Delhi District Court
M/S Accessories Point vs M/S Erd Technologies Pvt Ltd And Ors on 3 April, 2025
IN THE COURT OF SH. NARESH KUMAR MALHOTRA :
DISTRICT JUDGE (COMMERCIAL)-06
TIS HAZARI COURTS, WEST: DELHI
CS (COMM) No. 407/2020
CNR No. DLWT010064982020
03.04.2025
Sh. Manoj Kumar Grover,
Prop. Of M/s. Accessories Point,
A-123, G.F. New Moti Nagar,
New Delhi-15
Also at:-
Shop No. G-13/35, Arya Samaj Road,
WEA, Karol Bagh, New Delhi-110005.
.....Plaintiff
Vs.
1. M/s. ERD Technologies Pvt. Ltd.
(Through Sh. Sanjeev Bhardwaj, Director/owner).
2. Sh. Sanjeev Bhardwaj ( C.M.D.)
3. Sh. Sunil Sandal (Authorized Signatory).
All are available at:
C-3 & 38, Sector-59, Noida-201301 (U.P)
Uttar Pradesh, Code-09.
....Defendants.
Date of filing : 15.12.2020
Date of arguments : 01.04.2025
Date of judgment : 03.04.2025
COMMERCIAL SUIT FOR RECOVERY OF Rs. 77,55,829/-
ALONGWITH PENDENTELITE AND FUTURE INTEREST.
JUDGMENT:
1. Vide this judgment, I am deciding the suit for recovery of Rs. 77,55,829/- along with pendentelite and future interest filed by the plaintiff against the defendants.
CS (Comm.) No. 407/2020 -1-2. In the plaint, it is mentioned that the plaintiff is a peace loving and law abiding citizen and doing business at Moti Nagar, New Delhi. The plaintiff was distributor of M/s. ERD Group of company. The plaintiff was working as distributor of defendant no. 1 since 2007 to March 2019 as per different agreements executed between the parties and and the last agreement expired on 31.03.2019 and defendant no. 1 has not extended this agreement. It is mentioned that defendant no. 1 appointed new distributors namely M/s. Sanchit Teleworld, M/s. Speed Teleworld, Shri Sai Enterprises and M/s. Setia Enterprise and these distributors were also clients of the plaintiff earlier. The defendant no. 1 company authorized Sh. Sunil Sandal to execute business agreement and Sh. Ajay Dhiman was Sales Executive appointed by the defendant no. 1company for day to day works. During the course of distribution ship since 2007 to 2019, Sh. Sanjeev Bhardwaj/defendant no. 1 undertook to give benefits during the business to the plaintiff but no benefit was granted to the plaintiff. It is mentioned that Sh. Ajay Dhiman was appointed by the defendant company for marketing and he undertook to settle the account with the plaintiff firm. In February, 2019 bulk stock/ material was sent by the defendant no. 1 as per instructions of Mr. Ajay Dhiman to complete the target. Lateron plaintiff came to know that Mr. Ajay Dhiman fraudulently sent the goods to the plaintiff to complete his target as defendant no. 1 appointed some other distributors and stock of the plaintiff was struck. It is mentioned that in March 2019 the plaintiff came to know that defendant no. 1 has supplied the goods to other distributors namely M/s. Sanchit Teleworld, M/s.
CS (Comm.) No. 407/2020 -2-Shri Sai Enterprises, M/s. Setia Enterprises and M/s. Speed Teleworld who were earlier clients of the plaintiff and these four distributors used to purchase goods of the defendant no. 1 from plaintiff. The plaintiff raised objections with the defendants and representative of the defendant no. 1 Sh. Sanjeev Bhardwaj undertook that he will give multiple benefits to the plaintiff. He also assured that he will replace the articles which are not in use, outdated, defective and promised the plaintiff that they will pick up the defective/outdated material which are not in use. The defendant no. 1 also undertook to the plaintiff that all the items/pending stocks will be replaced by the defendant company and actual amount of billing along with interest will be returned to the plaintiff shortly. It is mentioned that during the month of March, 2019 the plaintiff and defendant had multiple communications with Mr. Ajay Dhiman regarding the replacement of articles/outdated articles/damaged articles and dump material but all in vain. The defendant company appointed some other distributors and all the post dated cheques were misused which are lying with the defendant no. 1 as per terms and clause at Sl. No. 6 of Agency Agreement dated 01.04.2018. It is mentioned that in March 2019, defendant company was only interested to take advance cheques with the condition that defendants will adjust all outdated articles amounting to Rs. 77 lacs. The agreement executed between the plaintiff and defendant expired on 31.03.2019 and after that agency agreement was not extended by the defendant company and even in February, 2019 defendant company supplied material as per following invoices:-
Sl. No. Bill detail Amount
i. 117 dated 11.02.2019 8,35,051.00
CS (Comm.) No. 407/2020 -3-
ii. 118 dated 14.02.2019 7,00,035.00
iii. 119 dated 14.02.2019 8,06,762.00
iv. 122 dated 19.02.2019 10,90,084.00
v. 123 dated 19.02.2019 8,40,042.00
vi. 124 dated 19.02.2019 10,64,367.00
Vii. 125 dated 19.02.2019 8,42,600.00
Total 61,78,941.00
The agreement executed between the parties expired on 31.03.2019 but this agreement was not extended without any reason. The plaintiff requested the defendants to take back the dumped articles which are lying in the store amounting to Rs. 77 lacs and account be cleared and amount of plaintiff be returned. It is mentioned that Mr. Sanjeev Bhardwaj, Director of ERD Technologies Pvt. Limited had directed the plaintiff to contact Mr. Ajay Dhiman directly in connection with any business, account, sale/purchase, replacement etc. It is mentioned that in March 2019 Mr. Ajay Dhiman (Sales Executive) and Mr. Sanjeev Bhardwaj, CMD had multiple communications with plaintiff regarding adjustment of amount and stock inventory of the goods lying with him. Mr. Ajay Dhiman also agreed to take back all the material/goods from the plaintiff godown and adjust the amount in the account of the plaintiff. The plaintiff has also requested the defendants not to present the previous security cheques given to the defendant no. 1 vide agreement dated 01.04.2018 because defendant no. 1 did not extend the agreement but defendant no. 1 deliberately presented the post dated cheques in the bank. The plaintiff requested the defendant company for replacement of defective materials which was lying with the plaintiff. The defendant no. 1 CS (Comm.) No. 407/2020 -4- has replaced the products of the plaintiff which were likely to be closed in future. The plaintiff has also sent email to the defendant regarding sending of out dated products. It is also mentioned that most of the time old materials and short expiry materials were changed with new holograms, which showed the new date of extended warranty. It is mentioned that the amount of holograms stickers were charged by the defendant company from the plaintiff. It is mentioned that after long discussion and request by the plaintiff, defendant agreed to take back all material which was lying with the plaintiff. The material was returned by the plaintiff to the defendant vide invoice no. MN 10 dated 11.05.2019 amounting to Rs. 9,11,125/-, bill no. 011 dated 11.05.2019 for Rs. 37,43,794/- and bill no. 012 dated 15.05.2019 for Rs. 5,11,244/- out of total goods amounting to Rs. 1,25,00,000/-. Thereafter, the plaintiff requested the defendants so many times regarding pending items lying with the plaintiff amounting to Rs. 77,55,829/- supplied through Mr. Ajay Dhiman but all in vain. It is mentioned that payment of all the items is already made by the plaintiff to the defendant no. 1. The defendant company has dishonestly misused the post dated cheques. The defendant has falsely initiated proceedings u/s 138 NI Act, send legal notice and plaintiff was compelled to file reply to the legal notice. It is mentioned that on 12.06.2019 Sh. Ajay Dhiman employee of the defendant no. 1 conveyed that defendant no. 2 Sh. Sanjeev Bhardwaj is out of station and fixed one meeting with defendant no. 2 on 13.06.2019. Thereafter, meeting was fixed for settlement on 27.06.2019 and on 27.06.2019 both the parties agreed to return the material to the defendant no. 1 but defendant no. 1 was having intention to CS (Comm.) No. 407/2020 -5- misuse the post dated cheques. It is also mentioned that some of the material out of those bills was returned to defendant no. 1 in June 2019. It is also mentioned that a meeting between the plaintiff and defendant was fixed on 04.07.2019. Plaintiff filed police complaint regarding cheating, breach of trust and filed criminal complaint against the defendants in Tis Hazari District Courts. It is further mentioned that till the date of filing of present suit, defendants have not paid the amount to the plaintiff. It is prayed by the plaintiff that a decree of Rs. 77,55,829/- be passed in his favour and against the defendants. The plaintiff has also claimed pendentelite and future interest since March, 2019.
3. The defendants no. 1 to 3 have filed written statement taking preliminary objections that plaintiff has not approached the court with clean hands and suppressed the material facts. The present suit is not maintainable as the defendants have sent a legal notice dated 03.07.2019 u/s 138 NI Act and filed complaint case against the plaintiff. The plaintiff has not filed the Stock Register, Ledger Account and Balance Sheet/ Profit & Loss Account to conceal the facts. The present suit is liable to be dismissed under Order VII Rule 11 CPC. There is no cause of action in favour of the plaintiff and against the defendants. The plaintiff is bound to the agency agreement dated 01.04.2018 which was executed between the parties as the defendants desired to appoint distributor for the sale of its products i.e. ERD Mobile Phone Accessories (Mobile phone charges, USB Cable, Mobile Phone Batteries and Lithium-ion Battery Packs (P.B) and to promote ERD Brand and its products being manufactured under the said name in the territory of Karol Bagh (New Delhi ) CS (Comm.) No. 407/2020 -6- for a period w.e.f. 1st April, 2018 to 31st March, 2019. The present suit is not maintainable as the plaintiff and defendants have executed agency agreement and warranty policy in which both the parties have shown the mutual understanding since long back. It is mentioned that Sh. Ajay Kumar Dhiman was dealing with the plaintiff for the last five years. The plaintiff has concealed the warranty policy for mobile accessories in which both the parties agreed the period of warranty for 15 months from the date of purchase of products as on invoice/ manufacturing warranty printed or warranty hologram on the products. In reply on merits, it is mentioned that plaintiff has not supplied any material to the defendant. It is denied that defendants were not willing to extend the agency agreement for the period from April 2019 to March 2020. As per the defendants, the plaintiff was not interested to work with the defendants for selling products in the territory of Karol Bagh as plaintiff has not sent any mail/letter for extension of agency agreement with the defendants before 31.03.2019. It is mentioned that plaintiff has demanded to supply the products during the month of February 2019 amounting to Rs. 61,78,941/- and his ledger account balance was Rs. 1,12,53,972/- as on 19.02.2019. Thereafter, the defendants have given rebate and discount of Rs. 1,77,900/- on 28.02.2019 and the plaintiff ledger account balance was Rs. 1,10,76,072/-. It is denied that the defendants have appointed new distributors in Karol Bagh territory namely M/s. Sanchit Teleworld (Paschim Vihar), M/s. Speed Teleworld (Kamla Nagar), M/s. Shri Sai Enterprises (Vikas Nagar, Uttam Nagar) and M/s. Sethia Enterprises (Lajpat Nagar). It is mentioned that defendant is at liberty to appoint other distributor in the same territory in case of CS (Comm.) No. 407/2020 -7- non-performance of sale by the plaintiff. As per the defendants, the above mentioned distributors are working since 2015 in the same territory of Karol Bagh, New Delhi and the plaintiff is well aware of this fact. It is denied that Sh. Sanjeev Bhardwaj has appointed Sh. Ajay Dhiman for day to day work since 2007 to 2019. It is mentioned that Sh. Sanjeev Bhardwaj was not responsible for any benefit to the distributor. It is mentioned that Sh. Sunil Sandal is working as an authorized signatory and Sh. Ajay Dhiman was working as a sales executive in the defendant company. It is denied that during the month of February 2019 the defendant send bulk stock/material to the plaintiff to complete his target and Sh. Ajay Dhiman fraudulently placed orders with the defendant company just to complete his target and outdated material was sent to the plaintiff. It is mentioned that plaintiff has placed orders as per requirement during the month of February 2019 for the total amount of Rs. 61,78,941/-. It is denied that defendant has appointed new distributors in Karol Bagh territory namely M/s. Sanchit Teleworld, M/s. Speed Teleworld, M/s. Shri Sai enterprises and M/s. Sethia Enterprises. It is mentioned that the above said distributors are working since 2015 with the defendants and plaintiff is well aware about this fact. It is denied that defendant no. 1 has further undertaken to give any benefit to the plaintiff. It is also denied that defendant no.1 had agreed to replace the articles which were outdated/defective. It is denied that defendant no.1 undertook to the plaintiff that all the items/pending stock will be handed over to the defendant company and the actual billing alongwith the interest shall be returned to the plaintiff. It is mentioned that the defendants company is following the universal procedure and CS (Comm.) No. 407/2020 -8- bound to the agency agreement executed with the plaintiff. In para no. 10 of the agency agreement, it is mentioned that the product once sold by the first party to the second party shall be returned only due to the manufacturing defect under the warranty period. It is denied that in March 2019, the plaintiff and defendants had multiple communication with Sh. Ajay Dhiman regarding replacement of articles/outdated articles and also dumped material. It is mentioned that the defendant company is bound to follow the agency agreement and warranty policy agreement to their distributors including plaintiff. It is denied that defendants have misused post dated cheques which were given to the defendant after receiving the material during the month of February 2019 as per the Clause-6 of Agency Agreement. As per the defendants, the plaintiff was not interested to extend the agency agreement for the year 2019-20. It is denied that the defendant company was only interested to take advance cheque with the condition that the defendant company will adjust all outdated articles approximately more than Rs. 77 lacs. It is mentioned that defendant no. 1 received the PDC bearing No. 999660 dated 07.03.2019 of Rs. 7,00,035/-, bearing No. 999661 dated 07.03.2019 of Rs. 8,06,762/-, bearing No. 999662 dated 13.03.2019 of Rs. 8,40,042/-, bearing No. 999663 dated 13.03.2019 of Rs. 10,90,084/-, bearing No. 999664 dated 13.03.2019 of Rs. 10,64,367/- all drawn on Yes Bank, Najafgarh Road, Moti Nagar, New Delhi and Cheque No. 000747 dated 14.03.2019 of Rs. 8,42,600/- drawn no HDFC Bank, Shivaji Marg, New Delhi Branch, total amounting to Rs. 53,43,890/-. These cheques were issued after receiving the materials vide Invoices No. 7399 to 7400 dated 19.02.2019 raised against the CS (Comm.) No. 407/2020 -9- said materials by the defendant company and the plaintiff deliberately hold the payments of the defendant company by giving instructions to the bank to stop payment and cheques return unpaid. It is mentioned that the plaintiff neither mailed nor requested for extension of the agency agreement during the month March 2019 and April 2019. It is mentioned that the invoices bearing No. 7233, 7314, 7315, 7397, 7398, 7399 & 7400 were generated after supplying the material to the plaintiff. As per the defendants, the plaintiff wants to adjust all the dumped articles which were kept in the Godown of the plaintiff since 2007 till 2018. It is mentioned that the defendant company agreed for warranty period for 15 months from the date of purchase of products invoices/ manufacturing warranty printed or warranty hologram on the products of the defendant company. It is denied that the defendant company ever agreed to take back the dump articles lying in the godown of plaintiff amounting to Rs. 77 lacs. As per the defendants, defendant no. 2 was not involved in day to day affairs of the plaintiff company. It is denied that Sh. Ajay Dhiman had any communication with the plaintiff regarding adjustment of the amount. It is denied that post dated cheques were given by the plaintiff as per the agency agreement dated 01.04.2018. It is mentioned that six post dated cheques were issued by the plaintiff to the defendant company after receiving the materials during the month of February 2019. It is denied that plaintiff requested to finalize the account of plaintiff and also requested not to present these cheques as the agency agreement was not extended. It is mentioned that one of sister concern of the defendant company M/s. Digitech Technology has purchased back the material of Rs.
CS (Comm.) No. 407/2020 -10-9,11,125/- and account of the plaintiff has been settled. It is mentioned that at the request of the plaintiff and as per the agency agreement and warranty policy, the defendant had taken back the material of Rs. 37,43,794/- dated 13.05.2019, Rs. 5,11,244/- dated 15.05.2019, Rs. 14,52,562.35 dated 26.06.2019 and Rs. 14,52,562.35 dated 26.06.2019 of the plaintiff company with the instructions that plaintiff company has to make payment of Rs. 53,68,471/- to the defendant company as per ledger account. It is mentioned that the plaintiff sold the products of the defendant company even after March 2018 as per the warranty policy on the products in their territory. It is mentioned that the product of the defendant company having national recognition and reputation in the market of Mobile Accessories and the said products were sold in the name of ERD. It is denied that most of the time out-dated materials and short expiry materials were changed with new holograms. It is mentioned that the material taken back by the defendant company vide Invoice No. MN 10 dated 11.05.2019 amounting Rs. 9,11,125/-, bill no. 011 dated 11.05.2019 amounting Rs. 37,43,794/-, bill no. 012 dated 15.05.2019 for Rs. 5,11,244/- and bill no. MN 17 of Rs. 14,52,562.35 dated 26.06.2019. It is denied that defendant misused the cheques amounting to Rs. 53,43,890/-. It is admitted that the defendant company has sent legal notice dated 03.07.2019 to the plaintiff for demand of Rs. 53,43,890/- out of Rs. 53,68,471/-. It is denied that any conversation had taken place with Mr. Ajay Dhiman. As per the defendants, the post dated cheques were used after settling the ledger account of the plaintiff. As per the defendants, defendant no. 1 has settled account in the month of June 2019 after all adjustments in the CS (Comm.) No. 407/2020 -11- ledger account. The plaintiff is liable to make the payment of Rs. 53,68,471/- to the defendant company. It is mentioned that defendant company has complied all the terms and conditions of the agency agreement dated 01.04.2018 valid till 31.03.2019 followed by the agency agreement. It is mentioned that the defendant company has filed a case of Rs. 53,43,890/- against the plaintiff. It is mentioned that defendant has filed complaint u/s 138 NI Act against the plaintiff. Dismissal of suit is prayed by the defendants.
4. The plaintiff has filed replication and controverted the allegations made in the written statement and further reaffirmed the averments made in the plaint.
5. On the basis of pleadings of the parties, following issues were framed by this court on 24.09.2024, which are as under:-
(i) Whether the suit for recovery is not maintainable in terms of agency agreement and warranty policy ? (OPD)
(ii) Whether the suit of the plaintiff is within limitation ? (OPP)
(iii) Whether the plaintiff is entitled for recovery of Rs.
77,55,829/- from the defendants, as prayed ? (OPP)
(iv) Whether the plaintiff is entitled to the interest on the amount of Rs. 77,55,829/-, if yes then at what rate and for what period ? (OPP) CS (Comm.) No. 407/2020 -12-
(v) Relief.
6. In evidence plaintiff has examined Sh. Manoj Kumar Grover S/o Sh. Prahlad Chand Grover, Proprietor of plaintiff as PW-1. This witness has filed affidavit on the lines of plaint. This witness has proved Agreement dated 07.05.2018 as Ex. PW1/1, bills issued by the plaintiff as Ex. PW1/2 (colly, Bills No. 118, dt. 14.02.2019, 119 dt. 14.02.2019, 122, dt. 19.02.2019, 123, dt.19.02.2019, 124, dt. 19.02.2019 and 125 dt.19.02.2019 as Ex. PW1/3 (colly), Whatsapp messages as Mark-X, messages as Mark-A (colly), All emails as Mark-B, Hologram stickers as Ex. PW1/5 (colly), Return bills as Ex. PW1/6 (colly), List of pending items lying with the plaintiff as Ex. PW1/7 (colly), Copy of reply to legal notice dated 12.07.2019 as Mark-C and Court fees certificate as Ex. PW1/8 This witness is duly cross examined by Ld. Counsel for defendant. In cross examination, this witness has stated that plaintiff company is having transactions with the defendants for the last 10 years. He has stated that Ex. PW1/1 was not signed as per the consent of both the parties. He has voluntarily stated that the defendant prepared the Ex. PW1/1 and sent the same duly signed to the plaintiff for signing. He has stated that the plaintiff company was having transaction with Sanchit Tally World since the year 2012. He has admitted that defendant used to give yearly target to the plaintiff company. He has voluntarily stated that some times targets were quarterly and sometimes targets were yearly. He has stated that targets were changed from time to time. He has admitted that after achieving the targets, the plaintiff company used to get incentives. He has stated that in the year CS (Comm.) No. 407/2020 -13- 2019, the plaintiff company has done the business of Rs. 60 Lakhs with the defendant. He has voluntarily stated that the plaintiff company had done business with the defendant for more than Rs. 60 lakhs. This witness has stated that he cannot admit or deny if the plaintiff company had done business with the defendant company amounting to Rs. 01 Crore in September, 2018. He has admitted that when the plaintiff company used to receive the goods from the plaintiff then it used to issue post dated cheques. He has stated that there is no document to show that defendant has cancelled the distributor agreement. He has voluntarily stated defendant company did not renew the agreement after Feb, 2019. He has admitted that there was agreement with defendant company till 31.03.2019. He has stated that no order was placed by the plaintiff in March, 2019 to the defendant. He has admitted that no written letter was sent to the defendant for renewing the agency agreement. This wintess has voluntarily stated he had requested telephonically. He has stated that no warranty exists with the defendant company. He has stated that document Ex. PW1/DX-1 bears his signatures at point A on each page. He has admitted that defendant has taken goods/material amounting to Rs. 57 lakhs from the plaintiff in May, 2019. He has stated that the defendant company used to give new stickers every month and also told the plaintiff to sell the goods after affixing new stickers. He has admitted that in Feb, 2019 the defendant had sent 22 items to the plaintiff. He has admitted that in May 2019 the defendant had received 108 items from the plaintiff. He has admitted that out of 22 items received from the defendant in Feb, 2019 and he had sold 14 items. This witness has stated that he is not maintaining any CS (Comm.) No. 407/2020 -14- stock register. This witness has admitted that he had not placed on record any document to show that the defendants used to supply new stickers to him every month which were to be affixed on the old material. This witness has stated that his CA is maintaining the profit and loss account of his firm. This witness has stated that he cannot admit or deny if his CA had mentioned the dead stock in the profit and loss account or not. This witness has admitted that he had filed a police complaint against the defendants. This witness has also admitted that he had also filed a criminal complaint in the Court of Ld. MM at THC. He has admitted that said complaint was dismissed by the Court of Ld. MM. This witness has stated that he had not filed any revision against the order passed by Ld. MM. He has admitted that defendant had filed complaint U/s 138 NI Act against him which is pending in Saket Court. He has stated that in the said complaint the cheque amount is approximately Rs. 53 lakhs.
7. On the other hand, defendant has examined Sh. Rajneesh Jaryal, AR of defendant as DW-1. This witness has filed affidavit on the lines of written statement. This witness has proved Board Resolution as Ex. DW1/1, Certificate of Incorporation as Ex. DW1/2, Copy of complaint case U/s 138 of NI Act as mark-A, Agency Agreement dated 01.04.2018 as Ex. DW1/4, Ledger account of plaintiff as Ex. DW1/5, Agency agreement of all distributors in Karol Bagh territory from 2015 to 2019 as Ex. DW1/6 (colly).
This witness is duly cross examined by Ld. Counsel for plaintiff. During cross examination, this witness has stated that he is working in the same group for the last 15 years. This CS (Comm.) No. 407/2020 -15- witness has stated that he had joined the defendant company since 2021. This witness has stated that he is having knowledge about the agreement executed between the parties prior to the year 2019. This witness has admitted that he had not worked with Ajay Kumar who was employed with the defendant company. This witness has admitted that he has no knowledge about the commitment made by Ajay Kumar, previous employee of defendant company with Manoj Kumar who is proprietor of plaintiff firm. This witness has stated that he has no knowledge if Ajay Kumar had conveyed about the commitment made with the plaintiff to his superior Mr. Sanjeev Bhardwaj. He has admitted that all the terms and conditions of the agreement Ex. DW1/4 are correct, including Clause No.6. He has admitted that the plaintiff had returned goods/material amounting to Rs. 53 lakh in June, 2019. He has admitted that the defendant company had received six cheques in Feb, 2019 in respect of the goods returned by the plaintiff in June, 2019. This witness has stated that he cannot tell the exact date when the defendant had sent notice of dishonour of the cheques prior to filing of the complaint U/s 138 of NI Act. This witness has stated that he is not aware about the whatsapp conversation between Mr. Ajay Kumar and proprietor of plaintiff. This witness has stated that he is not aware if the owner of the defendant company had made a commitment with the plaintiff in March, 2019. This witness has stated that he cannot say if Mr. Sanjeev Bhardwaj made any commitment in May, 2019 or not. This witness has stated that he had visited the godown of the plaintiff in the year 2024 but he cannot tell the exact month. This witness has stated that he alongwith counsel for defendant Mr. Suresh Kumar, Mr. Rakesh Kumar and one Mr. Satish visited the CS (Comm.) No. 407/2020 -16- godown of the plaintiff. He has stated that goods of ERD were lying at the godown of the plaintiff. He has admitted that the proprietor of the plaintiff has asked them to take the goods of ERD back. This witness has admited that neither him nor any person who had visited the godown had agreed to take back the goods of ERD company from the premises of the plaintiff. This witness has stated that he has no knowledge if the agreement which was executed in 2019 was extended or not. This witness after seeing the logo Mark A submits that he cannot say if these logos were issued by the defendant company or not. He has staed that the four dealers i.e. Sanchit Telecom, Spark Traders, Speed Telecom and Sai Communication used to receive the goods from the defendant company even prior to 2019 directly. A question was put during cross examination that if any material was returned for replacement whether defendant company replace the same or sent some other material before 2019 ? The witness replied that the same material which was under warranty was again sent to the plaintiff.
8. I have heard Ld. Counsels for both the parties at length and perused the record carefully.
9. My issue-wise findings are as under:-
10. First of all I am deciding Issue no. 2.
11. Issue No. 2-Whether the suit of the plaintiff is within limitation ? (OPP) CS (Comm.) No. 407/2020 -17- The burden to prove this issue is upon the plaintiff. It is contended by Ld. Counsel for defendants that present suit is not filed within the period of limitation. On the other hand, it is submitted by Ld. Counsel for plaintiff that present suit has been filed within the period of limitation. It is admitted fact that Agency agreement was executed between the parties and this agreement is proved on record as Ex. PW-1/1. This agreement was executed on 01.04.2018 and this agreement was valid upto 31.03.2019. This agreement is admitted by both the parties. It is also admitted fact that defendant has supplied goods to the plaintiff in February, 2019 and plaintiff has allegedly issued post dated cheques in favour of the defendant. These cheques are dated 13.03.2019 & 14.03.2019. It is also admitted fact that when the defendant has presented these cheques, all the cheques were dishonoured with the remakrs 'payment stopped by the drawyer'. It is admitted fact that after expiry of agreement the plaintiff has returned goods to the defendant. If we count the period of limitation from the date of issuance of cheques and from the date when the goods were returned by the plaintiff to the defendant in May, 2019, the present suit was filed on 15.12.2020. Thus, the present suit is within limitation. I am of the view that plaintiff is able to prove this issue. Accordingly, issue no. 2 is decided in favour of the plaintiff and against the defendants.
12. Issue No. 1 -Whether the suit for recovery is not maintainable in terms of agency agreement and warranty policy ? (OPD) & Issue no. 3- Whether the plaintiff is entitled for recovery of Rs. 77,55,829/- from the defendants, as prayed ? (OPP) CS (Comm.) No. 407/2020 -18- Both the issues are interconnected and can be decided together. The burden to prove issue no. 1 is upon the defendants and burden to prove issue no. 3 is upon the plaintiff.
13. At the very Outset, I may observe that the provisions of Section 2 (1) (c)(xviii) of Commercial Courts Act, 2015 are very clear which reads as under:-
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipments and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce.
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreement;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv)partnership agreements;
(xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) agreement for sale of goods or provision of services;CS (Comm.) No. 407/2020 -19-
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; (xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
14. The provisions of Section 2 (1) (c) (xviii) of Commercial Courts Act as above are very much clear. Sale of goods are governed by Sale of Goods Act, they pertain to movable properties, any dispute of sale or agreement to sale of goods of specified value do come within the jurisdiction of Commercial Courts Act. The clause also includes the services and guarantee given for the goods sold. The service or guarantee may be oral or written. Therefore, the facts which alleged in the plaint comes under the Commercial disputes.
15. Secondly, now the question arises whether this Court has the pecuniary jurisdiction to adjudicate the matter which is dispute. In this regard, the provisions of Section 3 of Commercial Courts Act, 2015 provides that:
Section 3 : Constitution of Commercial Courts:
(1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:CS (Comm.) No. 407/2020 -20-
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary. ] 3[1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.]
16. Admittedly, the Commercial Court Act was amended on 03.05.2018 and by virtue of the amendment and by virtue of the notification, the pecuniary value of the Commercial Courts Act shall not be less than Rs. 3,00,000/-. In the present case, the claim amount which is shown in the plaint is of Rs. 77,55,829/-. So, commercial court has jurisdiction to try and entertain the present suit.
17. It is the case of the plaintiff that defendant has not lifted the defective/unsold goods. The plaintiff has filed the present suit for recovery in respect of unsold/defective goods which are not replaced by the defendant. On the other hand, it is the stand of the defendant that defendant was not required to lift the unsold goods as per terms and conditions of agency agreement and warranty policy. In the present case agreement is admitted by both the parties. The plaintiff has placed copy of agency agreement. This agreement is valid from 01.04.2018 till 31.03.2019. Ld. Counsel for defendants has drawn my attention CS (Comm.) No. 407/2020 -21- towards para no. 10 of the agency agreement which reads as under:-
"The products once sold by the "First Party" to the "Second Party" shall be returned only due to the manufacturing defect under warranty period (as per warranty policy of the company)".
Plaintiff has also placed on record the warranty policy. This warranty policy is for the period from April 2018 to June 2018. During cross examination PW-1 has also admitted the warranty policy regarding mobile phone and accessories. This document is admitted by the plaintiff and this document is given exhibit mark as Ex. PW-1/DX-1. As per this warranty policy the goods/mobile phone accessories are under warranty period of 15 months from the date of purchase of product as on invoice/ manufacturing warranty sticker/hologram on the product. As per the scope of warranty policy, the police is applicable to ERD products only. The invoice/mfg. Warranty sticker/Hologram on the product is proof of purchase of the product and warranty period commences as of that date. This warranty extends only to the original purchase and is not transferable. As per the warranty policy the warrant coverage is as under:-
S. No. Product Description Warranty period
1. Mobile Phone chargers 15 Months from the date of purchase (TC/CC), Mobile Phone of product as on invoice/ Batteries, Mobile Charges manufacturing warranty sticker/ (P.B) hologram on the product.
2. Mobile Earphones & USB Manufacturing defect Warranty at Cables Sales Counter only.
In para no. 2 of the warranty policy terms and conditions it is mentioned that "The company's liability shall be limited to CS (Comm.) No. 407/2020 -22- replacement of sold products which are found due to manufacturing defect. In case product is not replaceable, the company has discretionary power to provide equivalent product or may give a credit note of the invoice value of the product on pro rata basis". In para no. 3 of the warranty policy terms and conditions, it is mentioned that " If the invoice/mfg. Warranty sticker/ hologram is tampered, the product will be treated as 'out of warranty' and no replacement will be made thereof ". The plaintiff has admitted both these documents. The plaintiff has himself annexed the warranty policy. The plaintiff in cross examination admitted that no warranty exists with the defendant company. PW-1 has admitted the document Ex. PW-1/DX-1 which is warranty policy. I am of the view that as per clause-10 of Agency agreement The products once sold by the "First Party"
to the "Second Party" shall be returned only due to the manufacturing defect under warranty period (as per warranty policy of the company). The plaintiff has not placed on record any document to show that goods supplied by the defendant were defective and defendant has not replaced these goods under warranty period. The plaintiff has not placed on record any document or any written communication sent by the plaintiff to the defendant to show that plaintiff ever requested the defendant to replace the goods. In view of Clause-10 of Agency agreement and warranty policy regarding mobile accessories, I am of the view that defendant was not required to replace all goods. Ld. Counsel for defendants has placed reliance on judgment titled as "Roop Kumar v. Mohan Thedani" (2003)6 SCC 595 , wherein, it is held that "It is likewise a general and most inflexible rule that wherever written instruments are appointed, either by the CS (Comm.) No. 407/2020 -23- requirement of law, or by the contract of the parties, to be the repositories and memorials of truth, any other evidence is excluded from being used either as a substitute for such instruments, or to contradict or alter them. This is a matter both of principle and policy. It is of principle because such instruments are in their own nature and origin, entitled to a much higher degree of credit than parol evidence ". Ld. Counsel for defendants has also placed reliance on judgment titled as " United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644, wherein, it is held that " It is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid would be sought unless the meaning is ambiguous". In view of the Agency agreement, warranty policy, the defendant was not bound to replace all goods which were sold by it to the plaintiff.
18. It is vehemently contended by Ld. Counsel for plaintiff that defendants have replaced the goods in May/ June, 2019 and defendants have adjusted the amount.
It is admitted fact that defendants have admitted to replace the goods but it is submitted by Ld. Counsel for defendants that only those goods were lifted from the premises of the defendant which are under warranty period and defendant has also adjusted the amount of returned goods in the ledger account maintained by the plaintiff. Plaintiff has not placed on record any document to show that defendant has lifted the other goods which were not in warranty period nor any document has been placed on record in this regard. Thus, this contention of Ld. Counsel for plaintiff carries no force.CS (Comm.) No. 407/2020 -24-
19. In the present case, the plaintiff has not produced any stock register, balance sheet and profit & loss account to show that unsold goods were lying at its premises. Plaintiff has not placed on record any document to show that defendant ever agreed to replace the outdated stock of the plaintiff.
20. It is also contended by Ld. Counsel for plaintiff that defendant used to supply stickers/ hologram to the plaintiff and plaintiff used to affix these holograms/ stickers on the unsold goods to sell them in the market.
Plaintiff has placed on record invoice dated 04.12.2017 of the defendant no. 1 in respect of holograms/ stickers. This invoice is dated 04.12.2017. The plaintiff has placed on record email dated 16.06.2017 vide which plaintiff has requested the defendant to send the stickers/holograms but this email is also dated 16.06.2017. Both these documents are admitted by the defendants but the plaintiff has not placed on record any document to show that he has requested the defendants to supply the stickers after June/December 2017. Plaintiff has placed on record invoice No. MN/010 dated 11.05.2019 amounting to Rs. 9,11,125/-, invoice no. MN/011 dated 11.05.2019 amounting to Rs. 37,43,794/- and invoice no. MN/012 dated 15.05.2019 amounting to Rs. 5,11,244/- to show that defendants have replaced the goods. Thus, the defendants have replaced the goods in the months of May/ June 2019. It is contended by Ld. Counsel for plaintiff that defendants have replaced the goods which were supplied in February 2019. This contention of Ld. Counsel for plaintiff is negated as PW-1 has admitted in the cross CS (Comm.) No. 407/2020 -25- examination that in February 2019 defendant had sent 22 items to the plaintiff. PW-1 has also admitted that out of 22 items received from the defendant in February 2019, he had sold 14 items. Thus, maximum items have been sold by the plaintiff which were supplied in February 2019, so it cannot be said that defendant has only replaced the goods which were supplied to the plaintiff in February 2019.
21. It is contended by Ld. Counsel for plaintiff that security cheques were given by the plaintiff to the defendants.
I have perused the agency agreement. Para no. 6 of the agency agreement reads as under:-
"The "Second Party" may be allowed credit period of 20 days PDC from date of invoice at the time of receiving the material. If the payment delayed beyond stipulated period of credit will carry an interest @ 18% per annum and the credit limit already enjoying shall be discontinues in case of defaults".
Thus, as the time of purchasing the goods or raising of invoice, the plaintiff was required to issue post dated cheques. Accordingly, plaintiff has issued post dated cheques and the plaintiff has stopped payment of these cheques. The goods were supplied by the defendant to the plaintiff in February 2019 and plaintiff issued post dated cheques on 13.03.2019 & 14.03.2019. So, plaintiff has issued post dated cheques at the time of raising of invoice for purchase of material from the defendant. Thus, it cannot be said that plaintiff has issued post dated cheques as security cheques to the defendants.
CS (Comm.) No. 407/2020 -26-22. It is contended by Ld. Counsel for plaintiff that plaintiff was forced to accept goods/materials of the defendant. In cross examination, PW-1 has admitted that he has sold 14 items out of 22 items received in February 2019, so it cannot be said that defendant has forced the plaintiff to receive the goods in February 2019.
23. It is contended by Ld. Counsel for plaintiff that from the conversation of plaintiff with Mr. Ajay Dhiman shows that defendant has agreed to replace the goods supplied to the plaintiff. Plaintiff has placed on record whatsapp conversation between PW-1 and Ajay Dhiman as Mark-X. This conversation is only photocopy of messages and plaintiff has not placed on record any certificate u/s 65-B of Indian Evidence Act to prove this conversation. Moreover, in all the conversations Ajay Dhman has no where stated that defendant company has agreed to replace the goods which are not under warranty period. So, this conversation is not proved by the plaintiff as per law and cannot be taken into consideration.
24. It is contended by Ld. Counsel for plaintiff that defendant has appointed other distributors, who earlier used to purchase goods of the defendant from the plaintiff, so defendant has suffered losses.
I have perused the agency agreement. In para no. 2 of the agency agreement, it is mentioned that "The First Party expressly reserves its right to enter into similar agreements with other parties in the same territory in case of non-performance of sales by the Second Party to market and promote their Brand. The CS (Comm.) No. 407/2020 -27- Second Party would have no objection for the same ". Ld. Counsel for defendant has placed on record photocopy of agreement dated 01.04.2018 which is proved on record as Ex. DW-1/4 to show that defendant has executed agreement in favour of Accessories Point, Shri Sai Enterprises, Setia Enterprises, Speed Tele Services and Sanchit Teleworld. As per clause 2 of Agency agreement, the defendant no. 1 was in his discretion to appoint other distributors. Moreover, it is not the case of the plaintiff in the present suit that due to the acts of the defendants, plaintiff has suffered losses. The present suit is only in respect of return of unsold goods supplied by the defendants to the plaintiff. So, this contention of Ld. Counsel for plaintiff carries no force.
25. It is contended by Ld. Counsel for plaintiff that defendants have not executed further agreement after 31.03.2019 and the plaintiff could not sell the goods of the defendant in the open market. This contention of Ld. Counsel for plaintiff carries no force as plaintiff has not placed on record any written communication with the defendant to show that he was intersted to extend the agreement. However, the present suit is not in respect of losses and only in respect of replacement of goods. So, this contention of Ld. Counsel for plaintiff carries no force.
26. Ld. Counsel for plaintiff has placed reliance on judgment tiled as "Central Govt. Employees Consumer Cooperative Society Ltd. Vs. Sanjeev Kumar" RFA (Comm) 220/2023 passed by Hon'ble High Court of Delhi and judgment titled as " Vatech Global Co. Ltd. Vs. Unicorn Denmart Ltd. & Ors. " CS (Comm) 857/2017 passed by Hon'ble High Court of Delhi. I have perused CS (Comm.) No. 407/2020 -28- both the judgments with utmost regard but these judgments are not helpful to the plaintiff.
27. In total facts and circumstances of the case, the plaintiff is not able to prove that he is entitled to recover a sum of Rs. 77,55,829/- from the defendants in respect of goods which were not replaced by the defendants. Thus, Issue no. 1 and Issue no. 3 are decided in favour of the defendants and against the plaintiff.
28. Issue No. 4- Whether the plaintiff is entitled to the interest on the amount of Rs. 77,55,829/-, if yes then at what rate and for what period ? (OPP) As I have decided Issues no. 1 & 3 in favour of the defendants and against the plaintiff, this issues is also decided in favour of the defendants and against the plaintiff.
29. RELIEF:
In view of my above discussions, the suit of the plaintiff is dismissed as same is without any merits with no order as to cost. Decree sheet be prepared accordingly. File be consigned to record room, after necessary compliance.
Announced in the (NARESH KUMAR MALHOTRA)
open court on 03.04.2025 District Judge, Comm. Court-06
West, Tis Hazari Courts
Extension Block, Delhi/03.04.2025
Digitally
signed by
NARESH
NARESH KUMAR
KUMAR MALHOTRA
MALHOTRA Date:
2025.04.03
16:47:26
+0530
CS (Comm.) No. 407/2020 -29-