Delhi High Court
Venezia Mobili (India) Pvt. Ltd. vs Ramprastha Promoters & Developers Pvt. ... on 26 March, 2019
Equivalent citations: AIRONLINE 2019 DEL 550
Author: Manmohan
Bench: Manmohan
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 760/2017
VENEZIA MOBILI (INDIA) PVT. LTD. ..... Plaintiff
Through: Mr. Tanmaya Mehta with Mr. Rajeev
Mishra, Advocates
versus
RAMPRASTHA PROMOTERS
& DEVELOPERS PVT. LTD. & ORS. ..... Defendants
Through: Mr. Gaurav Mitra with Mr. Shivendra
Dwivedi, Mr. Nitin Sharma and
Ms. Rashmita Roy Chowdhury,
Advocates
Reserved on : 18th February, 2019
% Date of Decision: 26th March, 2019
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J (Oral) I.As. 14036/2017 & 14064/2017
1. The present suit has been filed for recovery of Rs. 2,18,58,875/- (Rupees Two Crores Eighteen Lacs Fifty Eight Thousand Eight Hundred and Seventy Five Only) along with interest @ 18% per annum. The prayer clause in the present suit is reproduced hereinbelow:-
"a) This Hon‟ble Court may kindly be pleased to pass a decree for Rs. 2,18,58,875/- (Rupees Two Crore Eighteen Lacs Fifty Eight Thousand Eight Hundred & Seventy Five Only) along with interest @18% p.a. from 15.02.15 till its CS (COMM) 760/2017 Page 1 of 22 realization in favour of the plaintiff and against the Defendants;
b) Cost of the suit be awarded in favour of the plaintiff and against the Defendants;
c) Any other or further relief which this Hon‟ble Court may deem fit and proper under the facts and circumstances of the case may also be granted."
2. I.A. No. 14036/2017 has been filed by the plaintiff under Order XII Rule 6, Code of Civil Procedure, 1908 (hereinafter referred to as 'CPC') for judgment on admission and I.A. No. 14064/2017 has also been filed by the plaintiff under Order XIII-A of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as 'Commercial Courts Act, 2015‟) for summary judgment.
FACTS
3. Initially the plaintiff and defendants had entered into an agreement dated 18th September, 2012 (hereinafter referred to as 'First Agreement') under which the plaintiff had to supply a total number of 630 'Modular Kitchens' to the defendants, for installation in the defendants' Projects at - Gurgaon under the names "The Edge Towers, The Atrium, The View (Ramprashta City)".
4. As per the First Agreement, the defendants had to construct the apartments by 31st December, 2012 and the plaintiff was required to install a minimum order of 630 'Modular Kitchens' by 31st December, 2013. The relevant portion of the First Agreement is reproduced hereinbelow:-
"3. That „VM‟ shall install the „Modular Kitchens‟ upto 31st December 2013 as per the working schedule in Annexure CS (COMM) 760/2017 Page 2 of 22 III, „RPC‟ shall get the apartments ready for installation of „Modular Kitchens‟ upto 31st December 2012.
xxxx xxxx xxxx xxxx
5. That „RPC‟ is agreed to confirm minimum order of 630 „Modular Kitchens‟ "Model Modern & Model Classic"
from its clients on behalf of „VM‟ to be installed in its apartments, which are presently under construction, on or before 31st December 2013 as per Annexure III.
(emphasis supplied)
5. Since the defendants could not meet their obligation of getting the Apartments ready under the First Agreement, the parties re-negotiated the terms of the agreement.
6. Consequently, another agreement dated 25th April, 2014 (hereinafter referred to as 'Second Agreement') was entered into, for a reduced number of kitchens. Under the Second Agreement, the number of kitchens agreed upon was 133, as against the previous number of 630. The defendants not only gave an advance amount but also paid price escalation and compensation for breach of the First Agreement. The said portion of the Second Agreement is reproduced hereinbelow: -
"WHEREAS under clause 5 of the Previous Agreement RPC was obliged to confirm a minimum order of 630 „Modular Kitchens‟ from its customers. But RPC due to reasons beyond its control, could not fulfill this obligation and the performance of the Previous Agreement and consequently, the parties hereto have agreed to re-negotiate, cancel the Previous Agreement and enter into the fresh arrangement as embodied in this Agreement.
THAT this specific agreement is entered into between both the parties referred above, and the parties agree to the following terms and conditions:-CS (COMM) 760/2017 Page 3 of 22
1. That „RPC‟ has given a sum of Rs.1,25,00,000/- (One Crore Twenty Five Lakhs Only) to VM as advance (hereinafter referred to as "1.25 Cr. Advance") to commence work. Both Parties have agreed that said 1.25 Cr. Advance shall be adjusted as per following:
(a) a sum of Rs.51 lakhs (Rs.51,00,000/-) to VM as compensation for non-fulfillment by RPC of its obligation under the Previous Agreement, and
(b) a sum of Rs.2,53,125/- to VM for a sample kitchen installed by VM as required by RPC in sector 95 Gurgaon project, and
(c) a sum of Rs.42,40,750/- to VM as price escalation of 73 kitchens as per Clause 2 & Schedule II of this Agreement, and
(d) therefore the balance remaining with VM is Rs.29,06,125/- which shall be retained by VM as an interest free security deposit which may be adjusted towards the monies owed by RPC to VM at any point in time. The aforesaid security deposit of Rs.29,06,125/- if not adjusted by VM shall be refunded to RPC at the time of completion of installation of the 133 kitchens or at final settlement of accounts between RPC & VM whichever is later.
(emphasis supplied)
7. In accordance with the Second Agreement, the defendants had to make all apartments ready and available to the plaintiff for installation of 'Modular Kitchens' by 15thFebruary, 2015. However, the defendants once again, failed to do so.
8. On 28th May, 2015, the plaintiff filed the present suit for recovery of Rs. 2,18,58,875/- (Rupees Two Crores Eighteen Lacs Eight Hundred CS (COMM) 760/2017 Page 4 of 22 Seventy Five Only) along with interest @ 18% per annum from 15th February, 2015 till its realization.
9. On 24th March, 2017 the plaintiff filed an application for disposal of the Modular Kitchens which the plaintiff had imported.
10. Since the defendants did not file any reply to the said application, despite opportunity, this Court vide order dated 22nd August, 2017, permitted the plaintiff to dispose of the Modular Kitchens/materials by way of an auction. The relevant portion of the order dated 22nd August, 2017 is reproduced hereinbelow:-
"Present application has been filed by the plaintiff for disposal of goods.
It has been averred in the application that the plaintiff had entered into an agreement with the defendant company for installation of modular kitchens in the projects namely, The Edge Towers, The Atrium and the View (Ramprastha City).
It is further stated that the plaintiff company had specifically designed 133 modular kitchens as per the defendants‟ specifications and had ordered and procured the required material for the installation of kitchens, which are now lying un-utilized.
Learned counsel for plaintiff-applicant states that it has been more than twenty-one months since the material procured by the plaintiff as per the defendants‟ specification is lying in the plaintiff‟s warehouse. He stated that the equipment and material lying in the warehouse of the plaintiff is getting damaged due to wear and tear and also the design of the modular kitchens is becoming obsolete.
Despite opportunity, no reply has been filed.
Consequently, the present application is allowed and the plaintiff is permitted to dispose of the equipment and material of the modular kitchens and adjust the proceeds against the recovery in the present suit."
(emphasis supplied) CS (COMM) 760/2017 Page 5 of 22
11. The plaintiff published an auction notice in two newspapers being Jansatta (Hindi, Delhi Edition) and the Indian Express (English, Delhi Edition) with the entire description of the Modular Kitchens/materials on 26th August, 2017.
12. Against order dated 22nd August, 2017, the defendants filed FAO(OS) No. 244/ 2017. On 05th September, 2017, the said appeal was disposed of and the plaintiff was permitted to auction the Modular Kitchens. The relevant portion of the order dated 05th September, 2017 passed by the Division Bench is reproduced hereinbelow:-
"5. We are informed by Mr. Shivendra Dwivedi, learned counsel for the appellant that the respondents have since proposed to dispose of such goods by way of a public auction. Mr. T.K. Ganju, learned Senior Counsel for the respondent has placed before us a copy of an advertisement dated 26th August, 2017 published in the English edition of the Indian Express as well as the Hindi newspaper, Jansatta, proposing the auction of the goods on 31st August, 2017. We are informed that four parties have approached the respondents towards purchase of the goods. Mr. Ganju submits that the respondent has no objection if the appellant wishes to participate in the bidding as well.
6. It is submitted by Mr. Dwivedi (counsel for the defendant) that so far as the proposal of the respondent to sell the goods by a public auction is concerned, the appellant would have no objection. xxx........
7. The submission on behalf of the appellant is that upon the working of the above clause, the appellant may be found entitled to amounts from the respondent. It is further submitted that the working of the clause may get prejudiced if the respondent was permitted to appropriate the proceeds of the sale absolutely without any reservation.
8. It appears to us that the disputes between the parties are capable of resolution by recourse to mediation. We are CS (COMM) 760/2017 Page 6 of 22 informed by Mr. Shivendra Dwivedi, learned counsel for the appellant and Mr. T.K. Ganju, learned Senior Counsel, on instructions from the respondent, that their clients would have no objection in exploring the possibility of negotiated settlement through mediation, without prejudice to their respective rights and contentions.
9. In view of the above, this appeal and the application are disposed of with the following directions:
(i) It is made clear that the order dated 22nd August, 2017 as well as the order passed today shall not be treated as an adjudication on the rival contentions and claims. The suit shall proceed and be decided uninfluenced by any observations or directions contained in the order dated 22nd August, 2017 and the present order.
(ii) It is further directed that the authorised representatives of the parties shall appear before Mr. Sudhanshu Batra, Senior Mediator in the Delhi High Court Mediation & Conciliation Centre on 14th September, 2017 at 4 p.m. for fixation of a date in mediation. It shall be open for the mediator to join any other party deemed necessary for an effective mediation. The parties shall be at liberty to place any other dispute before the mediator.
(iii) It is further directed that the copy of the order shall be placed in CS(OS) 1875/2015.
(iv) The mediator shall file his reports as well as settlement agreement, if any, and outcome of the mediation in CS(OS)No.1875/2015."
(emphasis supplied)
13. In pursuance to this order, an open auction was held and details were provided to all interested parties. In the open auction, the Modular Kitchens were sold by the plaintiff for Rs.32,00,000/- (Rupees Thirty Two Lacs only).
CS (COMM) 760/2017 Page 7 of 2214. On 21st November, 2017 the plaintiff filed I.A No. 14036/2017 under Order XII Rule 6 CPC and I.A. No. 14064/2017 under Order XIII-A of the Commercial Courts Act, 2015.
PLAINTIFF‟S ARGUMENTS
15. Learned counsel for the plaintiff stated that the plaintiff had imported the Modular Kitchens exclusively for the defendants, as per the latter's specifications.
16. He further stated that under the Second Agreement, the defendants had to make all the apartments ready and available to the plaintiff for installation of the Modular Kitchens by 15th February, 2015-which the defendants failed to construct.
17. Learned counsel for the plaintiff submitted that by virtue of Section 55 of the Indian Contract Act, 1872, once the time had been specified in an agreement, time was the essence of the contract and the parties had to adhere to the same. He emphasized that in the present suit it was an admitted fact that the defendants had failed to comply with the deadline of 15th February, 2015 mentioned in the Second Agreement.
18. Learned counsel for the plaintiff contended that Clause 5 of the Second Agreement stipulated that if the defendants did not make the apartments ready for installation of the Modular Kitchens by 15th February, 2015, the defendants would pay to the plaintiff a total sum of Rs. 2,47,65,000/- (Rupees Two Crores Forty Seven Lacs Sixty Five Thousand Only) minus (a) the price of the kitchens already installed; and (b) the unadjusted portion of security deposit etc. CS (COMM) 760/2017 Page 8 of 22
19. He further stated that the defendants had never refused to pay the price agreed under the Second Agreement as would be apparent from its Clause 3. Clause 3 of the Second Agreement is reproduced hereinbelow:-
―3. That a total of 133 modular kitchens being 46 „Modern Kitchens & 87 „Classic‟ Kitchens have been booked by the customers of RPC with VM through RPC. The customers of RPC shall pay to VM in accordance with Clause 11 hereunder, the price of the relevant kitchens (& accessories) booked by them as per description & price of the model „Modern‟ kitchen given in Schedule III and that of the model „Classic‟ Kitchen given in Schedule IV attached hereto & forming part of this Agreement. Before commencement of installation by VM, each customer of RPC shall pay to VM through RPC a) 50% price before the end of 30 th October 2014 and b) balance by 15th February, 2015 towards kitchen booked by him/her (Payment Schedule)."
(emphasis supplied)
20. He submitted that no case had been pleaded or made out for frustration of the Second Agreement under Section 56 of the Indian Contract Act, 1872.
21. He further contended that in the defendants' written statement, there was no categorical and specific denial of the claim of the plaintiff. He stated that the defendants attributed delay in construction of the apartments to environmental issues, shortage of construction material and labour issues- which in fact pre-dated the execution of the Second Agreement.
22. Learned counsel for the plaintiff stated that the defendants participated in the auction through their proxy company represented by Mr. Naveen Madnani, an employee of the defendant company. He stated that the said fact was apparent from the LinkedIn profile of Mr. Naveen Madnani which stated that he had been working with the defendants in the capacity of Senior Manager-Planning & Budgeting since 2013. According to the CS (COMM) 760/2017 Page 9 of 22 plaintiff, the said employee himself inspected the entire goods and material available and upon being satisfied, offered the maximum price of Rs.28,50,000/-(Rupees Twenty Eight Lacs Fifty Thousand Only) --which showed that the defendants had no intention to get the material and goods installed in their respective projects.
23. He stated that since there was no specific defence to the claim of the plaintiff, the suit should be decreed and summary judgment be passed without subjecting the plaintiff to the travails and delays of trial.
DEFENDANTS‟ ARGUMENTS
24. Learned counsel for the defendants contended that the plaint was based on Clause 5 of the Second Agreement. He submitted that Clause 5 contemplated reciprocal obligations on both the parties and the plaintiff by way of its own conduct of sale of the kitchens, in an auction, had rendered performance of Clause 5 impossible/infructuous. Learned counsel for the plaintiff submitted that if the plaintiff were allowed to claim the stipulated amount of Rs. 2,47,65,000/- (Rupees Two Crores Forty Seven Lacs Sixty Five Thousand Only) without performing the reciprocal obligation of supplying the kitchens, it would amount to re-writing the agreement which was impermissible. Clause 5 of the Second Agreement is reproduced hereinbelow:-
"5. That VM shall be liable to install kitchens in the apartments of RPC customers upto a maximum period of 90 days from the date of signing of this Agreement. Notwithstanding anything contained in this Agreement, in the event RPC does not ready all the apartments for installation of modular kitchens by 15 th February 2015, then RPC shall pay to VM forthwith a total sum of Rs.2,47,65,000/- minus: (a) the price of the kitchens already installed or under installation by VM and (b) minus the unadjusted CS (COMM) 760/2017 Page 10 of 22 portion of the security deposit of Rs.29,06,125/- with VM under Clause 1(d) hereinabove. The relevant calculation of the aforesaid amount of Rs.2,47,65,000/- for 133 modular kitchens is given in Schedule I attached hereto and forming part of this Agreement. Upon complete payment in accordance with this clause by RPC, VM shall hand over to RPC the parts of the relevant uninstalled kitchens and VM shall also hand over to RPC the booking amount refund cheques made in favour of the customers of RPC and RPC shall handover these cheques to its customers (booking amount being Rs.10,000/- in case of Modern Kitchen and Rs.15,000/- in case of „Classic‟ Kitchen). It is made clear that VM shall commence installation of RPC customer‟s kitchen only after fulfillment of all the following conditions-(a) RPC has handed over the customer‟s apartment to VM for purpose of installation of kitchen by VM, (b) RPC has handed over kitchen area to VM to the satisfaction of VM and (c) the 100% price payment has been received by VM. After date of commencement of installation of modular kitchen at a RPC customer‟s apartment, VM shall be given 120 clear days to finish installation of that modular kitchen. Upon signing of this Agreement, RPC shall at the earliest provide VM with the entire list & contact details (including addresses & Telephone numbers) of customers of RPC who have booked modular kitchens. Without prejudice to the obligation of RPC contained in Clause 11 hereunder, VM shall have the right (but not the obligation), exercisable at VM‟s sole discretion, to collect the entire kitchen price from RPC customers on RPC‟s behalf and RPC hereby fully authorizes VM to do so."
(emphasis supplied)
25. He further stated that despite the defendants having put the plaintiff to notice, by specifically raising this ground in the Appeal before the Division Bench, being FAO(OS) 244/2017, the plaintiff had gone ahead with the sale of the Modular Kitchens/materials.
26. Learned counsel for the defendants alternatively stated that even if Clause 5 was taken to be the basis for making a claim for liquidated damages, the plaintiff had not made any pleading that it had suffered any CS (COMM) 760/2017 Page 11 of 22 loss and damages. He contended that without such a pleading, it was legally impermissible for the plaintiff to prove any loss or damages, as evidence cannot go beyond the pleadings.
27. Learned counsel for the defendants stated that the plaintiff had to prove that it had incurred the cost of 133 kitchens in the form of raw material procurement, failing which it would be entitled to the profit element it would have had under the Second Agreement only and not the entire selling price because that would result in double recovery of amount for the plaintiff. As a matter of illustration, he stated that if the selling price of the kitchen is Rs. 100/- and the cost of importing these kitchens was Rs.60/-, the plaintiff if able to prove that it had incurred the cost of importing the kitchens would be able to recover the entire selling price that is Rs. 100/- for it to make the contractual profit of Rs. 40/-. However, if the plaintiff were to be unable to show that it had incurred the cost of importing these kitchens/cost of raw material, it would only be entitled to claim the profit element of Rs. 40/-. He stated that awarding Rs. 100/- to the plaintiff would result in placing it in a better position than if the contract had been performed.
28. In view of the aforesaid illustration, learned counsel for the defendants stated that in the present case that the plaintiff had to prove that it had incurred the cost for the kitchens.
29. Learned counsel for the defendants submitted that under Section 74 of the Indian Contract Act, 1872, a claim for liquidated damages cannot be adjudicated in a summary manner. In support of his submission, he relied on Kailash Nath Associates vs. Delhi Development Authority (2015) 4 SCC 136 wherein it has been held that a party must prove actual damage and loss in accordance with the general principles of damages under Section 73 of CS (COMM) 760/2017 Page 12 of 22 the Indian Contract Act, 1872, even when there is a claim for liquidated damages under Section 74 of the Indian Contract Act, 1872. He further submitted that Kailash Nath Associates (supra) over-ruled the judgments of ONGC vs. Saw Pipes, AIR 2003 SC 2629, Maula Bux vs. Union of India, AIR 1970 SC 1955 and Fateh Chand vs. Balkishan Das, AIR 1963 SC 1405.
30. Learned counsel for the defendants lastly stated that the plaintiff had a duty of timely mitigation of loss which it had failed to discharge. He contended that the application for auctioning of the Modular Kitchens had been filed belatedly, on 30th November, 2015, i.e., one and a half years after filing of the present suit on 28th May, 2015.
COURT‟S REASONING THE BASIS FOR SEEKING SUMMARY JUDGMENT AS WELL AS JUDGMENT ON ADMISSION IS THE SAME THAT THERE IS NO TRIABLE ISSUE WHICH ARISES FOR CONSIDERATION, THE DEFENCE RAISED BY THE DEFENDANTS IS A MOONSHINE AND A SHAM AND THERE IS NO OTHER COMPELLING REASON WHY THE CLAIM SHOULD NOT BE DISPOSED OF BEFORE RECORDING OF ORAL EVIDENCE.
31. Having heard learned counsel for the parties, this Court is of the opinion that it is essential to first outline the scope and intent of Order XII Rule 6 CPC and Order XIII-A of the Commercial Courts Act, 2015.
32. The Commercial Courts Act, 2015, has been enacted with the intent to amend the CPC so as to improve the efficiency and reduce delays in disposal of the commercial cases.
33. Rule 3 of Order XIII-A empowers the Court to give a summary judgment against a defendant on a claim if it considers that it has no real prospect of succeeding or successfully defending the claim, and there is no other compelling reason why the claim should not be disposed of before CS (COMM) 760/2017 Page 13 of 22 recording of oral evidence (See: Bright Enterprises Private Limited & Anr. vs. MJ Bizcraft LLP & Anr., 2017 SCC OnLine Del 6394).
34. Order XII Rule 6 CPC empowers this Court to speedily pronounce judgment in a suit at any stage on the basis of admission of facts which have been made either in the pleadings or otherwise. The Apex Court in Uttam Singh Duggal & Co. Ltd. vs. United Bank of India &Ors., (2000) 7 SCC 120 has held as under:-
"12. .....The object of the Rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled". We should not unduly narrow down the meaning of this Rule as the object is to enable a party to obtain speedy judgment. Where the other party has made a plain admission entitling the former to succeed, it should apply and also wherever there is a clear admission of facts in the face of which it is impossible for the party making such admission to succeed."
(emphasis supplied)
35. The Supreme Court in Karam Kapahi & Ors. vs. Lal Chand Public Charitable Trust & Anr., (2010) 4 SCC 753 has held that the principle behind Order XII Rule 6 is to give the plaintiff a right to speedy judgment. Under this Rule either party may get rid of so much of the rival claims about 'which there is no controversy'. The relevant portion of the said judgment is reproduced hereinbelow:-
37. The principles behind Order 12 Rule 6 are to give the plaintiff a right to speedy judgment. Under this Rule either party may get rid of so much of the rival claims about "which there is no controversy" (see the dictum of Lord Jessel, the Master of Rolls, in Thorp v. Holdsworth [(1876) 3 Ch D 637] in Chancery Division at p. 640).
xxx xxx xxx CS (COMM) 760/2017 Page 14 of 22
40. If the provision of Order 12 Rule 1 is compared with Order 12 Rule 6, it becomes clear that the provision of Order 12 Rule 6 is wider inasmuch as the provision of Order 12 Rule 1 is limited to admission by "pleading or otherwise in writing" but in Order 12 Rule 6 the expression "or otherwise" is much wider in view of the words used therein, namely: "admission of fact ... either in the pleading or otherwise, whether orally or in writing".
(emphasis supplied)
36. Consequently, broadly speaking, the basis for seeking summary judgment as well as judgment on admission is the same i.e. that there is no triable issue which arises for consideration, there are reasons for allowing the claim without oral evidence and the defence raised by the defendants is a moonshine and a sham.
THERE IS BREACH ON THE PART OF THE DEFENDANTS AND THERE IS NO FAULT ON THE PART OF THE PLAINTIFF ADMITTEDLY
37. In the present case, the admitted position is that there is breach on the part of the defendants and there is no fault on the part of the plaintiff. This would be apparent from the following facts:
a. The Second Agreement is unequivocally admitted by the defendants.
b. Under Clause 2 of the Second Agreement, it has been admitted by both the parties that the plaintiff had imported the Modular Kitchens exclusively for the defendants, in accordance with the defendants' specific orders, drawing and size of the apartments.
c. Under the Second Agreement the defendants had to make all the apartments ready and available to the plaintiff for installation of the 'Modular Kitchens' by 15th February, 2015.CS (COMM) 760/2017 Page 15 of 22
Admittedly, the defendants failed to make the said apartments ready within the aforesaid stipulated time. d. Under Clause 5 of the Second Agreement it had been agreed between the parties that if the defendants failed to make the apartments ready for installation of the Modular Kitchens by 15th February, 2015, the defendants would pay the plaintiff the admitted base price of 2012 of Modular Kitchens of Rs.2,47,65,000/- (Rupees Two Crores Forty Seven Lacs Sixty Five Thousand Only) minus the price of the kitchens already installed and the unadjusted portion of the security deposit. e. The defendants in their written statement have not made any categorical or specific denial of the plaintiff's claim. The defendants have not filed any document to deny the claim of the plaintiff.
f. The defendants have not pleaded or made out a case of frustration and/or for the agreement to be declared void on account of being an agreement to do an impossible act under Section 56 of the Indian Contract Act, 1872. g. Defences regarding environmental issues, shortage of material as well as labour pre-date the Second Agreement and therefore cannot be put forward as a defence to its non-performance, besides being vague and bald pleas without any supporting document. Further, even if these factual assertions are accepted, there is no force majeure clause in the contract between the parties which would entitle the defendants in law to take any of these defences with regard to delay in the completion of their Construction Project.CS (COMM) 760/2017 Page 16 of 22
38. Consequently, the breach of the contract by the defendants and the loss of Rs.2,47,65,000/- (Rupees Two Crores Forty Seven Lacs Sixty Five Thousand Only) caused to the plaintiff are admitted facts.
SALE IN A PUBLIC AUCTION DOES NOT RENDER THE PERFORMANCE OF CLAUSE 5 OF THE SECOND AGREEMENT IMPOSSIBLE AS THE DEFENDANTS ELECTED TO WAIVE THEIR RIGHT TO PURCHASE THE MODULAR KITCHENS. THE DEFENDANTS COULD NOT INFACT HAVE TAKEN DELIVERY OF THE MODULAR KITCHENS AS ADMITTEDLY THEIR APARTMENTS WERE NOT READY
39. This Court is further of the view, that even if Clause 5 of the Second Agreement contemplated reciprocal obligations on both parties, the sale of the Modular Kitchens in a public auction does not render the performance of Clause 5 of the Second Agreement infructuous/impossible as the defendants elected to waive their right to purchase the Modular Kitchens. When the plaintiff filed an application for sale of the kitchens, the defendants never offered to purchase the same or take delivery of the same from the plaintiff. If the defendants were willing to take delivery of the kitchens, they ought to have made an application or offered to take delivery when the auction was ordered by the Court, but the defendants failed to do so.
40. In fact, in the opinion of this Court, the defendants could not have taken delivery of the Modular Kitchens as their apartments were not ready for installation of the Modular Kitchens admittedly.
RELIANCE BY THE DEFENDANTS ON A GROUND IN THEIR APPEAL MEMO IS COMPLETELY MISPLACED AS THE APPEAL OF THE DEFENDANTS WAS DISPOSED OF BY RECORDING THE CONSENT OF THE DEFENDANTS FOR SALE OF THE KITCHENS
41. Further, the appeal of the defendants was disposed of by recording the consent of the defendants for sale of the kitchens. The Division Bench in its CS (COMM) 760/2017 Page 17 of 22 order dated 22nd August, 2017 has recorded "It is submitted by Mr. Dwivedi that so far as the proposal of the respondent to sell the goods by a public auction is concerned, the appellant would have no objection". Consequently, reliance by the defendants on the ground in their appeal memo is completely misplaced.
THE JUDGMENT IN KAILASH NATH CANNOT AND DOES NOT OVERRULE THE LAW LAID DOWN BY COORDINATE OR LARGER BENCHES IN ONGC VS. SAW PIPES (SUPRA), MAULA BUX VS. UNION OF INDIA (SUPRA), AND FATEH CHAND VS. BALKISHAN DAS (SUPRA). FURTHER, NONE OF THESE FOUR JUDGMENTS ARE IN THE CONTEXT OF SUMMARY JUDGMENT UNDER ORDER XII RULE 6 AND ORDER XIII-A
42. The judgment in Kailash Nath (supra) having been rendered by a Bench of two Judges of the Apex Court cannot and does not overrule the law laid down by Coordinate or Larger Benches in ONGC vs. Saw Pipes, AIR 2003 SC 2629, Maula Bux vs. Union of India, AIR 1970 SC 1955 and Fateh Chand vs. Balkishan Das, AIR 1963 SC 1405. In fact, in Kailash Nath (supra), it has been held as under:-
"43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:
xxx xxx xxx 43.6. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded."
CS (COMM) 760/2017 Page 18 of 2243. In the opinion of this Court, all the four cases have to be read harmoniously and having done so, it simply means that Section 74 cannot be used as an opportunity to get a windfall gain, when no loss has been caused.
44. Further, none of these four judgments are in the context of summary judgment under Order XII Rule 6 and Order XIII-A CPC, as amended by the Commercial Courts Act, 2015.
45. In the present case, the determination of precise quantum of loss is difficult and that is why there is a clause for a reasonable pre-estimate of costs. In fact, Clauses 2, 3 and 5 provide for admitted cost price and not damages or loss of profit or penalty.
THE PLAINTIFF DOES NOT HAVE TO PROVE THE BASE PRICE OF 2012 OF MODULAR KITCHENS AS THE SAID PRICE HAD BEEN ADMITTED BY THE DEFENDANTS IN THE SECOND AGREEMENT
46. This Court is also of the opinion that the plaintiff does not have to prove the base price of 2012 of Modular Kitchens as the said price had been admitted by the defendants in both the First and Second Agreements. The relevant portion of Clause 7 of the First Agreement and Clauses 2 and 5 as well as Schedule I of Second Agreement are reproduced hereinbelow:-
" Clause 7 of the First Agreement:-
"7.That the parties hereto have agreed the price for „Modular Kitchens‟ of two type offered by „VM‟ i.e. Model Modern - Rs.1,25,000/- + Tax applicable and additional "Hob, Chimney Hood Type, Double Bowl Sink (in place of Single Bowl Sink) & Faucet" at a cost of Rs.25,000/- + applicable tax AND Model Classic - Rs.1,75,000/- + Tax applicable and additional "Chimney Hood Type, Pipe Chimney Covil, Hob, Microwave 20L & Faucets" at a cost of Rs.40,000/- + applicable tax as per the enclosed Performa Annexure I and IA valid upto 31 st December, 2013."CS (COMM) 760/2017 Page 19 of 22
Clauses 2 and 5 as well as Schedule I of Second Agreement:-
2. That under the Previous Agreement RPC has confirmed the order booking of 133 kitchens from its customers and the initial price calculation of such kitchens is set out in Schedule I attached hereto and forming part of this Agreement....The parties further acknowledge & agree that VM imported the Modern & Classic Model Kitchens exclusively for RPC customers as per their specific orders and as per the drawing and size of the apartments being constructed by RPC. Therefore RPC hereby agrees that it shall pay to VM a sum of Rs.42,40,750/- as price escalation of the 73 modular kitchen as per the details set out in Schedule II attached hereto & forming part of this Agreement. The payment of aforesaid sum of Rs.42,40,750/- is being made in terms of Clause 1(c) hereinabove.
5. ...in the event RPC does not ready all the apartments for installation of modular kitchens by 15th February, 2015, then RPC shall pay to VM forthwith at total sum of Rs.2,47,65,000/-....
Schedule I CALCULATION FOR KITCHENS BOOKED BY CUSTOMERS OF RPC AT OLD RATES A. Wooden Part Classic -87 Kitchens x Rs.1,75,000 = Rs.1,52,25,000/- Modern- 46 Kitchens x Rs.1,25,000 = Rs.57,50,000/- B. Accessories Classic-71 Kitchens x Rs.40,000 = Rs.28,40,000/- Modern-38 Kitchens x Rs.25,000 = Rs.9,50,000/-
TOTAL = Rs.2,47,65000/-"
(emphasis supplied)
47. Since the defendants have admitted the execution of the aforesaid agreements, they have also admitted the cost price of the kitchens. It is pertinent to mention that the defendants themselves had paid Rs.2,53,125/- to the plaintiff for a sample kitchen installed by it. The said fact has been CS (COMM) 760/2017 Page 20 of 22 recorded in Clause 1(b) of the Second Agreement executed between the parties.
48. Consequently, as the plaintiff in the present suit is only seeking recovery of admitted costs of 2012 of the Modular Kitchens without any element of profit and/or penalty or damages, this Court is of the view that there is no triable issue which arises for consideration, the defences raised by the defendants are moonshine and sham and there is no compelling reason why the claim should not be disposed of before recording of oral evidence. Accordingly, the plaintiff is entitled to a summary judgment without a trial.
RELIEF
49. In view of the above findings, the present applications are allowed and the plaintiff is held entitled to:-
A) Rs.2,47,65,000/- (Rupees Two Crores Forty Seven Lacs Sixty Five Thousand Only) as per Clause 5, minus the amounts which have already been received by it as per details given below:-
i) Rs.29,06,125/- (Rupees Twenty Nine Lacs Six Thousand One Hundred Twenty Five Only) security deposit received in terms of Clause 1(d);
ii) Rs.32,00,000/- (Rupees Thirty Two Lacs Only) received from sale of kitchen as per Court order;
iii) Rs.17,65,000/- (Rupees Seventeen Lacs Sixty Five Thousand Only) received from the defendants directly in accordance with the agreement (which defendants claim to have collected as advances from customers and the plaintiff never dealt with any customers directly in any manner whatsoever);CS (COMM) 760/2017 Page 21 of 22
50. Consequently, the plaintiff is held entitled to a decree of Rs.1,68,93,875/- (One Crore Sixty Eight Lacs Ninety Three Thousand Eight Hundred Seventy Five Only) along with interest @ 7% per annum from 15th February, 2015 till its realization along with actual costs. This Court may mention that it is awarding pre-suit, pendent lite and post-suit interest at 7% per annum as that is the normal rate at which the banks are lending monies now-a-days. The costs shall amongst others include lawyers' fees as well as the amounts spent on purchasing the Court fees. The plaintiff is given liberty to file on record the exact cost incurred by them in adjudication of the present suit, if not already filed. Registry is directed to prepare a decree sheet for Rs.1,68,93,875/- along with interest @ 7% per annum from 15th February, 2015 till its realization along with actual costs. With the aforesaid observations, present suit and pending applications stand disposed of.
MANMOHAN, J MARCH 26, 2019 rn/js CS (COMM) 760/2017 Page 22 of 22