Delhi District Court
R.S. Live Media Pvt. Ltd vs Kli Advertising on 28 April, 2018
IN THE COURT CIVIL JUDGE-06 (CENTRAL), TIS HAZARI COURTS,
DELHI
PRESIDED BY- HARSHITA VATSAYAN(CIVIL JUDGE)
SUIT NO. 597307/2016
1.R.S. Live Media Pvt. Ltd.
Through Mr. Shailesh Jha
3rd Floor, 13, Sant Nagar,
East of Kailash, New Delhi .........Plaintiff
VERSUS
1. KLI Advertising
1101, Padma Tower-1,
5 Rajendra Place,
New Delhi-08 ......Defendant No. 1
2. Nissan Motors India Pvt. Ltd.
ASV Ramana Towers, 37 & 38,
Venkatnarayana Road, T. Nagar,
Chennai-600017
........Defendant No. 2
Date of institution of the Suit: 18.08.2015
Date on which Judgment was reserved: 17.04.2018
Date of pronouncement of Judgment: 28.04.2018
Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 1/33
SUIT FOR RECOVERY OF RS. 1,33,560/ (RUPEES ONE LAKH THIRTY THREE THOUSAND FIVE HUNDRED AND SIXTY ONLY) ALONGWITH PENDENTE LITE AND FUTURE INTEREST
1). Vide this judgment, I shall dispose off a suit filed by the plaintiff R.S. Live Media Private Ltd. against the defendants K.L.I. Advertising and Nissan Motors India Private Ltd., seeking the relief of recovery of money to the tune of Rs. 1, 33, 560/- alongwith pendente lite and future interest @ 24% per cent per annum (simple interest).
2). Succinctly put, the factual matrix of the case, shorn of unnecessary details, as could be culled out from a bare perusal of the respective pleadings of the parties is as under:-
FACTUAL MATRIX AS GIVEN IN THE PLAINT
3). It is averred by the plaintiff that it is a company registered under the provisions of the Companies Act, 1956, having its office at Sant Nagar, East of Kailash, New Delhi. It is stated that Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 2/33 the plaintiff concern is engaged in the business of providing advertising services to various corporate and other business entities through various sources such as display screens, which are prominently displayed at leading hotels, restaurants, public places etc. It is stated that the plaintiff company through its Board Resolution (dated 15th March, 2010) authorized Shri Rajan Mehta, Managing Director of the Company, to sign and verify the plaint and other pleadings and to file and institute a suit for and on behalf of the Plaintiff Company. Shri Rajan Mehta, further authorized Shri Shailesh Jha (vide authority letter dated 30.07.2015) to sign and verify all the court papers in relation to the present suit, for and on behalf of the plaintiff company. It is averred that Shri Shailesh Jha, Manager (IT) of the plaintiff company was well conversant with the business activities of the plaintiff company as well as the facts and circumstances of the present case and hence, lawfully entitled to file the present suit. It was further stated that the defendant no. 1 was engaged in the business of providing marketing, advertising and promotional services and the defendant no. 2 was a leading vehicle Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 3/33 manufacturer and seller in India and across the world. The plaintiff avers that the defendant no. 1 was engaged in the promotion and advertising services for the vehicle named "Nissan Terrano"
launched by the defendant no. 2. It is stated that the defendant no. 1 had approached the plaintiff concern for advertising and had requested the plaintiff concern to run an advertising campaign for the defendant no. 2 for the period commencing from 10 th February, 2014 to 28th February, 2014. The defendant no. 1 on instructions from defendant no. 2, desired that the plaintiff concern run a campaign for the newly launched project of defendant no.2 in the Delhi region in different sectors. Therefore, on the agreed terms and conditions, the plaintiff company had provided his promotional services for the aforesaid campaign to the defendants and had telecast the promotional campaign for the Nissan Terrano car for the period from 10th February, 2014 to 28th February, 2014, thereby completing its part of the contractual obligation as per the contract entered into between the plaintiff company and the defendants. It is stated that after the completion of the campaign, the plaintiff concern had issued Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 4/33 an invoice numbered LM 2013-14/402 (dated 28th February, 2014) and sent the same to the defendant no. 1 via E-Mail on the E- Mail ID: [email protected] for the amount of Rs. 1, 33, 560/- (Rs. One Lakh Thirty Three Thousand Five Hundred and Sixty Only) which was duly received and acknowledged by the defendant no. 1. The plaintiff submits that ever since then, it was constantly following up with the defendant no. 1 and defendant no. 2 for the payment of the aforesaid amount. The plaintiff submits that the defendant no. 1 had accepted its financial liability qua the Plaintiff. However, much to the plaintiff's agony and financial discomfiture, the outstanding amount was not paid to the plaintiff by the defendant no. 1 for the stated reason that the said amount had not been paid by the defendant no. 2 to the defendant no.1. The plaintiff submits that both the defendants were jointly and severally liable for the payment of the outstanding amount due in favour of the plaintiff in view of the principal and agent relationship of the defendant no. 1 with the defendant No. 2. The plaintiff contends that since the completion of the advertising campaign and the sending of the invoice to the Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 5/33 defendant no. 1, the plaintiff had been constantly following up with the defendant no. 1 with regard to the payment of the outstanding amount i.e. Rs. 1,33,560/- but the defendant no. 1 had not paid any heed to the plaintiff's requests. The plaintiff had also pursued the matter of payment of the outstanding amount with the defendant No.2. However, much to the dismay and chagrin of the plaintiff, no positive response was received from either of the defendants. No payment was received by the plaintiff from any of the defendants towards the outstanding payment that was due and payable by the defendants to the plaintiff for the advertising and promotional services rendered by the plaintiff. It is averred that the Plaintiff had written to both the defendants on numerous occasions in this regard and had also made oral prayers to both the defendants. However, the defendants failed to send reply to the same and continued with their financial recalcitrance. It is stated that the plaintiff has made all its efforts to constantly remind both the defendants of the outstanding amount which was due on their part but none of the efforts fructified. It is stated that the invoice no. LM2013-14/402 (dated 28 th February, Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 6/33 2014) and all the payment reminders issued to the defendants by the plaintiff have been duly served upon the defendants. It is also contended that the defendants have never raised any objection or disputed (either in oral or in writing), the outstanding amount due and payable to the Plaintiff. The plaintiff submits that seeing the unrelenting attitude of the defendants and persistent default in payment, the plaintiff has an apprehension that ever since the beginning, it was the intention of the defendants to cheat the plaintiff company and utilize its best services without having to pay any amount. The plaintiff avers that when left with no other alternative, it was forced to send a legal demand notice (dated 10 th June, 2015) through its counsel calling upon the defendants to make the payment of the outstanding amount. The said Legal Notice was received by the defendants. However, the defendants failed to take any action on the same within 15 days as was granted to the defendants in the legal notice for making the said payment. The plaintiff submits that the defendants were also liable to be criminally prosecuted for cheating the plaintiff and causing wrongful loss to the plaintiff company. The Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 7/33 plaintiff by way of the present suit has sought to recover an amount of Rs. 1, 33, 560/- (Rs. One Lakh Thirty Three Thousand Five Hundred and Sixty only) from the defendants. It has also sought pendente lite and future interest @ 24% per annum (simple interest) till the date of realization.
4). Summons of the present suit was served on both the defendants. The defendant no.1 failed to appear in court and file written statement within the statutorily prescribed time. Hence, its right to file the written statement was closed and it was proceeded ex- parte vide order dated 30.11.2015. The Written Statement was filed on behalf of defendant no.2 on 30.11.2015.
FACTUAL MATRIX AS GIVEN IN THE WRITTEN STATEMENT FILED BY DEFENDANT
5). The Written Statement was filed on behalf of the defendant no.2 M/s Nissan Motor India P. Limited on 30.11.2015. It was and was signed by Ms. Reshma Ravindran, Manager (Legal), Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 8/33 who was conversant with the facts in the present case. It was stated in the Written Statement that the defendant no. 2 was selling cars of Nissan & Datsun Brand in the four wheeler segment. It is stated that defendant no.1 was a service provider hired by its ex-distributor M/s Hover Automotive India Private Limited ("HAI" for short) for marketing, sales & promotion of the Nissan Brand cars in India. It was stated by the defendant no.2 that all statements, allegations, contentions, submissions, premises and hypothesis mentioned in the plaint should be deemed denied unless expressly admitted in the written statement.
6). A slew of preliminary objections have been taken by the defendant no.2 in the written statement. Firstly, it is stated that the M/s Nissan Motor India P. Limited was filing the written statement on behalf of M/s Nissan Motors Limited, Japan ("NML" for short) and the latter had appointed Hover Automotive India P. Ltd. ("HAI" for short) as its distributor for managing the entire sales & marketing functions for the M/s Nissan Motor India P. Limited in India. It is stated that NML, Japan had terminated its relationship with the HAI Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 9/33 w.e.f. 14.02.2014 by way of an E- Mail. It is stated that M/s Nissan Motor India P. Limited neither approached the plaintiff nor the defendant no. 1 for carrying out any business of providing marketing, advertising and the promotional services for the vehicle of M/s Nissan Motor India P. Limited. It is stated that it was HAI which had approached the defendant no. 1 and in turn the defendant no. 1 had approached the plaintiff. It is stated that since there was no privity of contract between the plaintiff and M/s Nissan Motor India P. Limited, the suit was liable to be dismissed for mis-joinder of parties. Secondly, it is stated that the M/s Nissan Motor India P. Limited shared no relationship with the plaintiff and the plaintiff ought to have impleaded HAI as one of the defendants herein and not M/s Nissan Motor India P. Limited. It is stated that the suit is defective for non joinder of a necessary party too. Thirdly, it is contended that the M/s Nissan Motor India P. Limited is not liable for the payment of the claimed amount to the plaintiff as the plaintiff does not have any privity of contract with it. It is also stated that there is no principal- agent relationship between the M/s Nissan Motor India P. Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 10/33 Limited with HAI and defendant No. 1 and hence, the M/s Nissan Motor India P. Limited cannot be saddled with financial liability. It was further stated that M/s Nissan Motor India P. Limited shared a Principal to Principal relationship with all its dealers & other business partners, wherein each activity & liability is clearly defined and no one would act as agent of one another. It is stated that in the present case, the plaintiff acted on the instructions and offers of the defendant no. 1 and since the defendant no.2/ M/s Nissan Motor India P. Limited didn't have any transaction with the plaintiff directly, defendant no.2/ M/s Nissan Motor India P. Limited cannot be held accountable. Fourthly, it is contended that the plaintiff neither has locus standi nor any legitimate prerogative to sue the defendant no. 2/ M/s Nissan Motor India P. Limited as per the Indian Contract Act. It is argued that when the goods are sold by a manufacturer to its distributors thereby creating a "principal and principal" relationship, the ownership of the goods passes from the manufacturer to the distributors. Thereafter, it is the responsibility of the distributor to sell those goods further to the consumers, who are Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 11/33 the ultimate users. The principal/manufacturer does not come into picture at all. The principal/manufacturer may only be liable for some legal action by the consumer if the goods manufactured are defective goods etc. and not otherwise. Hence, it is argued that in the instant case, no liability can be attributed on the defendant no.2 as it didn't fall within this exception. It is stated in the written statement that in the same way, when services are availed by a distributor, it is the responsibility of the distributor thereafter to make payments to third party from whom the services are availed and the principal does not come in picture at all. It is stated that in all contracts or engagements entered into by the distributor with the customers for sale of vehicles, the distributor shall act and shall always be deemed to have acted as a principal and not as an agent or on account of the principal/manufacturer, and the principal/manufacturer shall not in any way be liable in any manner in respect of such contracts and/or engagements and/or in respect of any act or omission on the part of the distributor, his servants, agents and workmen in regard to such sale, distribution, repairs or otherwise. One of the clauses of the Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 12/33 agreement entered into between the HAL and defendant no.2 has been quoted in the written statement to avoid any liability in the instant case.
7). Hence, the crux of the arguments advanced on behalf of the defendant no.2/ M/s Nissan Motor India P. Limited is that since there was no privity of contract between the plaintiff and the defendant no.2, no financial liability can be fastened on the defendant no.2.
FACTUAL MATRIX AS GIVEN IN THE REPLICATION
8). In the replication filed by the plaintiffs on 07.01.2016, the contentions of the defendant no.2/ M/s Nissan Motor India P. Limited have been denied in toto and the averments made in the plaint have been reiterated and reaffirmed. It has been stated that as per the knowledge of the plaintiff, the defendant no.1 was an agent (sub- agent) of the defendant no.2 and hence, the defendant no.2 was responsible for the actions and inactions of the defendant no.1. It is stated that HAL was an agent of the defendant no.2 and defendant Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 13/33 no.1 was a sub- agent of HAL for advertising the cars of Nissan Motors Ltd. It is contended that since the sub- agent of the defendant no. 2 had approached the defendant no.1 for advertising services, the defendant no.2/ M/s Nissan Motor India P. Limited would still be liable to pay the plaintiff for the services rendered. It is also contended that when advertising work was started by the plaintiff, there was a principal- agent relationship existing between the defendant no.2/ M/s Nissan Motor India P. Limited and the HAL and hence, it can be said that principal- agent (sub- agent) relationship also extended in between defendant no.2/ M/s Nissan Motor India P. Limited and the defendant no.1. The plaintiff submits that since it was the defendant no.2/ M/s Nissan Motor India P. Limited which was the ultimate beneficiary of the advertising services done by the plaintiff, the defendant no.2/ M/s Nissan Motor India P. Limited was liable to pay the plaintiff for the services availed from it. It has been categorically and unequivocally denied that the suit was defective on account of mis- joinder of parties and non- joinder of necessary parties.
Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 14/33 ISSUES FRAMED ON THE BASIS OF PLEADINGS FILED
9). Once the pleadings were complete, the Ld. Predecessor proceeded to frame the following issues vide Order dated 07.01.2016:-
a) Whether the plaintiff is entitled for recovery of sum of Rs. 1, 33, 560/-? OPP
b) Whether the plaintiff is entitled to recovery of pendente lite and future interest, if affirmative at what rate? OPP
c) Relief EVIDENCE ADDUCED BY THE RESPECTIVE PARTIES EVIDENCE ADDUCED BY THE PLAINTIFF
10). Once the issues were framed the matter was listed for recording of plaintiff's evidence (herein after referred to as "PE").
The AR of the plaintiff Shri Shailesh Jha has himself stepped into the witness box to depose as a witness. His affidavit of evidence is Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 15/33 marked Exhibit PW-1/A. The contents of the same are not being reproduced here for the sake of brevity as it was a mere reiteration and reaffirmation of the contents of the plaint and replication. The plaintiff has relied upon the following documents:
a) Copy of the Board Resolution dated 15.03.2010 marked Exhibit PW1/1;
b) Letter of Authorization dated 14.08.2015 marked Exhibit PW1/2;
c) Written Order given by the defendant no.1 to the plaintiff on 07.02.2014 marked Exhibit PW1/3 (subsequently marked Mark A);
d) Photographs of promotional activities marked Exhibit PW1/4 (colly.);
e) Invoice dated 28.02.2014 marked Exhibit PW1/5;
f) E- Mails exchanged between plaintiff and defendant no.1 marked Exhibit PW1/6;
g) Certificate under Section 65 B of the Indian Evidence Act, in support of the document marked Exhibit PW1/6 is marked as Exhibit PW1/7; and
h) Legal Notice dated 10.06.2015 alongwith postal receipts marked Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 16/33 Exhibit PW1/8.
11). In his cross examination, PW-1 stated that he had joined the plaintiff company in 2009 and at that time there were two Directors of the plaintiff company i.e. Shri Rajan Mehta and Ms. Sona Mehta. He stated that he could not recall how the meeting was called for signing the Board Resolution and he also could not recall whether the copy of the Board Resolution and minutes of the meetings were sent to the Registrar of Companies. He stated he was not aware about the procedure of the execution of the Board Resolution as well as the conduct of the Board Proceedings. He denied that the Board Resolution was not in accordance with the procedure prescribed. He stated that he joined the plaintiff company as an IT Administrator. He admitted he was not from the Marketing team. He stated that in February, 2014, the defendant no.1 had approached the plaintiff company for publicity and advertisement of Nissan Products and initially Shri Sourav Negi negotiated on behalf of the plaintiff company with the defendant no.1. Thereafter, Shri Shehjad also dealt with the defendant no.1 and thereafter, Shri Jagjit Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 17/33 Singh dealt with the defendant no.1. He denied the suggestion that he didn't know the contents of the agreement between the plaintiff and the defendant no.1. He stated that he could not show any document in which defendant no.2 had given any directions to the defendant no.1 for carrying out promotional activities for its products. However, he stated that an official of defendant no.2 had visited the plaintiff's office to negotiate and approve the final advertising campaign to be run by the plaintiff company. He admitted that he was not aware about the accounting process of the plaintiff company. He admitted that the bill had been drawn up in the name of the defendant no.1 and no billing was done in the name of the defendant no.2. He denied the suggestion that defendant no.2 had no principal agent relationship with the defendant no.1 and that defendant no.2 was not liable to make any payments to the plaintiff company.
12). PW2 Shri Sourav Negi, Vice President of the plaintiff company has also been examined as a witness herein. His affidavit of evidence is marked Exhibit PW2/A and its contents are not repeated for the sake of brevity as it was merely a reiteration of the contents of Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 18/33 the pleadings filed by the plaintiff. He also relied on similar documents as PW1.
13). In his cross examination, he has stated that he had been working with the plaintiff company for more than 10 years. He admitted that he had not placed on record any document in respect of the communication of any instructions from the defendant no.2 to defendant no.1 as mentioned in his affidavit of evidence. He denied the suggestion that defendant no.1 had no authority to act on behalf of the defendant no.2. He also admitted that there was no correspondence on record to show that there was any communication between the plaintiff company and the defendant no.2. He however, stated that a representative of defendant no.2 was present at the time of finalization of the promotional campaign. He admitted that there was no direct contact between the plaintiff company and defendant no.2 in respect of any work. He denied the suggestion that there was no principal- agent relationship between the defendant no.1 and the defendant no.2. He admitted that the invoice was raised in the name of the defendant no.1.
Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 19/33
14). PE was closed on 31.01.2017 and matter was thereafter posted for recording of defendant's evidence (herein after referred to as "DE").
15). The defendant no.2 has examined Shri Bhavesh Saxena (AR of the defendant no.2) as a witness after moving an application for substitution of the AR which was allowed by this Court. The affidavit of evidence of Shri Bhavesh Saxena is marked Exhibit DW1/A. He has in his cross examination stated that as per his job profile, he was not involved in marketing and promotional activities of the defendant no.2. He stated that he had no personal knowledge of the transaction in question. He denied being acquainted with a person by the name of Shri Vinay Sharma, who was an employee of the defendant company. He said he knew of Shri Vivek Paliwal who was working for the defendant no.2. He stated that he also knew Shri Ajay Raghuvanshi who used to work for the defendant no.2 earlier. He stated that Shri Ajay Raghuvanshi and Shri Vivek Paliwal were jointly working for the defendant no.2 when the advertising campaign for Nissan Terrano vehicle was to be launched. He Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 20/33 admitted that the defendant no.2 was supplying cars of Terrano make to the HAL and he further stated that his company didn't keep a tab on the number of sales of the car. He admitted that only a part of the tripartite document was filed by the defendant no.2 in the present case and he also stated that he didn't know of the true nature of the agreement between HAL and the defendant no.1.
16). DE was closed thereafter on 26.02.2018.
17). Matter was thereafter posted for final arguments. Final
arguments were advanced by the respective counsels and the matter was thereafter posted for pronouncement of judgment.
18). Having briefly discussed the pleadings of the respective parties, the issues framed, the evidence adduced by the respective parties, I shall now delve into the realm of appraisal of the evidence led and I shall give my issue wise findings.
APPRAISAL OF EVIDENCE LED AND THE ISSUE WISE FINDINGS
19). Findings on the issues:- "Whether the plaintiff is entitled for recovery of sum of Rs. 1, 33, 560/-? OPP"; and Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 21/33 "Whether the plaintiff is entitled to recovery of pendente lite and future interest, if affirmative at what rate? OPP"
19.1). The onus of proving both these issues was on the plaintiff. I shall collectively dispose off these issues as they are intermeshed and can be decided by a common appraisal of the facts and evidence adduced.
19.2). In brief, the crux of the plaintiff's case against the defendant nos. 1 and 2 is that the defendant no.1 had approached the plaintiff in the capacity of an agent for defendant no.2 to carry out promotional and advertising activity for a newly launched car of the defendant no.2 i.e. Nissan Terrano. The plaintiff submits that pursuant to the contract entered into between it and the defendant no. 1, it had undertaken an advertising campaign for the defendant no.2 at different places in Delhi from 8 th February, 2014 till 28th February, 2014 and generated a bill to the tune of Rs. 1, 33, 560/- against the defendant no.1. The plaintiff states that several correspondences had been exchanged with the defendant no.1 regarding payment of the said amount. In all the correspondences received from the defendant Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 22/33 no.1, the recurring theme of reply was that though the defendant no.1 was bound to pay the said amount to the plaintiff, the payment was not being released to the plaintiff on account of certain disputes between defendant no.1, HAL and defendant no.2 Nissan and because HAL/defendant no.2 Nissan had not made the payment to defendant no.1. All the copies of correspondences filed by the plaintiff are supported by the Certificate under Section 65B Indian Evidence Act and the veracity of these have gone unchallenged and unassailed. The letters received by the plaintiff from the defendant no.1 on 22.09.2014 and 23.09.2014 clearly reflect the same. 19.3). Per contra, the defendant no.2/ M/s Nissan Motor India P. Limited have assailed the suit on the ground that the same was not maintainable against it as there was no privity of contract between defendant no.2 and the plaintiff company. It is stated that no direct contract was ever entered into between the plaintiff and the defendant no.2 and hence, it would be unfair to fasten financial liability on the defendant no.2. It is contended that the plaintiff could only have filed the suit against the defendant no.1. It is contended Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 23/33 that by joining the defendant no.2 as a defendant herein, the plaintiff had rendered the suit defective. It is also contended that there was no direct contract between the defendant no.2 and defendant no.1 as well. The defendant no.2/ M/s Nissan Motor India P. Limited submits that it had entered into a distribution agreement with HAL and as per the said agreement, the parties to it were to remain independent and act in independent capacities and not as agents of the other. The defendant no.2/ M/s Nissan Motor India P. Limited has filed a few pages of the tripartite distribution agreement to substantiate the said claim. On the basis of this agreement it is further contended that the plaintiff ought to have impleaded HAL as a defendant herein and the suit was defective for non joinder of a necessary party. It is also contended that since the defendant no.2 had already rescinded/ terminated the contract with HAL, the defendant no.2 could by no stretch of imagination have been made accountable for the expenses incurred by the plaintiff to run the advertising campaign for the product of defendant no.2.
19.4). At this stage I would like to state that the proceedings in Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 24/33 the instant matter have been done ex-parte qua defendant no.1, as none appeared for it despite service of summons and as no written statement was filed on its behalf. In such ex- parte suits, the court as well as the plaintiff proceeds under the presumption that there was no real, tenable defence/ opposition to put forth. The plaintiff is required only to prove a prima facie case, which in my considered view has been successfully done by the plaintiff in this case at least so far as the claim of the plaintiff is for the suit amount of Rs. 1, 33, 560/- alongwith pendente lite and future interest @ 24% per cent per annum (simple interest).
19.5). The only question which requires adjudication is whether the defendant no.2 too can be made financially liable qua the plaintiff. After hearing the rival submissions, I am of the considered view that the defendant no.2 is jointly and severally liable to pay the plaintiff alongwith the defendant no.1 for the advertising/ marketing services rendered by the plaintiff for promoting Nissan Terrano cars during the period 8th February, 2014 till 28th February, 2014. I say so for multiple reasons adumbrated herein under.
Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 25/33 19.6). It is established beyond doubt that the plaintiff undertook the promotional exercise for the vehicle launched by defendant no.2 during the above stated period. The invoice filed by the plaintiff and the email correspondences received by the plaintiff from the defendant no.1 which have been filed in the present suit conclusively establish the said fact. There is nothing on record to impeach the credibility of these documents. The main defence taken by the defendant no.2 is that there was no privity of contract between it and the plaintiff and it only had direct dealing with HAL and not with the defendant no.1 or the plaintiff.
19.7). Strictu sensu, the contention of the defendant no.2 appears to be valid. However, the veneer of legal tenability of this plea falls off as soon as we dig a bit deeper into it. Even though there was no direct contract between the plaintiff and defendant no.2, the kind of exercise undertaken by the plaintiff for promoting cars of the defendant no.2 and the relationship that emerges between the plaintiff and the defendant no.2 can be termed to be a quasi contractual relationship. It has all the inner trappings of a contractual Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 26/33 relationship even though the external semblance and manifestation may appear to be different from a direct/ express contractual relationship. It is quite evident that the promotional services rendered by the plaintiff for the defendant no.2's car were not gratuitous in nature. While undertaking the marketing/ advertising activities for the Nissan Terrano car, the plaintiff did not intend to do so gratuitously and he had expectations of being paid for the same. Hence, it is entitled to receive compensation for the services rendered by it, if the other party i.e. the defendant no.2 herein has enjoyed the benefit of the thing done or service delivered by the plaintiff. It would be pertinent to refer to Section 70 of the Indian Contract Act in this regard. Section 70 of the Indian Contract Act reads as under:-
Section 70 of the Indian Contract Act:-
"Obligation of a person enjoying benefit of a non gratuitous act- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 27/33 to restore, the thing so done or delivered."
(This Section has been relied upon by the Hon' ble Supreme Court of India and the Hon' ble High Court of Delhi in a catena of judicial pronouncements such as "Mulamchand v. State of MP", AIR 1968 SC 1218); "VR Subramanyam v. B Thayappa and Ors." AIR 1966 SC 1034.) 19.8). Section 70, Indian Contract Act recognises quasi contracts and intends to prevent unjust enrichment to one party and causing loss to another and it gives recognition to the doctrine of quantum meruit. In essence, Section 70 of the Indian Contract Act is based on the law of restitution and doctrine to prevent unjust enrichment. It is beautifully crafted Section which ensures fairness, equity and reasonableness. This Section promotes the inter partes equity. It is a very important section in the Indian Contract Act because it allows a court to provide a fair result in an unfair situation. The obligation to make restitution is one imposed by law in order to prevent the inequitable retention of a benefit received by one party at the expense of another. The quasi-contractual obligation to pay a fair Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 28/33 and just compensation for a benefit which has been accepted only arises in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, void or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution. Claims under Section 70 of the Indian Contract Act can be made when there are these four unifying elements:
1. The defendant has received a benefit i.e. defendant has incontro-
vertibly been enriched and he voluntarily accepted the benefit.
2. The benefit or enrichment was at the plaintiff's expense.
3. The enrichment was unjust.
4. There is no defence available.
19.9). The law recognizes that once the defendant has received something undeniably enriching and the plaintiff has met an expense or delivered a service to the defendant, which as a matter of legal or factual necessity, the defendant would have had to incur or would not Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 29/33 have received without making payment, then in such circumstances, the defendant is under an obligation to adequately compensate the plaintiff of the amount expended by him. Free acceptance of the payment by the plaintiff or services rendered by the plaintiff, therefore, operates like equitable estoppels. Hence, it would be unconscionable for the defendant to resile from the benefit having stood silently while the plaintiff performs work for him. 19.10). Given the factual matrix of the case, Section 70 of the Indian Contract Act is squarely applicable on it. Even though there was no express contract between the plaintiff and the defendant no.2, the latter can be fastened with financial liability qua the plaintiff, as it was the ultimate beneficiary of the entire marketing exercise done by the plaintiff.
19.11). There are other chinks in the defence put forth by the defendant no.2 which further convince me to disbelieve its version. The defendant no.2 has not filed any letter to show that it had rescinded/ terminated its contract with the HAL. Mere pleading is not proof. No document has been filed by the defendant no.2 to prove Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 30/33 termination of the contact with HAL as alleged. Since the correspondences between the plaintiff and defendant no.1 show that HAL had approached defendant no.1 for advertising services, an indirect link is prima facie established between the plaintiff and the defendant no.2. Also, I find it very peculiar that the defendant no.2 has not filed the complete tripartite agreement which also included the distribution agreement, which in a way hints that there was more to the defendant no. 2's defence than what meets the eyes. The defendant no.2 has also failed to explain the reason why it had not sent a reply to the legal demand notice sent by the plaintiff. Mere denial that the legal notice was not received by the defendant no.2 shall not suffice as the plaintiff has filed the postal receipts which leads to a presumption of due service of the legal notice. Failure to send reply to the legal notice tantamount to admission of its content. Also, the very fact that HAL was in a contractual relationship with the defendant no.1 as is evident in the correspondences exchanged between plaintiff and defendant no.1, which documents have remained undisputed and not disproved, go on to show link between Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 31/33 the plaintiff and the defendant no.2 even if indirect and involving intermediaries. Coupled with it is the fact that HAL had entered into a contractual relationship with the defendant no.2 and the fact of its termination and rescission has not been proved by the defendant no.2. Hence, a link even though tenuous is found to be existing between the plaintiff and the defendant no.2. The defendant no. 2 is prima facie the ultimate beneficiary of the promotional activities of the plaintiff and hence, it cannot take the plea of absence of privity to exculpate/ extricate itself from financial liability qua the plaintiff. 19.12). Both the issues are hence, decided against the defendant nos.1 and 2 and in favour of the plaintiff.
20). Hence, for the all the foregoing reasons I hold that the defendant nos. 1 and 2 are jointly and severally liable to pay the plaintiff, a sum of Rs. 1, 33, 560/- alongwith pendente lite and future interest @24% per annum (simple interest). Costs of the suit are also awarded to the plaintiff.
21). Decree sheet be prepared accordingly.
Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 32/33
22). File be consigned to the Record Room after due
compliance.
Announced in the open court HARSHITA VATSAYAN
On 28.04.2018 Civil Judge-06 (Central)
Delhi/28.04.2018
(This Judgment comprises of 33 pages and each page has been signed by me). Suit No. 597307/16 R.S. Live Media Pvt. Ltd. v. KLI Advertising & Anr. 33/33