Bangalore District Court
Humming Bird Travel & Stay Pvt. Ltd vs Elite Service Apartments Pvt. Ltd on 23 March, 2020
O.S.No.8661/2015
1
IN THE COURT OF LXVII ADDL CITY CIVIL AND
SESSIONS JUDGE; BENGALURU CITY (CCH.No.68)
PRESENT
SRI.K.SUBRAMANYA, B.Com., LL.M.
LXVII ADDL CITY CIVIL & SESSIONS JUDGE ,
BENGALURU.
Dated this the 23 rd day of March 2020.
O.S.No.8661/2015
PLAINTIFF : Humming Bird Travel & Stay Pvt. Ltd.,
A Company incorporated under the
Companies Act, 2013, and having its
Registered Office at No.122,
Amarjyothi Layout,
Domlur, Bengaluru.
Rep. by its Managing Director,
Mr.P.B.Thimmayya.
(By Sri.K.S.D., Advocate)
.Vs.
DEFENDANTS : 1. Elite Service Apartments Pvt. Ltd.,
A company incorporated under the
Companies Act, 2013, and having its
Registered Office at No.17,
Marigold House, 3rd Main,
Opp. Lela Palace East Gate,
HAL 2nd Stage, Kodihalli,
Old Airport Road,
Bengaluru.
Rep. by its Managing Director,
Ms.Manorama Srinivasan.
(By Sri.K.S.H., Advocate)
O.S.No.8661/2015
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2. Manipal Global Education Services
Private Limited,
A Company incorporated under the
Companies Act, 2013 and having its
Registered Office at: Century Towers,
No.14, Old Airport Road,
Bengaluru.
Also having an office at :
No.4, Millers Tank Bund Road,
Vasanthanagar, Bengaluru.
(By Sri.L.L.P., Advocate)
Date of institution of suit : 13.10.2015
Nature of Suit : Recovery of Money
Date of commencement of 01.03.2017
evidence :
Date on which the judgment 23.03.2020
is pronounced:
Duration taken for disposal : Year/s Month/s Day/s
04 05 10
(K.SUBRAMANYA)
LXVII Addl.City Civil and Sessions Judge,
BENGALURU.
J UD GM E N T
The plaintiff has filed this suit under Order VII Rule 1
r/w. Section 34 of CPC, praying the court to direct the
O.S.No.8661/2015
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defendant Nos.1 and 2 to jointly and severally to pay a sum
of Rs.7,21,320/- together with interest at the rate of 18%
per annum, from the date of suit till realization and also
costs of the suit.
2. The plaint averments in brief:
The plaintiff is a company engaged in providing and
dealing with stay related services for corporate companies
and it is represented by its Managing Director.
The defendant No.1 is engaged inter-alia in the business
of providing accommodation and hospitality services and
operates and runs establishments for providing such
services.
The plaintiff had identified the property of defendant
No.1 named Elite Galaxy, located at No.261, Galaxy
Heights, Marunje Road, Dhawale Vasti, Hinjewadi Phase II,
Pune. The plaintiff and defendant No.1 discussed and had
finalized certain understandings with the defendant No.1,
where-under the plaintiff would avail accommodation and
infrastructure facilities at the aforesaid property. The
defendant No.2 is an organization involved in education,
had approached the plaintiff to avail accommodation and
conference facility services at Pune. Upon the mutual
discussion and deliberations, the plaintiff, in terms of a
letter, dated:29.10.2013 submitted to the defendant No.2
its final offer for providing accommodation and conference
O.S.No.8661/2015
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facility services at the premises at Pune to the defendant
No.2. The final offer had set out the facilities and services
that would be provided by the plaintiff and also the billing
terms. The defendant No.2 had accepted the plaintiff's
offer and consequently raised a purchase order,
dated:31.10.2013 on the plaintiff. While the original
understanding between the plaintiff and defendant N.2 was
that the understandings would be valid for a period of
about 2 to 3 years, it was interalia agreed that the original
contract between the plaintiff and the defendant No.2
would be for a period of one year commencing from
18.11.2013. In terms of the said purchase order, the
defendant No.2 had paid a sum of Rs.24,65,280/- being the
rentals for three months, upfront, which was to be held by
the plaintiff in deposit and has to be set off against the
rentals payable for the last four months of the contract
period. The final offer made on 29.10.20913 and the
purchase order, dated:31.10.2013 are evidenced.
The plaintiff has also formalized the understanding with
the defendant No.1 to avail accommodation and
infrastructure facilities to the premises. The plaintiff had
entered into a Property Participation Agreement with the
defendant No.1 on 5.11.2013. The defendant No.1 has to
provide accommodation services and other facilities to the
conference hall etc., to such of the customers as are booked
O.S.No.8661/2015
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by the plaintiff. There was an understanding and
agreement between the plaintiff and defendant No.2 and
the defendant No.2 assured to extend the period for one
year. The defendant No.2 has intimated the plaintiff
company not to continue with the services after the expiry
of the agreed contract period and to terminate the same on
the expiry date. The contract was being terminated with
effect from 17.11.2014. The accommodation and other
facility would no longer required by the plaintiff post
17.11.2014. Accordingly, the plaintiff in turn intimated the
defendant No.1 that the contract will not be extended and
that, as per Clause-7 of the agreement, three months
advance notice was issued for termination and adjusting
the last three months payment from the deposits vide E-
mail, dated:8.09.2014. The defendant No.1 had accepted
the termination of contract and replied to the E-mail,
dated:19.09.2014. The plaintiff made E-mail to reconcile
the agreement and check the accounts. The defendant
No.1 had requested for immediate release by acknowledging
the termination of contract vide E-mail, dated:12.09.2014.
There was a mail correspondence between the plaintiff to
Ms.Manorama of the defendant No.1 concern.
Thereafter, the defendant No.2 informed the plaintiff
vide E-mail dated that the defendant No.1 has threatened
to stop supply of food to the clients of the defendant No.2.
O.S.No.8661/2015
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In response, the plaintiff wrote back to the defendants,
explaining how the amounts were adjusted as per the terms
of the contract and also suggesting that the contract be
extended for another year to resolve the issue for defendant
No.2. The defendant No.1 on the same day wrote to the
plaintiff and defendant No.2 threatening to stop the food
supplies to the clients of the defendant, in the event of the
contract not being extended directly with the defendant
No.2. In the alternative, if the contract is not renewed, the
defendant No.1 sought release of Rs.10 lakhs claiming it to
be towards certain infrastructure costs.
The plaintiff wrote a letter dated:23.12.2014 addressed
to the defendant No.2, asking for payment of Rs.5,73,264/-
due and payable by the defendant No.2 to the plaintiff. The
plaintiff has further reiterated that under their contract,
the defendant No.2 was to make all payments to the
plaintiff, and that the plaintiff has not consented for the
defendant No.2 to make any payments to anyone or to the
defendant No.1. In view of the same, the plaintiff had
refused to accept the debit note issued by the defendant
No.2 to the plaintiff against the payment made by the
defendant No.2 to the defendant No.1 and thereby,
returned the cheque and the debit note earlier issued by
the defendant No.2. The defendant No.2 replied to the
plaintiff vide Reply dated:29.12.2014, interalia falsely
O.S.No.8661/2015
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alleging that the threat made by the defendant No.1
resulted in breach of terms of Purchase Order and that the
defendant No.2 was left with no choice, but to make
payment to defendant No.1. The defendant No.2 has
further falsely claimed thereunder that a demand was
raised on the plaintiff towards reimbursement and making
good, cost and expenses incurred by defendant No.2 being
amount of Rs.4,75,000/- vide Debit Note,
dated:19.12.2014. The defendant No.1 had indeed
threatened stoppage of services, however, since the plaintiff
had paid all amounts due to the defendant No.1 and the
last three months amounts were set off against the deposit,
there was no amount due and payable by the plaintiff to
the defendant No.1. Such being the case, the defendant
No.2 could not have unilaterally decided to pay the
amounts to the defendant No.1 only to now claim it from
the plaintiff. In the event of there being an actual breach of
the Purchase Order, the defendant No.2 is entitled to take
appropriate action against the plaintiff. However, the
defendant No.2 did not and could not have decided to pay
the amounts to the defendant No.1 and account the same
to the plaintiff. These amounts were not amounts due and
payable to the defendant No.1 by the plaintiff. As such, the
defendant No.2 cannot take recourse under the General
Terms and Conditions as stated in para No.3 of the Reply,
O.S.No.8661/2015
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dated:29.12.2014. Therefore, the plaintiff has claimed an
amount of Rs.5,74,331/- as per E-mail, dated:17.03.2015
along with interest at the rate of 18% per annum, in all
Rs.7,21,378/-. Hence, this suit for the above said relief.
3. The defendant Nos.1 and 2 have appeared before the
court and have filed their separate written statement.
In the written statement, the defendant No.1 has
contended that the averments made in the plaint is not
true and correct and it may be put to strict proof. The suit
claim of the plaintiff is based on the Purchase Order,
dated:31.10.2013, that was placed on the plaintiff by the
defendant No.2 for providing accommodation and
conference facility to the defendant No.2 on certain terms
and conditions as specified in the Purchase Order and not
under the Property Participation Agreement,
dated:5.11.2013 between the plaintiff and defendant No.1.
The defendant No.1 is not a party to the agreement between
the plaintiff and defendant No.2. Hence, no cause of action
has accrued for seeking the relief of counterclaim by the
plaintiff/defendant No.2 as against the defendant No.1.
According to the plaintiff, a sum of Rs.4,75,000/- that was
paid to the defendant No.1 by the defendant No.2 was
outside the Property Participation Agreement or under the
contract between the plaintiff and defendant No.2. The
O.S.No.8661/2015
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said amount was paid by the defendant No.2 to the
defendant No.1 and not the dues owe by the defendant
No.2 to the plaintiff. The said payment is outside contract
between the parties and the plaintiff is not entitled for
refund or defendant No.2 can claim by way of counter
claim. The defendant No.2 has submitted that the Property
Participation Agreement, dated:5.11.2013 was executed
between the defendant No.1 and plaintiff. It was executed
to promote the market. It provided the facility and service
management bookings, etc., of such terms and conditions
as was agreed. The defendant No.1 is required to provide
accommodation services and other facilities such as use of
conference hall. In view of the agreement, the defendant
No.1 has incurred expenditure approximately Rs.8 lakhs to
Rs.9 lakhs for development of infrastructure required to the
defendant No.2 on the tenanted premises.
The plaintiff persuaded the defendant No.1 to believe
that the said agreement shall be extended for further
period. Therefore, such expenses were made by the
defendant No.1 for infrastructure. The plaintiff has
wrongly stated to the defendant No.1 that all the amount
due were remitted. The defendant has stated that an
amount of Rs.1,03,331/- towards double transaction and
difference in food bills is outstanding. The same is
accepted by the plaintiff in E-mail, dated:14.04.2015. The
O.S.No.8661/2015
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defendant has submitted that due to the termination of the
agreement i.e., prior to mutually assured two years, the
defendant was unable to market the rooms on time and
incurred huge loss. The landlord has forced the defendant
No.1 to dismantle the said conference room on the day and
the defendant No.1 has vacated the premises due to the
pressure from the landlord. It caused loss to the defendant
No.1. The defendant No.1 has received a sum of
Rs.4,75,000/- to meet additional/necessary expenses for
continuing the services to the defendant No.1. The sudden
termination of agreement drained the defendant No.1 cash
reserves which made it impossible for the defendant No.1
to supply the services. It has been informed to the plaintiff
and defendant No.2 through E-mails. Due to financial
constrains, the defendant No.1 is unable to continue with
the service. The defendant No.1 relying on false assurance
regarding extension of the agreement of the plaintiff, agreed
to provide food to the defendant No.1 at a very low cost.
Hence, the said payment of Rs.4,75,000/- was made by the
defendant No.2 to the defendant No.1 so as to ensure the
continuing service. The defendant No.1 has not agreed at
any time for repayment or adjusting of the same in the
payment to be made by the defendant No.2 to the plaintiff.
Hence, sought for dismissal of the suit.
O.S.No.8661/2015
11
4. The defendant No.2 in his written statement has
contending that the plaintiff has filed this suit interalia for
a judgment and decree for recovery of Rs.7,21,320/-. The
defendant No.2 had approached the plaintiff for
accommodation and conference facility. The contract was
12 months period effective from 18.11.2013 to 17.11.2014.
There is no provision for issuing notice of termination of the
contract by either party, though forfeiture is permitted
under the Contract Clause-C. Any extension to the
contract beyond the contract period was subject to mutual
negotiations between the parties. The defendant No.2 prior
to the expiry of the contract period, intimated the plaintiff
vide its E-mail, dated:10.09.2014 of its intention not to
renew the term of contract. The defendant No.2 has
received the E-mail from defendant No.1 represented by
Ms.Manorama, Director and threatened to stop the services
rendered on behalf of the plaintiff. Having communicated
directly, the defendant No.1 demanded a sum of
Rs.4,70,000/-, failing which, the services will be
withdrawn. The defendant No.2 in the interest of students
has paid the amount directly to the defendant No.1. The
defendant No.2 was left with no other option, but to pay
Rs.4,75,000/- on an ad-hoc basis to the defendant No.1,
who was plaintiff's agent vis-a-vis defendant No.2.
O.S.No.8661/2015
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Therefore, there is no due towards the plaintiff. Hence,
sought for dismissal of the suit. Further, it is contended
that the defendant No.2 had paid the balance outstanding
amount of Rs.23,867/- to the plaintiff through cheque
bearing No.905700, dated:19.12.2014 drawn on Standard
Chartered Bank, Bengaluru. In spite of it, the plaintiff
assmred that a sum of Rs.5,73,264/- is outstanding.
Therefore, the defendant No.2 claimed the set off and
counter claim against the plaintiff and defendant No.1 and
an application is also filed by the defendant No.2 under
Order XII Rule 6 of C.P.C., directing the defendant No.1 to
pay the amount of Rs.4,75,000/- to the plaintiff.
It is also stated that the plaintiff has clearly recorded
the fact of defendant No.2 paid a sum of Rs.4,75,000/- to
the defendant No.1 in E-mail, dated:29.04.2015. Therefore,
again claiming the amount by the plaintiff from the
defendant No.2 is an attempt to make profit without
sufficient cause. Hence, sought for set off a sum of
Rs.4,75,000/- being the amount paid by the defendant
No.2 to the defendant No.1 on behalf of the plaintiff,
together with interest at the rate of 18% per annum, from
8.10.2014 till the date of judgment. Alternatively, direct
the defendant No.1 to pay the plaintiff a sum of
Rs.4,75,000/- received from the defendant No.2 on
7.10.2014, together with interest at the rate of 18% per
O.S.No.8661/2015
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annum from 8.10.2014 till the date of payment and also
costs of the suit and such other reliefs.
5. From the above pleadings, the following issues have
been framed.
1.Whether, the plaintiff proves that, defendants are due to the tune of Rs.5,42,878/-?
2. Whether, the defendant No.2 proves that plaintiff has made breach of contract?
3. Whether, defendant No.2 is entitled for set off for tune of Rs.4,75,000/-?
4. Whether, plaintiff is entitled for suit claim of Rs.7,21,378/- as prayed for?
5. What Order or Decree?
Additional Issue framed on 06.4.2018:
1. Whether the defendant No.1 proves that, there is no cause of action against D1 firm and this court has no territorial jurisdiction?
6. The Managing Director/Authorised Signatory of the plaintiff came to be examined himself as P.W.1 and got marked the documents Exs.P.1 to 26. The Senior Manager of the defendant No.2 got examined himself as D.W.1 and got marked the documents Exs.D.1 to 3.
7. Heard arguments of both the sides. The learned counsel for plaintiff has submitted his written arguments.
O.S.No.8661/2015 14
8. My findings to the above issues are as under:
ISSUE No.1 - In the Affirmative, ISSUE No.2 - In the Negative, ISSUE No.3 - In the Negative, ISSUE No.4 - In the Affirmative, ADDL. ISSUE No.1 - In the Negative, ISSUE No.5 - As per the final order, for the following :
R E A S ON S
9. ISSUE Nos.1 & 4 : Since all these issues are interconnected, they have been taken up together for my discussion in order to avoid the repetition of reasonings.
P.W.1 has filed an affidavit evidence under Order XVIII Rule 4 of C.P.C., and reiterated the facts stated in the plaint. It is contended that plaintiff is a company engaged in providing and dealing with stay related services for corporate companies and it is represented by its Managing Director.
The defendant No.1 is engaged inter-alia in the business of providing accommodation and hospitality services and operates and runs establishments for providing such services.
O.S.No.8661/2015 15 The plaintiff had identified the property of defendant No.1 named Elite Galaxy, located at No.261, Galaxy Heights, Marunje Road, Dhawale Vasti, Hinjewadi Phase II, Pune. The plaintiff and defendant No.1 discussed and had finalized certain understandings with the defendant No.1, where-under the plaintiff would avail accommodation and infrastructure facilities at the aforesaid property. The defendant No.2 is an organization involved in education, had approached the plaintiff to avail accommodation and conference facility services at Pune. Upon the mutual discussion and deliberations, the plaintiff, in terms of a letter, dated:29.10.2013 submitted to the defendant No.2 its final offer for providing accommodation and conference facility services at the premises at Pune to the defendant No.2. The final offer had set out the facilities and services that would be provided by the plaintiff and also the billing terms. The defendant No.2 had accepted the plaintiff's offer and consequently raised a purchase order, dated:31.10.2013 on the plaintiff. While the original understanding between the plaintiff and defendant N.2 was that the understandings would be valid for a period of about 2 to 3 years, it was interalia agreed that the original contract between the plaintiff and the defendant No.2 would be for a period of one year commencing from O.S.No.8661/2015 16 18.11.2013. In terms of the said purchase order, the defendant No.2 had paid a sum of Rs.24,65,280/- being the rentals for three months, upfront, which was to be held by the plaintiff in deposit and has to be set off against the rentals payable for the last four months of the contract period. The final offer made on 29.10.2013 and the purchase order, dated:31.10.2013 are evidenced.
The plaintiff has also formalized the understanding with the defendant No.1 to avail accommodation and infrastructure facilities to the premises. The plaintiff had entered into a Property Participation Agreement with the defendant No.1 on 5.11.2013. The defendant No.1 has to provide accommodation services and other facilities to the conference hall etc., to such of the customers as are booked by the plaintiff. There was an understanding and agreement between the plaintiff and defendant No.2 and the defendant No.2 assured to extend the period for one year. The defendant No.2 has intimated the plaintiff company not to continue with the services after the expiry of the agreed contract period and to terminate the same on the expiry date. The contract was being terminated with effect from 17.11.2014. The accommodation and other facility would no longer required by the plaintiff post 17.11.2014. Accordingly, the plaintiff in turn intimated the defendant No.1 that the contract will not be extended and O.S.No.8661/2015 17 that, as per Clause-7 of the agreement, three months advance notice was issued for termination and adjusting the last three months payment from the deposits vide E- mail, dated:8.09.2014. The defendant No.1 had accepted the termination of contract and replied to the E-mail, dated:19.09.2014. The plaintiff made E-mail to reconcile the agreement and check the accounts. The defendant No.1 had requested for immediate release by acknowledging the termination of contract vide E-mail, dated:12.09.2014. There was a mail correspondence between the plaintiff to Ms.Manorama of the defendant No.1 concern.
Thereafter, the defendant No.2 informed the plaintiff vide E-mail dated that the defendant No.1 has threatened to stop supply of food to the clients of the defendant No.2. In response, the plaintiff wrote back to the defendants, explaining how the amounts were adjusted as per the terms of the contract and also suggesting that the contract be extended for another year to resolve the issue for defendant No.2. The defendant No.1 on the same day wrote to the plaintiff and defendant No.2 threatening to stop the food supplies to the clients of the defendant, in the event of the contract not being extended directly with the defendant No.2. In the alternative, if the contract is not renewed, the defendant No.1 sought release of Rs.10 lakhs claiming it to be towards certain infrastructure costs.
O.S.No.8661/2015 18 The plaintiff wrote a letter dated:23.12.2014 addressed to the defendant No.2, asking for payment of Rs.5,73,264/- due and payable by the defendant No.2 to the plaintiff. The plaintiff has further reiterated that under their contract, the defendant No.2 was to make all payments to the plaintiff, and that the plaintiff has not consented for the defendant No.2 to make any payments to anyone or to the defendant No.1. In view of the same, the plaintiff had refused to accept the debit note issued by the defendant No.2 to the plaintiff against the payment made by the defendant No.2 to the defendant No.1 and thereby, returned the cheque and the debit note earlier issued by the defendant No.2. The defendant No.2 replied to the plaintiff vide Reply dated:29.12.2014, interalia falsely alleging that the threat made by the defendant No.1 resulted in breach of terms of Purchase Order and that the defendant No.2 was left with no choice, but to make payment to defendant No.1. The defendant No.2 has further falsely claimed thereunder that a demand was raised on the plaintiff towards reimbursement and making good, cost and expenses incurred by defendant No.2 being amount of Rs.4,75,000/- vide Debit Note, dated:19.12.2014. The defendant No.1 had indeed threatened stoppage of services, however, since the plaintiff O.S.No.8661/2015 19 had paid all amounts due to the defendant No.1 and the last three months amounts were set off against the deposit, there was no amount due and payable by the plaintiff to the defendant No.1. Such being the case, the defendant No.2 could not have unilaterally decided to pay the amounts to the defendant No.1 only to now claim it from the plaintiff. In the event of there being an actual breach of the Purchase Order, the defendant No.2 is entitled to take appropriate action against the plaintiff. However, the defendant No.2 did not and could not have decided to pay the amounts to the defendant No.1 and account the same to the plaintiff. These amounts were not amounts due and payable to the defendant No.1 by the plaintiff. As such, the defendant No.2 cannot take recourse under the General Terms and Conditions as stated in para No.3 of the Reply, dated:29.12.2014. Therefore, the plaintiff has claimed an amount of Rs.5,74,331/- as per E-mail, dated:17.03.2015 along with interest at the rate of 18% per annum, in all Rs.7,21,378/-.
10. In support of its case, the plaintiff has produced the documents marked in "P" such as Property Participation Agreement, Reply, Resolutions, Copy of Final Offer, E- Mails, Debit Note, Copy of letter, Copy of legal notice, Postal Acknowledgements, Reply notices.
O.S.No.8661/2015 20
11. All these facts are clearly establishes the transaction and the agreement between the plaintiff and defendant Nos.1 and 2. The undisputed admitted facts are that the plaintiff made an agreement with the defendant No.1 in relation to Property Participation. The Property Participation Agreement was set into terms on 5.11.2013. The plaintiff was required to promote the market of the defendant No.1 establishments, facilities, services, manage bookings, etc on such terms and conditions as was agreed and recorded in the Agreement. There was an understanding between the plaintiff and defendant No.2 and there was a contract so as to provide accommodation for conference facility and services at Pune. On mutual discussion and deliberation, the plaintiff company in terms of the letter, dated:29.10.2013, set out final offer providing accommodation and conference facility services at the premises at Pune. It was agreed interalia that the understanding would be valid for a period of about 2-3 years. It was also intended to extend the period, but the defendant No.2 has intimated the plaintiff company of its decision of not to continue with the services after the expiry of agreed contract period and terminated the contract. The contract was being terminated with effect from 17.11.2014, the accommodation and other facilities would no longer be required by the plaintiff and accordingly, the plaintiff in O.S.No.8661/2015 21 turn intimated the defendant No.1 that the contract will not be extended. The advance notice was issued for termination and to adjust the last three months payment from the deposits as per E-mail, dated:8.09.2014. The defendant No.1 has accepted the termination of the contract and wrote a reply vide E-mail, dated:10.09.2014.
12. In spite of it, the defendant No.2 informed the plaintiff vide E-mail and stated that the defendant No.1 has threatened to stop the supply of food to the clients of the defendant No.2. The plaintiff wrote to the defendant No.2 explaining how the amounts were adjusted as per the agreement of contract and suggested that the contract be extended for another year to resolve the issue. The defendant No.1 wrote to the plaintiff and defendant No.2 threatening to stop food supplies to the clients of the defendant No.2. In the event of contract not being extended directly with the defendant No.2. There was so many E- mail correspondence as admittedly made between the defendant Nos.1 and 2 and plaintiff and it got marked in "P" series.
13. The defendant No.2 has contended that the termination of the agreement leads to continue the terms with the defendant No.1 directly so as to get facilities of O.S.No.8661/2015 22 defendant No.1 to the conference facilities and persons attending there. It is stated by the defendant No.2 that the defendant No.1 threatened to stop services, if the amount is not paid directly. Since the defendant No.1 had in deed threatened the stopping of services, the plaintiff had paid all the amount due to the defendant No.1 and last three months were set off against the deposits. On 1.04.2015, the plaintiff wrote E-mail asking Ms.Manorama that the defendant No.1 has received full payment towards charges and agreement. In spite of it, the defendant No.1 has threatened the defendant No.2 to stop the services and taken the amount of Rs.4,75,000/-.
14. The admitted pleadings and evidence could be relied under Sections 17 and 18 of Indian Evidence Act. The plaintiff has entered into Agreement between the defendants and there is violation of terms and conditions is apparent on record on evidence and E-mail correspondence exhibited in this case. The defendant Nos.1 an 2 interse made arrangement collusively and the defendant No.1 has threatened to stop the services to the defendant No.2 and forced to pay the amount of Rs.4,75,000/-. Later on, due to the claim of the plaintiff, the defendant No.2 asked the defendant No.1 for the amount and the defendant No.1 has agreed to pay the amount in instalments as per Ex.D.2 and O.S.No.8661/2015 23 undertaken to pay the same in tranches of Rs.50,000/- stretch over monthly instalments. Smt.Manorama representing the defendant No.1 expressed her difficulty and asked for time and admitted the balance due and liability as per the discussion. Therefore, the admitted liability is deserves to be discharged by the defendant Nos.1 and 2 and the claim of the plaintiff is justified in this regard. There is Subrogation and Novation of contract, which could be relied under Section 62 of Indian Contract Act and the admitted subsequent events and admitted liability under defendant Nos.1 and 2 is liable to be discharged and the claim of the plaintiff is deserved to be appreciated in the light of these evidence.
15. Further more, the defendant No.2 has filed an application under Order XII Rule 6 of C.P.C., so as to give direction to the defendant No.1 to pay the admitted liability. Therefore, the interse counterclaim of the defendant No.2 against the defendant No.1 does not in any way deprive the claim of the plaintiff. There is no counterclaim/claim forthcoming as against the plaintiff as to discharge of liability cast under the Agreement. Therefore, the suit is deserves to be decreed.
O.S.No.8661/2015 24
16. It is claimed in I.A., filed by the defendant No.2 under Order XII Rule 6 of C.P.C., that the set off in a sum of Rs.4,75,000/- being the amount paid by the defendant No.2 to the defendant No.1 on behalf of the plaintiff may be given set off and alternatively sought for passing the judgment directing the defendant No.1 to pay to the plaintiff a sum of Rs.4,75,000/- received from the defendant No.2 with interest at the rate of 18% per annum calculated from 8.10.2014 till judgment in the interest of justice and enquity. Therefore, the defendant No.2 has admitted that in view of breach of contract, the defendant No.1 is liable to pay the amount as per the admitted terms of settlement and as per the terms of Ex.D.2. Hence, the plaintiff has established their claim and the defendant Nos. and 2 are jointly and severally liable to pay the amount. Accordingly, I answer the Issue Nos.1 and 4 in the Affirmative.
17. ISSUE Nos.2 & 3 : Since all these issues are interconnected, they have been taken up together for my discussion in order to avoid the repetition of reasonings.
It is apparent that the defendant No.2 himself has stopped the user of conference hall and cancelled the contract. In view of expressing that the contract will not be O.S.No.8661/2015 25 extended further after one year itself shows that the defendant No.2 has made breach of contract. The defendant No.2 has not intimated the plaintiff while continuing the service of defendant No.1, as he was under the threat of stopping of things by defendant No.1. As such, without intimating the plaintiff, the defendant No.2 has made payment of Rs.4,75,000/- to the defendant No.1. Hence, the authorisation given by the plaintiff for such payment is not proved by the defendant No.2 on pleadings or on evidence or on documents. Therefore, the defendant No.2 has failed to prove that there is breach of contract by the plaintiff and also he is entitled for set off as provided under Order VIII Rule 6 and 6(A) of C.P.C.
18. The provision under Order VIII Rule 6 and 6(A) of C.P.C., reads thus :
Order VIII Rule 6 of Code of Civil Procedure 1908 "Particulars of set-off to be given in written statement"
(1) Where in a suit for the recovery of money the defendant claims to set-off against the plaintiff's demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same O.S.No.8661/2015 26 character as they fill in the plaintiffs suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, presents a written statement containing the particulars of the debt sought to be set- off.
(2) Effect of set-off- The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect of both the original claim and of the set-off :
but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.
(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off.
Rule 6A. Counter- claim by Defendant- 1) A Defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action according to the defendant against the plaintiff either before or after the filing of the suit, but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter- claim is in the nature of a claim for damage or not:
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1. Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the court.
2. Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.
3. The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court.
4. The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints.
19. The provision provides for set off and make counterclaim as against the plaintiff and not against the defendant interse. Here in this case, the defendant No.2 cannot seek counterclaim as against the defendant No.1 and also cannot direct the plaintiff to recover the amount from the defendant No.1 only. It is also pertinent to note that the claim made by the defendant No.2 is against the defendant No.1 and such counterclaim for Rs.4,75,000/- is not provided under the provision. It is only after certain O.S.No.8661/2015 28 amount is paid, if the liability cast on the plaintiff towards this defendant and then only, such counterclaim could be considered in the civil proceedings. Hence, I answer the Issue Nos.2 and 3 in the Negative.
20. ADDL. ISSUE No.1 : The defendant No.1 has not produced any cogent documentary evidence so as to show that there is no privity of contract between the plaintiff and defendant No.1 and there is no cause of action against the defendant No.1 firm. Even the question of territorial jurisdiction raised by the defendant No.1 technically has no ground, because both the plaintiff and defendants have contracted and having office at Bengaluru. There is a contract made in their respective office at Bengaluru attracting the territorial jurisdiction of this court. Therefore, the vague contention raised by the defendant No.1 merely that he has provided services at Pune and having the office at Pune does not exonerate the liability admitted as per Ex.D.2. Even, the defendant No.1 has admitted that the amount will be paid at tranches of Rs.50,000/- stretches over ten monthly instalments and admitted the fact of payment outside the service of contract are all indexing that the defendant No.1 is not entitled to evade the payment and claim it that there is a due from the O.S.No.8661/2015 29 plaintiff and as such, he is receiving such amount from the defendant No.2 and mis-interpreted the things, which attracts the civil liability and the plaintiff is entitled to recover the suit claim jointly and severally from the defendant Nos.1 and 2. If the defendant N.2 had any claim for recovery as per the undertaking made by the defendant No.1 under Ex.D.2, then he has to seek it in any other separate proceedings or claim it interse with the party. That apart, the defendant No.1 cannot contend that this court has no jurisdiction and there is no cause of action. Hence, I answer the Addl. Issue No.1 in the Negative.
21. The tripartite agreement made between the plaintiff, defendant No.1 and defendant No.2 is clearly cast duty on the parties to discharge their terms and conditions and covenants of the agreement. They are bind by the terms and conditions and any violation, as such attracts civil liability. Here in this case, the plaintiff has made out all the ingredients so as to recover the amount. The agreement between the plaintiff and defendant No.1 and the plaintiff and defendant No.2 even though separately done, it is for common cause of providing services to the defendant No.2 in conference hall situated at Pune and the defendant No.1 has also undertaken to give services. As O.S.No.8661/2015 30 such, being the service provider, it cannot be contended that there is no liability.
22. Section 92 of Transfer of Property, 1882 Act reads thus :
"Subrogation of right of a person to stand in the place of the creditor after paying of his liability....... Right of subrogation is statutorily recognized and described under Section 92 of Transfer of Property Act. The Doctrine of subrogation is based on principles of equity, justice, good conscious" .
Therefore, here in this case, the defendant No.2 even though claims to be discharged his liability, he being the creditor in the place of defendant No.1, has jointly and severally liable to the claim of the plaintiff as per the terms and conditions of the agreement made by the plaintiff either with the defendant No.1 or with the defendant No.2.
23. The provision under Section 140 of Indian Contract Act reads thus:
"Rights of surety on payment or performance.--Where a guaranteed debt has become due, or default of the O.S.No.8661/2015 31 principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. --Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor."
24. The provision under Section 141 of Indian Contract Act reads thus :
"Surety's right to benefit of creditor's securities.--A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security. --A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, O.S.No.8661/2015 32 or without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security."
25. In India, the right of subrogation has been enunciated in Sections 140 and 141 of Indian Contract Act, 1872. When a surety has paid of that, he is liable for, he is invested with all his rights, which creditors had against principal debtor. The creditor had the right to sue the principal debtors. In this case, the defendant No.2 had any claim against the defendant No.1, then he has to recover from the defendant No.1 and cannot claim discharge of liability towards the plaintiff, who is entitled to the recovery of amount as per the terms embedded in the contract.
26. The provision under Section 124 of Indian Contract Act reads thus :
"Contract of indemnity" defined.--A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity."
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27. The provision under Section 125 of Indian Contract Act reads thus :
'Contract of guarantee', 'surety',
'principal debtor' and 'creditor'--A
'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety'; the person in respect of whose default the guarantee is given is called the 'principal debtor', and the person to whom the guarantee is given is called the 'creditor'. A guarantee may be either oral or written.
28. The defendant No.2 has undertaken to indemnify the amount payable to the plaintiff, even though it is paid to the defendant No.1 directly. Even, the defendant No.1 has guaranteed the payment under Ex.D.2 and other E-mails correspondence. The admitted fact has clearly proves that the parties are substituted the new terms on due negotiation made through E-mails in electronic media and it could be relied under Section 65(A) & (B) of Indian Evidence Act. Hence, it is considered as Novation of Contract under Section 62 of Indian Contract Act.
29. Further, in the dictum reported in AIR 1991 Bombay 129 (Andheri Bridge View Co-op. Hsg. Society Ltd., .Vs. Krishnakant Anandrao Deo and others) , O.S.No.8661/2015 34 wherein the provision Section 62 of Contract Act being enunciated. It reads thus:
" Novation of contract - Substantial changes going to root of contract - There is novation".
29. Further, in the dictum reported in AIR 1956 Madhya Bharat 25 (Todarmal Tejmal and another .Vs. Chironjilal, Gopilal and another) , it reads thus :
" (B) Contract Act (9 of 1872), Section 62 -
Novation - What constitutes - Novation if constitutes consideration.
In a novation, there must be immediate and present substitution of another contract, and there is no due novation, if the liability under the original contract is not extinguished by the new contract and if there is reversion to the old contract. An agreement under Section 62 necessarily implies consideration. Novation itself constitutes a "good consideration" for a fresh promise. Hence, the suit is deserves to be decreed.
30. ISSUE No.5: My finding on this Issue is as per the following :
OR D E R The suit of the plaintiff is hereby decreed with costs.
O.S.No.8661/2015 35 The defendant Nos.1 and 2 are jointly and severally liable to pay the suit claim of Rs.7,21,320/- to the plaintiff along with interest at the rate of 6% per annum, as per Section 34 of C.P.C., from the date of suit till realization.
The defendant No.2 is at liberty to recover the amount from the defendant No.1, if he discharges the decretal amount as per the contract of Novation.
Draw decree accordingly.
(Dictated to the Judgment-writer, transcript thereof is corrected and then pronounced by me in the open court on this the 23rd day of March 2020) (K.SUBRAMANYA) LXVII Addl.City Civil and Sessions Judge, BENGALURU.
A N NE X U R E
1. WITNESSES EXAMINED IN FAVOUR OF THE PLAINTIFF:
P.W.1 P.B.Thimmayya
2. WITNESSES EXAMINED IN FAVOUR OF THE DEFENDANT :
D.W.1 Vallabhan Hariharan
3. DOCUMENTS MARKED IN FAVOUR OF THE PLAINTIFF:
Ex.P.1 Property Participation Agreement Ex.P.2 Reply, dated:29.12.2014. Ex.P.3 Resolution, dated;16.06.2015.
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Ex.P.4 Office copy of final offer
Exs.P.5 to 9 E-mails
Ex.P.10 Debit Note, dated:19.12.2014.
Ex.P.11 Copy of letter, dated:23.12.2014.
Exs.P.12 to 15 E-mails
Ex.P.16 Office copy of letter, dated:6.04.2015.
Exs.P.17 to 21 E-mails
Ex.P.22 Legal Notice, dated:24.06.2015.
Exs.P.23 & 24 Postal Acknowledgments
Ex.P.25 Reply Notice, dated:17.07.2015.
Ex.P.26 Reply Notice, dated:29.07.2015.
4. DOCUMENTS MARKED IN FAVOUR OF THE DEFENDANTS :
Ex.D.1 Letter of Authorisation
Ex.D.2 Copy of E-mail info.
Ex.D.3 Copy of Board Resolution.
(K.SUBRAMANYA)
LXVII Addl.City Civil and Sessions Judge, BENGALURU.