm as I used to provide the entire data to Chartered Accountant for filing of GST returns.
31. Document Ex.PW1/2 was shown to DW1. Yes we accepted this invoice but I cannot say whether we have availed the ITC (input Tax Credit) of Rs.2,06,100/ or not.
32. No, we never reversed any ITC to the GST Department.
33. I cannot say how many debit notes were generated by the defendant firm in financial year 20182019.
34. No, we never forwarded this debit note to the plaintiff.
35. It is not in m knowledge that what are the quality standards which are required by the defendant firm to pass the material.
36. That quality department never informed about the quality parameters of the material of the plaintiff company (vol. I do not remember exact about the same).
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 24 of 28
37. Document Ex.DW1/1 was shown to the witness. It is correct that on this debit note i.e. DW1/1 there is no specific quality control parameters are mentioned due to which the material of the plaintiff was rejected.
38. I don't remember how many debit notes were issued prior to this debit note. I cannot say how many debit notes were issued after this debit note. (Vol. I can tell only after checking my reports).
39. No acknowledgement was ever been obtained upon the debit note or anywhere else, which shows that we have informed about the issuance/ generation of the alleged debit note DW1/1 on account of substandard quality of material.
40. I cannot say that any lab test was performed before declaring the material of the plaintiff company as sub standard.
41. We have not filed any lab test report or any other certificate duly issued by specialized technician in which it was mentioned that the material was substandard.
42. We have not informed the GST department or any other authority in respect of substandard of material of the plaintiff company.
43. Yes. Balance sheet was duly prepared in our defendant firm and Audit was also conducted annually.
44. I do not remember that how this figure of Rs.6,75,550/ was deducted and in which head it was settled.....".
(29) It is writ large from the above that only a vague defence has been raised by the defendant substandard material was supplied to them. Even the alleged Debit Note Ex.DW1/1 is a self created document by the defendant which was never forwarded to the plaintiff. There is no document on record to show that the plaintiff was given any information by the defendant with regard to the supply being substandard. The witness of the defendant claimant that Mr. Firoz Khan (Partner of the defendant) might have informed the plaintiff about the same through telephone but the Firoz Khan has not been examined Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 25 of 28 before this Court to prove the said aspect. Even the witness of the defendant has not been able to provide the quality parameters of the goods. It is also an admitted case of the defendant that no test report has been filed nor any other certificate issued by any specialized technician has been placed on record nor they have informed the GST department or any other authority in respect of substandard material sent by the plaintiff. (30) Seventhly, it is also evident from the cross examination of Rinkoo Singh (DW1) that presently the defendant company is running on papers only. According to him, he had received the last salary of Rs.28,000/ in March 2020 and is still continuing in the said job but he is not drawing any salary the defendant firm. I also note that the defendant has not placed on record any document in the form of letter, email etc. to show that they had communicated the plaintiff about the substandard quality of goods. Had there been any supply of goods of sub standard quality, I am sure the defendant would have sent a communication to the plaintiff with regard to return of goods which is not the case. Only a vague and non specific defence has been raised by the defendant which they have not been able to establish. The possibility of the defendant company having closed its business cannot be ruled out. (31) Eighthly, I may note that despite having claimed that there was a settlement between the parties with regard to the sub standard material, after which the defendant made the payment of settled amount, the defendant has not placed on record any document showing the various payments made by it to the Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 26 of 28 plaintiff. Neither any Statement of Account nor any Ledger Account has been placed on record by the defendant in support of its case, for which an adverse inference is drawn against the defendant.
(32) Ninethly, the witness of the plaintiff Sachin Gupta (PW1) has proved the ledger account w.e.f. 01.04.2018 to 12.02.2022 which is Ex.PW1/4 showing the closing balance of Rs.6,46,286/, which the defendant has not been able to rebut. No question was put to the witness of the plaintiff with regard to the ledger account. The defendant having admitted the Tax Invoice raised by the plaintiff which is Ex.PW1/2 and having failed to establish the defence putforth, I hereby hold that the plaintiff is entitled to the recovery of principal amount of Rs.6,46,286/ from the defendant.
(33) Lastly, in so far as the Interest on the principal amount is concerned, the plaintiff is claiming an interest @ 18% per annum. In this regard, I may observe that there is no written agreement between the parties with regard to the interest. Even otherwise, in my considered view the rate of interest of 18% is excessive and hence, in the interest of justice, the plaintiff is held entitled to the recovery of principal amount of Rs.6,46,286/ along with interest @ 6% per annum from the date of filing of suit till the date of realization of the same. The plaintiff is also held entitled to the costs of the suit. (34) All the issues are accordingly decided in favour of the plaintiff and against the defendants.
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors. CS (Comm) No. 616/2022, Judgment dated 29.01.2024 Page No. 27 of 28 CONCLUSIONS & RELIEF:
(35) In view of my findings on the various issues, I hereby hold that the plaintiff is entitled to following reliefs:
A) That the plaintiff is entitled to recovery of principal amount of Rs.6,46,286/ from the defendant. B) That the plaintiff is entitled to the recovery of principal amount of Rs.6,46,286/ along with Simple Interest @ 6% per annum from the date of filing of the suit till realization.
C) That the plaintiff shall also be entitled to the Costs of the Suit.
(36) Suit of the plaintiff is accordingly Decreed. Decree Sheet be prepared accordingly.
(37) File be consigned to Record Room.
Announced in the open court (Dr. KAMINI LAU)
Dated: 29.01.2024 District Judge (Commercial Court)02,
Central, Tis Hazari Courts, Delhi
Bindal Smelting Pvt. Ltd. Vs. Power & Energy System & Ors.
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