Delhi District Court
M/S Surbhi Body Products (P) Ltd vs M/S Interfuse on 8 August, 2023
IN THE COURT OF SHRI LAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT-01),
SOUTH-EAST, SAKET COURTS, NEW DELHI
CS (Comm) No. 167/2019
In the matter of:
M/s Surbhi Body Products (P) Ltd.
(Through its Authorised Representative)
Having its Registered Office at:
635/1, Gadaipur Bandh,
Tehsil Mehrauli, New Delhi-110030.
............Plaintiff
Versus
1. M/s Interfuse
(Through its Proprietor Mr. Sandeep Kumar),
Regd. Off: 975, Gali no. 9,
Govind Puri, Near Kalkaji,
New Delhi-110019.
2. Mr. Sandeep Kumar
(Proprietor of M/s Interfuse),
Regd. Off: 975, Gali no. 9,
Govind Puri, Near Kalkaji,
New Delhi-110019.
.........Defendants
Date of institution : 10.07.2019
Date of reserving judgment : 28.07.2023
Date of judgment : 08.08.2023
JUDGMENT
1. The instant suit has been filed by the plaintiff against CS (Comm) No. 167/2019 Page 1 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. the defendants for recovery of Rs.3,50,000/- alongwith pendente lite and future interest @ 24% per annum.
2. It is stated that the plaintiff is a company duly incorporated and registered under the Companies Act, 1956, under the name and style of M/s Surbhi Body Products (P) Ltd. It is stated that the plaintiff company is engaged in the business of supply of linings, interlinings, accessories & embellishments which is used for making garments and it has gained goodwill in the market for its quality products and competitive rates. The plaintiff company had been in business terms with the defendants for purchase textile coated fabric to be ordered by the plaintiff company from time to time, subject to mutually agreed terms and conditions. Plaintiff averred that the defendants supplied goods to the plaintiff company vide tax invoices bearing No. 343 dt. 05.06.2018, No. 354 dt. 07.06.2018, No. 405 dt. 18.06.2018 and No. 435 dt. 25.06.2018 worth Rs. 9,25,326/-. It is also averred by the plaintiff that for the payment for the goods, the plaintiff had issued four cheques bearing No. 006280, 006282, 006300, 006306 for the aforementioned bills raised by the defendants and one of the said cheques bearing no. 006280 for a sum of Rs. 1,73,978/- was also duly cleared and encashed by the defendants.
Plaintiff further averred that when the above mentioned goods were supplied by the plaintiff company to its buyer namely JMD Trrexim, out of the total, goods worth Rs. 3,46,742/- were found to be defective and as a result of which the above named buyer suffered huge losses. Thereafter, plaintiff company informed the defendants through letter / notice dt. 02.08.2018, that the goods supplied by the defendants had shrinkage in excess of acceptable CS (Comm) No. 167/2019 Page 2 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. norms and as a result of the unacceptable shrinkage, the goods supplied by the defendants were rejected by the customers. Plaintiff also averred that the plaintiff company returned as much of the goods (those not consumed or cut) by the above named buyer, to the defendants and requested not to present or encash the remaining three cheques lying with the defendants as the payment for defective goods was cancelled and debited by the above named buyer. As per the plaintiff, through the said notice / letter dt. 02.08.2018, plaintiff company also conveyed to the defendant, its intention to sort out the issue amicably and requested to the defendants to visit their buyer and resolve the issue with them but the defendants failed to do any of the acts requested for, by the plaintiff. Plaintiff further averred that eventually, the buyer of the plaintiff company, namely JMD Trrexim issued a debit note dt. 02.08.2018 for Rs. 3,50,000/- to their client. Thereafter, the plaintiff company raised a purchase return invoice (debit note) dt. 10.08.2018 against the defendants for an amount of Rs. 3,46,742.20/-. The plaintiff company also served the defendants with letter / notice dt. 04.09.2018 alongwith one piece of defective shirt and a copy of debit note from the buyer requiring the defendants to amicably resolve the issue and thereafter, stopped the payment of remaining three cheques as mentioned above.
3. Plaintiff also averred that in order to ensure good relation with the defendant, the plaintiff served the defendants with another letter / notice dt. 25.09.2018 (aknowledged by defendant no.2 on 01.10.2018) enumerating the account summary whereby the plaintiff company issued another cheque bearing No. 0006637 dt. 06.10.2018 towards the payment of outstanding balance of Rs.
CS (Comm) No. 167/2019 Page 3 of 24M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. 4,04,606/- and requested the defendants to return the remaining abovesaid three cheques and thereafter, the said three cheques were returned to the plaintiff company by the defendant. Plaintiff further averred that the defendants did not address the issue with the aforementioned buyer and did not refund the amount of Rs. 3,50,000/-. Therefore, plaintiff called upon the defendants through a legal notice dt. 22.11.2018 to refund Rs. 3,50,000/- to the plaintiff, which amount was debited by the aforementioned buyer of the plaintiff company. Thereafter, defendants replied to the abovesaid notice vide reply dt. 28.11.2018, whereby the defendants denied all the facts and contents of the legal notice dt. 22.11.2018. Plaintiff stated that the amount of Rs. 3,50,000/- is still due and payable by the defendants to the plaintiff and as such the plaintiff has filed the present suit for the recovery of Rs. 3,50,000/- alongwith pendente-lite and future interest @ 24% per annum.
4. Defendants were duly served and the defendants filed the written statement. In the written statement, the defendants took several preliminary objections stating therein that suit of the plaintiff is not maintainable as the same has been filed on the basis of false and fabricated facts and also suppressed the material facts and created false story with a view to harass the defendants and also plaintiff wants to get benefits of his own wrongs. Defendants also contended that this court has no jurisdiction to entertain the present suit because as per the terms and conditions of the invoices, if any dispute arise, it will be subject to jurisdiction of Hindustan Mercantile Association and as per the Mercantile Bulletin in case of any dispute regarding the bills / invoice, the CS (Comm) No. 167/2019 Page 4 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. matter shall be referred to Daily Hindustan Mercantile Association, Delhi, for adjudication through Arbitration and Conciliation Act 1996. It is contended that the defendants Interfuse is the member of Delhi Hindustani Mercantile Association (Redg.) vide receipt no. 3407 dt. 25.04.2018. Defendants also contended that defendants supplied the goods through tax invoices and terms and conditions have been incorporated therein and the question of shrinking in excess of acceptable norms does not arise as such terms was not incorporated in tax invoices. The defendants further contended that they have no concern with the transactions between the plaintiff and M/s JMD Trrexim in any manner. Defendants further contended that plaintiff has already admitted in the suit that goods worth Rs. 3,46,742/- were found to be defective and in the letter dt. 04.09.2018, the plaintiff also admitted that the plaintiff has returned the goods worth Rs. 3,46,742/- due to defect, vide invoice No. PR180000001 dt. 10.08.2018 and therefore, the question to suffer with any loss on account of defective goods supplied by the defendants to the plaintiff does not arise at all. Defendants also stated that M/s JMD Trrexim has issued the debit note dt. 02.08.2018 to the plaintiff wehrein it has been clearly mentioned as trade discount but the plaintiff changed the meaning of that letter by saying that M/s JMD Trrexim had issued debit note dt. 02.08.2018 to him. Defendants also denied that the defendants had supplied the defective goods to the plaintiff. In the reply on merits also the defendants mostly denied the averments and contentions of the plaintiff and reiterated the contentions as raised in the preliminary objections of the written statement.
5. Plaintiff has filed replication to the WS of defendants CS (Comm) No. 167/2019 Page 5 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. wherein the plaintiff reiterated and reaffirm the averments as made in the plaint / suit and denied the contentions of the defendants.
6. After completion of pleadings vide order dt. 17.12.2021, Ld. Predecessor Court has framed the following issues:
1 Whether the suit of the plaintiff is not maintainable for the reasons mentioned in the preliminary objection? OPD.
2 Whether the court has no jurisdiction to entertain the present suit as claimed in preliminary objection No. 7? OP Parties 3 Whether the goods supplied by the plaintiff were defective, if so, its effects? OPD.
4 Whether the plaintiff is entitled to the suit amount as claimed for? OPP 5 Whether the plaintiff is entitled to the interest, if so, at what rate and for that period? OPP.
6 Relief, if any.
7. Thereafter, the plaintiff led evidence and examined Sh.
Faisal Ahmad as PW1. PW1 Sh. Faisal Ahmad has tendered his evidence by way of affidavit vide Ex. PW1/A and in his evidence, he also relied upon the following documents:
S. No. Documents Exhibit Pages 1. Plaint The document referred as Ex. 10 PW1/2 in affidavit is exhibited as Ex. PW1/1 CS (Comm) No. 167/2019 Page 6 of 24
M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr.
2. Board Resolution The document referred as Ex. 01 dated 29.09.2020 PW1/3 in affidavit is exhibited as Ex. PW1/2 3. Invoices The document referred as Ex. 04 PW1/4 in affidavit is exhibited as Ex. PW1/3 (colly)
4. Pictures of picketed The document referred as Ex. 03 in stripe fabric PW1/5 in affidavit is marked design. as Mark P1 5. Debit Note The document referred as Ex. 02 PW1/6 in affidavit is exhibited as Ex. PW1/4
6. Duly acknowledged The document referred as Ex. 02 purchase return PW1/7 in affidavit is invoice dated exhibited as 10.08.2018 Ex. PW1/5
7. Duly acknowledged The document referred as Ex. 01 letter/notice dated PW1/8 in affidavit is 09.04.2018 exhibited as Ex. PW1/6
8. Duly acknowledged The document referred as Ex. 01 letter/notice dated PW1/9 in affidavit is 25.09.2018 exhibited as Ex. PW1/7
9. Legal Notice dated The document referred as Ex. 02 22.11.2018 PW1/10 in affidavit is exhibited as Ex. PW1/8
10. Reply to Legal The document referred as Ex. 09 Notice alongwith PW1/11 in affidavit is envelope exhibited as Ex. PW1/9
11. Postal Receipt Ex. PW1/10 01 CS (Comm) No. 167/2019 Page 7 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr.
8. PW1 was cross examined by the defendants. In his cross examination on behalf of defendants, PW1 deposed that he is working with the plaintiff company for the last 15 years as an accountant, however, he does not know about the fabrics in dispute deeply. PW1 admitted that the fabrics were supplied by the defendants to the plaintiff company vide Ex. PW1/3 (Colly.) and the terms and conditions as mentioned in Ex. PW1/3 was binding upon the plaintiff company and defendants. He further admitted that there is no terms and conditions with respect to shrinkage and inferior quality. PW1 in his cross examination also admitted that no loss has been occurred to the plaintiff company on the acts of the defendants. He further stated that M/s JMD Trrexim is their customer to whom they sell fabric. PW1 denied to the suggestion that fabric sold by the defendants to the plaintiff company never shrinked or that it was of superior quality as the fabrics were duly inspected prior to purchase. PW1 deposed that word 'Trade Discount' they mean the discount offered to the customer.
9. Thereafter, defendants led the evidence on behalf of the defendants. DW1 Sh. Sandeep Gupta has tendered his evidence by way of affidavit vide Ex. DW1/1 and also relied upon the following documents:-
S. No. Documents Exhibit Pages 1. Mercantile Bulletin Ex. DW1/A 17 2. Receipt No. 3407 dated Ex. DW1/B (OSR) 01 25.04.2018 3. Statement of Account Ex. DW1/C (colly) 02 alongwith certificate u/s 65- B of Indian Evidence Act CS (Comm) No. 167/2019 Page 8 of 24
M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr.
In his cross examination, DW1 admitted that there is no arbitration agreement signed between the parties. DW1 further admitted that there was no specific discussion between the parties prior to issuance of purchase order that he was a member of Hindustan Mercantile Association. He also admitted that the plaintiff had returned the unused materials to him. DW1 denied to the suggestion that the material supplied by him to the plaintiff was defective due to excessive shrinkage. DW1 also denied to the suggestion that the debit note of Rs. 3,46,742/- was issued due to the defective supplies made by him. He also denied to the suggestion that the ledger account statement Ex. DW1/C is a forged and fabricated document.
10. Vide order dt. 28.07.2023, issue no. 2 and 3 were amended / modified as under:
Issue No. 2: Whether the court has no jurisdiction to entertain the present suit as claimed in preliminary objection No. 7? OPD Issue No. 3: Whether the goods supplied by the defendants were defective, if so, its effects? OPP
11. Final arguments heard.
12. Ld. counsel for the plaintiff submitted that the defendant no. 1 is a firm and defendant no. 2 is its Proprietor and they supplied the goods to the plaintiff company vide invoices bearing Nos. 343 dt. 05.06.2018, 354 dt. 07.06.2018, 405 dt. 18.06.2018 and 435 dt. 25.06.2018, worth Rs. 9,25,326/- and when the said goods (textile coated fabric purchased from defendants) CS (Comm) No. 167/2019 Page 9 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. were supplied by the plaintiff to its buyer namely JMD Trrexim, the said goods were found defective and out of total defective goods, the plaintiff company returned as much of the goods (those not consumed or cut) by the above named buyer, to the defendants worth Rs. 3,46,742/- and as a result of which the above named buyer suffered huge losses and raised a debit note for a sum of Rs. 3,50,000/- on the plaintiff, which the defendants have to pay and plaintiff company claims the same in the present suit. Ld. Counsel for the plaintiff submitted that the said debit note dt. 02.08.2018 of Rs. 3,50,000/- issued by the JMD Trrexim. Ld. Counsel for the plaintiff has also relied upon the judgment titled as Parmeet Singh Chatwal & Ors. Vs. Ashwani Sahani, OMP 1445/2014 & IA No. 22669/2014, decided on 14.02.2023, by Hon'ble High Court of Delhi.
13. On the other hand, Ld. Counsel for the defendants submitted that the plaintiff company has no locus standi to file the present suit against the defendants as this court has no jurisdiction to entertain this suit in view of the terms and conditions incorporated in the invoices. He also argued that as per the terms and conditions of the invoices, if any dispute arise, it will be subject to the jurisdiction of Hindustan Mercantile Association and moreover, the defendants interfuse is the member of Delhi Mercantile Association vide receipt no. 3407 dt. 25.04.2018. He also submitted that the shrinkage in excess of acceptable norms does not arise as such term was not incorporated in the tax invoice. He further argued that the defendants have no concern with the transaction between the plaintiff and M/s JMD Trrexim and the plaintiff is trying to shift the burden of its liability upon the CS (Comm) No. 167/2019 Page 10 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. shoulder of the defendants in order to save its liability payable to M/s JMD Trrexim. He further submitted that it has been admitted by the plaintiff that he had paid the full and final amount vide cheque bearing no. 0006637 dt. 06.10.2018 to the defendants, therefore, the question of having any due amount against the defendants does not arise at all. He also submitted that plaintiff has not arrayed M/s JMD Trrexim as necessary party in the present suit nor examine JMD Trrexim as a witness to prove trade discount / debit note as well as alleged defects in the goods. He also submitted that trade discount is the one allowed to a customer, if he places an order for a certain amount or quantity. He also argued that in the purchase return invoice for a sum of Rs. 3,46,742/- there is no mention that goods were defective. Ld. Counsel for the defendants has also relied upon the judgment titled as MRF Limited Vs. Commissioner of Trade and Taxes decided in ST. APPL. 1/2015 and ST. APPL. 2/2015 by the Hon'ble High Court of Delhi on 14.05.2015.
14. I have considered the above submissions of Ld. Counsel for the plaintiff and Ld. Counsel for the defendants and also perused the file and gone through the evidence on record.
15. My issue wise findings are as under:
ISSUE No. 1: Whether the suit of the plaintiff is not maintainable for the reasons mentioned in the preliminary objection? OPD.
The onus to prove this issue no. 1 is upon the defendants. In its written statement the defendants have taken CS (Comm) No. 167/2019 Page 11 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. several preliminary objections and out of the said preliminary objections, the preliminary objection No. 7 shall be dealt separately as separate issue no. 2 has been framed qua the preliminary objection No. 7 and therefore, rest of the preliminary objections shall be dealt in this issue no. 1.
In its written statement, the defendants had raised several preliminary objections, contending that the suit is not maintainable as the suit has been filed on the basis of false and fabricated facts and plaintiff has also suppressed the material facts and as well as the defendants have no concern with the transaction between the plaintiff and M/s JMD Trrexim in any manner. Further, the defendants in their WS also taken the preliminary objections that the plaintiff has already admitted that the goods worth Rs.3,46,742/- were found defective and in the letter dt. 04.09.2018, the plaintiff admitted that the plaintiff returned the goods worth Rs. 3,46,742/- due to defects and therefore, the question to suffer any loss on account of alleged defective goods alleged to be supplied by the defendants to the plaintiff does not arise at all.
It is the contention of the defendants that suit is not maintainable for the reasons as mentioned in the preliminary objections. The contentions as raised in the preliminary objections in the WS of the defendants are concerned that are primarily on the ground that the defendants have filed the present suit on false and fabricated facts, suppressed the material facts etc., but the defendants have not brought any cogent evidence so as to establish that the suit has been filed by the plaintiff on false and fabricated facts or suppress the material facts from the court. It is admitted CS (Comm) No. 167/2019 Page 12 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. case of the parties that there had been transactions between the parties. It is also the admitted fact that the goods were supplied by the defendants to the plaintiff against the purchase order. The contentions of the plaintiff is that goods were defective and hence, the goods (not consumed or cut) were returned to the defendants by the plaintiff and the present suit is mainly for supply of defective goods and due to which the alleged loss stated to be incurred by the plaintiff and said contentions shall be dealt hereinafter while dealing with the issues no. 3 and 4. So far as this issue No. 1 is concerned, the defendants have not brought forth any convincing evidence, if the plaintiff has suppressed the material fact or filed the present suit on false and fabricated grounds. As such the defendants have failed to establish that the suit has been filed by the plaintiff on the basis of false and fabricated facts or that the plaintiff also suppressed the material facts.
As such the issue no. 1 is decided against the defendants and in favour of the plaintiff.
16. ISSUE No. 2: Whether the court has no jurisdiction to entertain the present suit as claimed in preliminary objection No. 7? OPD The onus to prove this issue is upon the defendants. In their written statement, in preliminary objection no. 7, the defendants stated that the plaintiff has no locus standi to file the suit against the defendants as this court has no jurisdiction to entertain the present suit in view of the terms and conditions incorporated in the invoices. It is also contended by the defendants CS (Comm) No. 167/2019 Page 13 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. that as per the terms and conditions of the invoices, "if any dispute arise, it will be subject to jurisdiction of Hindustan Mercantile Association" and from the perusal of the Mercantile Bulletin, it is clearly revealed that "in case of any dispute regarding the bill /invoice, the matter shall be referred to Delhi Hindustan Mercantile Association (Regd.), Delhi-110006 for adjudication through Arbitration and Conciliation Act, 1996 and the decision of the said association will be final and binding upon the parties". It is also the contention of the defendants that defendants interfuse is the member of Delhi Hindustani Mercantile Association (Regd.) vide receipt No. 3407 dt. 25.04.2018.
In his evidence, DW1 has also relied upon the Mercantile Bulletin vide Ex. DW1/A and receipt No. 3407 dt. 25.04.2018 vide Ex. DW1/B. Further, during the course of arguments also Ld. Counsel for the defendants submitted that as per the terms and conditions of invoices, if any dispute arise, it will be subject to jurisdiction of Hindustan Mercantile Association and as per the Mercantile Bulletin, in case of any dispute regarding the bill / invoice, the matter shall be referred to Delhi Hindustan Mercantile Association for adjudication through Arbitration and Conciliation Act.
However, in its replication, the plaintiff submitted that the transactions between the plaintiff and defendants are of commercial in nature and is covered by the provisions of Commercial Courts Act. Plaintiff also contended that there was no agreement in writing between the plaintiff and defendants to refer the matter to arbitration. The plaintiff has never agreed / accepted CS (Comm) No. 167/2019 Page 14 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. to the printed clause and the printed clause of the invoices does not confer exclusive jurisdiction to any forum thereby ousting the jurisdiction of this court.
In the judgment titled as Parmeet Singh Chatwal & Ors. Vs. Ashwani Sahani, O.M.P. 1445/2014, & I.A. No. 22669/2014, decided on 14.02.2020, by the Hon'ble High Court of Delhi, it was observed as under:
25. A perusal of the above invoice shows that it is not clear as to whether the petitioner who is the proprietor of the said Mahima Exports has signed the invoice or it has been signed on his behalf by some other entity. That apart, the manner of signing indicates that the person is only signing receipt of the goods rather than agreeing to the arbitration agreement between the parties. In my opinion, the manner in which the signatures have been affixed on the invoice does not indicate an intent on the part of the petitioner agreeing to settle their disputes through arbitration.
The so called Arbitration Clause is reproduced in a small font at the bottom of the invoice. It is doubtful if the petitioner even noticed that he was signing a document which has an Arbitration Clause. It is not possible to conclude that the parties were ad idem.
Further I may note that as per the said alleged arbitration clause, the disputes are to be settled by Delhi Hindustan Mercantile Association. The Association claims to be registered presumably under the Societies Registration Act. It has to act through authorised persons for the purpose of conducting arbitration. There is nothing to show the composition or status of this Association. There is nothing to show how the arbitral CS (Comm) No. 167/2019 Page 15 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. tribunal will be constituted by the said Delhi Hindustan Mercantile Association. There is no consensus indicated in the arbitration clause of the composition of the arbitral tribunal.
In my opinion, apart from the fact that there is no consensus for Arbitration, the clause itself is vague. It is not possible to accept the plea of the respondent that the parties have agreed to refer the disputes to arbitration of the said Delhi Hindustan Mercantile Association. Hence, the findings of the learned Arbitrators in the impuged order are clearly erroneous and contrary to the settled legal position.
27. In this context, I may also look at a judgment of a Coordinate Bench of this court in the case of Taipack Ltd. & Ors. V. Ram Kishore Nagar Mal (supra) where the court was interpreting an arbitration clause which was printed on the invoice and stated as follows:-
"In case of any dispute the judgment of the Tribunal of any other authority appointed by the paper Merchants Association (Regd.) Delhi will be final and binding."
28. This court had held that the aforesaid clause is not an arbitration clause. It held as follows:
"20. The signature by the petitioners agent on the respondents copy of invoice cannot tantamount to acceptance of the respondents so called offer for arbitration. The signatures in such a situation were evidently an acknowledgment of receipt of the goods and nothing more. There is another aspect of the so- called Arbitration Agreement contained in condition No. 4 of the Respondents invoice. The said condition in the invoice firstly does not use the expression 'arbitration' or 'arbitrator'. Secondly, the CS (Comm) No. 167/2019 Page 16 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. Respondent does not even make a reference to the "Constitution and Regulations" of the paper Merchants Association (Regd.), Delhi. Consequently, it is difficult to accept that the petitioner ever became aware of, or agreed to refer its dispute with the Respondent and relation to the contract in question to arbitration by the Paper Merchants Association (Regd.), Delhi. The condition No. 4 appears to be incomplete and rather vague.
Moreover, in the present case, in his cross examination also DW1 Sh. Sandeep Gupta admitted that there is no arbitration agreement signed between the parties. DW1 also admitted that there was no specific discussion between the parties prior to issuance of purchase order that he (DW1) is a member of Hindustan Mercantile Association.
Therefore, in view of the abovesaid admission of DW1 that there was no arbitration agreement signed between the parties as well as the above mentioned case law, there is no force in the contention of the defendants that this court has no jurisdiction to entertain the present suit as claimed in preliminary objection No.7.
Accordingly, issue no. 2 is decided against the defendants and in favour of the plaintiff.
17. Issue No. 3: Whether the goods supplied by the defendants were defective, if so, its effects? OPP The onus to prove this issue is upon the plaintiff. It is contention of the plaintiff that goods supplied by the defendants to the plaintiff were defective. Plaintiff also stated that the goods CS (Comm) No. 167/2019 Page 17 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. supplied by the defendants to the plaintiff, were further supplied by the plaintiff company to its buyer namely JMD Trrexim, and out of total goods, goods worth Rs. 3,46,742/- were found to be defective and as a result of which above named buyer namely JMD Trrexim suffered huge losses. It is also stated by the plaintiff that the plaintiff informed the defendants through a letter / notice dt. 02.08.2018 that the goods supplied by the defendants had shrinkage in excess of acceptable norms. As a result, the goods supplied by the defendants were rejected by the customers of the plaintiff. The defendants have denied that the goods supplied by them to the plaintiff were defective. It is the case of the plaintiff that goods supplied by the defendants to the plaintiff were defective as it had shrinkage in excess of the acceptable norms. The plaintiff has also placed on file one shirt, so as to show that the goods supplied by the defendants were defective, however, the said shirt remained unproved as the plaintiff has not exhibited the said shirt in its evidence. Moreover, PW1 has also not stated anything about the said shirt as placed on file in his evidence. Otherwise also in the purchase return invoice dt. 10.08.2018 vide Ex. PW1/5 for a sum of Rs. 3,46,742.20/-, there is no mention that the goods supplied by the defendants were defective. Though in letter dt. 04.09.2018 vide Ex.PW1/6 as addresses to the defendant no. 1 by the plaintiff, it is mentioned that plaintiff has returned goods worth Rs. 3,46,742.20/- due to defects. However, defendants contended that after seeing the goods, plaintiff placed the order to the defendants for supply of goods and accordingly, the plaintiff supplied the goods and as such there was no defects in the goods. It is also the contentions of the defendants that plaintiff has CS (Comm) No. 167/2019 Page 18 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. returned the unused goods to the defendants. PW1 in his cross examination admitted that there was no terms and conditions with respect to shrinkage and inferior quality. PW1 also admitted that no loss has been occurred to the plaintiff company on the acts of the defendants. Moreover, the plaintiff has neither made M/s JMD Trrexim as party in the present suit nor examined any witness from JMD Trrexim. It is the case of the plaintiff that said JMD Trrexim, whom the plaintiff supplied the goods purchased from defendants, returned some of the goods due to alleged defective goods. The concerned witness from the M/s JMD Trrexim should have been the best person to establish that the goods supplied by the defendants to the plaintiff and further supplied by the plaintiff to the JMD Trrexim, were defective. As the plaintiff has not examined any witness from the JMD Trrexim to establish that the goods as originally supplied by the defendants to the plaintiff, were defective, hence, an adverse inference can be taken against the plaintiff on that aspect. Therefore, the plaintiff has failed to establish that goods supplied by the defendants to the plaintiff were defective.
Accordingly, issue no. 3 is decided against the plaintiff and in favour of the defendants.
18. ISSUE No. 4: Whether the plaintiff is entitled to the suit amount as claimed for? OPP ISSUE No. 5: Whether the plaintiff is entitled to the interest, if so, at what rate and for that period? OPP.
The issues no. 4 and 5 shall be dealt together. The onus to prove both issues no. 4 and 5 are upon the plaintiff. The CS (Comm) No. 167/2019 Page 19 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. plaintiff has filed the present suit for recovery of Rs. 3,50,000/- alongwith pendent-lite and future interest @ 24% per annum. It is the contention of the plaintiff that defendants supplied the goods to the plaintiff company vide invoices Nos. 343 dt. 05.06.2018, 354 dt. 07.06.2018, 405 dt. 18.06.2018 and 435 dt. 25.06.2018 vide Ex. PW1/3 (Colly.), worth Rs. 9,25,326/-. It is also the contention of the plaintiff that the above-mentioned goods were supplied by the plaintiff to its buyer namely M/s JMD Trrexim and out of the total, the good worth Rs.3,46,742/- were found to be defective and as a result of which the above named buyer i.e. JMD Trrexim suffered huge losses. As per the plaintiff, the defendants were also informed vide letter / notice dt. 02.08.2018 that the goods supplied by the defendants had shrinkage in excess of acceptable norms. The letter dt. 02.08.2018, Ex. PW1/4 (Colly.) was actually a debit note / trade discount issued by the JMD Trrexim to the plaintiff and alongwith the said debit note, the photocopy of letter / notice dt. 02.08.2018 was annexed and as per which the said letter has been issued by the JMD Trrexim to the plaintiff stating that they have issued debit note of Rs. 3,50,000/- for inferior quality of 405 interlining and claim settlement thereon. There is contradiction in the alleged debit note Ex. PW1/4 (Colly.) as first page of it is in original hand written, wherein, against the column of sum of Rs. 3,50,000/- Trade Discount is mentioned, whereas on the second page which is a photocopy, wherein it is mentioned that they have issued debit note of Rs. 3,50,000/- for inferior quality. This second page of Ex. PW1/4 is a photocopy and no witness from JMD Trrexim examined by the plaintiff to prove the same. The plaintiff should have examined the witness from JMD Trrexim as the first page of CS (Comm) No. 167/2019 Page 20 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. Ex.PW1/4 which is original one wherein it is categorically mentioned as the Trade Discount and not mentioned as debit note. Moreover, it is the contention of the defendants that in the purchase return invoice dt. 10.08.2018 Ex. PW1/5 for a sum of Rs. 3,76,742/-, there is no mention that goods were defective. It is also the contention of the defendants that the plaintiff has returned the goods (unused and uncut) to the defendants. Further, it is also the contention of the defendants that it has been admitted by the plaintiff that plaintiff had paid full and final amount vide cheque dt. 06.10.2018 to the defendants, therefore, the question of having any due amount against the defendants does not arise at all. In the plaint it is mentioned that for the payment of goods, the plaintiff had issued four cheques bearing no. 006280, 006282, 006300, 006306 for the bills raised by the defendants. As per plaintiff, one of the said cheque bearing no. 006280 for a sum of Rs. 1,73,978/- was duly cleared and encashed by the defendants. Further, in the plaint the plaintiff stated that the plaintiff served the defendants with the letter / notice dt. 25.09.2018 enumerating the accounts summary whereby the plaintiff company issued another cheque bearing no. 0006637 dt. 06.10.2018 towards the payment of outstanding balance of Rs. 4,04,606/- and requested the defendants to return the remaining above-mentioned three cheques. Thus, it is the contention of the defendants that the plaintiff has made full and final payment regarding the goods supplied by the defendants and now nothing due against the defendants.
It is also the contention of the defendants in its written arguments that defendants have has started to supply the fabrics / material to the plaintiff company on 05.06.2018, however, the CS (Comm) No. 167/2019 Page 21 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. settlement was executed between the plaintiff and JMD Trrexim in respect of the loss vide letter dt. 26.02.2018 upon which the debit note was issued by the JMD Trrexim to the plaintiff and hence, the question of having any transaction / liability of defendants prior to 05.06.2018 does not arise at all. Alongwith the written argument, the defendants have also filed copy of said letter dt. 26.02.2018. However, the said letter dt. 26.02.2018 as filed by the defendants alongwith written statement cannot be considered as the same has not mentioned by the defendants in their WS and also not relied the said letter in their evidence.
It is the contention of the plaintiff that for the defective goods supplied by the defendants to the plaintiff, which the plaintiff further supplied to the JMD Trrexim, the said JMD Trrexim suffered loss and issued debit note for a sum of Rs. 3,50,000/- vide debit note dt. 02.08.2018 Ex. PW1/4. The perusal of said debit note Ex. PW1/4 shows that the said debit note was issued by the JMD Trrexim to the plaintiff and in the said alleged debit note, it is mentioned as trade discount. The plaintiff has filed the present suit for recovery of Rs. 3,50,000/- as mentioned in the said debit note dt. 02.08.2018. Ld. Counsel for defendants argued that M/s JMD Trrexim has issued the debit note dt. 02.08.2018 to the plaintiff wherein it is clearly mentioned as trade discount but the plaintiff changed the meaning of letter by saying that M/s JMD Trrexim issued the debit note dt. 02.08.2018 to the plaintiff.
In the judgment titled as MRF Limited Vs. Commissioner of Trade and Taxes decided in ST. APPL. 1/2015 and ST. APPL. 2/2015 by the Hon'ble High Court of Delhi on 14.05.2015, it was observed as under:CS (Comm) No. 167/2019 Page 22 of 24
M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr.
It is well-known that a scheme of discount adopted by the commercial circles is normally of two types-cash discount and trade discount-and a discount normally denotes a deduction from the amount due as price of goods in consideration of its being paid promptly or in advance. Trade discount is the one allowed to a customer if he places an order for a certain amount or quantity or more. Such a discount is given to encourage a buyer to buy more at a time or within a period of time.
In the instant case also PW1 in his cross examination admitted that by the word 'Trade Discount' they mean the discount offer to the customer. Therefore, the plaintiff's witness PW1 Sh. Faisal Ahmad has also categorically admitted that the trade discount means the discount offered to the customers. Thus, the alleged debit note of Rs. 3,50,000/- as issued by the M/s JMD Trrexim is a trade discount and on the alleged debit note dt. 02.08.2018 vide Ex. PW1/4 also against the column of sum of Rs.
3,50,000/-, the Trade Discount has been mentioned.
Moreover, apart from this, in the cross examination of PW1, he also categorically admitted that no loss has been occurred to the plaintiff company on the acts of the defendants. If no loss has been occurred to the plaintiff company as per the admission of PW1, then the question of alleged loss incurred by the plaintiff due to the alleged supply of defective goods does not arise at all. Therefore, considering all the above facts and circumstances and evidence as well as case laws as discussed above, the plaintiff is not entitled to suit amount as claimed for. The plaintiff has failed to establish its case against the defendants. As the plaintiff is not entitled for the suit amount as claimed for, hence, the plaintiff is CS (Comm) No. 167/2019 Page 23 of 24 M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr. also not entitled for any interest.
Accordingly, issues no. 4 and 5 are decided against the plaintiff and in favour of the defendants.
19. While deciding issue no. 3, it is held that the plaintiff has failed to establish that the defendants have supplied the defective goods to the plaintiff and in issue no. 4, it is held that the plaintiff is not entitled for the suit amount as claimed for. Thus, the plaintiff has failed to prove its case against the defendants for recovery of Rs. 3,50,000/- i.e. suit amount alongwith pendente lite and future interest @ 24% per annum.
As such, in view of the above findings, the plaintiff has failed to prove its case against the defendants and accordingly, the suit is dismissed. No order as to cost. Decree sheet be drawn accordingly.
File be consigned to be record room.
Digitally signedLAL by LAL SINGH Date: SINGH 2023.08.08 16:08:19 +0530 Announced in Open (LAL SINGH) Court on 08.08.2023 District Judge (Commercial Court-01) South East/Saket Courts, New Delhi CS (Comm) No. 167/2019 Page 24 of 24
M/s Surbhi Body Products (P) Ltd. Vs. M/s Interfuse & Anr.