Karnataka High Court
M/S S.A.L. Steel Limited vs M/S. Sreenidhi Trading Company on 20 February, 2024
RFA. NO.100242/2017
1
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 20TH DAY OF FEBRUARY, 2024
PRESENT
THE HON'BLE MR JUSTICE ASHOK S. KINAGI
AND
THE HON'BLE MR JUSTICE VENKATESH NAIK T
REGULAR FIRST APPEAL NO. 100242 OF 2017
BETWEEN:
M/S. S.A.L.STEEL LIMITED,
REGISTERED OFFICE NO.5/1, SHREEJI HOUSE,
5TH FLOOR, B.H.M.LIBRARY, ASHRAM ROAD,
AHMEDABAD.(GUJARAT STATE)
REPRESENTED BY ITS AUTHORISED SIGNATORY.
...APPELLANT
(BY SRI.S.S.NAGANANDA SENIOR COUNSEL FOR
SRI.MRUTYUNJAYA S. HALLIKERI)
AND:
1. M/S. SREENIDHI TRADING COMPANY
THROUGH ITS PROPRIETOR
SHRI. BADRINARAYAN NANDKISHOR LADDA,
Digitally signed
by
VIJAYALAKSHMI VIJAYALAKSHMI
M KANKUPPI M KANKUPPI
AGED: 48 YEARS, OCC: BUSINESS,
Date: 2024.03.16
11:34:45 +0530
R/O. R.NO.345, KIRAN NIWAS,
OPP. ALL INDIA RADIO STATION, HOSPET.
2. SHRI. RAJENDRA V. SHAH,
MAJOR, OCC. BUSINESS,
CHAIRMAN OF S.A.L. STEEL LIMITED,
R/O. ADMINISTRATION OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
3. SHRI. RAJENDRA ARORA,
MAJOR, OCC: BUSINESS, M.D. S.A.L. STEEL LTD.,
9TH FLOOR, GNFC INFO. TOWER,
RFA. NO.100242/2017
2
SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
4. SHRI. SUJAL A.SHAH,
MAJOR, OCC: BUSINESS,
DIRECTOR(PURCHASE),
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
5. SHRI. RAKESH RANJAN,
MAJOR, OCC: BUSINESS,
SENIOR ASSISTANT GENERAL MANAGER
(PURCHASE), R/O. ADMINISTRATIVE OFFICE,
9TH FLOOR, GNFC INFO. TOWER,
SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV,
AHMEDABAD-380054.
6. SHRI. DEEPAK KUBERDAS SHAH,
MAJOR, OCC: BUSINESS,
DIRECTOR, S.A.L. STEEL LIMITED,
R/O. PLOT NO.55, WARD NO.10A,
OPP.IFFCO COLONY, GANDHIDHAM, GUJARAT-370201.
7. SHRI. DYNANSHANKAR G.PANDEY,
MAJOR, OCC.BUSINESS EXECUTIVE DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER,
SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
8. SHRI. SURESH D. SHAH,
MAJOR, OCC: BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER,
SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV,
AHMEDABAD-380054.
9. SHRI. BABULAL M.SINGHAL,
MAJOR, OCC: BUSINESS, DIRECTOR(COMMERCIAL),
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
RFA. NO.100242/2017
3
10. SHRI. AMBALAL C. PATEL,
MAJOR, OCC. BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
11. SHRI. GULAM HUSSAIN MOHAMMED SHAIKH,
MAJOR, OCC: BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
12. SHRI. HARASAD SHAH,
MAJOR, OCC: BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
13. SHRI. JETHABHAI M.SHAH,
MAJOR, OCC: BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
14. SHRI. TEJPAL S.SHAH,
MAJOR, OCC: BUSINESS, DIRECTOR,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
15. SHRI. UMESH YADAV,
MAJOR, OCC: BUSINESS,
CHIEF CHEMIST and INCHARGE,
HOSPET SECTION OF SAL STEEL LIMITED,
R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR,
GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY,
BODAKDEV, AHMEDABAD-380054.
....RESPONDENTS
(BY SRI.S.A.SONDUR AND SRI. K.L.PATIL, ADV. FOR R1;
NOTICE TO R2 TO R15 ARE DISPENSED WITH).
RFA. NO.100242/2017
4
THIS RFA IS FILED UNDER SEC. 96 OF CPC., AGAINST THE
JUDGMENT AND DECREE DATED: 26.04.2017 PASSED IN O.S. NO.
22/2009 ON THE FILE OF THE PRINCIPAL SENIOR CIVIL JUDGE AND
JUDICIAL MAGISTRATE FIRST CLASS, HOSAPETE, PARTLY DECREEING
THE SUIT FILED FOR RECOVERY OF MONEY.
THIS RFA HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON 13.02.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, ASHOK
S. KINAGI, J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the appellant challenging the judgment and decree dated 26.04.2017, passed in favour of plaintiff and also dismissal of counter claim of defendant No.1 in O.S.No.22/2009 by the Principal Senior Civil Judge and JMFC, Hospet.
2. For the sake of convenience, the parties are referred to as per their ranking before the trial Court. Appellant is defendant No.1, respondent No.1 is the plaintiff and respondent Nos.2 to 15 are defendant Nos.2 to 15.
3. Brief facts leading rise to filing of this appeal are as under:
RFA. NO.100242/20175
Plaintiff filed a suit for recovery of money. It is the case of the plaintiff that, plaintiff Sreenidhi Trading Company runs its business in mines and mineral traders in proprietary concern and it's proprietor is Badrinarayan, S/o Nandkishor Ladda. plaintiff is dealing with mines and minerals, more particularly in purchasing and selling of Iron Ore to it's various customers all over country at the rate and quality agreed to. Defendant No.1-S.A.L. Steel Limited, Ahmedabad is a company incorporated and registered under the provisions of the Companies Act having it's office at Ashram Road, Ahemadabad. Defendant No.2 is the Chairman of defendant No.1 - company, defendant No.3 is the Managing Director of defendant No.1 - Company, defendant No.4 is the Director (Purchase) of defendant No.1 - company, defendant No.5 is Assistant General Manager (Purchase) of defendant No.1 - company, defendant No.7 is Executive Director of defendant No.1 - company, defendant No.9 is Director (Commercial) of defendant No.1 company, defendant Nos.6,7 and defendant Nos.10 to 14 are the directors of the RFA. NO.100242/2017 6 defendant No. 1 - company and defendant No.15 is the Chief Chemist and In charge of Hospet Sector of defendant No.1 - company.
4. The defendants are engaged in manufacturing and production of steel in their factory for which they require Iron Ore as a raw material for the production of steel. Mr. Harsh Maheshwari, native of Ahemdabad (State - Gujarat) runs business in textile at Ichalkaranji, Dist. Kolhapur (State of Maharashtra) is well known to the plaintiff and defendants and said Harsh Maheshwari introduced plaintiff and defendants to each other, informed business of plaintiff and defendants and also disclosed the nature of business of the plaintiff and defendants and disclosed the needs of defendants. Defendant Nos. 5 and 12 along with Mr. Harsh Maheshwari and other persons of defendants' sector at Hospet, had visited the office premises of plaintiff at Hospet in the month of May 2006 and introduced each other and their business etc. The defendant No.2 at the instigation of remaining defendants, with pre-dedicated mind of RFA. NO.100242/2017 7 committing mischief to the plaintiff, persuaded the plaintiff to have business relationship with the defendants. The defendants succeeded in convincing the plaintiff. After the introduction by Harsh Maheshwari, it was agreed between the plaintiff and defendants that, defendants regularly purchase Iron Ore from the plaintiff by opening and keeping continuous account with the plaintiff, as and when required on credit and defendants agreed to deposit an amount of Rs.5,00,000/- as security by cheque. It was also agreed by the defendants that, they will bare the transporting charges from placing of loading i.e., from mining plot or crusher plot and it was also agreed that the defendants' person will be present to ascertain the quality of goods and after approval of the quality and quantity of the material the goods is required to be sent and also after the satisfaction of person of defendants the goods/material/Iron Ore would be loaded and thereafter plaintiff is suppose to send the bills and after receipt of the bills, defendants immediately would pay the amount to the plaintiff. It is also agreed that payment would RFA. NO.100242/2017 8 be made at business place of the plaintiff i.e. at Hospet and also agreed that if the payment is not made within a particular period, interest at the rate of 24% per annum by way of compensation, would be charged on the amount due, as prevailing custom in the traders community. It is also settled between the plaintiff and defendants that a written order is required to be placed with the plaintiff and after the satisfaction of the defendants in respect of the quality of goods, quantity of goods and after overall satisfaction by the defendants, the material would be loaded and all sort transporting charges would be at the cost of defendants.
5. In the month of June 2006, plaintiff received a purchase order from defendant bearing P.O.SSL/A- 0049/2006-2007/1853 dated 25/05/2006 along with covering letter. The purchase order is signed by authorized signatory and the covering letter is signed by defendant No.5-Rakesh Ranjan. After receipt of the said purchase order, plaintiff issued a cheque of Rs.5,00,000/- in the name of defendant No.1 as security and delivered the same to the RFA. NO.100242/2017 9 defendants' person, namely, Ashok Jain at Hospet. Thereafter, on 15th June 2006, defendants' person who was working at Hospet section had been to the office of plaintiff at Hospet and informed the plaintiff that an amount of Rs.5,00,000/- is transferred by the defendant to the plaintiff's account in ING Vaishya Bank, Hospet Branch. After ascertaining that the amount of court Rs.5,00,000/- has been transferred to the plaintiff on 17/06/2006, in presence of the person and representative of defendants loaded an Iron Ore under various different invoices to the tune of Rs.5,80,476/-. At the time of delivering the said material, the concerned bills, permit, weight slip, etc., were sent along with the material and the same were hand-over to the person and representative of the defendants who were present at the time of loading. It is the practice of the plaintiff that bills were prepared in 4 + 1 and like manner and on 19/06/2006, the plaintiff sent a letter to the defendants regarding statement of supply of Iron Ore to the defendants. In this fashion, the plaintiff was supplying the RFA. NO.100242/2017 10 material i.e., Iron Ore often as per the orders of the defendants and on 20/06/2006 an amount of Rs.10,00,000/- was received by the plaintiff. In between 16/06/2006 to 19/01/2008, plaintiff sent and loaded the Iron Ore as per the orders and quality booked by defendants on various occasions. Defendants also made payment against the said transactions on various occasions. Taking into consideration the price of goods i.e. Iron Ore delivered by the plaintiff to the defendants and the amount received by the plaintiff from the defendants, the total balance amount to the tune of Rs.3,42,66,961.98 Paise (Rupees Three Crore Forty Two Lakh Sixty Six Thousand Nine Hundred Ninety One and Ninty Eight Paise only), including charges of local transportation for rack, rack charges and D.D. paid by the plaintiff for the rack purpose etc., are shown in the Khata Extract. The accounts are maintained by the plaintiff regularly on day-to-day basis as per the occurrence of the transaction between the plaintiff and defendants.
RFA. NO.100242/201711
6. Sometimes as per the request and assurance of repayment of the same by the defendants, plaintiff paid transporting rack charges, railway freight charges, etc. The statement from 16/06/2006 to 21/01/2008 containing all better particulars of transactions regarding serial number, date, supply value, freight charges, payment received, the total amount due etc., by the defendants was maintained, made and copy of the same were sent to the defendants. In this context, the plaintiff submits that, the defendants' representative was stationed in PAI Hotel at Hospet for the purpose of verifying the quantity that is meant for the movement of the ore pertaining to the loading into the lorries or the railway wagons and also to note down the expenses incurred by wagons and also to note down the expenses incurred by the plaintiff regarding the same, since defendants assured to reimburse the same.
7. Since no further purchase order was placed and the heavy dues by the defendants remained unpaid, the plaintiff personally went to Ahemadabad, met the Chairman RFA. NO.100242/2017 12 and the concerned officials. He contacted the Managing Director at Gandhi Dham, Kutch District, and requested for payment of dues which has been held up for long cupping loss to the plaintiff. The said persons assured on behalf of the company to make payments as early as possible. But no amount was paid. On 21st January, 2008 plaintiff received 2 cheques bearing cheque No.166541 and 166542 towards the amount due to the plaintiff against the internal rack loading and other expenses incurred by the plaintiff in connection with the dispatch in respect of the dispatched railway racks 10 (Ten racks).
8. The said cheques were issued by the representative Mr. Umesh Yadav, Hopset and handed over the same only on 21/01/2008 to the plaintiff, requesting not to present till 23/02/2008. Further, since for a long time no instructions were received regarding the presentation of the said cheques, the plaintiff presented the said cheques on 11.03.2008 and 12.03.2008, respectively in the plaintiff's Bank namely Andhra Bank, Hospet Branch. However they RFA. NO.100242/2017 13 were returned dishonoured on the ground of ''Insufficient Funds".
9. As such, the plaintiff was constrained to issue legal notice calling upon the defendants to pay the amount within 15 days as contemplated under Section 138 of the amended Negotiable Instrument Act. Since the defendant did not pay, the plaintiff was compelled to file a complaint against all the Directors of the defendants' Company as well as some other staff connected there with pertaining to the bouncing of the cheques under Sections 405, 415, 420 of IPC read with Sections 109 and 105 of Cr.P.C., before the Additional Civil Judge (Jr.Dn.) and J.M.F.C., Hospet, and the matter was referred to the Police under Section 156 (3) of the CrP.C. There upon, the Police investigated the matter and submitted a charge-sheet dated 05/05/2008 in C.C.No.1180/2008 for which summons have been ordered by the Hon'ble Court and the same were served.
RFA. NO.100242/201714
10. In response to plaintiff's letter dated 23/01/2008, the representative of the defendants Mr. Umesh Yadav, stationed at Hospet by letter dated 02/02/2008, has stated that the company is satisfied with the quality and quantity of the material supplied by the plaintiff and in particular mentioning that, Sujal A. Shah, the Purchase Officer Sri.Rakesh Ranjan has expressed their satisfaction over the quality and quantity of the material supplied by the plaintiff. He also enclosed statement of the supply of Iron Ore by the plaintiff giving the particulars of dates, invoices numbers quantity and other details and total value made of transport, etc. The said statement and the letter as well as the available purchase orders are produced. It is contended that then the defendants' company became due in the amount of Rs.3,42,66,961-98 paise, less Rs.60,00,000/- subsequently received against the two cheques given after the issue of notice by the plaintiff, hence the balance amount comes to Rs.2,82,66,691-98 which the defendant No.1 and its Directors are liable to pay, and the plaintiff further submits RFA. NO.100242/2017 15 that the defendant No.1 and its directors are liable to pay the interest thereon in view of withholding the amount wrongfully causing mental agony and loss to the plaintiff. Further, in law the defendants cannot be permitted to have unjust and wrongful gain at the cost of the plaintiff, the benefit of which they have enjoyed. Hence the plaintiff claims interest at 24% per annum by way of compensation as agreed by the defendants and as per the custom prevailing in trade community. The defendants being a well known producer of Steel can afford to pay the interest and cannot be allowed to enjoy others money.
11. Hence it is contended that, the plaintiff is entitled to get the balance amount of Rs.2,82,66,961.98 (Rupees Two Crore Eighty Two Lakh Sixty Six Thousand Nine Hundred Sixty One and Ninety Eight Paise only) plus interest by way of damages at the rate of 24% p.a. [from 05.05.2008 till 29.09.2008]. Thus, in all, the defendants and its directors are liable to pay Rs.3,12,96,560-75 paise, jointly and severally to the plaintiff.
RFA. NO.100242/201716
12. It is further stated, the cause of action for the suit arose on 25/05/2006 when the defendant sent a purchase order signed by Mr. Rakesh Ranjan A.G.M., Purchaser Director, requesting for the supply of Iron Ore and on 16/06/2006 when the defendant No.1 - Company paid an advance of Rs.5,00,000/- and subsequently on various dates when they sent the purchases orders and the plaintiff dispatched the Iron Ore by road and rail as requested by the defendants from time to time, on various dates, verified by the representative when the defendant made payments; on 23/01/2008 when the plaintiff sent the statement of running account requesting to pay the said outstanding amount and on oral requests and demands; when statement is sent which is acknowledged by the defendants on 21/01/2008; when the defendants' representative at Hospet Mr. Umesh Yadav gave two cheques sent by the defendants towards dues which bounced when presented on 23/03/2008; when the legal notice dated 05.04.2008 was issued calling upon the defendants to pay the amount covered under Section 138 of RFA. NO.100242/2017 17 the N.I.Act; when Rs.60,00,000/- was paid subsequently when C. C. No. 1180 of 2008 was filed in the Court of the A.C.J. (Jr.Dn.) & JMFC, Hospet, for the offences punishable under several sections of I.P.C. The defendants have failed to pay the amount due by them to the plaintiff at Hospet, within the Jurisdiction of this Honorable Court. Hence, cause of action arose for the plaintiff to file the present suit.
13. Defendant No.1 filed written statement and contended that defendant No.1 is a Company incorporated under the provisions of the Companies Act, 1956, having its registered office at 5/1, Shreeji House, 5th Floor, B/h. M.J. Library, Ashram Road, Ahmedabad and its manufacturing unit in Taluka Gandhidham, Dist. Kutch in the State of Gujarat. Defendant No.1 is engaged in the business of manufacturing sponge iron and Ferro alloys at its manufacturing unit. Defendant No.1 denies all statements, averments, contentions and allegations made in the plaint as if the same are set out herein and traversed, unless the same are specifically admitted to be true. Defendant No.1 RFA. NO.100242/2017 18 denies that it is liable to make any payment to the plaintiff much less Rs.3,12,96,560.75 as claimed in the plaint.
14. The 1st defendant submits that the contract of purchase of iron ore between the plaintiff and the 1st defendant, on the basis of which the plaintiff had allegedly sold and dispatched iron ore to the 1st defendant came to be constituted under the purchase orders that were issued by the answering defendant from time to time which are also produced on record by the plaintiff. The answering defendant submits that under Clause 19(J) and Clause 20 of the said Purchase Order, any dispute arising between the parties in respect of the issues covered under the said purchase order that is quantity, quality, delivery and payment, etc., would be decided by competent Courts at Ahmedabad and shall be subject to the jurisdiction of Ahmedabad Courts only. The said conditions are mentioned overleaf the said Purchase Order and specific attention to the said condition is drawn on the main page of the said Purchase Order. The applicant submits that the plaintiff has at all times been aware of the RFA. NO.100242/2017 19 said terms and has at no point of time raised any objections whatsoever to the said term. The plaintiff has without demur acted on the said Purchase Order. In the circumstances, the court does not have territorial jurisdiction to entertain and try the Suit.
15. The answering defendant states that the plaintiff has wrongly arrayed defendants Nos. 2 to 15 as parties in the suit. The defendants Nos. 2 to 15 are individual Directors of the 1st defendant-company herein and as such they cannot be made liable in their personal capacity for the alleged contract entered into by the 1st defendant-company. The defendant Nos. 2 to 15 in no circumstances can be made liable for any alleged claim of the plaintiff and as such they are neither necessary nor proper parties.
16. It is denied that the answering defendant is engaged in the manufacture and production of steel or that iron ore is a raw material for production of steel by the answering defendant as alleged. The answering defendant RFA. NO.100242/2017 20 does not admit that Mr. Harsh Maheshwari is a native of Ahmedabad or runs business in textile at Ichalkaranji, District Kolhapur and denies that the said Mr. Harsh Maheshwari is well known to defendant No.1, as alleged or otherwise. It is not admitted that the said Mr. Maheshwari introduced the answering defendant to the plaintiff or disclosed any information in respect of the answering defendant or that the defendant Nos. 5 and 12 visited the office of the plaintiff in the month of May 2006 with Mr. Maheshwari and the plaintiff and the same is put to strict proof thereof. It is denied that the answering defendant or the defendant No.2 were introduced to the plaintiff with any alleged pre-decided mind of committing mischief or persuaded the plaintiff who have business relationship with the answering defendant, as alleged. It is denied that there was any agreement between the plaintiff and the answering defendant, oral or otherwise, that the answering defendant will regularly purchase iron ore from the plaintiff or that the same would be done by the plaintiff by opening and keeping RFA. NO.100242/2017 21 a continuing account, as alleged. It is denied that an amount of Rs.5,00,000/- was deposited as security for the aforesaid arrangement, as alleged. The usual methodology of conducting purchase adopted by the answering defendant is to raise a purchase order on a party containing all relevant and agreed terms and conditions for each transaction. It is possible that an advance may be paid by the answering defendant in respect of a transaction agreed upon in a purchase order. The answering defendant however has not made any security deposit with the plaintiff. It is denied that there was any agreement for borrowing transporting charges, as alleged. It is denied that there was any agreement that the answering defendant's representative will ascertain the quality and quantity of the material or that only after such approval/ ascertainment the material would be loaded for being dispatched, as alleged. The answering defendant states that ascertainment of quality of material at the time of loading is practically impossible. The said averment in the paragraph under reply is false and contrary RFA. NO.100242/2017 22 to record since the relevant purchase orders clearly state that the inspection of the material will be at the consignee's end. It is denied that payment in respect of the bill issued by the plaintiff was to be made immediately or that any delay would attract interest @ 24% p.a. as alleged. It is denied that any agreement, oral or otherwise was entered into between the plaintiff and the answering defendant stipulating that material would be loaded only after overall satisfaction of the answering defendant, as alleged.
17. It is further stated that, it is evident from the contents thereof that the amount of Rs.5,00,000/- was paid as security only after issuance of purchase order dated 25.5.2006. While it is true that the answering defendant placed several purchase orders upon the plaintiff and the plaintiff dispatched material allegedly in compliance of the said purchase orders, when the material was received by the answering defendant, it transpired that the same was short of the quantity that was stated in the relevant purchase orders, the bills raised by the plaintiff and the delivery RFA. NO.100242/2017 23 receipt that were issued by the Railway Authority or the carrier. The answering defendant states that in addition to the discrepancy in quantity, when the material dispatched by the plaintiff was sent for inspection and testing to an independent laboratory it transpired that the said material was not of the quality that was specified in the concerned purchase orders but was of an inferior quality. The 1st defendant states that the value of the material short received and excess payment was made by the answering defendant to the plaintiff for higher quality material, but the plaintiff fraudulently and with mala fide intention dispatched inferior quality material. In view of the above fraudulent acts of the plaintiff, the answering defendant had to suffer losses on account of procuring better quality material at higher rates from other sources and also, at times manufacturing final product of inferior quality, for which the answering defendant could fetch a far lower price than the usual price charged by the answering defendant to its buyers. The said consequence has also entailed into loss of profit and reputation of the RFA. NO.100242/2017 24 answering defendant amongst its buyers and business community. The answering defendant also had to procure material of requisite quality from other sources at higher price to the tune of Rs.45,19,901/- in order to enhance the quality of its goods. The answering defendant has a counter claim in which he would also be entitled to set off to the tune of Rs.45,19,901/- in the unlikely event that the claim of the plaintiff is decreed by this Hon'ble Court. It is denied that the answering defendant is required to make any payment to the plaintiff or that any alleged balance, much less balance amount of Rs.3,42,66,961.98 is pending payment by the answering defendant. The answering defendant does not admit the statements of accounts of the plaintiff and puts the plaintiff the strict proof of each and every item and the particulars stated therein.
18. It is denied that the answering defendant has requested the plaintiff to pay transporting rake charges or railway freight charges etc, as alleged. The answering defendant denies the contents of the statement for the RFA. NO.100242/2017 25 period 16.6.2006 to 21.1.2008 and puts the plaintiff to the strict proof of the particulars stated therein. With reference to the contents of paragraph No.6, it is denied that any representative of the 1st defendant at Hospet was stationed for the purpose of verifying the quantity, as alleged or that the said representative noted the quantity loaded and the alleged expenses incurred by the plaintiff regarding the same, as alleged. It is denied that any dues remained unpaid by the 1st defendant or that any alleged assurance was given by the Chairman, Managing Director or other officers for making early payments as alleged. In so far as the dishonour of two cheques is concerned the answering defendant has, as admitted by the plaintiff, made payment of the amount covered under the said cheques. In so far as Criminal Complaint No. 1180 of 2008 is concerned the same being wholly vexatious and untenable on facts and in law, the answering defendant and other accused have filed a petition under Section 482 of the Code of Criminal Procedure, 1973 and the Hon'ble High Court of Karnataka Circuit Bench at RFA. NO.100242/2017 26 Dharwad has vide order dated 29th October 2009 stayed proceedings of the said Criminal Complaint, till 21.06.2010 giving other directions, in compliance of which the plaintiff is filing this written statement. It is denied that Shri. Rakesh Ranjan expressed any satisfaction in respect of quantity or quality of the material dispatched by the plaintiff as alleged. The contents of letter dated 2.2.2008 allegedly written by the Mr. Umesh Yadav are denied. The said Mr. Yadav had no authority to issue any letter on behalf of the answering defendant and it appears that the said letter dated 2.2.2008 has been procured by the plaintiff from Shri. Umesh Yadav fraudulently and by illegal means only to create and fabricate evidence against the answering defendant. The answering defendant is not aware of the alleged enclosures allegedly tendered by Shri. Yadav along with the said letter dated 2.2.2008 and does not admit the contents thereof. The plaintiff is put to the strict proof thereof and also of the particulars stated in the said alleged statement. It is denied that the answering defendant became due to the tune RFA. NO.100242/2017 27 Rs.2,82,66,691-98 alleged. It is denied that the answering defendant or its Directors are liable to pay any amount much less an amount of Rs.2,82,66,691-98 to the plaintiff or are liable to pay any interest thereon, as alleged. It is denied that the answering defendant has had any unjust or wrongful gain at the cost of the plaintiff, as alleged or that the plaintiff is entitled to claim interest @ 24% p.a., as alleged, or that the same has been agreed by the answering defendant or is as per the custom prevailing in trade community. It is denied that the answering defendant has enjoyed others' money as alleged.
19. It is denied that the plaintiff is entitled to any sum much less a sum of Rs. 2,82,66,691.98 or any interest, much less interest @ 24% p.a. from 5.5.2008 till 29.9.2008 or any aggregate amount of Rs.3,12,96,560-75 as claimed in the plaint. It is submitted that the plaintiff cannot be permitted to file photocopies of the documents upon which he seeks to rely in the present suit and the documents produced by the plaintiff cannot be and ought not be taken on record. The RFA. NO.100242/2017 28 plaintiff has no cause of action for filing the present suit and has also failed to plead any cause of action in the plaint so as to maintain a suit against the answering defendant. Therefore, it is humbly prayed that this Hon'ble Court be pleased to dismiss the suit with exemplary costs under Sec.35A of the Code of Civil Procedure.
20. Counter Claim is filed by the answering defendant No.1 under order VIII Rule 6-A of the Code of Civil Procedure. The 1st Defendant states that it is engaged in the business of manufacturing Ferro Alloys and Sponge Iron at its unit located in District Kutch, Gujarat. Ferro Alloys and Sponge Iron are manufactured by heating Chrome Ore/Manganese Ore and Iron Ore, respectively with Coal/Lignite in a kiln at high temperatures. The said process removes impurities and gives Ferro Alloys like Ferro Chrome/Ferro Manganese and Sponge Iron. For manufacturing Sponge Iron, Iron Ore is a major ingredient for the 1st Defendant. In order to fulfill its requirement of Iron Ore, which is not available in Gujarat, the 1st Defendant RFA. NO.100242/2017 29 sources the same from suppliers in the states of Orissa and Karnataka. Since many steel units are established in Kutch district of Gujarat, suppliers of Iron Ore in the states of Orissa and Karnataka keep approaching the units and their representatives. The plaintiff had also approached the 1st answering defendant for supplying Iron Ore. Pursuant to negotiations, the 1st answering defendant agreed to purchase Iron Ore from the plaintiffs. The agreed mode was that the 1st answering defendant would raise a purchase order containing price and other terms, including the terms stated overleaf the Purchase order, on the basis of which the plaintiff would supply the Iron ore to the 1st answering defendant. The 1st answering defendant states that accordingly it began raising Purchase Orders, containing the agreed price, quality and other terms upon the plaintiffs, who thereupon used to Supply Iron Ore by, rail and road to the 1st answering defendant with clear understanding and representation that the material supplied is of the requisite quantity and quality and raised bills with necessary RFA. NO.100242/2017 30 enclosures. The 1st answering defendant would make payment for the same. Since the purchase Order quantity were large, the plaintiffs were required to satisfy the said quantity in more than one delivery / dispatch and were therefore required to maintain clear records so as to ensure that each bill pertains to the relevant purchase order. This was significant since each purchase order had different prices. It is however transpired that the plaintiffs adopted a practice of not mentioning the Purchase order numbers in the bills raised by them which created confusion as to the quantity and price payable for the delivery so made and began raising bills for higher price of another purchase order, despite the fact that it had not satisfied the prior purchase order. On this fraudulent practice coming to notice, the 1st answering defendant made several requests to the plaintiffs to rectify the bills and state clearly as to what quantity pertains to which purchase order. The plaintiffs however, maintained a stoic silence and went on furthering their illegal gains. The 1st answering defendant was, therefore, RFA. NO.100242/2017 31 constrained to clear bills after rationalizing the same to the delivery against the concerned purchase orders and on the price of the purchase order whose quantity was to be completed. Assuming while denying that any payment is not made by the 1st Defendant, the alleged non payment was the only method of checking that the plaintiff does not continue to make illegal gains. In fact, the plaintiff had, in its malafide and ingenious manner over billed the 1st answering defendant and is not entitled to make any claim upon the 1st Defendant.
21. In addition to what is stated hereinabove, the plaintiff also devised an ingenious method of profiteering at the cost of the 1st answering defendant by dispatching less quantity of Iron Ore by making false and fabricated statements in its bills and making false entries in the Railways receipt, more so when the plaintiff has itself claimed that it caused the material to be dispatched. The said discrepancy came to light on weighment at the unloading station. Whether the table of short shipment is RFA. NO.100242/2017 32 required? The 1st Defendant is thus entitled to claim Rs. 33,56,569 with interest @ 24% per annum from the plaintiff. Apart from the above discrepancies, the 1st Defendant used to get the material received at Gandhidham by an independent laboratory, namely SGS Laboratory, Mumbai, which is a renowned laboratory in India and Abroad. For the following quantity received, the 'Fe' content in the Iron Ore was much less. In certain dispatches, the Iron Ore lumps were over sized and/or undersized as distinguished from the purchase orders, due to which the 1st Defendant was unable to procure the requisite yield in the kiln, thereby increasing cost of production. The plaintiff supplied 14,621.04 MT of Iron Ore during Sept 07 to January, 2008, with low 'Fe' Content, as certified by SGS. Laboratory, Mumbai, the value of which was far lower than the Purchase Order value, thereby causing a loss on account of excess price paid of Rs.3,11,79,368.00.
22. The 1st answering defendant is accordingly entitled to claim Rs.3,11,79,368.00 from the plaintiff. The 1st RFA. NO.100242/2017 33 answering defendant further states that the loss incurred by it due to low yield on account of over sized / undersized material comes to Rs.88,70,505/-. Considering the poor quality of material received, the 1st Defendant was constrained to buy better quality Iron Ore from other sources at higher rates, in order to ensure that the Sponge iron is of the quality for which the 1st defendant was contractually bound to its customers. The plaintiff thus procured 14,621.04 MT i.e., the quantity with inferior quality, of Iron Ore from 3rd parties at varying rates, causing additional loss of Rs. 45,17,901.
23. The answering defendant is thus entitled to be compensated for Short shipment and freight paid for short quantity to the tune of Rs. 33,56,569/- for excess payment on account of inferior quality in respect of 14,621.04 MT iron ore to the tune of Rs.3,11,79,368/ for loss incurred due to low yield on account of oversized / undersized iron ore lumps to the tune of Rs.88,70,505/- and procurement of 14,621.04 MT iron ore of the quality that was to be delivered by the RFA. NO.100242/2017 34 plaintiff, from 3rd parties to the tune of Rs.45,17,901/- totaling to Rs.4,79,24,343/- with interest @ 24% per annum from the date of suit till actual payment by the plaintiff The aforesaid Claims are stated with particulars in the statement of claims appended to the Counter claim.
24. The 1st answering defendant states that while this Court does not have territorial jurisdiction to entertain the suit filed by the plaintiff, in respect of which the 1st Defendant has filed a separate application under Order VII Rule 11 of the CPC Code of Civil Procedure 1908, and preliminary issue is also raised in the written statement, the 1st defendant is filing its Counter claim at the first given opportunity without prejudice to its contention that both, present suit and the counter claim ought to be tried by Courts in Ahmedabad, as contractually agreed by the parties. The 1st defendant states that no claim made by it is barred by the law of limitation and this Court has the pecuniary jurisdiction to try and entertain the present counter claim. RFA. NO.100242/2017 35
25. The Counter claim is valued at Rs. 4,79,24,343/- and appropriate Court Fee of Rs.4,46,747/- is herewith paid by the 1 Defendant on the Counter Claim under Sec.21 of the Karnataka Court Fees and Suits Valuation Act, 1958. The 1st Defendant craves leave to produce documents relied upon by way of a separate list at the appropriate time. The 1st Defendant therefore prays that the Court be pleased to pass a decree in the sum of Rs.4,79,24,343/- in favour of the 1st Defendant and against the plaintiff and holding that the plaintiff is liable for the short delivery of Iron ore to the 1st Defendant, supply of inferior quality of iron ore to the 1st Defendant, loss caused due to low yield on account of supply of improper size of lumps by the plaintiff to the 1st Defendant and loss caused in procuring requisite quality material by the 1st Defendant from 3rd parties; and interest @ 24% per annum be awarded from the date of suit till realization by the 1st Defendant.
26. On the basis of the pleadings of the parties, the trial Court framed following issues and additional issues: RFA. NO.100242/2017 36
1) Whether the plaintiff proves that he has supplied iron ore materials to the defendant No.1/company as per various purchase orders and quality booked by the defendants on various occasions between 16.6.2006 and 19.1.2008 and the defendant No.1/company failed to pay entire sale price and other incidental charges and become due an amount of Rs.2,82,66,691-98 as pleaded in the plaint?
2) What is the current and future rate of interest to which the plaintiff is entitled?
3) Whether the plaintiff proves that he is entitled to recover an amount of Rs.2,82,66,691-98 with interest an amount of Rs.30,29,596-79 in total an amount of Rs.3,12,96,560-75 from the defendants as sought for?
4) Whether the defendants prove that suit of the plaintiff is barred by limitation?
RFA. NO.100242/201737
5) Whether defendants prove that this court has no territorial jurisdiction to entertain the suit and suit is not maintainable?
6) Whether the defendant No.1 company proves that the company is entitled to an amount of Rs.4,79,24,343/- from the plaintiff by way of counter as pleaded in the written statement?
7) To what reliefs the parties are entitled?
8) What order or decree?
Note: Issue No.5 is treated as preliminary issue. Additional issues:
1) Whether the defendant No.1 company proves that the plaintiff has supplied 14,621.04 METRIC TONE of Iron ore during September, 2007 to January 2008 with low Fe contents as pleaded in the written statement?RFA. NO.100242/2017
38
2) Does the 1st defendant proves that on 3.3.2007, the plaintiff has accepted to receive a sum of Rs.7,50,000/- from the 1st defendant towards full and final settlement of all dues payable to the plaintiff till that day as stated in para No.4.4(A) of written statement?
27. In order to prove the case, plaintiff company examined its proprietor as P.W.1 and two witnesses were examined as P.Ws.2 and 3 and got marked 1784 documents as Exs.P1 to P.1784. Defendant No.1 company examined its vice president as D.W.1 and its Lab Chemist examined as D.W.2 and got marked 126 documents as Exs.D1 to D.126. Court Commissioner was examined as C.W.1 and got marked 20 documents as Exs.C1 to C20. The trial Court after hearing the learned counsel for the parties and considering the oral and documentary evidence answered issue No.1 in the affirmative, issue Nos.2, 3 and 7 partly in the affirmative and issue Nos.4, 6 in the negative, additional issue Nos.1 and 2 in the negative and consequently, decreed the suit of the RFA. NO.100242/2017 39 plaintiff in part with costs. It is ordered and decreed that plaintiff is entitled for due amount of Rs.2,82,66,691-98 (Rupees Two Crore eighty two lakh sixty six thousand six hundred ninety one and paise ninety eight only) with interest at the rate of 12% p.a. on the above said balance due amount from May 2008 to till its realization. It is further ordered and decreed that defendant No.1 company is hereby directed to pay due amount of Rs.2,82,66,691-98 with interest as ordered above. Being aggrieved by the judgment and decree passed by the trial Court, defendant No.1 has filed this appeal.
28. Heard the learned senior counsel Sri.S.S.Nagananda for Sri.Mrutyunjaya S.Hallikeri for defendant No.1/appellant and learned counsel Sri.S.A.Sondur and learned counsel Sri.K.L.Patil for the plaintiff.
29. Learned senior counsel Sri.S.S.Nagananda for the defendant No.1 submits that suit filed by the plaintiff is not maintainable on the ground that any person carrying on RFA. NO.100242/2017 40 business other than his own name may be sued in such a name or style as if it was a firms name and the said benefit is not extended to the plaintiff filing suit in the name other than his own. It is contended that suit is filed by M/s Sreenidhi Trading Company. Admittedly, plaintiff is a proprietorship concern is not a legal entity and is not a competent to maintain a suit and is not legal entity cannot sue in its own name. The plaintiff neither sought liberty to amend its name in the cause title nor has it explained this apparent mis-description. In support of his arguments, he has placed reliance on the judgment in the case of Svapn Construction Vs. IDPL Employees Co-Operative Group Housing Society Ltd. reported in (2006) 127 DLT, 80 and in the case of M/s Arora Enterprises Vs. M/s Vijay Power Generator Ltd., reported in 2015 SCC Online Del 9644.
30. Learned senior counsel further submits that defendant has raised a defence that trial Court has no territorial jurisdiction. The trial Court on the basis of the RFA. NO.100242/2017 41 pleadings of the parties framed issues and issue No.5 was framed relating to territorial jurisdiction and the same was tried as a preliminary issue. He submits that as per Clauses 19(j) and 20 purchase order that if any dispute arises between the parties, the court have any dispute relating to the transaction, then the court in Ahmedabad would have jurisdiction only. The said Clauses 19(j) and 20 were not considered by the trial Court and proceeded to answer issue No.5 in the negative. He submits that appellate Court can consider the correctness of the order on issue No.5 in the present appeal. In support of his contention, he has placed reliance on the judgment of the Hon'ble Apex Court in the case of Satyadhyan Ghosal and others Vs. Smt. Deorajin Debi and another reported in AIR 1960 SC 941 and in the case of ABC Laminart Pvt. Ltd. and another Vs. AP Agencies, Salem reported in (1989) 2 SCC 163.
31. He submits that there was settlement between plaintiff and defendant company and accordingly a settlement deed came to be executed in between the parties RFA. NO.100242/2017 42 as per Ex.D78. The plaintiff has denied his signature on the said Ex.D78. He submits that plaintiff has not written any letter seeking payment of outstanding dues and no orders have been placed by the defendant after Feb 2007 to July 2007. He submits that even if Ex.D78 presumed to be fabricated, the financial statement for the year ending 31.03.2007 produced by the plaintiff indicates that defendant is not in the list of plaintiff's list of sundry debtors. This indicates that as on the end of financial year, the plaintiff had treated the receipt of Rs.7,50,000/- as a final settlement of all dues. Further Ex.D122 sundry creditor's list for the year 2007-08 maintained by the defendant discloses a due amount of Rs.1,54,41,110/-. Similarly, the defendant had produced Ex.D123, a list of sundry creditors as on 31.03.2009 wherein Rs.94,41,110/- is reflected against the name of plaintiff. Similarly, Exs.D124 and 125 were also produced. These apparent inconsistencies would only demonstrate there was no proof to indicate with exactitude the claim amount of the plaintiff. Further, plaintiff addressed RFA. NO.100242/2017 43 letters to the defendant after the date of settlement also do not indicate any request being made for payment of outstanding dues. The plaintiff requested for issuance of purchase orders in its favour without any request for clearance of dues. He submits that the materials supplied by the plaintiff was of inferior grade. In this regard, the defendant placed reliance on the inspection reports at Exs.D109 to 114. The trial Court has not properly considered Exs.P109 to 114 to show that materials supplied by the plaintiff was of inferior grade and the said reports are inclusive of contamination, they cannot be accepted. He further submits that Exs.D109 to 114 does not indicate supplier's name, but these reports make a reference to quantity and rake number. The trial Court has failed to consider plaintiff's own document. Ex.P1065 is the letter dated 15.01.2008 wherein the plaintiff has requested the defendant to reconsider the decision of cancellation of rake Nos.6 and 7.
RFA. NO.100242/201744
32. He further submits that trial Court has recorded a finding that defendant company had not communicated its dissatisfaction and said finding is contrary to the records. He submits that C forms are the declarations give by the register purchaser to the registered seller of another State under Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 to certify the value and quantity of goods received. There is no provision in C form for certifying the quality of products received. Hence, mere issuance of C form by the defendant company could not have been relied upon the trial Court for the purpose of certifying the quality of products received. He submits that issue of quality was raised way back in the year 2006-07. To sort out these disputes, P.W.1 had visited the office of the defendant company in Ahmedabad and accepted an amount of Rs.7.5 lakhs i.e., at a lesser price in view of the substandard quality of Iron Ore supplied to the defendant company, as full and final settlement. He submits that trial Court has failed to notice that burden is upon the plaintiff to prove the said RFA. NO.100242/2017 45 factual assertion and the plaintiff has also failed to produce any material to prove that ore was of good quality. In support of his contention he placed reliance on the judgment of the Hon'ble Apex Court in the case of Mohd. Abdullah Azam Khan Vs Nawab Kazim Ali Khan reported in 2022 SCC Online SC 1544.
33. He further submits that trial Court has recorded a finding against the defendant that defendant has not been able to prove that the SAL Lab in Hospet was functioning only till Jan 2007. He submits that trial Court has misread Ex.D115 which is a list of employees of the defendant company. Wherein the said list the name of Umesh Yadav was shown as employee for the defendant company from 05.01.2006 to 21.04.2009. He submits that trial Court has failed to consider the contention of D.W.1 that said Lab was not in existence beyond January, 2007 and the same was permanently closed. He submits that trial Court has failed to consider Ex.P.1236, letter dated 23.07.2007, wherein plaintiff requested the defendant to arrange its chemist in RFA. NO.100242/2017 46 Hospet as it would be convenient for the regular supply of iron ore. It is submitted that there was no chemist was appointed by the defendant company in Hospet and further submitted that Umesh Yadav had no authorization of the company to write the said letter. Ex.P.1070 is not even on the company letter head and D.W.1 has denied the contents of Ex.P.1070. The trial Court has failed to examined the said aspect. He further submits that plaintiff has failed to examine Umesh Yadav as a witness, the trial Court could have drawn adverse inference against the plaintiff under Section 114(g) of the Indian Evidence Act. He submits that IT returns submitted by the plaintiff are of different financial years and different proprietary concern and the financial statements of the plaintiff are not furnished. He submits that mere production of books of accounts is not sufficient to prove debts. In this regard, he has placed reliance on the judgment of the Hon'ble Apex Court in the case of Central Bureau of Investigation Vs. V.C. Shukla and Others reported in (1998) 3 SCC 410, the judgment of the co-ordinate bench of this RFA. NO.100242/2017 47 Court, in the case of Hegde and Golay Limited Vs. State Bank of India reported in ILR 1987 Kar 2673 and the judgment of the Hon'ble Apex Court in the case of M/s Halawagalu Adikar Channappa Proprietorship Firm Vs. Vastrada Shivamurthappa reported in 2014 SCC Online Kar 8614. He submits that plaintiff has fabricated the records and furnished the statements.
34. He further submitted that defendant company had never agreed for payment of transportation charges. plaintiff has neither produced any agreement nor has produced any letter/communication addressed by the defendant agreeing to pay the transportation charges. He further submits that trial Court has placed reliance on Ex.P.1066 to grant claim in entirety is incorrect and the said document indicates that demand draft was for the purposes of railway freight charges and the demand draft is drawn in favour of South Western Railway. He further submits that defendant's company communication at Ex.D80 clearly reflects the intention to bear the railway freight charges only. He submits that RFA. NO.100242/2017 48 plaintiff has made claim for transportation charges for the first time as per Ex.P956 and the plaintiff has sought for reimbursement towards payment made to South Western Railway.
35. Learned senior counsel for the defendant company further submits that sampling refers to the process of drawing samples from the rake before it leaves the point of loading towards the destination. Testing refers to the act of subjecting the samples drawn for chemical analysis to determine the quality of the product and the trial Court has misdirected itself to believe that drawing of samples at Hospet as testing at Hospet. The defendant had produced the certified copies of railway receipts and wagon loading particulars issued by the railway authorities which clearly demonstrates the baseless claims of the plaintiff. The defendant had also produced the bills raised by the CTA Logistic Company which has transported the iron ore from Gandhidham Railway Yard to the defendant company in Bharapur. The quantity claimed to have been supplied by the RFA. NO.100242/2017 49 plaintiff does not tally with the aforesaid bill raised by the CTA Logistic Company as different quantity is transported. The documents produced by the plaintiff in regard to quantity alleged to have been supplied by the plaintiff is contrary to the actual quantity received. He further submitted that the trial Court committed an error in granting interest at the rate of 12% p.a. on Rs.2,82,66,691-98 from May 2008 till its realization. Hence, on these grounds he prays to allow the appeal.
36. In support of his contention, learned senior counsel for the defendant has placed reliance on the following judgments.
1. Padum Kumar v. State of Uttar Pradesh,reported in (2020) 3 SCC 35.
2. Murari Lal v. State of Madhya Pradesh, reported in (1980) 1 SCC 704.
3. Central Bureau of Investigation v. V.C. Shukla and Others, reported in (1998) 3 SCC 410.
4. Hegde and Golay Limited v. State Bank of India, reported in ILR 1987 Kar 2673.
RFA. NO.100242/201750
5. M/S Halawagalu Adikar Channappa Proprietorship Firm v. Vastrada Shivamurthappa, reported in 2014 SCC OnLine Kar 8614.
6. Bank of Baroda, Chickmagalur v. M. N. Somashekar, reported in (2000) 7 Kant LJ 329.
7. R.M.Sundaram alias Meenakshisundaram v. Sri Kayarohanasamy and Neelayadhakshi Amman Temple, Nagapattanam, Tamil Nadu, reported in 2022 SCC OnLine SC 888.
8. Bachhaj Nahar v. Nilima Mandal and Another, reported in (2008) 17 SCC 491
9. Union of India v. Ibrahim Uddin and Another, reported in (2012) 8 SCC 148.
10. Svapn Constructions v. IDPL Employees Co- Operative Group Housing Society Ltd., (2006) 126 DLT 80. (2006) 127 DLT 80
11. M/s Arora Enterprises v. M/s Vijay Power Generator Ltd., 2015 SCC Online Del 9644.
12. Satyadhyan Ghosal and others v. Smt. Deorajin Debi and another, AIR 1960 SC 941.
13. Mohd. Abdullah Azam Khan v. Nawab Kazim Ali Khan, 2022 SCC OnLine SC 1544.
14. N.G. Dastane (Dr) v. S. Dastane, (1975) 2 SCC
326.
15. Delta Distilleries Ltd. v. United Spirits Ltd., & another (2014) 1 SCC 113.
RFA. NO.100242/201751
16. Murugesam Pillai v. Manickavasaka Pandara and another, (1916-17) 44 IA 98.
17. M.N. Rajan v. Konnali Khalid Haji and another, ILR 2004 KAR 3731.
18. Fabril Gasosa v. Labour Commissioner, (1997) 3 SCC 150.
19. S. Saktivel v. M. Venugopal Pillai, (2000) 7 SCC
104.
20. Jayesh Tanna v. Radha Arakkal, (2022) 5 MahLJ
337.
21. KPTCL v. JSW Energy Ltd., (2023) 5 SCC 541.
22. Union of India and another v. N. Murugesan and others (2022) 2 SCC 25.
23. Kailash Nath Associates v. Delhi Development Authority and another, (2015) 4 SCC 136.
37. Learned counsel for the plaintiff submits that insofar as jurisdiction is concerned, the trial Court has already passed an order on preliminary issue and the defendant No.1 has no right to raise such a ground in the appeal. He submits that the order passed on the preliminary issue No.5 has attained finality. He submits that the RFA. NO.100242/2017 52 revisional jurisdiction is part and parcel of appellate jurisdiction and basically and fundamentally it is the appellate jurisdiction which is being exercised by the High Court while examining the correctness of an order under Section 115 of CPC and the defendant No.1 has miserably failed in establishing the said contention and the defendant company cannot re-adjudicate the said issue in the present appeal. In support of his contention he has placed reliance on the judgment of the Hon'ble Apex Court reported in (AIR 1970 SC 1) Shankar Ramachandra Abhyankar v. Krishnagiri Dattatreya Bagat.
38. Regarding quantity and quality of iron ores supplied by the plaintiff to defendant No.1, the defendant company has seriously disputed the quantity and quality of iron ore supplied by the plaintiff, but there is absolutely no material placed on record to show that any time before issuance of notice by the plaintiff, any such dispute was ever raised or communicated. Further he has placed reliance on Ex.P1038 dated 25.05.2006. The said document is a RFA. NO.100242/2017 53 clarification issued by the defendant company on their purchase order wherein it has been categorically stated by the defendant that (1) their purchase order will be in standard format (2) analysis and sampling will be done by the defendant at Hospet at their own cost and it will be final for the payment and (3) that their SAL Steel representative will be present at the time of loading and dispatch. The said document was confronted to DW-1 and DW-1 admitted the conditions mentioned in the aforesaid exhibit. Further, Ex.P.1072 reveals that Senior Chemist by name Umesh Yadav gave a letter to the defendant stating that the defendant Company is satisfied with the quality and quantity of the material supplied by the plaintiff. He further submits that Umesh Yadav is the employee of defendant No.1 Company and defendant No.1 has not examined Umesh Yadav. He submits that the defendant No.1 cannot expect the plaintiff to examine Umesh Yadav as a plaintiff witness and further he was arrayed as defendant No.13. He was the competent person to opine on the quality and quantity of the RFA. NO.100242/2017 54 material supplied by the plaintiff to defendant No.1 and further no material are placed on record by defendant No.1 to show that any action is initiated against Umesh Yadav. He submits that defendant No.1 could have examined Umesh Yadav. The defendant No.1 withheld the material witness and an adverse inference has to be drawn against defendant No.1 under Section 114(g) of the Indian Evidence Act for non-examination of Umesh Yadav. Insofar as discrepancy in total weight mentioned in Ex.D.90 to Ex.D.96 which are Railway Weighment Receipts at a loading point, the defendant company has not produced any records to show that there is a discrepancy in the weight at unloading point. It is submitted that DW-1 admitted in the course of cross- examination that defendant No.1 received excess than what order was actually placed by them. Hence the contention of the learned counsel for defendant No.1 that there is a discrepancy at the loading and unloading points is incorrect.
39. Regarding quality, the learned counsel for plaintiff further submits that DW-1 admitted that they used to RFA. NO.100242/2017 55 receive samplings report from their chemist at Hospet and thereafter they used to lift the material and also admitted that they never lifted any material without sampling. Though defendant company has produced lab reports at Exs.P.1041 to P.1060 and contended that the quality of material supplied by the plaintiff is inferior in nature, but DW-1 in the course of cross-examination admitted that the material can be said to be contaminated if there are foreign particles present in the material, apart from those which are inherent materials. He submits that from the perusal of the lab report, it clearly shows that there was no presence of foreign particles and he also admitted that contamination upto 5% was allowed by defendant for the purpose of procurement. He submits that the author of Exs.P.1754 to P.1757 has not been examined and in the absence of evidence of author of Exs.P1754 to P.1757, no reliance can be placed upon them to conclude that the reports relate to the materials supplied by the plaintiff. He submits that the entire responsibility as to the sampling and analysis was taken up by the defendant and RFA. NO.100242/2017 56 not by the plaintiffs. He further submits that as per proviso of Section 16(2) of the Sales of Goods Act, if the buyer has examined the goods, there shall be no implied condition as regards defect which such examination ought to have revealed. He further submits that if really the plaintiff has supplied inferior quality material, the defendant No.1 could have returned the material, on the contrary, DW-1 admitted that the said material has been utilized by them and further he places reliance on Section 24 of the Sales of Goods Act.
40. Plaintiff produced Exs.P1318 and P1319, i.e., statement for the financial year which discloses that there is a discrepancy in Exs.P.1318 and P.1319 in regard to the loss and profit. He submits that as per Section 139(5) of the Income Tax Act, revised returns can be filed within one and the same financial year and as per Section 139(5), the plaintiff has filed revised returns and the same was accepted by the Income Tax authorities and the said document being a public document. Though in Ex.P.1318 name of defendant company was not shown in the list of sundry debtors, RFA. NO.100242/2017 57 subsequently shown in Ex.P.1319. The defendant produced Exs.D.116 to D.119, the list of sundry creditors of defendant Company for various financial years including 2009-10. In the said exhibits, name of the plaintiff appears at various places. But DW-1 admitted that for effecting such entries, the defendant has not considered the quality and quantity of materials supplied by the plaintiff. Further he has placed reliance on the judgment of the Hon'ble Apex Court reported in (AIR 2021 SC 5249) Asset Reconstruction Co. (India) Ltd., v. Bishal Jaiswal.
41. Regarding transportation cost to be bound by the plaintiff: The plaintiff has placed reliance on Ex.P1038 wherein condition Nos.4, 5 and 6 clearly reveals that in case of railway transport, defendant was to arrange for delivery of materials to the railway plot, transporting vehicles will be arranged by the defendants, railway rake charges and other incidental charges will be borne by the defendant No.1. He submits that the said condition has not been disputed by defendant No.1.
RFA. NO.100242/201758
42. Insofar as alleged settlement between plaintiff and defendant No.1, it is the case of the defendants that the settlement was arrived in between the plaintiff and defendant No.1. In the said settlement, it was settled for a sum of Rs.7,50,000/- which is alleged to have been paid by way of cheque. The said settlement has been seriously disputed by the plaintiff. Further the plaintiff has also denied the signature on Ex.D.74 and submits that the burden is on the defendant company to prove the alleged settlement. He submits that the defendant company failed to prove the alleged settlement.
43. The plaintiff filed a suit for recovery of money. Defendant company made a counter claim in the written statement. The trial Court decreed the suit filed by the plaintiff and dismissed the counter claim. He submits that the defendant company filed a composite appeal challenging the decreetal of suit and dismissal of counter claim as not maintainable. In support of his argument he has placed reliance on the judgment of this Court in the case of Ramesh RFA. NO.100242/2017 59 Chand vs. Omraj and Ors., in RSA No.57/2017. Hence on these grounds pray to dismiss the appeal.
44. Perused the records and considered the submissions of the learned counsel for the parties.
45. The points that arise for our consideration are:
1) Whether the defendant proves that trial Court has no territorial jurisdiction to entertain the suit in view of Clause 19(j) and 20 mentioned in the purchase order?
2) Whether the plaintiff proves that plaintiff has supplied iron ore to the defendant company as per purchase order and quality booked by the defendant on various occasions between 16.06.2006 and 19.01.2008 and the defendant company failed to pay entire sale price and other incidental charges and become due an amount of Rs.2,82,66,691-98?
3) Whether defendant No.1 proves that on 03.03.2007 the plaintiff has accepted to receive a sum of Rs.7,50,000/- from defendant No.1 towards full and final settlement of all dues payable to the plaintiff till that day?RFA. NO.100242/2017
60
4) Whether defendant No.1 company proves that plaintiff has supplied iron ore during September 2007 to January 2008 with low 'Fe' contents as pleaded in the written statement?
5) Whether appeal filed by the defendant No.1 challenging the judgment and decree and dismissal of counter claim in single appeal is maintainable?
6) Whether defendant proves that judgment and decree passed by the trial Court is arbitrary and erroneous and calls for interference by this court?
7) What order or decree?
46. Point No.1: The plaintiff has filed a suit for recovery of money against the defendants before the Principal Senior Civil Judge and JMFC, Hospet. Defendant No.1 has taken a specific defence in the written statement that as per purchase orders, any dispute arise between the parties, the same would be decided by competent court at Ahmedabad and the trial Court has no jurisdiction to entertain the suit. The trial Court on the basis of pleadings of the parties framed issues and issue No.5 reads as under: RFA. NO.100242/2017 61
"5. Whether the defendants prove that this Court has no territorial jurisdiction to entertain the suit and suit is not maintainable?"
47. The said issue was treated as a preliminary issue and answered in the negative vide order dated 08.02.2010. Defendant No.1 being aggrieved by order passed on preliminary issue No.5 preferred CRP No.1019/2010 before this court and this court dismissed the petition vide order dated 04.02.2011. Against the said order, defendant No.1 preferred SLP No.10926/2011 before the Hon'ble Apex Court. The Hon'ble Apex Court dismissed the SLP vide order dated 09.05.2011. Learned senior counsel for the defendant No.1 submits that there is no bar for this Court to consider the correctness of the order on Issue No.5 in the present appeal. To buttress his argument, he has placed reliance on the judgment of the Hon'ble Apex Court in AIR 1960 SC 941 Satyadhyan Ghoshal v. Smt. Deprajin Debi. We have perused the aforesaid judgment. In the said judgment, the question was raised before the Hon'ble Apex Court that "because at an earlier stage of litigation a Court has decided RFA. NO.100242/2017 62 an interlocutory matter in one way and no appeal has been taken thereof, or no appeal did lie, higher Court cannot at a later stage of the same litigation consider the matter again"
In the instant case, as observed above, the trial Court has framed issue No.5 and answered the same in negative holding that the trial Court has got jurisdiction to entertain the suit and the said order was challenged by defendant No.1 in CRP No.1019/2010 which came to be dismissed by this Court and the said order was challenged in SLP No.10926/2011. The said finding has attained finality. The Hon'ble Apex Court in the case of SHANKAR RAMACHANDRA ABHYANKAR VS. KRISHNAJI DATTATREYA BAPAT reported in AIR 1970 SC 1, wherein it is held that even on the assumption that the order of the Appellate Court had merged in the order of Single Judge who had disposed of the Revision Petition, we are of a view that the writ petition ought not to have been entertained by the High Court when the respondent had already chosen the remedy under Section 115 of the Code of Civil Procedure. If there are two modes RFA. NO.100242/2017 63 of invoking the jurisdiction of the High Court and one of those modes has been chosen and exhausted, it would not be a proper and sound exercise of discretion to grant a relief in the other set of proceedings in respect of the same order of sub-ordinate Court. The refusal to grant a relief in such circumstances, would be in consonance with anxiety of the Court to prevent abuse of process as also to respect and accord finality to its own decision. As observed above, the findings on issue No.5 has attained the finality. Hence defendant cannot re-agitate the said issue in the instant appeal. In view of the above discussion, we answer point No.1 in the negative.
48. Point Nos.2 and 4 are taken together for common discussion as they are interlinked: The defendant used to place the purchase orders for purchasing iron ore from the plaintiff. The plaintiff on the basis of the purchase order placed by the representatives of defendant No.1 used to supply the iron ore to defendant No.1. In order to establish that plaintiff had supplied iron ore to defendant RFA. NO.100242/2017 64 No.1, plaintiff has produced Exs.P1 to P18. The said fact has not been disputed by the defendant No.1. The only dispute raised by defendant No.1 is that the materials supplied by the plaintiff is of inferior quality and also there is discrepancy in regard to the quantity supplied by the plaintiff. The plaintiff in order to prove its case, examined its Proprietor as PW-1 and he has reiterated the plaint averments in his examination-in-chief. He has stated that the defendant Company used to request orally to supply iron ores. The plaintiff used to supply the iron ores to the defendant Company on the basis of oral instructions and only after satisfaction of quality and quantity of the material supplied by the plaintiff, the representatives of defendant No.1 issued cheques on several occasions. Thus the defendant company has paid a total sum of Rs.73,50,000/- from 29.09.2006 to 09.03.2007. The defendant Company is liable to pay the balance amount of Rs.3,42,66,691.98 including local transportation charges. The plaintiff has maintained the accounts regularly and he has stated that sometimes at the RFA. NO.100242/2017 65 request of the defendant and with the assurance of repayment, he paid transporting, rake charges, etc. Further Umesh Yadav, the representative of the defendant Company issued cheques only after 23.02.2008. The said cheques were presented and same were dishonoured and returned for insufficient funds. The plaintiff issued legal notice on 05.04.2008 calling upon the defendants Nos.1 to 3 to pay the amount. Notice was served on the defendants. The defendants Nos.1 to 3 did not reply to the legal notice. In compliance of the notice, defendant Company sent two demand drafts for Rs.30,00,000/- each. After deduction in the suit claim, the plaintiff filed a private complaint for recovery of suit amount. In the course of cross-examination, he has denied the short and low quality materials supplied by the plaintiff to defendant No.1. He admitted that to discuss the quality of the material, he went to Ahmedabad on 05.01.2007 and 06.01.2007 and he assured defendant No.1 Company that he would supply the quality materials and wrote a letter to defendant No.1 Company in assurance to RFA. NO.100242/2017 66 the supply of good quality material. He denied that there was no oral agreement between the plaintiff and defendant Company. It is elicited in Exs.P1 to P8, P15 to P18, that the weighment at Hospet shall be final. He admitted about issuing a communication at Ex.P1086. He denies that plaintiff has got created the documents to extract money from the defendant Company.
49. Plaintiff also examined one witness Sri. M. Krishnakumar as PW-2 who has deposed about Ex.P1094 to P1098. The plaintiff also examined one Mr. Muralidhar as PW.3, who is the Financial Advisor to the plaintiff. He has deposed that he is assisting the plaintiff in his day to day transaction. He has deposed that the plaintiff has supplied iron ore materials to the defendants. As per the instructions of the plaintiff he has prepared the bills and covering letters during the delivery and dispatch of iron ore materials to the defendants during the years 2006 to 2008. Whenever the materials were supplied to the defendant company is the authorized representatives of defendant No.1-Company at RFA. NO.100242/2017 67 Hospet to visit the office of the plaintiff and collect the iron ore materials supply bills along with covering letter with necessary enclosures. He also deposed that he knows some of the responsible officers of defendant No.1 - Company like Ashok Jain, Bavin Bhai, Srinivas, Umesh Yadav, Milend, Soudagar and other officers and Chemists of defendant No.1
- Company. They used to visit the office of the plaintiff - Company and they used to attend all the correspondences of the plaintiff and of the defendants many times. In the course of cross-examination he has stated that he is not the employee of the plaintiff company. He was just assisting the plaintiff in his business as a part time worker and he also stated that from one Raghunandan and Shetty Shaphi, the plaintiff was taking the assistance to prepare the bills, books of accounts and ledger etc., documents pertaining to the plaintiff - Company. He has stated that he has prepared Exs.P.812, 816, 818, 820, 822 and 824 which are the letters written by the plaintiff to the defendant - Company and the RFA. NO.100242/2017 68 said exhibits discloses that the information about the supply of goods, quantity, price and details of debits.
50. Defendant No.1 - Company examined its Vice President by name Rakesh Ranjan who is defendant No.5 as DW.1 and he has reiterated the written statement averments in the examination-in-chief. He has stated that the plaintiff - Company supplied the materials and the defendant - Company had purchased the materials from the plaintiff. He has stated that defendant No.1 Laboratory was functioning at Hospet up to January 2007. Later on, it was closed. It is stated that the plaintiff has not supplied proper grade materials, his company stopped the transaction. Later on, the plaintiff requested and wrote a letter to the defendant - Company to send purchase orders and the plaintiff has assured the defendant - Officer that he would strictly adhere to the quality and quantity, specifications and send proper grade materials as required, However the materials supplied by the plaintiff is less and low quality material. During the months of November 2007 and January 2008 during the RFA. NO.100242/2017 69 period the plaintiff supplied the materials in six rakes, and came to know that there is a less quantity materials and also low quality materials. The defendant - Company tested the materials supplied by the plaintiff in six rates through SGS India Pvt. Ltd. As per the reports of the said sampling company the material supplied by the plaintiff was not in proper grade and got marked the reports issued by SGS company. He has deposed that there was a transaction dispute between the plaintiff and the defendants and negotiation was held between the plaintiff and officials of defendant No.1. He has stated that the plaintiff is liable to pay a sum of Rs.45,17,901/- and prayed to dismiss the suit an decree counter claim. In the course of cross-examination he has admitted that there was a dispute only with respect of purchase orders dated 02.11.2007, 21.11.2007 under which the materials supplied from 05.11.2007 to 19.01.2008 in six rakes. It is stated that they had a SAL Laboratory near Sai Baba Temple at Hosapete during that period. He also stated that one Gururaj Deshpande was the owner of that building RFA. NO.100242/2017 70 and defendant No.1 had taken the said premises on lease agreement from Gururaj Deshpande under an agreement and he used to pay rent of Rs.4,000/- per month to the premises and paid advance Rs.50,000/-. The said agreement was confronted to DW.1 and he has admitted the said agreement and marked as Ex.P.1096 and it is signed by one Ramakrishna on behalf of the defendant. Further said that he was the Chemist and he was authorised by the company entering into an agreement. He has stated that he is not aware of the fact that the Court has directed the defendant to produce the original of Ex.P.1096 as per the order on I.A.No.11 dated 20.11.2010 and he has stated that he was not aware that inspite of direction defendant No.1 - Company has not produced document within prescribed period. He admits that Mr. Milind was Chemist and he was working at Hosapete during that period and he also admits that in the written statement they would denied that we had no such laboratory and now stated in para No.21 of examination-in-chief that we had laboratory here. Ex.P2 was RFA. NO.100242/2017 71 confronted to DW.1 and he admits that it is issued by defendant No.1-Company and signed by defendant No.4 and himself. The signature of DW.1 and signature of defendant No.4 are not disputed by this witness. Exs.P.214 and 218 are the purchase orders issued by one company and it is signed by Sujal Shah and himself and his signature can be seen in all these exhibits. He admits his signature of Ex.P.1127 and his signature was marked as Ex.P.1127(a). It is stated that Ashok Jain was the employee of defendant No.1. His duty was to Co-ordinate defendant No.1 - Company with any suppliers. Ex.P162 was confronted to DW.1. He admits that it bares the signature of Ashok Jain, but it is not sure about Exs.P.702, 705, 735, 736, 752, 755, 777, 800, 1084, 1085, 1088, 1105, 1106, 1108 to 1112, 1118 are signed by Ashok Jain. It is stated that Harshad Shah was also one of the Director of the defendant No.1 - Company and at present he is not in the Board of Directors. It is elicited that he is not aware that Harshad Shah was staying at Hosapete for looking after defendant No.1 - Company and he cannot RFA. NO.100242/2017 72 identify the signature of Harshad Shah. Exs.P.2, 3, 4, 8, 10, 11, 14, 15, 16, 17, 18 were confronted to DW.1 wherein Rakesh Suthariya has affixed his signatures. Ex.P3(a) is the signature of Rakesh Suthariya and signature of Bhavin Bhavasar, is marked as Ex.P.1225(a). Both of them are the employee of defendant No.1 - Company and he was also office purchaser purchased in Ex.P.1225 is signed by Mr. Bhavin Bhavsar and DW.1 identify his signature and marked as Ex.P.1225(a). Exs.P.902, 906, 908, 942 are also singed by Mr. Bhavin Bhavsar. It is stated that Ex.P.1084 contends the signature of Ashok Jain. It is stated that he has gone through the most of the documents filed by plaintiff in the case. Ex.P.104 is the covering letter and Exs.P95 to 108 are the bills enclosed at Exs.P.94. It is stated that he is not denying receipts of these documents. It is stated that Ex.P.109 to Ex.P.123 are received by defendant No.1 - Company. Similarly Ex.P.124 is the covering letter and bills as Exs.P.125 to 136 and they received such documents. Ex.P.137 is the covering letter. Exs.P.138 to P.161 are the RFA. NO.100242/2017 73 bills received by defendant No.1 - Company. Ex.P.163 is the covering letter. Exs.P.164 to P.176 are bills which are received by defendant No.1 - Company. Ex.P.177 covering letter and Exs.P.178 to P.185 are the bills received by defendant No.1 - Company. He admits that the Exs.P.186 to P.927 are the covering letters and the bills and they are received at end of defendant No.1 - Company and also admits that similarly defendant No.1 - Company received Ex.P.929 to Ex.P.1035 along with its enclosures. He further stated that he cannot say that who has filed the written statement and he is unable to say that Yogesh talker has a personal knowledge in the case or not. He further stated that he is not aware about the documents produced by the Company. He has voluntarily stated that Vinod kumar shah was director of the company during 2006 to 2008 and he has filed the application as per the instructions given by the management . He admits his signature on Ex.P.1127 and his signature was marked as Ex.P.1127(a). He admits that Ashok jain was staying at Hospet and he was the employee and his RFA. NO.100242/2017 74 duty was to co-ordinate the defendant No.1 company with the suppliers. Ex.P.162 was confronted to DW.1 to confirm the signature of Mr.Ashok Jain, but he has stated he is not sure about the exhibits signed by Ashok Jain. He has stated that Ashok jain is not in the Board of Directors. Harshad shah was one of the directors of the defendant Company and he was not aware that Harshad shah was staying at the Hosmat for looking over the company. He has not seen the signature of Harshad shah. One Bhavin Bhavsar was an employee in the company, but now he is not with the company, he was also office purchaser in the company and he has signed on Ex.P.1225 and he has also signed on Exs.P.902, 906, 908 and 942 . He admits the signature of Ashok Jain on Ex.P.1084. He admits that he has received the documents which are marked as Ex.P.928 along with the 13 bills enclosed to that letter. Similarly he has received Exs.P.929 to Ex.P.1035. He admit that after receiving the cheque from the plaintiff for the purpose of security they used to release the amount towards the material costs and that on RFA. NO.100242/2017 75 15.06.2006, the defendant made a payment as per Ex.P.1302. Ex.P.1129 was confronted to DW.1. He states that he has not received the cheque stated in the letter. He admits that Harshad Shah is also a Director of the Company and he was not informed about Ex.P.1129 or about the cheque mentioned in the said document. He has stated that after filing of suit he has never received any phone calls from the plaintiff and the plaintiff never threatened him directly over telephone or in any manner.
51. He admits that after receiving the sampling report from the Chemist from their laboratory by way of FAX, telephonic discussions, letters etc., whenever the supply of material is due then they used to get a report from their Chemist about the materials sampling details and he do not know whether a copy of such sampling report was given to the plaintiff. Ex.P.1039 was confronted to the witness, the witness admits that it is a report of Chemist of defendant No.1 and one more sampling report dated 26.06.2006 written by Ashok Jain and Milin. Further, the said document RFA. NO.100242/2017 76 is marked as Ex.P.1781 and the said exhibit was signed by way of facts and the same was accepted by the defendant and intimated about the release of payment of dispatch of rake of iron ore . He admits that contents of Ex.P.3(a) and the said Ex.P.3(a) was prepared by the defendant company laboratory at Hospet and he admits that Chemist used to analyze sample in the laboratory at Hospet and they used to send analysis report to him or Ashok Jain and after approval by Ashok Jain defendant company used to take material from Hospet to their place and he further admits that whenever materials are loaded at that time samples have to be tested and in the case of other suppliers they used to follow the same procedure. Sometimes, with the mutual consent and agreement they used to pay sampling. Whenever the material is loaded, the samples are collected and after the examination of sample they used to receive the report and the materials are loaded to the rake and sample report was received subsequently. The defendant company never lifted any material without sampling. A question was put to DW.1 RFA. NO.100242/2017 77 as to who was collecting sample on behalf of defendant No.1- company, witness states that it depends on purchase order and terms and conditions and mutual consent. That one Umesh Yadav has issued a letter as per Ex.P.1072 to the defendant - Company wherein he has clearly stated that the defendant - Company is satisfied with the quality and quantity of the material supplied by the plaintiff . Further the defendant company has not examined Umesh Yadav, who is the employee of the defendant - Company. Though Umesh Yadav was arrayed as defendant No.13 and further Umesh Yadav was a senior chemist in the defendant -Company and he was stationed at Hospet during in which the transaction took place. It is the case of the defendant that Umesh Yadav had no authority to issue Ex.P.1072 If at all Umesh Yadav has issued Ex.P.1072 without any authority, the defendant company ought to have taken action against Umesh Yadav. The defendant - Company has not produced any records to establish that an action was taken against Umesh Yadav. Further the defendant-company produced Exs.D.92 to D.96 RFA. NO.100242/2017 78 which are the Railway weighment receipts at the loading point and contended that there are discrepancies in the total weight mentioned in the said receipt. In order to show that there was discrepancy in the weight, the weighment at unloading point is not placed on record to show that what was received is less than what was loaded into the wagon. From the perusal of evidence of DW.1, admitted that they have received the excess material what was actual asked for by them.
52. It is the case of the defendant that plaintiff has supplied the materials of inferior quality to them. The defendant- Company before loading the materials they used to collect the samples and they used to test it in their laboratory at Hospet and the plaintiff has produced the test reports, lab reports marked as Exs.P.1666, 1667 and 1770. Further, DW.1 clearly admitted that defendant- Company never let the material without sampling. Further the defendant has placed the reliance on Ex.P.1041 to 1060 and contended that the quality of the materials supplied by the RFA. NO.100242/2017 79 plaintiff is inferior in nature, but DW.1 in the course of cross examination admitted that material can be contaminated if there are foreign particles present in the materials apart from those which are inherent materials. The defendant placed a reliance on the lab reports issued by SGS laboratories. In order to prove the contents of lab reports, the defendant examined DW.2 official of SGS Lab. In the course of cross examination, he has categorically admitted that usual procedure for drawing samples is to draw it in the presence of vendor and purchaser and signature of both the parties will be obtained while taking such samples.
53. The defendant has failed to establish that the plaintiff has supplied inferior quality of iron ore. The plaintiff has produced the records to show that the plaintiff has supplied iron ore to the defendant - Company as per the purchase order and quality booked by the defendant on various occasions between 16.06.2006 and 19.01.2008. The defendant - Company has not produced any records to show that the defendant - Company has paid the entire sale price RFA. NO.100242/2017 80 and other incidental charges. The case of the defendant No.1 there is shortage of goods when it was received. In order to consider the same the purchases orders which are as under:
Ex.P series Total Supplied Qty
P.O.No.27
859 1441.6
895 121.31
931 87.34
937 555.45
993 294.17
995 787.16
1001 427.55
1005 356.49
1013 231.61
1029 423.49
Total 4726.17 MT
Ex.P Series Total Supplied quantity
PO No. 32
1031 365.45
863 208.89
877 163
893 925.24
897 223.1
899 124.57
905 487.81
913 495.46
917 720
925 135.38
929 372.98
941 434.1
981 680.96
999 327.52
1023 59.37
1035 70.53
Total 5794.36 MT
RFA. NO.100242/2017
81
54. From the perusal of the tabular column defendant No.1 has received the goods at unloading point. There is an discrepancy in the supply of materials. There is a difference of 1246.9 MT. Thus, the plaintiff is not entitled to claim amount for 1246.9 MT. Insofar as interest is concerned the Trial Court discussed in para 69 of the impugned judgment. The Trial Court has assigned detailed reasons in awarding interest. As the suit transaction is a commercial transaction, the Trial Court was justified in awarding interest at the rate of 12% p.a. In view of the above discussions, we answer point No.2 in the affirmative and point No.4 in the negative.
Point No.3: It is the case of the defendant No.1 that on 03.03.2007 the plaintiff accepted to receive an amount of Rs.7,75,000/- from defendant No.1 towards full and final settlement of dues payable to the plaintiff. Further, the defendant has produced the letter marked as Ex.D.74, wherein the entire dispute of payment was settled for a sum of Rs.7,50,000/ which is paid by way of cheque. The said letter has disputed by the plaintiff and also signature RFA. NO.100242/2017 82 appearing on Ex.D.74. The said document was sent to experts for examination. The Commissioner submitted a report opining that the admitted signature and disputed signatures are not matching. The Commissioner was examined as CW.1 and he has deposed that he has compared the admitted signature and disputed signature sent to her and submitted certificate of examination marked as Ex.C.1, Ex.C.2, which is the handwriting expert opinion, Ex.C.3 to 20 enlarged prints of admitted and disputed signatures of the plaintiff. In the course of cross examination, nothing has been elicited to disbelieve Ex.C.1 and Ex.C.2. Further the defendant company has not produced any document to show that pursuant to Ex.D.74 , the cheque was issued to the plaintiff. The defendant company except producing Ex.D.74 has not produced any other records to show that there was settlement between the plaintiff and defendant company and plaintiff agreed to receive a sum of Rs.7,50,000/- from defendant No.1 towards full and final settlement of all dues payable to the plaintiff till RFA. NO.100242/2017 83 that date. Thus the defendant company have failed to prove that there was settlement between the parties. In view of the above discussion, we answer point No.3 in the negative.
55. Point No.5: The plaintiff filed a suit for recovery of money against the defendants. The defendant No.1 filed the written statement seeking for counter claim against the plaintiff . The trial Court decreed the suit of the plaintiff and dismissed the counter claim of defendant No.1. The defendant No.1 aggrieved by the common judgment preferred the instant appeal. The plaintiff has raised objections in regard to the maintainability of single appeal against the decree passed in the suit and the counter claim. Counter claim is a plaint in law:
(i) when two suits are consolidated and tried together with common issues framed and common evidence led by the parties, resulting in a common judgment and decree, the same may be subject to challenge by single appeal at the instance of aggrieved party.RFA. NO.100242/2017
84
(ii) Where a single appeal is filed questioning the judgment and decree passed in two suits, which were consolidated and decided by common judgment, decision of such single appeal, by a common judgment, reversing or modifying the claim in one suit out of the two can be challenged by the aggrieved party also, in a single appeal.
The said view is supported in the case of Shri Ramesh Chand Vs. Om Raj and others in RSA No.57/2017, the Hon'ble High Court of Himachal Pradesh.
(iii) When two suits though not consolidated but are decided by a common judgment, resulting in to preparation of two separate decrees, the aggrieved party would be required to challenge both of them by filing separate appeals.
(iv) When both the suit and the counter claim are decreed by a common judgment, regardless of whether separate decree has been prepared in the counter claim, both required to be challenged by separate appeals; RFA. NO.100242/2017 85
(v) In a case where two separate appeals are required to be filed against judgment of the suit and the counter claim and if appeal is filed only against one and not against the others, non filing of appeal against such judgment and decree would attach finality thereto and would attract not only the principle of res-judicata but also waiver and estoppel and the judgment and decree not appealed against would be fallen to have been acquiesced to by the party not filing appeal and;
(vi) When however, two appeals are filed against a common judgment passed by the Trail Court, both the plaintiff and defendant are disposed of by the first appellate court by modifying/reversing/affirming judgment of Trial Court, the aggrieved party, would be required to challenge both by two separate appeals, in absence of which, non-filing of appeal against one shall attract bar of the principles of res-judicata against another.
RFA. NO.100242/201786
(vii) Where more than one appeals are required to be filed or are filed and one more of/them are dismissed for default, delay of any other similar reason any such situation would attract res-judicata and such dismissal would satisfy the requirement of appeal being heard any finally decided on merits "in a former suit" for the purpose of attracting principles of res-judicata.
The learned senior counsel for the defendant submits that the defendant will not press prayer in regard to the counter claim. He submits that he confines the appeal only in respect of decree granted in favour of the plaintiff. In view of the submission made by the learned senior counsel for the defendant, point No.5 does not survive for consideration.
56. Point No.6: The trial Court considering the pleadings, oral and documentary evidence and the admission of DW.1 has rightly decreed the suit of the plaintiff. As we have recorded a findings that there was a shortage of materials supplied by the plaintiff and the plaintiff is not RFA. NO.100242/2017 87 entitled to claim amount for 1249.9 MT., the said fact was not considered by the Trial Court. To the above said extent, the judgment and decree of Trial Court needs to be modified. Thus, in view of the above discussion, we answer point No.6 partly negative and partly affirmative. Hence, in view of facts and circumstances of the case, we proceed to pass the following:
ORDER Appeal is allowed in part.
The judgment and decree dated 26.04.2017 passed by the learned Principal Senior Civil Judge and JMFC, Hospet in O.S.No.22/2009 is modified. The suit of the plaintiff is partly decreed. The plaintiff is entitled for a sum of Rs. 2,45,70,623.98/- with interest at 12% p.a. from May 2008 till its realization. Defendant No.1 is directed to pay the amount to the plaintiff within two months from the date of receipt of copy of this judgment.RFA. NO.100242/2017
88
No order as to the costs.
Office is directed to transmit the amount deposited by the appellant before this Court to the trial Court.
Sd/-
JUDGE Sd/-
JUDGE MBS/RD