Delhi District Court
M/S Dgm India Marketing Pvt. Ltd vs M/S Pinstorm Technologies Pvt. Ltd on 3 July, 2013
IN THE COURT OF SH. M.P. SINGH: ACJ/CCJ/ARC(SE), SAKET COURT, NEW
DELHI
CS No.109/13
Unique case ID No. 02406C0453542010
M/s DGM India Marketing Pvt. Ltd.
Through its duly authorized representative
Regd. Office & Corporate Office at:
F90, Second Floor, Okhla Industrial Area, PhaseI,
New Delhi - 110 020. ........... Plaintiff
Vs.
M/s Pinstorm Technologies Pvt. Ltd.
Ground Floor, Swati Building,
North Avenue Road,
Santa Cruz (W), Mumbai - 400 054. ......... Defendant
Suit instituted on : 31.07.2010
Arguments heard on : 16.05.2013
Judgment pronounced on : 03.07.2013
JUDGMENT UNDER ORDER XII RULE 6 CPC
(On plaintiff's application under Order XII Rule 6 read with section 151 CPC)
1.Plaintiff company is engaged and specialises in providing internet marketing services to various companies and organisations. On 24.07.2009, the defendant contacted the plaintiff for formulating and devising a marketing campaign for one of its clients, namely, Greenpeace. It was communicated to the plaintiff by the defendant that its client i.e. Greenpeace wanted to launch a campaign which involved a petition to the Prime Minister visavis climate Page 1/24 change and enactment of renewable energy law at the earliest. The objective of the campaign was to have one million Indian citizens write to the Prime Minister by way of signup on the campaign designed by the plaintiff. Representatives of the plaintiff and the defendant held negotiations and discussions. Thereafter, the defendant placed a release order dt. 24.07.2009 with the plaintiff for 10,000 signups/registrations/leads.
2. On 10.08.2009 defendant placed an insertion order with the plaintiff asking the latter to design the internet marketing campaign. The duly signed insertion order placed by the defendant was received by the plaintiff in Delhi on 10.08.2009. It was agreed that the defendant would pay Rs. 22/ as cost per signup/registration/lead besides the applicable taxes. It was also agreed that the payment would be made within 7 days from the date of invoice. It was further agreed that the invoice period would be 30 days. As a special concession, the plaintiff did not charge any set up fees or monthly fees for devising the internet marketing campaign for Greenpeace, the defendant's client.
3. Having received the insertion order, the plaintiff began designing the internet campaign for Greenpeace. It quickly designed and made live the internet campaign. It is averred that on account of its excellent marketing campaign, it proved to be a great success with net number of signup/registration/lead crossing 10,000. Vide email dt. 11.09.2009, defendant acknowledged that number of signup/registration/lead generated by the campaign designed by the plaintiff totaled 12253. Thereafter, the plaintiff raised two invoices on 31.08.2009 and 30.09.2009 at the rate mutually agreed upon. As per the record maintained by the plaintiff, there were 217 leads in the month of August 2009 and 11460 leads in the Page 2/24 month of September 2009. Therefore, the defendant was under an obligation to pay a sum of Rs. 5,266/ @ Rs. 22/ per lead for the leads generated in August 2009. And similarly for the month of September 2009, it was under an obligation to pay Rs. 2,78,088/. Thus, the total amount due was Rs. 2,83,354/. The invoices raised by the plaintiff were inclusive of all taxes. Contrary to the stipulation that the payment was to be made within 7 days of the invoice being raised, the defendant did not pay a single penny. Repeated requests and reminders of the plaintiff fell on defendant's deaf ears. Plaintiff alleges that the defendant has turned dishonest and does not want to fulfill its obligations stipulated in the insertion order dt. 10.08.2009.
4. It is pointed out that the defendant deposited TDS (tax deducted at source) with the Central Govt. on the two invoices raised by the plaintiff on 31.08.2009 and 30.09.2009 for Rs. 5,266/ and Rs. 2,78,088/ respectively. It is submitted that bare perusal of Form No. 16A issued by the defendant would show that it had deducted TDS towards the amount due to the plaintiff. It is stated that deposit of TDS by the defendant is a clear admission of its liability towards the plaintiff in respect of the two invoices. Plaintiff submits that on the one hand the defendant has deducted TDS from the amount due to it and on the other hand it has withheld the amount legally due to it. It is urged that the form no. 16A issued by the defendant is a conclusive proof that the defendant has admitted its liability towards the plaintiff in unequivocal terms and cannot wriggle out of the same. Vide legal notice dt. 18.05.2010, plaintiff called upon the defendant to pay the amount due within 15 days of its receipt. The legal notice failed to elicit any response. It is thus that this suit came to be filed.
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5. Defendant filed its written statement 29.09.2011. At the very outset, it states that this court has no territorial jurisdiction to try and entertain the present suit as the contract was concluded at Bombay, the head office of the defendant company is at Bombay and the acceptance was made at Bombay. It has also taken few other preliminary objections like there being no cause of action in favour of the plaintiff; the suit as framed being not maintainable and the plaintiff's AR having no authority to sign, file and verify the suit. Insofar as the transaction in question upon which the plaintiff is basing its case, the defendant does not dispute it. It rather admits the transaction in question. However, it takes the stand that there was deficiency and delay in providing services which adversely affected its client (Greenpeace).
6. In response to the plaintiff's assertion that the payment was to be made within 7 days of the date of invoice, the defendant states in para 6 of reply on merits that no such time was agreed upon. It goes on to state that the insertion order dt. 10.08.2009 which was placed by it had been placed from Bombay and acceptance thereof was received by it from the plaintiff at Bombay. Interestingly enough, in para 8 of the reply on merits of its written statement, the defendant goes on to state, "It is settled between the parties that no terms as laid in the invoice was not to be followed by the defendant." (This would in effect mean that the terms contained in the invoice were to be followed.) It further states in the same paragraph (para 8 of reply on merits), "It is specifically denied that there was no condition stipulated in the insertion order that all invoices were required to be made within 7 days from the date of invoice."
7. In response to plaintiff's averments visavis TDS, this is all what the Page 4/24 defendant has to say:
"11. That the contents of para no. 11 of the plaint as stated are wrong and denied because it is vague, misconceived and contrary to the allegations made in the body of the plaint".
8. The defendant denies service of legal notice as averred by plaintiff. Denying rest of the averments, it has prayed for dismissal of the suit.
9. Plaintiff filed its replication. The plaintiff asserts that this court has the jurisdiction. It has reiterated the averments made in the plaint.
10. Now to the averments in the application. In the application, the plaintiff has reiterated the averments made by it in the plaint. It submits that the defendant has acknowledged its liability to pay the said amount to the plaintiff company and accordingly deposited the tax with the Income Tax Department. Its submits that by deposit of TDS under section 203 of Income Tax Act and issuance of TDS certificate dt. 31.03.2010, duly received by the plaintiff from the defendant, the latter has acknowledged its liability to pay the amount. Defendant, on the other hand, has vehemently opposed the application. It states that it has taken specific objection regarding the territorial jurisdiction and as such the court cannot proceed to pass a decree straightaway. It states that it has not made any admission, much less any unequivocal admission, and as such plaintiff's application under consideration deserves dismissal.
11. I have heard the arguments at Bar and perused the record of the case.
12. Before proceeding further, one aspect of the present matter is required to be taken note of. The issues in this case were framed on 07.02.2012. Although this point was not agitated, yet it may argued that the court ought to continue with Page 5/24 the trial instead of passing a judgment on the basis of admission in the pleadings or otherwise in the face of the fact that issues have already been framed. However, this argument may not be legally tenable. There are decisions to hold that application under Order XII Rule 6 CPC cannot be dismissed merely because issues have been framed in the case. (Meera Gupta Vs. Dinesh Chand, 94(2001) DLT 10 and Parivar Sewa Sansthan Vs. Veena Kalra, AIR 2000 Del
349). Nonetheless, a plain reading of Order XII Rule 6 CPC makes it clear that the court may proceed to pronounce a judgment on the basis of admissions of fact either in the pleadings or otherwise at any stage of the suit.
13. Under Order XII Rule 6 CPC, admissions on which the court wishes to pass a decree have to be unambiguous, clear and unconditional. Reliance placed upon by Ld. Counsel for the defendant, on this proposition of law, on the decisions of Raj Kumar Chawla Vs. M/s Lucas Indian Services, AIR 2006 Delhi 266; Anup Jindal Vs. Jagdish Chander Gupta, 103 (2003) DLT 234 and M/s Jeevan Diesels & Electricals Ltd. Vs. M/s Jasbir Singh Chadha (HUF) & Anr., AIR 2010 SC 1890 certainly cannot be faulted.
14. It would be apt to take a note of the object behind this provision. Whole object of incorporating the procedure of Order XII Rule 6 CPC is to grant a quick relief to commercial litigants whenever the court finds any legally enforceable admission and that in such situations the court will help the litigations to get quick relief. (Prabitra Kumar Basu & Anr. vs. Calcutta Municipal Corporation, 2000 AIHC 2101). In the case of Karam Kapahi & Ors. vs. Lal Chand Public Charitable Trust & Anr. (2010) 4 SCC 753 it was held that the Page 6/24 object behind Order XII Rule 6 CPC is to give the plaintiff a speedy judgment. Further, in the case of Uttam Singh Duggal & Co. Ltd. Vs. United Bank of India, AIR 2000 SC 2740, Apex Court made the following observations: 'We should not unduly narrow down the meaning of this rule, as the object is to enable a party to obtain speedy judgment. Where the other party has made a plain admission entitling the former to succeed, it should apply and also whereever there is a clear admission of fact in the face of which it is impossible for the party making such admission to succeed."
15. In the case at hand, the defendant does not at all dispute the transaction in question. It rather admits the same in its written statement. A bare reading of the written statement amply reflects that the defendant has nowhere disputed that the Greenpeace had approached it for devising a campaign involving presentation of a petition to the Prime Minister against climate change and enactment of law for renewable energy. It also does not dispute that it had then approached the plaintiff for designing an internet marketing campaign. In para 5 of the plaint, the plaintiff had averred as follows:
5. Thereafter, negotiations and discussions between the representatives of the plaintiff and the defendant, the defendant placed a release order dt. 24.07,2009 with the plaintiff for 10,000 signup/registration/leads.
16. In response to this paragraph, this is precisely what the defendant in para 5 of reply on merits of its written statement has to say:
5. In reply to para no. 5 of the plaint, it is submitted that the negotiations and discussions Page 7/24 between the plaintiff and the defendant through their representatives took place at Bombay and not as alleged.
17. What is clear beyond any shadow doubt from the pleadings and the aforesaid two extracts is that the defendant does not dispute that Greenpeace had approached it for devising a campaign. It also does not dispute that it had then approached the plaintiff for devising the internet marketing campaign to be presented to the Prime Minister. It also does not dispute that it had placed a release order dt. 24.07.2009 with the plaintiff for 10,000 signup/registration/leads. Furthermore, in para 6 of the plaint, this is what the plaintiff had averred:
6. On 10.08.09, the defendant placed the insertion order with the plaintiff asking it the plaintiff to design the internet marketing campaign. It was agreed that the defendant would pay Rs. 22/ as cost per signup/registration/leads with taxes extra as applicable. Further, it was agreed by the defendant that the payment for the said campaign would be within 7 days from the date of the invoice. It was further agreed that the invoice period would be 30 days. That the plaintiff, as a special concession, did not charge any setup fees or monthly fees for devising the said marketing campaign for Greenpeace i.e. defendant's client. That the duly signed insertion order dated 10.08.2009 placed by the defendant was received by the plaintiff on 10.08.2009."
18. In response to this assertion of the plaintiff, the defendant's response was asunder:
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6. That the contents of para 6 of the plaint as stated are wrong and denied and there was no time agreed by the defendant to make the payment within 7 days from the date of the invoice. It reply to para 6, it is submitted by the defendant that the alleged insertion order dt. 10.08.2009 placed by the defendant from Bombay and acceptance thereof was received by the defendant from the plaintiff at Bombay.
19. From the above what is therefore clear is that plaintiff's assertion visa vis paying Rs. 22/ as cost per signup/registration/leads with extra cost as applicable has not been answered specifically. Defendant has not answered the pint of substance on this score. On the issue of the insertion order dt. 10.08.2009 issued by the defendant, the only stand is that the same was placed at Bombay and its acceptance was received at Bombay. That is to say, the existence and the placing of the insertion order as aforesaid stands admitted.
20. Furthermore, in para 8 of the plaint, this is what the plaintiff had stated:
8. Subsequent to the successful implementation of the Greenpeace campaign two invoices were raised by the plaintiff on 31.8.2009 and 30.9.2009 at the rate agreed to between the parties. As per the records maintained by the Plaintiff, 217 leads were generated for the month of August, 2009 and 11460 leads were generated for the month of September, 2009. Therefore, the defendant was under an obligation to pay a sum of Rs. 5,266/ @ Rs. 22/ per Signup /registration /lead, for the Signup /registration /lead generated in August, Page 9/24 2009 and Rs. 2,78,088/ for September, 2009.
The invoices raised by the plaintiff on the defendant were inclusive of all taxes. That as per the terms and conditions stipulated in the insertion order, all invoices were required to be paid within 7 days from the date of the invoice.
However, to utter dismay and surprise of the Plaintiff till date, the defendant has failed to pay any monies towards total outstanding amount of Rs. 2,83,354/ besides interest on the outstanding amount."
21. In response to this paragraph, this what the defendant states:
8. That the contents of para no. 8 of the plaint as stated are wrong and denied. It is specifically denied that there was no condition stipulated in the insertion order that all invoices were required to be made within 7 days from the date of invoice. It is settled between the parties that no terms as laid in the invoice was not to be followed by the defendant.
22. What therefore appears is that the defendant has not answered the point of substance. This denial is absolutely a vague one. It is sketchy and and bereft of necessary and requisite details.
23. I shall come to the relevant paragraph (para 11) of the plaint regarding the deposit of TDS by the defendant. It reads asunder:
11. It is pertinent to point out that the defendant has deposited TDS (Tax Deducted at Source) with the Central Government on the two invoices which were raised by the Plaintiff on 31.8.2009 and 30.9.2009 for sum of Rs. 5,266/ and Rs.
2,78,088/ respectively. A bare perusal of the Page 10/24 Form 16A issued by the Defendant would show that the defendant has deposited TDS towards the amounts due to the Plaintiff. Deposit of TDS by the Defendant is clear admission of its liability towards the Plaintiff in terms of invoices dt. 31.08.2009 and 30.9.2009. On one hand, the defendant has deducted TDS from the amount due to the Plaintiff and deposited the same with the income tax department but on the other hand, the defendant has withheld the amount legally due to the Plaintiff. Form 16A issued by the defendant is conclusive proof that the defendant has admitted its liability towards the plaintiff in unequivocal terms and cannot wriggle out of the same.
24. Defendant in response to this assertion of the plaintiff, regarding deduction of TDS, has merely stated that the 'contents of para no. 11 of the plaint as stated are wrong and denied because it is vague, misconceived and contrary to the allegation made in the body of the plaint.' (This para has been reproduced verbatim hereinabove). Now, on the issue of deduction of TDS the defendant has not answered the point of substance. It has not answered the point of substance of deduction of TDS on 31.08.2009 and 30.09.2009 on the amount of Rs. 5,266/ and Rs. 2,78,088/ respectively. The defendant is merely taking a bland plea that the contents of this paragraph are wrong and denied being vague, misconceived and contrary to the allegations made in the body of the plaint. But it does not say as to how the contents of the aforesaid paragraph regarding deduction of TDS are wrong. It does not say as to how the the contents of the same are misconceived, vague and contrary to the allegations made in the plaint. Order VIII Rule 3 of CPC requires a denial in the written statement to be specific. The defendant is Page 11/24 bound to deal specifically with each allegation of fact. If the defendant does not answer the point of substance and does not deny specifically an allegation of fact, the said facts shall be deemed to be admitted against him. The provision of Order VIII Rule 5 of the CPC, lays down the basic principle of law that a fact not denied specifically in the pleadings is deemed to be admitted. In the instant case, leave aside, there being lack of any specific denial in the written statement; on the contrary, as it shall be hereinafter noted, the defendant has taken absolutely vexatious and false stand regarding deduction of tax. The combined effect of Rules 3, 4 & 5 of Order VIII of the CPC has been considered by Subba Rao J. (as he then was) in the case of Badat & Co. vs. East India Trading Company AIR 1964 SC 538 in the following words:
These three rules form an integral code dealing with the manner in which allegations of fact in the plaint should be traversed and the legal consequences flowing from its non compliance. The written statement must deal specifically with each allegation of fact in the plaint and when a defendant denies any such fact, he must not do so evasively, but answer the point of substance. If his denial of a fact is not specific but evasive, the said fact shall be taken to be admitted. In such an event, the admission itself being proof, no other proof is necessary.(emphasis supplied)
25. Therefore, in terms of ratio decidendi of Badat & Co. case (supra) if there is no specific denial, the said fact is taken to be admitted, and further where there are admissions of fact in the pleadings itself, then such admission is proof by itself and no other proof is necessary. The present case involves a situation where there are admissions in the pleadings itself. And there can certainly be no Page 12/24 better admission than the present one. Therefore, when there is direct admission, what more proof is required? Is there anything more required, when there is direct admission in the pleadings itself?
26. In this context I shall take note of certain observations made in a judgment of Delhi High Court reported as Ved Prakash vs. M/s Marudhar Services Limited (2000)V AD (DHC) 845:
3. ......................... It would be too pedantic an approach to maintain that an admission can only be considered to have been made where a particular party specifically agrees to the correctness of a statement made in pleadings by the opposite party. The admission must be drawn from the totality of the circumstances of the case; the Court is not powerless to review the entire defense presented in the written statement. It is only in those instances where, from other attendant facts the Court is of the view that despite the existence of admissions triable issue have arisen, that its discretion should be exercised.
(underlined for emphasis) xxxxxxxxxxxxxxxxxxxxxx
5. ........................... Even if a bald assertion had been made in this regard, the Court is not powerless to look into the surrounding circumstances to see whether this was only a plea calculated to protract and prolong the litigation.
............................ Furthermore, if the argument of the learned counsel for the Defendant is accepted, it would result in the anomalous position that whilst the pleadings of the defendant is substantiation of its plea of waiver are allowed to be sketchy and bereft of necessary and requisite detail, the plaintiff's explanatory pleadings containing the necessary details would have to be ignored. The failure of the Defendant to plead full particulars cannot be countenanced. It is palpably clear that Page 13/24 the defendant has deliberately made vague pleadings in order to mislead the Court. (underlined for emphasis) xxxxxxxxxxxxxxxx
7. .......................... Merely because a palpably false case has been set up, in the present circumstances relating to the waiver of the notice, it would not lead to the consequence that a judgment should not be passed. Failure to plead facts which constitute a valid defense, must be read as admissions made as contemplated by Rule VI of Order 12. To hold otherwise would be an emasculation of judicial powers to dispense complete justice. Justice delayed is justice denied. (underlined for emphasis)
27. A judgment of Division Bench of Delhi High Court reported as Surjit Sachdev vs. Kazakhstan Investment Services Pvt. Ltd. 66(1997) DLT 54 can also be taken note of in this connection. It was observed in this case that admissions need not be made expressly in the pleadings and even on constructive admissions, Court can proceed to pass a decree in plaintiff's favour.
28. Notwithstanding defendant's admissions in its written statement visa vis the deduction of TDS; an officer of the defendant company in his examination under section 165 of Evidence Act had clearly stated that the taxes as disclosed in the form no. 16A, which is in judicial file, was indeed deposited. Before we deal specifically with the contents of his examination under section 165 of Evidence Act, it would be apposite to take a note of the contents of the form no. 16A. The form no. 16A bears the seal of the defendant company. This form no. 16A is under the signature of Ekta Mehta, Finance Officer of the defendant company. The name and address of the deductee is Pinstorm Technologies Pvt. Ltd., Page 14/24 Ground Floor, Swati Building, North Avenue Road, Santacruz (W) Mumbai400
054. Name and address of the person to whom payment was to be made or in whose account it was to be credited is disclosed as - DGM India Internet Marketing P. Ltd., F90/34, Second Floor, Okhla Industrial Area, PhaseI, New Delhi. The nature of the payment is stated to be to Contractors" . This "Payment form no. 16A clearly discloses that an amount of Rs. 108/ (Rs. 105/ TDS + Rs. 3/ education cess) was deposited on the amount of Rs. 5,266/ and the date of this payment/credit is 31.08.09. Furthermore, Rs. 5,729/ (Rs. 5,562/ TDS + Rs. 167/ education cess) was deposited on the amount of Rs. 2,78,088/ and the date of this payment/credit is 30.09.09. This form no. 16A clearly states that the tax has been deducted at source and paid to the Central Government.
29. In this background, we shall now take a look at the examination under section 165 of Evidence Act of the officer of the defendant company. The same is reproduced asunder:
Statement u/s 165 of Evidence Act Statement of Sh. Amit Joshi, Assistant Manager, Pinstorm Technologies Pvt. Ltd., R/o Flat no. 6, Shanti Niketan, 16th Road, Khar West, Mumbai - 400
054.
On S.A. Q. Was Ekta Mehta an employee of Pinstorm Technologies Pvt. Ltd. of which you are the Assistant Manager?
A. Yes. She was an employee. She was the head of finance. She is presently not working.
Q. When did Ekta Mehta leave the services of your company? A. I do not know the exact date but it was about two years ago. Q. Have you deposited the tax which is reflected in the form no. 16 A which is in the judicial file (The form under the signature of Ms. Ekta Mehta)? Page 15/24 A. We have paid the tax as disclosed in the aforesaid form. Vol. There were two payments of tax. One was made on 31.08.2009, amounting Rs. 108/ and the other was 30.09.2009, amounting Rs. 5729/.
RO & AC (Sd/)
30. Therefore, what is absolutely clear from the aforesaid is that the defendant admits that the taxes as disclosed in the form no. 16A placed on record by the plaintiff was indeed deposited. He also clearly admits that Ekta Mehta under whose signatures form no. 16A was issued was the head of finance division of the defendant company. Therefore, the genuineness of the document and the factum of deposit of tax at source on Rs. 5,266/ and Rs. 2,78,088/ is absolutely beyond any shadow of doubt. It is absolutely clear that defendant owes an amount of Rs. 5,266/ + Rs. 2,78,088/ = Rs. 2,83,354/. This admission of liability on the part of defendant as culled out from the TDS certificate and from the examination of the officer of the defendant company are absolutely unambiguous, clear and unequivocal. Besides this, the defendant in its written statement by way of admissions visavis liability by not answering the point of substance and by not making specific denials has clearly admitted that it owed the amount of Rs. 5,266/ + Rs. 2,78,088/ = Rs. 2,83,354/ to the plaintiff. It bears repetition to state here that the defendant in its pleadings does not at all dispute the factum of the contract entered into with the plaintiff for devising an internet marketing campaign for Greenpeace. And it also does not dispute that for this, it had placed an insertion order with the plaintiff and that the cost as agreed upon between the parties for each signup/registration/leads was Rs. 22/.
31. I shall now come to the most important plank of the defendant's Page 16/24 defence. And this was regarding territorial jurisdiction. The defendant states that all the negotiations regarding the contract took place at Bombay, that the contract was made at Bombay, and that the acceptance thereof was also at Bombay. It thus strongly avers that this court has no jurisdiction. The issue of territorial jurisdiction in the case, as in the present one, would be governed by section 20 CPC. Clause (c) section 20 CPC states that a suit can be instituted where the cause of action, wholly or in part, arises. In this connection, a reference may be made to the oftquoted enunciation of law by the Apex Court in A. B. C. Laminart Pvt. Ltd. & Anr. Vs. A. P. Agencies, Salem, AIR 1989 SC 1239, with regard to the jurisdiction of Courts in cases such as the present one:
"11. The jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors.
12. A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it Page 17/24 depend upon the character of the relief prayed for by the plaintiff.
13. Under section 20 (c) of the Code of Civil Procedure subject to the limitation stated theretofore, every suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part arises. It may be remembered that earlier section 7 of Act 7 of 1888 added Explanation III as under:
"Explanation III. - In suits arising out of contract the cause of action arises within the meaning of this section at any of the following places, namely: (1) the place where the contract was made; (2) the place where the contract was to be performed or performance thereof completed;
(3) the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable.
14. The above Explanation III has now been omitted but nevertheless it may serve a guide. There must be a connecting factor.
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place Page 18/24 where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors."
32. Therefore, 'cause of action' under clause (c) of section 20 CPC is not limited to negotiations between the parties or entering into the contract or acceptance of the offer preceding the contract. A cause of action can be said to arise also at a place where the payment was to be made or from where the invoices were issued. This dictum was followed in a decision of Delhi High Court in Artee Minerals Vs. Kanwal Kaur, 1998 AIHC 1422.
33. Having taken a note of clause (c) of section 20 CPC and the law as enunciated by the Apex Court in A. B. C. Laminart case (supra), I shall now Page 19/24 come to the aspect of territorial jurisdiction in the present case. It has already been noted hereinabove that as per form no. 16A issued by the defendant, the name and address of the person to whom the payment was to be made or in whose account it was to be credited is disclosed as DGM India Internet Marketing P. Ltd., F90/34, Second Floor, Okhla Industrial Area, PhaseI, New Delhi. This is the own document of the defendant. By way of this document the defendant had deposited the taxes. It is not a document of the plaintiff. This was sent to the plaintiff by the defendant under its own seal and signature of its finance officer. Therefore, from this it is abundantly cleared that the payment was to be made to the plaintiff at Delhi. And as such looked at from this perspective, a part of cause of action is surely made out at the place (Delhi) where payment was to be made or in whose account it was to be credited.
34. This issue can be looked at from another angle. The common law rule is that when no place of payment is specified, either expressly or by implication, the debtor must seek his creditor and pay. There are numerous decisions to hold that in civil matters this common law doctrine applies in this country. The plaintiff DGM India Marketing, therefore, as the creditor can very well institute the suit in Delhi where its office is located and in that view of the matter a part of cause of action arises in terms of section 20 (c) CPC. If any citation is required for this, decision of Andhra Pradesh High Court in Rajasthan SEB Vs. Dayal Wood Work, AIR 1998 AP 381 can be fruitfully referred to. I, therefore, hold that this Court at Delhi has the jurisdiction to entertain and try this case.
35. On the aspect of territorial jurisdiction, Ld. counsel for the defendant placed reliance upon a decision of Delhi High Court reported as Korba Super Page 20/24 Thermal Power Project Vs. Radha Madhav Engineering Enterprises, 1996 AIHC 4535. He urged that as per the ratio of this judgment this court would not have territorial jurisdiction. The facts of this case, as culled from para 4 of the judgment, are materially at variance with the case at hand. This was a case where the tenders were floated and the contract was executed between the parties at Korba, payments in respect of the works were made at Korba and all other related works were done at Korba, no cause of action ever accrued at Delhi. The instant case as noted hereinabove is on an altogether different footing. As per the own document of the defendant (form no. 16A), the payment was to be made/credited to the plaintiff, whose office is situated at Delhi. Therefore, this judgment would have no application to the case at hand.
36. The other plank of defence of the defendant was that there was deficiency and delay in providing services which adversely affected its clients. Now this defence is absolutely false and a fictitious one. It is a complete afterthought. The client of the defendant in this case was none other than Greenpeace. From the pleadings and material on record, it is absolutely clear that at no point of time did Greenpeace ever write or communicate to the defendant that there was deficiency and delay in providing the services. Had the Greenpeace communicated even on a single occasion to the defendant about the alleged delay and deficiency in the services, there may have been some ground to hold that this defence was not a sham one. This matter can be looked at from another angle. If there was delay and deficiency in the services, then why was it that the defendant promptly deducted the tax from the contractual amount forthwith on 31.08.2009 and 30.09.2009. Thirdly, if it was that the plaintiff was in Page 21/24 breach of the contract on account of deficiency and delay in the services, then the Greenpeace would have been dissatisfied with the performance and would not have made the entire payment to the defendant. But this is actually not so. From the material on record, what transpires is that the Greenpeace has made the payment to the defendant. Defendant was then obliged to make payment to the plaintiff. It also deducted tax at source thereon. It is a clear cut case of defendant having turned dishonest after having availed of the services from the plaintiff. It appears that the defendant has received the payment from its client Greenpeace, but it is not passing on what is legitimately due to the plaintiff.
37. Having considered the case at hand, I am satisfied that on a complete and meaningful reading of the written statement and in the backdrop of the examination of the officer of the defendant company under section 165 Evidence Act, there is an admission of the liability. This is fit case where the application of the plaintiff under Order XII Rule 6 deserves to be allowed. As observed in Ved Prakash case (supra) failure to plead facts which constitute a valid defence, must be read as admissions made as contemplated by Rule 6 of Order 12 and to hold otherwise would be an emasculation of judicial powers to dispense complete justice.
38. Interest It is absolutely clear that the transaction in question is a commercial one. According to section 34 CPC, court can award interest which it deems to be reasonable on the principal sum adjudged from the date of the suit till the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit. Insofar as future interest is concerned, according to section 34 CPC, in matters where there is no contractual Page 22/24 rate, the court may award interest at the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
39. In the case at hand, the rate of interest of 15% per annum on the principal sum of Rs. 2,83,354/ would, to my mind, be a reasonable one considering the fact that the transaction was a purely commercial one. Accordingly, the plaintiff is awarded 15% interest on the principal sum of Rs. 2,83,354/ from 01.10.2009 till the actual and final realization of the decretal amount.
40. False and vexatious stand of the defendant On the point of deduction of TDS, the defendant was less than honest in making an absolutely evasive denial by stating that it was wrong being vague, misconceived and contrary to the allegations made in the body of the plaint. Whether a tax has been deposited or not is entirely a matter of record. The defendant after framing of the issues had moved an application for admission/denial of documents. An opportunity for admissions/denial of documents was given to the defendant in the fond hope that admission of even one or two documents would cut short the controversy. However, the defendant had, for reasons best known to it, some other designs in its mind. When the defendant was actually called upon to admit or deny the documents, it took a stand of neither admitting nor denying any document including the form no. 16A. This form no. 16A was issued by the defendant itself. It is a document concerning deposit of tax with the Income Tax Department and as such it was perplexing as to how the defendant could refuse to either admit or deny this document, and that too when the defendant itself had sought to put the clock back by asking for an opportunity for admission/denial of Page 23/24 documents at a later stage. The officer of the defendant was examined under section 165 Evidence Act. What he stated has already been noted hereinabove. He clearly admitted that the form no. 16A was issued by Ekta Mehta, officer of the defendant company, and that the taxes as disclosed therein were indeed deposited. The defendant has, therefore, knowingly and purposely ventured into taking a false and vexatious stand in its pleadings regarding form no. 16A. This certainly calls for imposition of cost upon the defendant under section 35A CPC. In exercise of power under section 35A CPC, this court imposes a cost of Rs. 3,000/ upon the defendant.
41. Cost of the suit is also awarded to the plaintiff.
42. Conclusion - The defendant Pinstorm Technologies Pvt. Ltd. is liable to pay an amount of Rs. 2,83,354/ (Rupees Two Lakh Eighty Three Thousand and Three Hundred Fifty Four only) to the plaintiff along with 15% interest per annum on this amount from 01.10.2009 till the actual and final realization of the decretal amount. Cost of the suit is also awarded to the plaintiff. Cost of Rs. 3,000/ is imposed upon the defendant under section 35A CPC to be paid to the plaintiff. Decree sheet be prepared. File be consigned to record room. Announced in the open court on 03.07.2013 (M. P. Singh) ACJ/CCJ/ARC(SE) Saket Court, New Delhi Page 24/24