Bangalore District Court
Geetha Monitors Pvt Ltd vs Kanoe Softwares Ltd on 25 January, 2024
1
Com.O.S.No.1474/2022
KABC170027632022
IN THE COURT OF LXXXIV ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.85)
THIS THE 25th DAY OF JANUARY 2024
PRESENT:
SUMANGALA S. BASAVANNOUR, B.COM, LL.M.,
C/c LXXXIV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com. O.S.No.1474/2022
BETWEEN:
Geeta Monitors Pvt. Ltd.,
A company registered
under Company's Act and
having its registered office
at No.38/1, 1st floor,
N.S.Iyengar Street,
Bangalore - 560 020,
rep. by its Director and
Authorized Signatory
Mr.Ashok Arjandas
Chhabria,
Ph. No. 9845025726
Email :
[email protected] [
: PLAINTIFF
(Rep. by Sri.Rajaram Bhat
- Advocate)
AND
2
Com.O.S.No.1474/2022
1. Kanoe Softwares Ltd.,
A company registered
under Company's Act and
having its registered office
at No.90, Ground Floor,
Sector - B, Metropolitan
South Canal Road,
Kolkatta - 700 105, rep. by
its Director Deb Jyoti Ray
Email : [email protected]
Ph.No.9844918829
2. Mr.Debjyoti Ray,
Director, Kanoe Softwares
Ltd., No.90, Ground Floor,
Sector - B, Metropolitan
South Canal Road,
Kolkatta - 700 105, Email :
[email protected]
Ph.No.9844918829
3. Mr.Debashis Ray,
Director, M/s Kanoe
Softwares Ltd., No.90,
Ground Floor, Sector - B,
Metropolitan South Canal
Road, Kolkatta - 700 105
4. Mrs.Kusum Gadigappa
Mallappa Allias Kusum
Ray, Director, M/s Kanoe
Softwares Ltd., No.134,
Shikharipura Town,
Shivamogga Road,
Shikaripura, Shivamogga -
577 427,
Email : [email protected]
3
Com.O.S.No.1474/2022
Ph.No.9901024621
: DEFENDANTS
(D1 and D2 rep. by
Sri.Ravichandra M.R.,
Advocate; D3 - Exparte; and
D4 by Smt.Kusuma G.M.,
Advocate)
Date of Institution 01.10.2022
Nature of the suit Suit for recovery of money
Date of commencement of
recording of evidence 19.07.2023
Date on which judgment was
25.01.2024
pronounced
Total Duration Year/s Month/s Day/s
01 03 24
(SUMANGALA S. BASAVANNOUR),
C/c LXXXIV Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
The Plaintiff has filed this suit for recovery of Rs.9,56,513/- with future interest at 24% p.a. from the defendants jointly and severally from the date of suit till realization and cost of the suit.
4Com.O.S.No.1474/2022
2. The Brief facts of the Plaint are as follows:-
(a) The Plaintiff is a private limited company engaged in the business of selling and renting out computer, its accessories and other office automation systems to the general public. The 1st defendant is a company registered under the Companies Act and the defendant No.2 to 4 are its directors and responsible for the day to day affairs of the 1 st defendant company. The 1 st defendant is also engaged in the commercial activity of selling of computers, laptops and its accessories. The 1 st defendant has purchased materials from the plaintiff and the plaintiff raised the following invoices-
Date Invoice No. Amount
08.09.2016 10097/2016-17 8,79,022
18.02.2017 11023/2016-17 13,12,019
28.02.2017 11096/2016-17 10,95,122
16.03.2017 11189/2016-17 21,16,541
16.03.2017 11190/2016-17 8,81,769
21.03.2017 11213/2016-17 6,40,500
21.03.2017 11219/2016-17 4,27,275
11.10.2017 1750 27,541
(b) The 1st defendant has purchased the above computers and its peripherals through above said invoices and used to make payments in lumpsum and the plaintiff has maintained a running account in respect of the transactions of the 1 st 5 Com.O.S.No.1474/2022 defendant. Though the plaintiff has demanded the defendants to clear the dues, the defendants have not cleared the dues of the plaintiff though they have made part payments towards the outstanding amount till January 2022. The 1st defendant has agreed to pay interest at 24% p.a. upon the due amount as agreed by the directors of the 1 st defendant through their letters dated 07.09.2016 and 18.02.2017 and also by a board resolution of the 1st defendant dated 07.09.2016 a certified true copy of which was given to the plaintiff. The defendants have confirmed the balance amount payable to the plaintiff in writing on 31.03.2019. As the defendants No.2 and 4 being the directors of the 1st defendant have given their personal guarantee for due repayment of the dues of the plaintiff, all the defendants are jointly and severally liable to pay the outstanding amount due and payable to the plaintiff.
(c) The defendants have given their personal guarantee and also undertaken to pay interest at 24% p.a. upon the outstanding amount, they are jointly and severally liable to pay the same to the plaintiff. As such, the defendants are liable to pay an amount of Rs.4,36,669/- towards interest upon the balance principal amount of Rs.5,19,844/- and the interest is calculated till 29.09.2022. The defendants have failed to pay the due amount, it has written several emails to the defendants calling upon them to clear the outstanding amount. In spite of 6 Com.O.S.No.1474/2022 the same, the defendants have made small amounts towards outstanding amount till January 2022 and thereafter stopped payment of any amount towards the outstanding balance.
Hence, this suit.
3. The Defendant No.1 has resisted the claim of the plaintiff and filed Written Statement stating that -
(a) While having the commercial transaction, the plaintiff had obtained six signed letter heads and six signed blank cheques and a rubber stamp from defendant No.1. Since the transaction were there between the plaintiff and the 1 st defendant, blank letter heads and cheques were handed over to the plaintiff with signatures of defendant No.2 and 4. While collecting the above mentioned blank/signed documents, the 1 st plaintiff has also obtained signed blank white papers from the 2nd defendant. It appears from the record produced before this court that the plaintiff has used those documents to generate the letters, invoices and the board resolution to use against the defendants in this case to get favourable orders from this court with concocted and fabricated documents. As far as the documents with respect to balance amount payable as 31.03.2019 is concerned is it is admitted and those documents indicating balance confirmation are about purchase order dated 08.11.2016 and 09.02.2017 arising out of the orders issued by 7 Com.O.S.No.1474/2022 the Govt. of Karnataka in tender vide HKRDB/KLB/TECH/26/2016-17/1047 dated 06.06.2016.
(b) There was a commercial transaction between the plaintiff and the 1st defendant which is governed by the terms and conditions of the Letter of Intent and the purchase orders issued in favour of the plaintiff. The payment schedule had been accepted and acknowledged between the plaintiff and the 1st defendant, as such the balance confirmation have no bearing on this case. The amounts paid by the 1 st defendant towards the alleged due under constant threat through an email and abuses over the internet call to 2nd defendant and 4th defendant. To circumvent the threats, the 1st defendant used to pay once in a month under protest despite of the fact that the 1 st defendant is not supposed to pay unless the payment is cleared from the Govt. of Karnataka in terms of purchase orders. The payments are governed by the purchase order dated 08.11.2016 and 09.02.2017 wherein it was made it clear that the final settlement shall be done after satisfying all the criteria of the tender / PO issued by the Hyderabad Karnataka Regional Development Board, Govt. of Karnataka. The cause of action pertaining to the invoices has not at all arose as the plaintiff has never submitted such invoice to the defendants, as such the plaint is bad for misjoinder of cause of action and the same needs to be rejected / returned by this court for curing the 8 Com.O.S.No.1474/2022 defects of the misjoinder of cause of action. There is no contract between the plaintiff and the defendants for imposing 24% interest.
(c) The defendant further contended that the 1st defendant is a public limited company registered under the Indian Companies Act and engaging in the business of artificial intelligence, internet of things, enterprise resource planning system and Govt. Information Communication Technology Projects. The Govt. of Karnataka called for a public tender with respect to "upgradation of Public Libraries through Procurement of Multipurpose Multimedia Electronic Information Kiosk and Cyber Cafe" under Hyderabad Karnataka Region Development Board Macro Project for the year 2014-15. The 1 st defendant participated in the tender process and was successfully bagged the project in the month of August 2016 and first directed to submit the bank guarantee of Rs.7,57,400/- to proceed further. Before entering tender process the 1 st defendant in view of previous acquaintance with the plaintiff, had a detailed discussion with the plaintiff regarding the supply of material as per the tender specifications and has offered the plaintiff to collaborate with the 1st defendant as a "Solution Partner". Looking at the profitability of the project, the plaintiff has accepted the offer and offered the quotation much before the tender process is completed. Subsequently, upon acceptance of 9 Com.O.S.No.1474/2022 the tender, the plaintiff has requested the 1st defendant to issue the letter of intent along with other documents vide email dated 30.08.2016.
(d) As per the discussion had with the plaintiff, the 1 st defendant has issued a Letter of Intent dated 31.08.2016 engaging the plaintiff as the "solution partner" to execute the project, in consonance with specification mentioned in the tender document. In the letter of intent, the payment terms were also mentioned that 90% of the payment would be done back to back and final 10% would be released on successful closure of the project as per the tender document. The said letter of intent was accepted and acknowledged by the plaintiff without any demur but rather willingly. As per the conditions specified in the tender documents, the 1 st defendant had submitted its bank guarantee for Rs.7,57,400/-. Upon submitting the bank guarantee, the 1 st defendant was directed to supply the equipment as per the tender conditions and specifications by the Govt. of Karnataka and purchase order dated 07.11.2016 was issued in favour of the 1 st defendant. Since the plaintiff was appointed as Solution Partner, 1 st defendant has issued a purchase order vide bearing No.KSL/PO/ 233/11/2016-17 in favour of the plaintiff along with terms and conditions. In the purchase order dated 08.11.2016 the payment terms were mentioned noticeably and the plaintiff has 10 Com.O.S.No.1474/2022 accepted and acknowledged the same. The terms and conditions regarding payment is reproduced herein below:
(i) Back to Back within 7 days from the date, the payment made by the Hyderabad Karnataka Regional Development Board, Kalaburagi, Govt. of Karnataka.
(ii) Final Settlement of 10% shall be done after satisfying all the criteria of the tender / PO issued by Hyderabad Karnataka Regional Development Board, Kalaburagi, Govt. of Karnataka inclusive of releasing of all the payments and Bank Guarantee.
(iii) Unless specifically listed on this agreement, all hardware maintenance, configuration, operating system or other software licensing, software support, certification for support or any other services are included from the estimated cost mentioned in this Purchase Order and as such is the responsibility of 1st defendant.
(e) Immediately upon obtaining the purchase order from the Govt. of Karnataka, the defendant had placed orders to supply equipment from the up-gradation of 100 public libraries for the multipurpose multimedia electronic information Kiosk and Cafe. However, the said order was held up due to budget issues at the Govt. level and purchase order dated 08.11.2016 could not be implemented. Thereafter, the Govt. of Karnataka has revised the purchase order for upgradation of 70 public libraries for the multipurpose multimedia electronic information 11 Com.O.S.No.1474/2022 Kiosk and Cafe and a fresh purchase order was issued by the Govt. of Karnataka to the 1st defendant. Consequently, 1st defendant has issued one more purchase order in favour of the plaintiff for supply of 70 public libraries for the multipurpose multimedia electronic information Kiosk and Cafe. All the unit, cloud software charges and terms and conditions shall remain the same, except 100 locations is reduced to 70 locations.
(f) As per the Purchase orders, the Plaintiff has supplied the products and there were lots of defect and 1 st Defendant has requested the Plaintiff to rectify the same as agreed in the purchase order. As a matter of fact, the above-mentioned issues were reported to the Plaintiff by the 1 st Defendant on various occasions and the Plaintiff never took any initiative to replace or to give on-site warranty which was agreed at the time of initiating the purchase order. The Plaintiff had provided the 1 st Defendant with their vendors, and they also failed to provide the warranty support and service. This was also brought to Plaintiff notice, but the plaintiff failed to take any further action.
Since the plaintiff failed to provide warranty support, the 1 st Defendant had to provide the warranty support as it was issued with the purchase order from HKRDB, Kalaburagi, Govt. of Karnataka, where it would be backlisted if the 1 st Defendant are produced failed to provide any support in warranty period. So, the 1st Defendant had to spend huge amount by appointing 12 Com.O.S.No.1474/2022 engineers who could provide support at all the 70 different rural locations spread across 4 large districts of Hyderabad Karnataka.
(g) The 1st Defendant had borne all the expenditures of the warranty support i.e., the salary, transportation, lodging, food, and the cost for alternative solution for the defective items and interest for the finance taken from outside. However, since the product supplied by the 1st Plaintiff were defective and still not functioning as per the purchase order, so the Government of Karnataka has forfeited the Bank Guarantee of Rs.7,57,400/- issued by State Bank of India against the fixed deposit of Rs.7,70,000/- paid to State Bank of India by the 1 st defendant company. As per the purchase order, the total value of the amount was approximately Rs.64,73,226/- and against which the 1st Defendant has already paid 90% towards the invoice as per the payment schedule agreed and the remaining 10% would be payable upon completion of the project successfully. However, since the products were defective and the project could not be completed as per the tender documents, the bank guarantee is forfeited. The bank guarantee is forfeited because the Plaintiff has supplied defective items and no support was provided during the warranty period. Hence in terms of the payment schedule agreed the 1st Defendant is not liable to pay 13 Com.O.S.No.1474/2022 any amount as on today as BG is forfeited for defective service provided by the Plaintiff.
(h) The 1st Defendant reserves the liberty to file order of forfeiture as and when it is available. It is found later from the bank statement that all the payments are made as per the total number of invoices raised pertaining to government tender those are available with the 1st Defendant and hence the defendant sent an email to the plaintiff dated 10.02.2022 mentioning that the 1st Defendant have checked with the ledger, that is not matching with the money claimed by the plaintiff and further requested to submit all the documents that the plaintiff is referring to. However, as on today neither the Plaintiff has clarified the doubt nor produced the correct statements to vindicate its claim. The 2 nd Defendant was living in Nepal on business from 07.09.2018 to 31.01.2020. During that period when 2nd Defendant was not available in India, the Plaintiff misled the 4th Defendant as well as 2nd Defendant on various occasions by misrepresentation, miscommunicating, threatening, presenting incorrect information, and created confusion like, Plaintiff had informed 4 th Defendant that 2nd Defendant had agreed on certain conditions which was not the part of the original understanding and influenced 4 th Defendant to mention certain clauses in the email in plaintiff's favour.
14Com.O.S.No.1474/2022
(i) Similar thing happened with 2nd Defendant like, Plaintiff mentioned that Plaintiff is answerable to its board, so they need emails in the favour of the Mr.Ashok A. Chhabria, who is the director of the Plaintiff company. Mr.Ashok A. Chhabria had literally dictated the content of the email on the phone, and he wanted the defendant to send the emails before disconnecting the phone. When and if the defendants disagreed, Mr.Ashok A.Chhabria, the Managing Director of the Plaintiff company threatened the Defendants to either pay the remaining amount on spot or face criminal charges. Mr. Ashok A. Chhabria, the Managing Director of Plaintiff company often threatened to use the pre-signed blank letter heads against Defendants to put them under criminal charges. Also, the plaintiff referred the emails of 4th Defendant to 2nd Defendant and got further emails in its favour. As a matter of fact, Mr.Ashok A. Chhabria representing the Plaintiff, created immense pressure in various ways and pursued the Defendants to pay further beyond the 10% where the Plaintiff is eligible to receive only 90% of the invoice based on the Letter of intent and the purchase order issued to Plaintiff. When the 2nd defendant was in Nepal, the Plaintiff could manage to get a Balance Confirmation from the 4th Defendant and the Junior Accounts manager by manipulating them and by taking the advantage of 2nd Defendant absence in the office.
15Com.O.S.No.1474/2022
(j) Later when 2nd Defendant found the mismatch between the balance confirmation issued on 31st March 2019 and the bank statement he requested the Plaintiff to return the document over an internet call from Nepal, the Plaintiff said that he destroyed the same, that the plaintiff has referred the same document later in various occasions to threat that he would use that document which he said is destroyed earlier and used in his submission in the court as well. To execute the Hyderabad Karnataka Regional Development Board, Kalaburagi, Government of Karnataka, the Plaintiff was engaged as a solution partner and there was an understanding between the parties where the terms and conditions of the project execution and terms of payment were also discussed and written it down in the PO which was duly signed by the Plaintiff and the 1 st Defendant. The entire transaction is revolving around Hyderabad Karnataka Regional Development Board, Kalaburagi, Government of Karnataka project/tender. Even if the Plaintiff claims are admitted as true for arguments sake, all-inclusive payments have been made to the Plaintiff despite of the fact that the 1st Defendant could deferred the final payment schedule. Even if the alleged invoices are accepted as true, either it is a time barred debt or if at all if there is any dispute, same shall be settled within Chennai Jurisdiction only. As such the plaint is to be returned to be presented to the court in which 16 Com.O.S.No.1474/2022 the suit should have been instituted under Order VII Rule 10 of CPC. Hence, the defendant prays to dismiss the suit.
4. The defendants 2 and 4 are adopted the written statement of the 1st defendant.
5. Heard arguments and perused the records.
6. Based on the above pleadings, the following Issues are framed:
1. Whether the plaintiff proves that there was short payment of Rs.5,19,844/- by the 1st defendant towards supply of materials under the invoices mentioned in para 2 of the plaint?
2. Whether the 1st defendant proves that they have already paid 90% of the invoice value and the remaining 10% is payable on successful completion of the project?
3. Whether the 1st defendant proves that the project could not be completed as the plaintiff supplied defective products and failed to provide support during the warranty period, resulting in forfeiture of the bank guarantee by the State Government?
4. Whether the 1st defendant proves that the plaintiff obtained six signed blank letterheads, six signed blank cheques and rubber stamp under threat of foisting criminal charges and misused the same to file this suit?17
Com.O.S.No.1474/2022
5. Whether the 1st defendant proves that only the courts in Chennai are having jurisdiction to try this suit?
6. Whether the plaintiff proves that there was an agreement to pay interest at 24% p.a. on the amount due?
7. Whether the plaintiff is entitled for Rs.5,19,844/- towards outstanding principal amount and Rs.4,36,669/- towards interest upto 29.09.2022, i.e. in all a sum of Rs.9,56,513/- from the defendants with future interest at 24% p.a as prayed?
8. What order or decree?
7. My findings on the above Issues are as under:
Issue No.1 : In the affirmative Issue No.2 : In the affirmative Issue No.3 : In the negative Issue No.4 : In the negative Issue No.5 : In the affirmative Issue No.6 : In the affirmative Issue No.7 : Partly in the affirmative Issue No.8 : As per the final Order for the following reasons.
REASONS
8. Issue No.5 : The defendant has taken contention that the suit of the plaintiff shall be settled within Chennai jurisdiction only. The learned counsel for the defendant during the course of argument relied upon Ex.P14 Invoice dated 08.09.2016 and 18 Com.O.S.No.1474/2022 argued that as per this invoice all the disputes will be settled within Chennai jurisdiction only.
9. On the other hand, the plaintiff in his affidavit evidence stated that the registered office of the plaintiff company is in Bengaluru and the goods were either dispatched to the customer of the 1st defendant or delivered personally to the 2 nd defendant in the plaintiff's office at Bengaluru. The purchase orders were placed to the plaintiff's office in Bengaluru by Bengaluru office of the 1st defendant and invoices were also raised upon the 1st defendant from the plaintiff's Bengaluru office. In invoice bearing No.10097 dated 08.09.2016, it is mentioned that the Chennai courts get the jurisdiction in respect of the disputes and also mentioned in the bottom of the invoice that the said invoice is subject to Bengaluru jurisdiction. The entry regarding the jurisdiction of Chennai court had crept in the said document by typographical error as the plaintiff's company earlier had a branch at Chennai prior to 2017. As far as the transaction between the plaintiff company and the 1 st defendant is concerned, it has entirely taken place from Bengaluru. As such, the cause of action for the above suit has arisen at Bengaluru and only this court has got territorial jurisdiction to try this suit.
19Com.O.S.No.1474/2022
10. Perused the Ex.P.14 it shows that, in the bottom of Ex.P14 mentioned as "Subject to Bengaluru Jurisdiction". On perusal of the documents it is clearly shows that both the plaintiff's and the defendants' registered office is situated at Bengaluru. The goods were either dispatched to the customer of the 1 st defendant or delivered personally to the 2 nd defendant in the plaintiff's office at Bengaluru. The invoices at Ex.P.3, Ex.P.4, Ex.P5, Ex.P.6, Ex.P.7, Ex.P.14 and Ex.P.15 were also raised upon the 1st defendant from the plaintiff's registered office at Bengaluru.
11. Further the Defendant has not denied that from inception till now the 1st defendant has three offices. First it was in Jayanagar 9th Block, then World Trade Centre. In between they are operating from a premises on Queens Road for one year and it was closed in 2014 itself. They had also an office in C- 204, 2nd Floor, Pyramid Banksia Apartment, Basaweshwar Nagar, Bengaluru. The 1st defendant had office at No.10, Novel Business Centre, 100 ft Road, BTM 1st Stage, Bengaluru and No.132, 6th Main, 12th Cross, J.P Nagar 3rd Phase, Bengaluru. Their registered office is at No.527/B, 2 nd Floor, 1st Main Road, Dr.Rajkumar Road, Rajajinagar 2nd stage, Bengaluru. This office is shifted to Kolkata in the year 2020. They had also an office at No.19, 1st Floor, Queens Road, Near Indian Express Circle, Shivajinagar, Bengaluru. This office was shifted to Rajajinagar 20 Com.O.S.No.1474/2022 in 2014. The 1st defendant is transacting with the plaintiff since 2017. Their office in Bengaluru, at that time and all the transactions between them originated in Bengaluru. Dw1 has admitted that he has made payment of Rs.1,46,000/- in all to the plaintiff on different dates between 01.04.2019 to January 2022, after confirming the balance on 31.03.2019.
12. Section 20(c) of CPC reads as under :
"The cause of action, wholly or in part, arises."
13. So, by considering all the facts and circumstances, it is clear that the cause of action arose within the jurisdiction of this court. Hence, this court has jurisdiction to entertain this suit. Hence, issue No.5 is answered in the affirmative.
14. Issue Nos.1 to 4: The plaintiff company to substantiate its case, its Director is examined as Pw1. Pw1 in his evidence reiterated the averments of the plaint and got marked Ex.P1 to P25. It is pertinent to note that Ex.P1 to P10 are marked during course of case management hearing. The Advocate for Defendant cross-examined PW.1 in detail. The facts elicited during cross-examination is to be considered herein after at appropriate stage.
21Com.O.S.No.1474/2022
15. On the other hand, the defendants to substantiate its case, the 2nd defendant is examined as Dw1. Dw1 in his evidence reiterated the averments of the written statement and got marked Ex.D1 to D27. It is pertinent to note that Ex.D1 to D12 are marked during course of case management hearing. The Advocate for Plaintiff cross-examined DW.1 in detail. The facts elicited during cross-examination is to be considered herein after at appropriate stage.
16. Before going to the contrary facts of the case, it is necessary to mention the admitted facts. The admitted facts are that Upon submitting the bank guarantee, the 1 st defendant was directed to supply the equipment as per the tender conditions and specifications by the Govt. of Karnataka and purchase order dated 07.11.2016 was issued in favour of the 1st defendant. Since the plaintiff was appointed as Solution Partner, 1st defendant has issued a purchase order vide bearing No.KSL/PO/233/11/2016-17 in favour of the plaintiff along with terms and conditions. In the purchase order dated 08.11.2016 the payment terms were mentioned noticeably and the plaintiff has accepted and acknowledged the same. The 1st defendant is also engaged in the commercial activity of selling of computers, laptops and its accessories and purchased materials from the Plaintiff.
22Com.O.S.No.1474/2022
17. It is the case of the plaintiff that the 1st defendant has purchased computers and its peripherals through eight invoices from 08.09.2016 to 11.10.2017 and used to make payments in lumpsum and the plaintiff has maintained a running account in respect of the transactions of the 1 st defendant. Further, it is stated that the defendants have not cleared the dues of the plaintiff though they have made part payments towards the outstanding amount till January 2022. The 1st defendant has agreed to pay interest at 24% p.a. upon the due amount as agreed by the directors of the 1st defendant through their letters dated 07.09.2016 and 18.02.2017 and also by a board resolution of the 1st defendant dated 07.09.2016. The defendants have confirmed the balance amount payable to the plaintiff in writing on 31.03.2019.
18. Though the defendants have disputed Ex.P14 invoice and supply of the goods under Ex.P14. But during cross examination, Dw1 has categorically admitted that Ex.P14 bears his signatures and seal of the 1st defendant. Further stated that the items mentioned in the purchase orders at Ex.P13 and P14 are one and the same and Ex.P13(a) is his signature. He has also admitted the carbon copy of delivery challan dated 08.09.2016 at Ex.P25 and the items mentioned in the invoice at Ex.P14 and the delivery challan at Ex.P25 are one and the same and he has acknowledged receipt of material in good and 23 Com.O.S.No.1474/2022 working condition at Ex.P25(b).
19. On the contrary, the defendants have taken a contention that the Plaintiff has supplied the products and there were lots of defect and 1st Defendant has requested the Plaintiff to rectify the same as agreed in the purchase order. Since the plaintiff failed to provide warranty support, the 1 st Defendant had to provide the warranty support as it was issued with the purchase order from HKRDB, Kalaburagi, Govt. of Karnataka, where it would be backlisted if the 1 st Defendant are produced failed to provide any support in warranty period. However, since the product supplied by the 1st Plaintiff were defective and still not functioning as per the purchase order, so the Government of Karnataka has forfeited the Bank Guarantee of Rs.7,57,400/- issued by State Bank of India against the fixed deposit of Rs.7,70,000/- paid to State Bank of India by the 1 st defendant company.
20. It is pertinent to note that till filing of the written statement either the defendant No.1 company or defendants 2 to 4 has not raised any objection regarding defects in the materials supplied by the plaintiff. Even at the time of confirmation of balance amount, the defendant has not raised single word about the defects in the materials supplied by the plaintiff. Under these circumstances, it is clearly shows that 24 Com.O.S.No.1474/2022 only in order to escape from liability, the defendant has taken a specific defence of defects in materials supplied by the plaintiff without any basis.
21. The learned counsel for the defendants argued that except Ex.P14 they have no dispute regarding other invoices. Further, during cross-examination of DW.1 admitted that page No. 5 of Ex.D.1 is the confirmation of the amount shown in Ex.P.15 and it is also admitted fact that the Defendant has not paid the Ex.P.14 of the invoice amount. Ex.P20, the ledger account maintained by the plaintiff shows the closing balance as on 04.01.2022 is Rs.5,58,303/-. Further on perusal of Ex.P14 it is clear that it contains the signature of the defendant No.2 with seal of the defendant No.1 and this fact is admitted by Dw1 in his evidence.
22. At this juncture it is necessary to refer to Sec.42 of the Sales of Goods Act 1930, which are reproduced as follows:-
"42. Acceptance - The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."
23. In the judgment titled as Lohmann Rausher Gmbh Vs Medisphere Marketing Pvt. Ltd. reported as 117 (2004) DLT 95, it was held by the Hon'ble High Court of Delhi that as per the mandate of Sec.41 of the Sales of Goods Act, the 25 Com.O.S.No.1474/2022 defendant not having inspected the goods in question prior to delivery, had a right to inspect the goods on delivery and report defects within a reasonable time of delivery. If not rejected within reasonable time, mandate of Sec.42 stipulates that the defendant would be deemed to have accepted the goods.
24. In the present case as above discussed the Defendant has acknowledged receipt of the goods as per Ex.P.14 and Ex.P.25. It is also admitted fact that till filing the written statement defendant has not raised any objection regarding the quality of material supplied by the Plaintiff. Under these circumstances, it is clearly shows that the Defendant has not reported the defects within the reasonable time of delivery. As per section 42 of sale of goods act. IF not rejected within a reasonable time the Defendant would be deemed to have accepted the goods.
25. The plaintiff has stated that the 1st defendant has agreed to pay interest at 24% p.a. upon the due amount as agreed by the directors of the 1st defendant through their letters dated 07.09.2016 and 18.02.2017 and also by a board resolution of the 1st defendant dated 07.09.2016 a certified true copy of which was given to the plaintiff. The defendants have confirmed the balance amount payable to the plaintiff in writing on 31.03.2019. As the defendants No.2 and 4 being the 26 Com.O.S.No.1474/2022 directors of the 1st defendant have given their personal guarantee for due repayment of the dues of the plaintiff.
26. The plaintiff has produced two personal guarantees executed by the defendants No.2 and 4 on 07.09.2016 and 18.02.2017 at Ex.P18 and P19 respectively. On perusal of Ex.P17, board resolution of the defendants' company dated 07.09.2016 discloses that the defendant No.1 company resolved that one Mr.Debjyoti Ray and Mrs.Kusuma D. Ray will be individually, personally and jointly and severally be responsible to repay the amount if the company does defaults or does not pay the amount along with interest 24% p.a. This document contains the signature of defendants 2 and 4 and seal of defendant No.1 company. Ex.P18 discloses that the defendants 2 and 4 have executed this letter in favour of the plaintiff by undertaking that in case their company not able to repay the amount on or before 06.12.2016, they shall be individually, jointly and severally be responsible to repay the above amount along with interest at 24% p.a. for the delay beyond 06.12.2016. They were issuing their company cheque for same amount which can present on 07.12.2016. In case they are required additional time, they will let him know in writing on or before 05.12.2016. Additional time of one month maximum will be granted for clearing the outstanding along with interest for the delay at 24% p.a. They are personally 27 Com.O.S.No.1474/2022 responsible to pay the above said amount along with the interest for the delay in the payment till all the amounts are cleared. Ex.P19 personal guarantee dated 18.02.2017 discloses that they are confirm that in case their company is not able to pay their dues, both of them will be individually, jointly and severally bound to pay the outstanding amount along with interest at 24% p.a. at all times.
27. Further, the defendant has taken a specific defence that while having the commercial transaction, the plaintiff had obtained six signed letter heads and six signed blank cheques and a rubber stamp from defendant No.1. Since the transaction were there between the plaintiff and the 1 st defendant, blank letter heads and cheques were handed over to the plaintiff with signatures of defendant No.2 and 4. While collecting the above mentioned blank/signed documents, the 1 st plaintiff has also obtained signed blank white papers from the 2 nd defendant. The plaintiff has used those documents to generate the letters, invoices and the board resolution to use against the defendants in this case to get favourable orders from this court.
28. In the recent judgment of our Hon'ble High Court of Karnataka, it is held that "validly signed blank cheque towards some dues would attract presumption in favour of the account payee U/s 139 of N.I. Act".
28Com.O.S.No.1474/2022
29. During cross examination, Dw1 has clearly stated that himself and 4th defendant were dealing with the plaintiff and the 4th defendant has signed some of the documents on his instruction and he did so at the plaintiff's request. Further he has categorically admitted that Ex.P12(a) is his signature and he has endorsed in his hand writing with regard to receipt of materials in good and working condition, affixed his signature with the date at the end of the page at Ex.P12(b). So this fact clearly falsifies the contention of the defendant that the plaintiff had obtained six signed letter heads and six signed blank cheques and a rubber stamp from defendant No.1. Further, the defendant has not issued legal notice or demand notice for return of these blank cheques, letter heads and rubber stamp and also not filed any complaint against the plaintiff regarding the same. Further the defendant has not made it clear that on what purpose he has issued a blank signed cheque and signed papers and why he has handed over the rubber stamp to the Plaintiff. In the absence of all these facts and circumstances, we cannot believe the contention of the defendants that the plaintiff has created the documents and on the basis of the concocted documents he has filed this suit.
30. Further, in this case the defendant No.1 has filed written statement and defendant No.2 and 4 are adopted the same. It 29 Com.O.S.No.1474/2022 is pertinent to note that defendant No.2 who has examined in his individual capacity and he has not examined on behalf of the defendant No.1 and 4. His affidavit evidence does not discloses that he has led evidence on behalf of the defendants 1 and 4. Further, the defendant No.1 admitted that he has not produced any board resolution or authorization from the defendant No.1 company to lead evidence on behalf of the defendant No.1 company. Under these circumstances, it is clear that the defendant No.1 and 4 have not led any evidence.
31. In this regard I relied upon a decision reported in AIR 1999 S.C 1441. It is well settled by Hon'ble Supreme Court in Vidhyadhar vs Manikrao & Anr is as under :-.
a. Evidence Act - Section 144 - Adverse inference - Party to the suit not entering the witness box - Give rise to inference adverse against him.
32. Where a party to the suit does not appear into the witness box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct.
33. In view of the above decision adverse inference can be drawn against the Defendant No.2 and 4 and presumed that the case setup by the Defendant is not correct.
30Com.O.S.No.1474/2022
34. Hence the plaintiff proved that there was short payment of Rs.5,19,844/- by the 1st defendant towards supply of materials under the invoices mentioned in para 2 of the plaint.
35. Further, the 2nd defendant has also failed to establish that the defendant No.1 company and defendants 2 and 4 are not liable to pay the suit claim amount. Accordingly, Issue No.1 and 2 are answered in the affirmative, Issue No.3 and 4 are answered in the negative.
36. Issues 6 and 7: The plaintiff has stated that the defendants have given their personal guarantee and also undertaken to pay the interest at 24% p.a. upon outstanding amount, they are jointly and severally liable to pay the same to the plaintiff. As such the defendants are liable to pay a sum of Rs.4,36,669/- towards interest upon the balance principal amount of Rs.5,19,844/- and interest is calculated till 29.09.2022. On the other hand, the defendant has taken contention that there is no contract between the plaintiff and the defendants for imposing 24% interest. As above discussed, Ex.P17 to P19 the defendants have agreed to pay the interest in case of delayed payment beyond 06.12.2016. Hence, in view of Ex.P17 to P19, the defendants are liable to pay interest at 24% p.a. on principle of amount of Rs. 5,19,844/- till filing of the suit i.e., 29.09.2022 it comes 4,36,669/- the total due and 31 Com.O.S.No.1474/2022 payable by the Defendant is Rs. 9,56,513/-.
(a) The Plaintiff also claimed future at 24% per annum on the suit claim amount of Rs.Rs.9,56,513/- from the date of filing the suit till the date of realization.
37. Section 34 of CPC provides that the court may, in a decree for payment of money, order interest on the principal sum adjudged for any period prior to institution of the suit and from the date of institution of the suit to the date of decree. As the court deems reasonable. Further, Section 34 of CPC provides that the court may order future interest at such rate not exceeding 6% p.a. and for liability arising out of a commercial transaction, court may order future interest exceeding 6% p.a. But not exceeding contractual rate of interest and if there is no contractual rate of interest, at the rate on which nationalized bank advance loans.
38. Considering the aforesaid proposition of law, interest as claimed by the plaintiff at 24% p.a. appears to be too exorbitant and it could be in the interest of justice if the interest at 10% p.a. on the principal amount is awarded in favour of the plaintiff.
39. From the above discussion, I hold that the Plaintiff has proved that the Plaintiff is entitled to recover the amount of 32 Com.O.S.No.1474/2022 Rs.9,56,513/- with future interest at 10% p.a. from the defendants 1 to 4 from the date of suit till realization. Accordingly, Issue No.6 is answered in the affirmative and issue No.7 is answered partly in the affirmative.
40. Issue No.8 : Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed in part with cost.
The defendants are jointly and severally liable to pay a sum Rs.9,56,513/- with future interest at 10% p.a. to the plaintiff from the date of the suit till realization.
Draw Decree accordingly.
The Office is directed to send copy of this Judgment to Plaintiff and Defendants to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer, typed by her directly on computer, verified and then pronounced by me in open Court on this the 25th day of January, 2024).
(SUMANGALA S BASAVANNOUR), C/c LXXXIV Addl.City Civil & Sessions Judge, Bengaluru.
33Com.O.S.No.1474/2022 ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE PLAINTIFF P.W.1 Ashok Arjandas Chhabria LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P1 True copy of Board Resolution dated 04.04.2022 Ex.P2 Tax invoice dated 18.02.2017 Ex.P.3 Tax invoice dated 28.02.2017 Ex.P4 & 5 Tax invoices date16.03.2017d Ex.P6 & 7 Tax invoices date21.03.2017d Ex.P8 Balance confirmation Ex.P9 Account of 1st defendant dated 31.03.2019 Ex.P10 Emails communication Ex.P11 Purchase order dated 07.09.2016 Ex.P11(a), Relevant entry
(b) Ex.P12 Purchase order dated 28.02.2017 Ex.P12(a) Relevant entry Ex.P13 Purchase order dated 07.09.2016 Ex.P13(a) Relevant entry Ex.P14 Tax invoice dated 08.09.2016 Ex.P14(a) Relevant entry Ex.P15 Tax invoice Ex.P16 Certificate U/s 65B of the Indian Evidence Act Ex.P17 Board Resolution dated 07.09.2016 Ex.P18 Personal guarantee dated 07.09.2016 Ex.P19 Personal guarantee dated 18.02.2017 34 Com.O.S.No.1474/2022 Ex.P20 Ledger account statement Ex.P21 Certificate U/s 65B of the Indian Evidence Act Ex.P22 Certificate U/s 65B of the Indian Evidence Act Ex.P23 Computer generated interest caculation sheet Ex.P24 Certificate U/s 65B of the Indian Evidence Act Ex.P25 Delivery challan dated 08.09.2016 Ex.P25(a) Relevant entry LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT D.W.1 Debjyothi Ray LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT Ex.D1 Copy of email dated 27.10.2016 Ex.D2 Copy of email dated 16.02.2017 Ex.D3 Copy of email dated 10.02.2022 Ex.D4 Copy of email dated 30.08.2016 Ex.D5 Copy of email and whatsapp chats Ex.D6 Copy of email dated 10.02.2022 Ex.D7 to D12 Copies of invoices Ex.D13 Document evidencing forfeiture of the amount by Hyderabad Karnataka Region Development Board Ex.D14 Letter of intent dated 31.08.2016 Ex.D15 Copy of 1st purchase order dated 07.11.2016 with technical specifications received from HKRDB Ex.D16 Copy of 2nd purchase order dated 08.02.2017 received from HKRDB Ex.D17 Attested copy of tender notification with 35 Com.O.S.No.1474/2022 specifications Ex.D18 Email dated 22.04.2019 sent by the plaintiff's directorin the format of balance confirmation Ex.D19 Email dated 06.12.2019 received from HKRDB with attachment stating that there was short comings in the goods supplied Ex.D20 1st defendant's master data downloaded from the website of MCA Ex.D21 GST information of Rey Inc. a proprietorship concern downloaded from the website Ex.D22 Notarized copy of passport extract Ex.D23 & Photocopies of two purchase order dated D24 08.11.2016 and 09.02.2017 Ex.D25 Lost report dated 01.08.2023 issued by Bengaluru City Police on receipt of my compliant registered online Ex.D26 Certificate U/Sec.65B of the Evidence Act Ex.D27 Certificate U/Sec.65B of the Evidence Act (SUMANGALA S. BASAVANNOUR), C/c LXXXIV Addl.City Civil & Sessions Judge, Bengaluru.