Delhi District Court
M/S Softcell Information Systems (P) ... vs M/S Summit Information Technologies ... on 25 August, 2010
IN THE COURT OF JITENDRA KUMAR MISHRA, ADJ
(CENTRAL12) , TIS HAZARI COURTS, DELHI.
Civil suit No. 366/08
Unique Case ID No. 02401C0800192006
M/s Softcell Information Systems (P) Ltd.,
(Through its Director Shri Ajai Goel),
D12, Greater Kailash EnclaveI,
New Delhi110 048
...............Plaintiff
Versus
1. M/s Summit Information Technologies Limited
(Through its Managing Director Shri Rakesh Kapoor),
816, PhaseV, Udyog Vihar,
Gurgaon122 016
2. Shri Rakesh Kapoor,
Managing Director,
M/s Summit Information Technologies Limited,
816, PhaseV, Udyog Vihar,
Gurgaon122 016
...........Defendants
Date of institution of the suit : 06.09.2006
Reserved for judgment : 09.08.2010
Date of pronouncement of judgment : 25.08.2010
JUDGMENT
Civil Suit No.: 366/08 1 This is a suit for recovery filed by the plaintiff.
2 Briefly stated the facts of the case as set out in the plaint are:
(a) Plaintiff is a Pvt. Ltd. Company duly
incorporated under the Companies Act, 1956 and is engaged in the design and development of Computer Software ;
(b) Sh. Ajai Goel is Director of the plaintiff company, is well conversant with the facts and circumstances of the case and has been authorized by the Board of Directors of the plaintiff vide resolution dated 01st Oct, 2005 to sign, file and conduct the present suit ;
(c) Defendant no.1 is a company and defendant no. 2 is the Managing Director of defendant no.1 ;
(d) Defendant no.2 through defendant no. 1 approached the plaintiff for the development of the software of Accounts Receivable module to be clubbed with their software for Advertisement Management System Software. The plaintiff submitted a proposal for the development of the Civil Suit No.: 366/08 required software. The accounts receivable package was to be developed for use by Indian Express group of Companies. The defendants accepted the proposal and awarded the job to the plaintiff through a Work Order dated 5th March, 2003 ;
(e) Plaintiff commenced the work on 10.3.2003 as per the terms of the Work Order dated 5th March, 2003. The development of the software was to be completed and delivered within eight weeks from the date of start of the work by the plaintiff;
(f) During the process of development of software, there were periodic demands by the defendants for modifications/ extensions/ enhancements in the software and the plaintiff carried out the desired extensions/enhancements to the entire satisfaction and acceptance reports of the defendants ;
(g) Plaintiff within the stipulated time period, Civil Suit No.: 366/08 delivered the requisite software along with source code, user documentation and technical design documentation but due to constant demand of changes required by the defendants, the entire work got extended from time to time for which the plaintiff is not liable ;
(h) The value of the contract was Rs.
2,35,000/ as per the work order dated 5th March, 2003 but due to the extensions/modifications as per the instructions of the defendants, the project work not only got delayed but the total value of the work, worked out to Rs. 4,65,500/;
(i) Out of Rs. 4,65,500/, the defendants paid to the plaintiff a sum of Rs. 3,29,300/ and thus a sum of Rs. 1,36,200/ is still due and outstanding against the defendants ;
(j) The defendants asked the plaintiff to undertake the work relating to the development of Canvasser Module for their Sri Lankan client Vijeya Publishers through contract dated Civil Suit No.: 366/08 10.9.2004. The total value of the contract was fixed for Rs. 1,35,000/ by the defendants. The entire assignment was completed and delivered to the defendants. However, inadvertently one of the reports for the canvasser module for a value of Rs. 3,500/ was not delivered by the plaintiff to the defendants but non delivery of the same, does/did not hamper the defendants in using the software in its full potential. With respect to the assignment relating to the canvasser module, the defendants had to pay to the plaintiff an amount of Rs. 1,35,000/. Towards this amount, an advance to the tune of Rs. 40,000/ was paid to the plaintiff by the defendants and therefore, an amount of Rs. 95,000/ is still due from, and outstanding against the defendants ;
(k) Thus, a total sum aggregating to Rs.
2,31,200/ is still due and outstanding against the defendants along with interest @ 18% p.a. and as such the defendants are liable to pay to the Civil Suit No.: 366/08 plaintiff a sum of Rs. 3,10,730/ inclusive of interest till the filing of the present suit ;
(l) A notice dated 21.2.2005 was sent to the defendants to pay the sum due and outstanding against them but no reply whatsoever was received from the defendants.
3 Written statement filed by the defendants wherein it is objected that the suit of the plaintiff is barred by limitation. It is further objected that at no point of time the defendant acknowledged any liability qua the plaintiff and sought rejection of the plaintiff on this ground. It is further objected that the plaint has not been signed, verified and instituted by a duly authorized person. It is further objected that at no point of time, there was any outstanding dues against the defendant. It is admitted that defendant no. 2 through defendant no. 1 approached the plaintiff for development of software of Accounts Receivable Module to be accompanied with the software for Advertising Management System Software. It is admitted that the contract to the plaintiff was awarded on 05.3.2003 for a sum of Rs. 2,35,000/. It is stated that the software was to be delivered in eight weeks time consisting of source code and executable etc. It is Civil Suit No.: 366/08 further stated that the time of delivery and quality of software were the essence of the contract. It is further stated that the work order dated 05.3.2003 contained that the development of the software was to be completed by the plaintiff and delivered to the defendants within eight weeks. It is further stated that the plaintiff miserably failed to execute the job within the stipulated period which resulted into heavy losses to the defendants. It is further denied that the plaintiff kept on writing to the defendants to seek clarifications. It is further stated that the development of the software was delayed by the plaintiff by twenty months which amounted to 1000% delay and in today's competitive business environment, cannot be acceptable by any standard. It is further stated that full and final payment has been made to the plaintiff. It is further stated that in view of the heavy losses suffered by the defendants due to sheer negligence of the plaintiff, the bill for Rs. 4,65,000/ raised by the plaintiff, was finally settled at Rs. 3,63,000/ and was paid through cheques. It is further stated that a sum of Rs. 6,300/ was paid in excess. It is further stated that due to delay by the plaintiff, the defendants suffered great humiliation, goodwill and financial losses due to sheer negligence of the plaintiff. Rest of the contents of the plaint have been denied in the Civil Suit No.: 366/08 written statement by the defendants.
4 Replication filed by the plaintiff to the written statement of the defendant. Defendant in para9 of the written statement has alleged that in lieu of the heavy losses suffered by the defendants due to sheer negligence of the plaintiffs the bill for Rs. 4,65,000/ raised by the plaintiff was finally settled at Rs. 3,63,000/ which was paid by means of cheques. In reply to this para of written statement, the plaintiff has not denied specifically this averment of the written statement. Thus, this specific averment of the defendant is deemed to be admitted by the plaintiff.
5 My learned Predecessor by order dated 02.4.2007 framed following issues :
1. Whether the suit is barred by limitation ? OPD
2. Whether the suit is bad for not being signed, verified and instituted by duly authorized person? OPD
3. Whether the plaintiff is entitled for recovery of the suit amount, if so, to what sum ? OPP
4. Whether the plaintiff is entitled for interest, if so, at what rate and for which period ? OPP.
5. Relief.
6 To prove its case, the plaintiff examined Sh. Ajay Goel as PW1. He tendered his evidence by way of affidavit dated 02.04.2007. Civil Suit No.: 366/08 He has further relied upon copy of resolution dated 01.10.2005 as Ex. PW1/1, letter dated 05.03.2003 as Ex. PW1/2, copy of email dated 11.09.2003 as Ex. PW1/3, copy of email dated 25.09.2003 as Ex. PW 1/4, copy of email dated 19.10.2003 as Ex. PW 1/5, copy of email dated 26.11.2003 as Ex. PW 1/6, copy of email dated 14.02.2004, copy of email dated 09.06.2004 as Ex. PW 1/8, copy of email dated 25.06.2004 as Ex.PW1/9, copy of email dated 10.09.2004 as Ex. PW1/10, bill dated 29.12.2004 as Ex. PW1/10A, copy of email dated 13.09.2004 as Ex. PW1/11, letter dated 01.02.2005 as Ex. PW 1/12. Thereafter, counsel for the plaintiff closed PE. 7 To rebut the case of the plaintiff, defendant examined Shri Rakesh Kapoor as DW1. He tendered his evidence by way of affidavit dated 21.8.2007. The contents of this affidavit are similar to the averments made by the defendant in the written statement. He also relied upon copy of emails dated 12.6.2003 and dated 15.4.2004 as Ex. PW1/D1 and Ex. PW1/D2 respectively which were already put to PW1 during cross examination. Thereafter, counsel for the defendant closed DE.
8 Ld. Counsel for the plaintiff filed written submissions and counsel for the defendant also filed written submissions. I have also Civil Suit No.: 366/08 gone through written submissions, entire records of the case including pleadings of the parties, evidence led by the parties and documents proved by the parties during trial.
9 My issuewise findings are:
10 Issue no. 1.
Whether the suit is barred by limitation ? OPD Onus to prove this issue was upon the defendant. This suit was filed on 06.09.2006. It is stated in para 18 of the plaint that the cause of action to file this suit arose in favour of the plaintiff and against the defendant on 05.03.2003 when the work order was placed upon the plaintiff by the defendants. It is further stated that cause of action arose on various dates when the counsel for the plaintiff demanded the payment or the outstanding amount due to the defendant and the defendants failed to make the payments. It is further stated that a notice dated 21.02.2005 was issued for demand for the payment and thereafter this suit is filed.
In para 6 of the affidavit of evidence, it is stated by PW1 that the defendant desired plaintiff to develop eight additional reports in AprilMay 2003. It is further deposed that on 12.06.2003 specification alongwith additional eight reports were handed over to Civil Suit No.: 366/08 the defendants. It is further deposed that the plaintiff also provided user manual on 03.09.2003 on the software on which the implementation had started at Indian Express. It is further deposed that a representative of plaintiff along with the representative of defendant had visited the office of Indian Express at Bombay on 18.09.2003 to discuss the module of AIR2003. During the cross examination, witness stated that project was completed with the initial specification when it was delivered at the initial stage at the first time in June 2003. During crossexamination, DW1 admitted that a triparte meeting between the plaintiff, defendant and the Indian Express was conducted for finalization of the software development and delivered by the plaintiff and subsequently notified the defects. The Indian Express submitted a list of defects and clarifications which were to be removed by the plaintiff and the same were communicated to the plaintiff through the defendants. It is further stated that the plaintiff gave a proposal to the defendants regarding extra cost and time required to complete the defects as desired by the Indian Express. At this stage, witness voluntarily stated that this was after the expiry of the contract period. This witness stated that he did not remember the date when the new software was delivered by the plaintiff which was Civil Suit No.: 366/08 done several time. The suggestion was given by the plaintiff to DW1 that the entire developed software with initial specification was delivered to the defendant on 07.07.2003. This suggestion was denied by the witness. He has further suggested that user manual and other related deliverables were delivered to the defendants on 03.09.2003 and the same suggestion was also denied. Except these two dates no other date has been suggested by the plaintiff to DW1 in cross examination. The last date which has been suggested by the plaintiff to DW1 is 03.09.2003. Thus, as per the admission of the plaintiff itself, the last cause of action must have been arisen on 03.09.2003 and the present suit has been filed on 06.09.2006. It clearly comes out that the suit has not been filed within 3 years i.e. during the period of limitation. Thus, the suit of the plaintiff is hopelessly time barred. During arguments when a query was raised from counsel for the plaintiff regarding this issue then counsel for the plaintiff submitted that as per Ex. PW1/10A i.e. a bill raised by the defendant to the plaintiff. It is stated that subsequently payments were made in the year 200405 as mentioned in Ex. PW1/10A. It is further submitted by counsel for the plaintiff that in view of this document, defendant acknowledged the debt of the plaintiff. Evidence of the plaintiff is Civil Suit No.: 366/08 again perused. In the entire affidavit of the plaintiff tendered in evidence, no averment has been made by the plaintiff for any acknowledgment by the defendant towards the payment of the plaintiff. Infact, this document does not find mention in the affidavit. Moreover, during cross examination of DW1, this document has not been confronted to the defendant. No question or suggestion has been put by the plaintiff to DW1 regarding any subsequent payment made by the defendant to the plaintiff in the year 200405. Therefore, this issue is decided against the plaintiff especially in view of the fact that during crossexamination of DW1, no suggestion put by the plaintiff regarding any cause of action which must be arisen during the period of limitation. Accordingly, this issue is decided in favour of the defendant.
11 Issue no. 2.
Whether the suit is bad for not being signed, verified and instituted by duly authorized person? OPD Onus to prove this issue was upon the defendant. This suit is filed by Sh. Ajai Goel who has been stated to be one of the Directors of the plaintiff. PW1 also proved Ex. PW1/1 which is the copy of the resolution wherein Sh. Ajai Kr. Goel is duly authorized to institute Civil Suit No.: 366/08 the suit or to verify the pleadings on behalf of the plaintiff. During crossexamination of PW1, the defendant has not put any serious challenge to Ex. PW1/1.
In view of the provisions of Order 29 Rule 1 of CPC, any Director of the corporation who is able to depose the facts of the case, is competent to sign and verify the pleadings on behalf of the corporation. Thus, the present suit is filed by a competent person.
Moreover, in case RFA 174/2007 titled as Kingston Computers I P. Ltd. versus State Bank of Travancore decided on 12.08.2008, the Hon'ble Delhi High Court in para 26 observed:
"26. Suffice would it be to state that in law, the Secretary, Director or a Principal Officer of a company would be treated as duly authorized to institute suit on behalf of a company. This flows out from a bare reading of Order 29 Rule 1 of the Code of Civil Procedure has further explained in the decision in United Bank of India's case."
The Hon'ble High Court of Delhi in case 167 (2010) DLT 237 [2010 II AD (Delhi) 595] in para 22 held:
" that procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the Courts, Civil Suit No.: 366/08 under the Code, to ensure that injustice is not done to any party which has a just case as far as possible a substantive right should not be allowed to be defeated."
Thus, in view of law laid down by the Hon'ble High Court, the defendant is not able to discharge onus to prove this issue. Accordingly, this issue is decided in favour of the plaintiff holding that the suit has been signed and verified and instituted by duly authorized person.
12 Issue no. 3.
Whether the plaintiff is entitled for recovery of the suit amount, if so, to what sum ? OPP Onus to prove this issue was upon the plaintiff. It is already observed in para 4 of this judgment that defendant in para9 of the written statement has alleged that in lieu of the heavy losses suffered by the defendants due to sheer negligence of the plaintiffs the bill for Rs. 4,65,000/ raised by the plaintiff was finally settled at Rs. 3,63,000/ which was paid by means of cheques. In reply to this para of written statement, the plaintiff has not denied specifically this averment of the defendant. Thus, this specific averment of the defendant is deemed to be admitted by the plaintiff. Civil Suit No.: 366/08 Moreover, in case ILR (2009) II DELHI 676 titled as Pfizer Enterprises Sarl V. Cipla Limited where in para 8, it has been observed:
"8. In Trade Connection vs. International Building Products (P) Ltd., 2002 III AD (Delhi) 344, a learned Single Judge of this Court had transformed a failure to reply to paragraphs in the Plaint into unequivocal admissions of fact. In H.S.E.B. vs. Ram Nath, (2004) 5 SCC 793 their Lordships noted that there was no denial to the categoric averments to the effect that electrical wires were loose and were drooping and touching the roof of houses and, therefore, a deemed admission must be drawn against the Defendant. In Nagindas Ramdas vs. Dalpatram Iccharam, AIR 1974 SC 471 a Coordinate Bench had observed that"admissions in pleadings or judicial admissions admissible under Section 58 of the Evidence Act made by the parties or their agents at or before the hearing of the case, stand on a higher footing than evidentiary admissions. The former class of admissions are fully binding on the party that makes them and constitute a waiver of proof. They by themselves can be made the foundation of the rights of the parties. On the other hand evidentiary admissions which are receivable at Civil Suit No.: 366/08 the trial as evidence are by themselves not conclusive. They can be shown to be wrong".
Moreover, during cross examination PW1 has admitted that the time was the essence of the contract and the penal clause was there. He has further admitted that initial period as mentioned in Ex. PW1/2 i.e. work order was eight weeks. He has further admitted that the delivery means the delivery with the initial software specifications. He has further submitted that the initial specification was provided by the defendant within one week from the date of placing of Ex. PW1/2. He has further stated that he did not remember how many total specifications were received. He has further stated that second specification might have been received within three days from the date of first specification and sending of the specification was the regular feature in the present project. It is further stated that no specification received from the defendant has been placed on the court file by him. A suggestion was put to him that after receipt of specification within a week from the date of placement of order Ex. PW1/2, no other specification was sent by the defendant till the delivery of initial software supplied on 12.6.2003 and the said suggestion was denied. He has further admitted that Ex. PW1/D1 which are unsigned email documents issued by the defendant to the Civil Suit No.: 366/08 plaintiff wherein the defendant has made complaint to the plaintiff for rectification of the software. He has further admitted that the plaintiff has not specified in the plaint or in his evidence about the additional specification given by the defendant for the initial stage. He has further admitted that no user manual was given along with software on 12.6.2003. He has further stated that the user manual was supplied sometime in September 2003. A suggestion was put to this witness that the plaintiff has been terming in its terminology as additional work/specifications to the rectification sought by the defendant in the software and the said suggestion was denied. DW1 in para3 in his affidavit of evidence stated that delivery was to consist of source code, executable and documentation. In para5, he has further stated that there was no specific demand by the defendants for modification, extension or enhancement in the software. DW1 in cross examination has stated that at no point of time extra reports pertaining to the development were asked to be developed or prepared extra reports. He has further stated that the plaintiff developed software in parts which was in violation of contract. He has further stated that defendant had tested whatever software supplied by the plaintiff. He has further stated that it was not found Civil Suit No.: 366/08 OK as it has many defects and the defects were communicated to the plaintiff in writing by email. He has further stated that the plaintiff thereafter delivered the revised version of the software developed by them subsequently. During further cross examination, a suggestion was given to DW1 that the entire software with initial specification was delivered to the defendants on 07.7.2003 and the said suggestion was denied. In para10 of the plaint, the plaintiff has stated that the plaintiff had completed the software in April, 2004 and on 23.6.2004, the plaintiff delivered the complete software to defendants along with source code, technical and user documentation. There is no mention about date of 07.7.2003 in the entire plaint. Thus, the plaintiff has given evidence beyond pleadings and that said evidence cannot be looked into. DW1 has further stated that the defects with regard to the software, documentation and source code were never completely rectified. DW1 has further stated that after delivery of software, the plaintiff started requesting the defendant to make the payment. He has further stated that all payments were linked to satisfactory deliverables on time and of right quality. DW1 has further stated that defendant did not have any choice except to engage the plaintiff for development of canvasser module to work along with Civil Suit No.: 366/08 the A.R. module. He has further stated that this work was never completed by the plaintiff and therefore, could never be used by the customers. He has further stated that the defendant asked for rectification of defects with respect to canvasser module. He has further stated that the defects were never completely removed and the defected software was delivered by the plaintiff. DW1 has further stated that he was not aware whether the Indian Express had asked the plaintiff to develop additional modules to the software from the plaintiff. However, no such work order raised by Indian Express has been brought on the record. The entire testimony of DW1 is remain unimpeached and during cross examination satisfactorily explained that the plaintiff has failed to supply the software according to the satisfaction of the defendant and in accordance with the work order Ex. PW1/2. Moreover, it is the admission of the plaintiff that a bill of Rs. 4,65,000/ raised by the plaintiff was finally settled at Rs. 3,63,000/ as the said averment of the written statement has not been specifically denied by the plaintiff in the replication filed before this court. In view of the observations made hereinabove, the plaintiff is not able to discharge the onus to prove this issue. Accordingly, this issue is decided against the plaintiff with the observations that the Civil Suit No.: 366/08 plaintiff is not entitled for the recovery of the suit amount. Moreover, issue no. 1 has already been decided by this court to the effect that the suit is time barred.
13 Issue no. 4.
Whether the plaintiff is entitled for interest, if so, at what rate and for which period ? OPP.
Onus to prove this issue was upon the plaintiff. Since issue no.3 has already been decided against the plaintiff and the plaintiff is not entitled for recovery of the suit amount therefore, there is no order of interest. Accordingly, the plaintiff is not entitled for any interest.
14 Issue no. 5.
Relief.
In view of the observations made hereinabove, the suit of the plaintiff is dismissed. There is no order of cost. Decree sheet be prepared accordingly. File be consigned to record room. Announced in the Open Court today on 25.08.2010.
(Jitendra Kumar Mishra) ADJ (Central)12, Delhi Civil Suit No.: 366/08 C.S. No.: 366/08 17.8.2010 Present None.
Order could not pass due to paucity of time.
Now to come up for order on 24.8.2010.
(Jitendra Kumar Mishra)
ADJ (Central)12, Delhi
17.8.2010
25.8.2010
Present None.
Case file taken up today as 24.08.2010 was holiday due to 'Raksha Bandhan'.
By separate judgment announced in the open court today, the suit of the plaintiff is dismissed. There is no order of cost. Decree sheet be prepared accordingly. File be consigned to record room after completion of necessary formalities.
(Jitendra Kumar Mishra) ADJ (Central)12, Delhi 25.8.2010 Civil Suit No.: 366/08