Delhi District Court
Elektroweld Automations India (P) Ltd vs Glaves Corporation on 22 January, 2010
IN THE COURT OF MS. SANGITA DHINGRA SEHGAL,
ADDITIONAL DISTRICT JUDGE, TIS HAZARI COURTS, DELHI
Suit No. 830/08
Elektroweld Automations India (P) Ltd.
202203 Kamal House, Plot No. 6,
W.H.S. Furniture Block,
Kirti Nagar, New Delhi110015 ...........Plaintiff
Vs.
1. Glaves Corporation
A406a, VKIA, 4th Road,
Jaipur13.
2. Mr. V. B. Jain,
Managing Director, Glaves Corporation,
A406a, VKIA, 4th Road,
Jaipur13. .................Defendant
ORDER
1. That the plaintiff has filed the present suit U/o XXXVII of the CPC on the brief fact that plaintiff is carrying on the business of manufacture, exportimport and supply of welding machines, equipments and its allied products under name and style of M/s Elektroweld Automation India Pvt. Ltd.
2. That Shri.Vipin Sinha is the director of the plaintiff company and is managing all the affairs of the company.
3. That the Defendant No.1 is a company carrying on its business under the name and style of M/s Glaves Corporation and Defendant No.2 is the Managing Director of Defendant No.1 and acting and dealing with all day to day matters/affairs of Defendant No.1.
4. That the Plaintiff had business dealings with the Defendants and during the course of the same the defendants placed the purchase order bearing no.5730/2396 dated 16.04.2004 for the supply of one automatic PTA (Plasma Transferred Act) Satellite Deposition System and that scheduled terms of payment were agreed by both the parties and Rs.2.5 lacs were received in advance and a payment of Rs.10 Lacs was made by the defendant on 05.07.2004 after the inspection of the said machine.
5. That as desired by the Defendant, the Plaintiff supplied the said machine to the Defendant at their workplace for Rs.15,55,000/ and agreed to supply the 'C' form.
6. That the machine was to the satisfaction of the Defendants and hence 'C' form was released on 04.10.2004.
7. That the plaintiff demanded the balance amount of Rs.3,05,000/ from the Defendants vide letter dated 13.10.2004 but the Defendants failed to make the payment.
8. That the Defendants have failed and neglected to fulfill their commitments and that the Defendants are liable to pay 24% of the interest on the outstanding dues. The legal notice was issued to the Defendant dated 03.10.06 despite which the Defendants failed to make the payment.
9. That an outstanding amount of Rs.3,05,000/ with effect from 01.09.2004 to 31.03.07 amounting to Rs.1,83,000/ total amounting to Rs.4,88,000/ is due. And hence the present suit.
10.That the defendants were served with summons under order XXXVII of CPC, who put in appearance within stipulated period. On receipt of summons for judgment, the defendant sought grant of leave to defend their suit and took up a plea that a suit was beyond ambit and scope of order XXXVII of CPC. It is neither based on Bills of Exchange, Hundies or promissory note, nor there is any written contract or an enactment or on a guarantee and as such the defendants are entitled to unconditional leave to defend.
11.That the defendant sought grant for leave to defend on the ground that defendant No. 2 Shri V. B. Jain, Managing Director of M/s. Glaves Corporation, a qualified Mechanical Engineer from BITS, Pilani, who set up defendant No. 1 i.e. M/s. Glaves Corporation in Jaipur and is engaged in the manufacturing of very hitech equipments used in Polyster and Man made fibre industry. In the process of up gradation of technology some export obligation, a hi tech plant of Plasma Transferred Act was required and the plaintiff M/s. Eletroweld Automations India Pvt. Ltd., New Delhi were short listed. It is submitted that after holding technical discussions, quotations were sought and a formal purchase order was placed for a total sum of Rs.15 Lacs and Rs.2.5 Lacs paid with the purchase order to the plaintiff. According to the defendant, the plaintiff did not discuss that the machine would be managed by M/s. Mastermind, Pune, but introduced at the time of finalisation of the order. It is submitted that the trial piece weighing about 125 Kgs. was sent to M/s. Mastermind at Pune to tryout before dispatching the machine at our cost of the defendant and the date of trial on sample supplied by the defendant was fixed on 07.05.2004 at Pune. It is stated that the date of trial was postponed from 07.05.2004 to 16.05.2004 and was further postponed to 25.05.2004. On 28.04.2004, on inspection it was found that machine was completed and the PTA torch failed to ignite and trial had to be aborted on 30.05.2004. It is submitted by the defendant that on 02.06.2004, a list of observations and a list of 26 main points and subpoints which were sent to the plaintiff were accepted with a promise to do the make up of deficiency. According to the defendant, the second installment of Rs.11 Lacs was to be made after a positive inspection report at Pune, but despite the fact that the inspection report was negative and at the request of the plaintiff that M/s. Mastermind would not release the machine before getting the full payment of Rs.10 Lacs, the defendant released the installment of Rs.10 Lacs in place of Rs.11 Lacs to which the plaintiff agreed. According to he defendant a checklist of 14 points were sent to the plaintiff on 18.06.2004 and besides a cheque of Rs.10 Lacs was sent to the plaintiff on 15.07.2004. The machine was received at Jaipur on 16.07.2004, but PTA torches failed to perform due to the poor quality of Torch, pipe and components.
12.That the plaintiff kept asking for balance payment from the defendant, but the machine was rejected on 14.10.2004. The plaintiff sent a letter of completion on 19.10.2004.
13.That a huge amount was invested by the defendant in unusable piece of plant and the job had to be entrusted to Siemens to handle the mechanical problems.
14.That the plaintiff accepted to bear the expenses for the same and a debit note was sent to the plaintiff clear the accounts alongwith a Cform on the request of the plaintiff.
15.Thereafter, an automatic shielding system was purchased from the plaintiff on 27.12.2004, which was sent on credit and the defendant paid Rs.10,000/ for the same through cheque on 28.12.2004 and thereafter there was no pending dispute.
16.In this background, defendant has submitted that they have substantial and plausible defence to the present suit and a number of triable issues arise in the present suit which deserves adjudication and trial.
17.In reply to the leave to defend the present suit, the plaintiff has submitted that purchase order and invoices were raised by the plaintiff towards the supply made to the defendant and same is a type of contract and the present suit is well within the ambit and scope of the Order XXXVII of CPC.
18.That the defendants are not entitled for unconditional leave to defend for the reasons that the plaintiff company is engaged in marketing the PTA machine and the same is product of M/s. Mastermind and the said fact was within the knowledge of defendants from the beginning which is evident from the quotation letter of the plaintiff. Only after discussing the technicalities thereof with the plaintiff by the defendants, the defendants placed the Purchase Order of PTA machine for Rs.15,50,000/ and sent Rs.2,50,000/ towards advance for the said order.
19.It is submitted that a trial was to be conducted at Pune before dispatch of the said machines to Jaipur and as per the agreement between the parties it was the obligation of the defendants to supply the trial piece to the plaintiff for trial of the machine. As per the agreement the plaintiff completed the machine in time and got the trial conducted.
20.That the said machine was at the stage of completion though not completed, when Defendant No. 2 alongwith Shri Arpan Jain, Technical Manager of Defendant No. 1 visited to inspect the said machine. In case, the defendants were not satisfied with the performance of the machine on 28.05.2004, they were at liberty to reject the said machine but they asked the plaintiff to continue the completion of the machine as they were satisfied with the project and were keen to purchase the said machine as it suited their requirement. As per the agreement with the defendants, plaintiff completed the job and dispatched the said machine for commissioning at the defendants place within stipulated time.
21.As per the agreement, the second installment of Rs.11,00,000/ was to be made to the plaintiff by the defendant after inspection of the machine at work site of Plaintiff before dispatch of the said machines. However, defendants deliberately sent a cheque of Rs.10 Lacs, which was received by the plaintiff from the defendants in July, 2004. It was well known to the defendants that PTA machine was a product of M/s Mastermind and plaintiff was only marketing the said product.
22.That the plaintiff performed all the commitments made in the agreement, while defendants did not keep their commitments made in the agreement and every time demanded new thing to be added in the machine which was never part of the agreement. If the defendant would have informed about the said requirement to the plaintiff at the time of agreement, plaintiff would not have suffered loss and the cost of the machine could have been enhanced.
23.That the plaintiff had finally commissioned the said machine to the satisfaction of the defendants on 22.09.2004 and the machine was working properly from the very beginning and this fact has also been reflected in the minutes of meeting dated.23.08.2004 held between Mr. Avinash from Plaintiff Company and Mr. Arpan Jain, Technical Manager and Mr. S. Gaur of Defendant company.
24.That the defendants are using the machine and have become dishonest and with malafide intentions sent a frivolous letter of rejection after getting the machine commissioned at their work place just to avoid payment to the plaintiff. It is submitted by the plaintiff that guarantee of certain parts of the said machine was for limited period and the plaintiff can not be held liable thereafter.
25.That the plaintiff is demanding only the agreed amount from the Defendants and the said amount is legally enforceable debt to which plaintiff is entitled.
I heard the arguments and perused the record.
It is well settled principle that the court has vast discretion in granting (or refusing) leave to defend and to grant the same on conditions or unconditionally.
As has been observed by the Hon'ble Supreme Court in the case reported as M/s. Uma Shankar Kamal Narayan and Anr. Vs. M.D. Overseas Ltd. 2007(2) CCC 149 (SC).
"It is only when the defendant satisfies the court that he has a good defense to the claim on merits that the defendant is entitled to unconditional leave to defend. If the defendant has no defense or if the defense is sham or illusionary, the defendant would not be entitled to leave to defend. The court may still grant leave to defend if the defendant shows that he has some defense and that there are triable issues, but in such a case, the court may impose conditions while granting leave to defend. Finally, even where the defense raised is illusionary, the court may "show mercy to the defendant by enabling him to try to prove a defense but at the same time to protect the plaintiff imposing the condition that the amount claimed should be paid into court or otherwise secured."
It is admitted case of the parties that the defendant placed an order with the plaintiff for a machine for total amount of Rs.15,55,000/. The plaintiff has admitted the receipt of Rs.12,50,000/. Accordingly to the plaintiff the defendant owes the balance amount. Whereas the issue raised by the defendant is that the entire matter stood settled which fact is being disputed by the plaintiff. The defendant has also raised other issues as to whether the work was entrusted by other engineers after seeking permission from the plaintiff and on their undertaking that the expenses would be borne by the plaintiff as the machine had failed to take of.
In view of the above, the strength of the defendant's case need not be reflected upon at this juncture. Even though his defence is not an airtight defence, in my considered view, defendant ought to be granted an opportunity to prove his case and if the defence stands proved, the liability of the defendant to the plaintiff may become doubtful.
Keeping in mind, the nature of the defence raised, leave to defend is granted to the defendant unconditionally. Ordered accordingly.
Announced in the open SANGITA DHINGRA SEHGAL
Court on 22.01.2010 ADDL. DISTRICT JUDGE : DELHI
Suit No. 830/08
22.01.2010
Present : Counsel for the parties.
Vide my separate order of even date, application U/o XXXVII Rule 3 (5) CPC is allowed.
Now to come up for admission and denial and framing of issues on 06.04.2010.
ADJ/Delhi/22.01.2010