Delhi District Court
Tata Steel Ltd vs M/S Shakti Bearings on 24 January, 2013
1
IN THE COURT OF DIG VINAY SINGH
ADDITIONAL DISTRICT JUDGE, (CENTRAL) 04, THC, DELHI
Date of institution : 20.02.1989
Judgment reserved on : 09.01.2013
Judgment delivered on : 24.01.2013
CS No.83/08/89 Unique Case ID No. 02404C0129872006
Tata Steel Ltd.
having its registered and Head Office at 24,
Homi Mody Street, Fort,
Mumbai-400 023 and its Zonal Office
at 5, Parliament Street, Jeevan Tara Building,
1st Floor, New Delhi. .... Plaintiff.
Versus
1. M/s Shakti Bearings,
633/3-4, Hamilton Road,
Kashmere Gate,
Delhi-110 006.
2. Mr. Ramesh Kumar,
Partner of Shakti Bearings,
633/3-4, Hamilton Road,
Delhi-110 006. ... Defendants.
JUDGMENT
1. This is a suit for recovery of Rs.8,19,369.08. The defendant No.1 was a partnership firm at the relevant time, of which the defendant No.2 was a partner. Suit was filed under Order 37 of CPC, on 20.02.1989. The defendants were granted leave to defend the suit, vide order dated 17.07.2001, passed by Hon'ble Delhi High Court, as at that time the suit was pending there and it came to be transferred to the District Courts upon enhancement of pecuniary jurisdiction.
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22. Plaintiff is a public limited company. It acquired one 'Ball Bearings' Unit/Factory from a Company namely Metal Box (India) Ltd., on 01.10.1983. In this regard a memorandum of understanding and agreement dated 29.08.1983 was executed between the two companies.
3. It is claimed by the plaintiff that the defendants were carrying on business as Dealers in all kinds of Ball Bearings, Tapered Roller, Thrust Machinery and Tractor Bearings etc. The defendants had been placing orders on the plaintiff for supply of Bearings, which the plaintiff had supplied to the defendants from time to time. Along with the supply of goods, invoice; delivery note cum challan and; original L/R were also sent to the defendants. As per books of accounts maintained by the plaintiff, a sum of Rs.5,76,445.11 was due against the defendants as on 11.11.1986, in respect of the price of 'Bearings' supplied to the defendants. The defendants issued seven cheques to the plaintiff, as per details mentioned in Para 14 of the plaint, on different dates, but all those cheques were returned dis-honoured. Despite intimation as to non-payment, the defendants did not pay the outstanding amount. Plaintiff has calculated interest @ 18% per annum from the date of Bills. The interest component calculated by the plaintiff comes to Rs. 2,42,923.97, which when added in the principal amount of Rs. 5,76,445.11 makes the suit amount of Rs.8,19,369.08. The plaint has been signed, verified and filed by Sh. A.K. Badhuri, who claimed himself to be a Principal Officer of the plaintiff, and a duly constituted attorney.
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34. The two defendants contested the suit claiming that there was no legal and valid authorization on behalf of the plaintiff company to institute the suit. No resolution was passed by the Board of Director therefore, the suit is not properly instituted. The defendants do not deny receipt of goods from the plaintiff company. Receipt of goods is rather admitted by the defendants. Even the issuance of cheques is not denied by the defendants. Instead it is claimed that the cheques were issued in blank and only as security. The claim of defendants is that the plaintiff company was in a very bad state in 1985-86 as goods had accumulated and they were not being purchased by the distributors/customers. The plaintiff company then started forcing the dealers to take delivery of the goods. They were forced upon the defendants as well. The defendants had not given any orders for supply of goods to the plaintiff. Instead, the goods, which were slow moving goods and the delivery of which was not being taken by the distributors/customers, were dumped on the defendants. The goods supplied were not in proper 'crates'. Blank cheques were taken by the plaintiff on the agreement that the cheques will not be filled up and encashed till the time losses to be suffered by the defendants on account of dumping of goods were compensated. It is claimed by the defendants that they suffered losses because of dumping of goods. The plaintiff had allegedly written letters dated 31.03.1986 and 10.11.1986, agreeing to compensate the loss suffered by the defendants due to alleged dumping of goods. Defendants claim that all the cheques in question in the suit were against the goods dumped by the plaintiff. It is claimed that to cover up the losses of defendants the plaintiff had agreed to supply 'Bearings' to the defendants which were CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 3 of 31 h.l.
4not supplied and nothing was done by the plaintiff to compensate the loss, therefore, no amount was due.
5. Defendants also claim that had the plaintiff supplied the promised goods to compensate the loss, the defendants would have earned profits to the tune of Rs.2,44,576/- and Rs.3,16,062/- during the years 1986-87 and 1987-88, which would have wiped out the due amount.
6. It is also claimed that goods were supplied without proper cartons and sometimes cartons were not at all supplied. Plaintiff promised to supply those cartons but did not supply them, because of which the defendants suffered losses to the tune of Rs.70,000/- for which the plaintiff was liable to pay.
7. It is also claimed that under the policy of the plaintiff company, performance incentive was to be given to the defendants, which was not paid, and an amount of Rs.60,000/- on that account also was to be recovered from the plaintiff by the defendants.
8. It is also claimed that the defendants had agreed to purchase 1050 Nos. of Bearings with specification No. 6303 under invoice No. D-727 dated 11.02.1986 for a sum of Rs.26,734.05. The said amount was paid to the plaintiff by the defendants, but since no such goods were supplied, therefore, the defendants were entitled to receive this amount also from the plaintiff.
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59. Defendants claim that after setting off all these amounts, nothing remains due. Suit is claimed to be false.
10. In replication the plaintiff reiterated the averments of the plaint while denying the averments of the written statement. It is claimed by the plaintiff that goods were supplied to the defendants on the basis of various orders placed by them upon the plaintiff. So far as performance incentives is concerned it was payable to the distributors who sells maximum quantity of products and who makes timely payments, for which the defendants were not entitled. Plaintiff denied that any goods were forced upon the defendants.
11. From the pleadings of parties following issues were framed on 28.01.2004.
1 Whether the plaint has been signed, verified and instituted by duly authorized person? OPP.
2 Whether the plaintiff had supplied the goods in question to the defendants on orders placed by the defendants?OPP.
3 Whether the defendants were compelled to purchase and delivery of the goods as claimed in preliminary objection No.5 in the WS? OPD.
4 Whether it was agreed between the parties that the plaintiff will compensate the defendants for any loss suffered by the defendants for non-supply of goods?OPD CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 5 of 31 h.l.
65 Whether the defendants suffered loss of Rs.70,000/- for the goods not packed in proper cartons as stated in para-7(b) of the WS? OPD 6 Whether the defendants have suffered loss to the tune of Rs. 60,000/- as performance incentives for the goods alleged to be taken by the defendants as claimed in para-7(c) of the WS?OPD 7 Whether the defendants had paid a sum of Rs.26,734.05 to the plaintiff as claimed in para-7(d) of the WS and no goods in that regard was supplied by the plaintiff to the defendants?OPD.
8 Whether the cheques mentioned in para-14 of the plaint were issued by the defendants in blank as alleged in the WS, if so, to what effect? OPP 9 Whether the plaintiff is entitled to recover the suit amount from the defendants? OPP.
10 Whether the plaintiff is entitled to interest, if so at what rate and for what amount?OPP.
11 Relief.
12. In support of its case the plaintiff examined Sh. Ravinder Kumar Verma, the Chief Manager (Sales) of the company as PW-1 and Sh. K. S. V. Satya Narayana as PW-2.
13. On the other hand the defendants examined the defendant No.2 as the only witness as DW-1.
14. The testimony of PW-1 Ravinder Kumar Verma is in lines to the averments contained in the plaint and replication. This witness exhibited various documents i.e. Certificate of incorporation of plaintiff CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 6 of 31 h.l.
7company as Ex.PW-1/1; Power of Attorney executed in favour of Sh. A. K. Bhaduri, who signed and instituted the suit, as Ex.PW-1/2; Power of Attorney in favour of PW-1 Ravinder K. Verma as Ex.PW-1/2A; the seven invoices through which goods were supplied as Ex.PW-1/4 to 1/9A, respectively; photocopies of seven cheques as Ex.PW-1/10 to 1/15A, respectively; photocopies of the three cheque returning memos as Ex.PW-1/16, 17 and 18; photocopy of legal notice dated 30.11.1987 and its postal receipt as Ex.PW-1/22 and 23, respectively.
15. It would be pertinent to mention here that in the affidavit of this witness, the documents PW-1/10 to 1/23, were shown as CW-1/10 to CW-1/23, but it was clarified in the examination-in-chief dated 05.11.2007 that the documents will be read as PW and not CWs. It is also necessary to mention here that the documents shown as Ex.PW-1/3, Ex.PW-1/19 to Ex.PW-1/21, Ex.PW-1/24 and Ex.PW-1/25 in the affidavit of this witness were not on record, therefore, they were not so marked.
16. PW-2 Sh. K.S.V. Satya Narayana deposed that the plaintiff company had executed a power of attorney Ex.PW-2/1 in favour of Mr. Alok Prasad on 11.05.2001 and there was a resolution in his favour dated 23.04.2001, true copy of which was exhibited as Ex.PW-2/2.
17. On the other hand the defendant No.2, as DW-1, also deposed in lines to the averments in written statement. This witness exhibited documents Ex.D-1 & Ex.D-2, i.e. letters dated 11.05.1986 & 11.07.1986 sent through postal receipts Ex.D-3 & Ex.D-4. The witness CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 7 of 31 h.l.
8also proved the document Ex.DW-1/A, which is a handwritten document dated 24.06.1985 written by someone instructing to allow certain Bearings out of go-down. This witness also exhibited invoices as Ex.D-7 to Ex.D-17. (Ex.D-7 to D-11 are Ex.PW-1/10, Ex.PW-1/11, Ex.PW-1/14, Ex.PW-1/D-13 and Ex.PW-1/D16 respectively, Ex. D-12 & D-13 were not on record, Ex.D-14 to Ex.D-17 are Ex.PW-1/4, Ex.PW-1/7, Ex.PW-1/9 and Ex.PW-1/8, respectively.)
18. Certain admissions made by the defendants in their evidence are important to be noted here. DW 1 admitted that the defendant no. 1 was an authorized stockist of the plaintiff in respect of Bearings marketed by the plaintiff, as per the certificates Ex.PW-1/D8 and D9. He admitted that the business relationship with the plaintiff started in the year 1985-86, when the plaintiff took over the company M/s Metal Box Limited, with whom the defendants were having business relationship since 1983. He admitted that the agreement was initially executed between the defendants and M/s Metal Box Ltd. and the same continued with the plaintiff. Admittedly the said agreement was of dealership in relation to the Bearings. The witness admitted that material was purchased from M/s Metal Box Ltd. and subsequently from the plaintiff also in pursuance of the said agreement of dealership. He admitted that the defendants never returned any material to the plaintiff company so purchased from the plaintiff. The witness admitted that the material which was sent by the plaintiff to the defendants used to be accompanied with the invoices. He specifically admitted that the defendants received the material from the plaintiff between 31.03.1986 to 11.11.1986 against invoices. The witness also admitted that the CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 8 of 31 h.l.
9defendants used to maintain records relating to the materials purchased by the defendants and sometime even the stock register used to be maintained; sometimes even the accounts was being maintained and the material received from the plaintiff used to be entered in the books kept by the defendants. The witness admitted that no such stock register, account book etc. have been filed or proved by the defendants. Admittedly no receipts, showing cash payment to the plaintiff have been filed on record. Admittedly no books of accounts have been filed by the defendants on record. When the witness was questioned as to whether he can produce those books of accounts, sales tax records or income tax records, the witness stated that they were destroyed since the firm was dissolved. The defendant No.1 firm was dissolved in the year 1998. The present suit is pending since 1989. Despite that fact neither were the records filed by the defendants nor they were preserved, particularly when the defendants knew pendency of this litigation.
19. The issue wise findings are as follows:
Issue No.1 Whether the plaint has been signed, verified and instituted by duly authorized person? OPP.
20. The defendants laid much stress on the point that the suit has not been signed, verified and instituted by a duly authorized person. The defendants relied upon the cases of; Lucas Indian Services Ltd. Vs. CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 9 of 31 h.l.
10Sanjay Kumar Aggarwal, 173 (2010) DLT 438; State Bank of Travancore Vs. Kingston Computers (I) Pvt. Ltd. II(2011) CLT 164 (SC); J. Yashoda Vs. Shobha Rani, II(2007)CLT 490(SC); State Bank of Travancore Vs. Kingston Computers, II (2011) CLT (164) SC and; Bharat Aluminium Company Vs Maharashtra Aluminium Corporation, 159 (2009) DLT 489.
21. As against this the plaintiff has relied upon following authorities:
United Bank of India Vs. Naresh Kumar & Ors. (1996) 6 SCC 660; Anil Kumar Marwah Vs. Deepak Sunder & Ors., 2007 (98) DRJ 443; M/s Praja Mechanicals Pvt. Ltd. Vs. M/s Vardaan Agrotech, 186 (2012) DLT 415; Indian Bank Vs. Gawri Construction Udyog Ltd. & Ors., 2011 (126) DRJ 569; Bhanu Pratap Mehra Vs. Brij Leasing (P) Ltd. & Ors., 2011 (4) ADJ 125; Delhi State Industrial Development Corporation Ltd. Vs. J.K. Synthetics (2011) 3 Comp LJ7 12 (DEL); United India Insurance Co. Ltd. and Anr. Vs. Okara Trade Parcel Carriage, RFA NO.160/1991, Decided on 07.12.2010; Mahanagar Telephone Nigam Ltd. Vs. Bharat Bhushan Sharma, RFA NO. 343/2001, Decided on 06.12.2010; Harjit Kaur Dhingra Vs. Pan American World Airways and Anr. CS (OS) No.3457 of 1992, decided on 06.08.2010; Bhushan Steel and Strips Vs. Bhartiya Loha Udyog, 167 (2010) DLT 237; Bharat Aluminium Co Ltd. Vs. Maharashtra Aluminium Corporation, 159 (2009) DLT 489; Indian Oil Corporation Ltd. Vs. Union of India (UOI) and Ors., 140 (2007) DLT 571; Kingston Computers (I) P. Ltd. Vs. State Bank of Travancore, (2009) 153PLR 18; United Bank of India CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 10 of 31 h.l.11
Vs. Naresh Kumar, AIR 1997 SC 3 and; Oriental Bank of Commerce Vs. S.R. Kishore, AIR 1992 Delhi 174.
22. The precedents relied upon by the defendants does not help their case for the reason that already in this very suit, Hon'ble Delhi High Court in its order dated 17.01.2001 has rejected the contention of the defendants that the suit was not signed, verified or instituted by a duly authorized person. In the said order it was held as follows:
"I am afraid the very reference of the word 'commence' itself embraces in its fold the word 'institution' vis-a-vis suits. It is the intention which is paramount. It is not the requirement of law to mechanically reproduce the terminology or language of the section or stature. The sense a particular word or phraseology conveys is material and decisive. The power to the attorney to commence any suit and other proceedings itself means and includes instituting a suit or proceedings. Had it not be so, there was no need for further empowering him to sign and verify and present the plaint as is referred in clause itself. Similarly to say that Mr. Gupta has not legally and validly delegated his powers to Mr. Bhaduri is not correct as the power of attorney executed by Mr. Gupta in favour of Mr. Bhaduri clearly stipulates this.
Again the contention that the power to institute the suit was not allowed by the Vice President vide letter dated 10.06.1987 which only authorized Mr. Gupta to delegate powers to Mr. A.K. Bhaduri to take legal action in various Courts/Tribunals and Quasi-Judicial Authorities/Judicial Authorities in India hold water like a sieve.
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Power to take any legal action by way of delegation of powers is of wide amplitude particularly when looked into the context of Power of attorney executed in favour of Mr. Gupta and it cannot be said that Mr. Gupta was not authorized to delegate powers to Mr. Badhuri for taking legal action. It in my opinion, included institution, signing and verifying the suit. The intention and meaning conveyed is delegation of all the powers vested in Mr. Gupta to Mr. Bhaduri. Contention is a feeble attempt to whittle down the import of the delegated powers."
23. The plaintiff company is a public limited company and not a private limited company. In a public limited company public shares also form an important part. Thus public money is invested in it. Effort of defendants to distinguish the case of United bank of India Vs. Naresh (Supra), decided by Hon'ble Supreme Court, does not hold water on this ground.
24. Also in the plaint, Sh. A.K. Bhaduri was claimed to be a Principal officer. Even in the affidavit in Evidence of PW-1 it is specifically deposed that Sh. A.K. Bhaduri was the Principal officer of the plaintiff company. Despite the said specific deposition of PW-1, during cross- examination of PW-1 not even a single suggestion was put to this witness to the effect that Sh. A.K. Bhaduri was not the principal officer of the plaintiff company. Thereby meaning that this part of deposition of the plaintiff company remained uncontroverted and therefore, admitted. PW-1 was himself Chief Manager (Sales) and he entered into the witness box duly supporting the case of plaintiff.
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1325. Hon'ble Delhi High Court in the case of United India Insurance Co.
Ltd. Vs. Okara Trade Parcel Carriage, RFA No.160/1991, decided on 07.12.2010, held that a General Manager of a Company is indeed a Principal Officer within the meaning of Order 29 Rule 1 of CPC. Similarly, Hon'ble Delhi High Court in the case of MTNL Vs. Bharat Bhushan Sharma, RFA NO. 343/2001 decided on 06.12.2010, held that an Accounts Officer (Legal) is also definitely a Principal Officer, within the meaning of Order 29 Rule 1 CPC and Section 2 (30) of the Companies Act, 1956.
26. In these two judgments Hon'ble Delhi High Court, referring to the case of United Bank of India Vs. Naresh Kumar (Supra), held that there is a presumption of valid institution of suit once the same is prosecuted for number of years.
27. In the present case also the suit has been prosecuted since 1989 till 2013 i.e. for last 24 years. When it has been held by Hon'ble Supreme Court and Hon'ble Delhi High Court that even a defective plaint can be ratified, which may even be through an implied ratification, I don't see any reason as to why the plaintiff should be non-suited on this technical ground of defect in institution of suit, if any.
28. Even otherwise, law is well settled that courts are meant for dispensing justice on merits of the case. Technicalities of procedural matters cannot be allowed to come in the way of substantial justice. It is not a case where the plaintiff company does not own up the act of institution CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 13 of 31 h.l.
14of suit and its prosecution including giving of evidence and other proceedings. Rather, till date the plaintiff company stands by all the proceedings done in the matter.
29. In the present case the plaintiff company has fought this case right from 1989 till date. The plaintiff company owns up the proceedings which have taken place. This fact alone is enough to conclude that the plaintiff company ratifies all the acts done by its officers, in filing of the plaint, replication, in participating in other proceedings in the suit including giving evidence. Hon'ble Supreme court in the case of United Bank of India Vs. Naresh Kumar, AIR 1997 SC 3, held that procedural defects cannot be allowed to go to the route of the matter and substantive rights cannot be allowed to be defeated on account of procedural irregularities which are curable. In such circumstances, it is held that the plaint is signed, verified and instituted by a duly authorized person on behalf of the plaintiff. In such circumstances, the issue against the defendants and in favour of the plaintiff.
30. Issue No.2 and 3 are taken up together being interconnected.
Issue No. 2 & 3Whether the plaintiff had supplied the goods in question to the defendants on orders placed by the defendants?OPP.
& Whether the defendants were compelled to purchase and delivery of the goods as claimed in preliminary objection No.5 in the WS? OPD.
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1531. In the testimony of PW-1, the seven invoices through which goods were supplied to the defendants were proved as Ex.PW-1/4 to 1/9A. Details of those invoices are as follows:
No. invoice No. Date Amount (Rs.)
1 D/840 31.3.86 92,444.65
2. D/841 31.3.86 1,00,000.00
3. D/997 23.6.86 44,838.42
4. D/998 22.7.86 66,561.45
5. D/1045 22.7.86 81,491.80
6. D/1020 10.7.86 1,09,584.39
7. D/1301 11.11.86 81,524.40
32. None of these seven invoices are denied by the defendants in the cross examination of PW-1. Not even a single suggestion was put to PW-1 that goods were not supplied to the defendants through these invoices for the corresponding amount mentioned therein. Instead in the cross-examination the defendant No.2, as DW-1 admitted that goods were supplied to the defendants through invoices between 31.03.1986 to 11.11.1986. In view of this categorical admission of the defendant No.2, it stands established beyond doubt that goods were received by the defendants under invoices Ex.PW-1/4 to 1/9A. Corresponding to these invoices seven cheques were issued by the defendants to the plaintiff as mentioned in examination in chief of PW-1 as follows:
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S. No. Cheque No. Date Amount (Rs.)
1 007787 28.3.1987 92,444.65
2. 007798 28.3.1987 81,491.80
3. 039265 28.3.1987 1,00,000.00
4. 007791 30.3.1987 44,838.42
5. 007790 30.3.1987 66,561.45
6. 007788 31.3.1987 1,14,144.00
7. 037246 31.3.1987 81,524.40
33. Though the plaintiff marked photocopies of these cheques as Ex.PW-1/10 to Ex.PW-1/15A, in its evidence and even though objection as to mode of their proof was taken by the defendants still the plaintiff did not take any step to prove these cheques. These cheques thus could not have been exhibited. However, even if we ignore these cheques as exhibited documents, still one thing is clear that the defendants have nowhere denied issuance of those cheques. In fact issuance of cheques is admitted by the defendants and, the stand of the defendants was that these cheques were issued in blank. Once signatures on these cheques are admitted by the defendants, the factum of issuance of these cheques stood admitted. A fact admitted need not be proved. Perusal of these cheques would show that all those cheques except the cheque No. 007788, were issued for the same amount for which the invoices Ex.PW-1/4 to 1/9A were issued.
The cheque No.,007788 is for a slightly higher amount than the corresponding invoice. It is not in dispute that all these cheques were dishonored, thus, payment against the corresponding invoices was not CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 16 of 31 h.l.
17made. The admissions made by the DW1, as mentioned above, prove that goods were purchased by the defendants from the plaintiff.
34. Much stress has been laid by the defendants on the point that goods were thrusted upon the defendants by the plaintiff. To prove this point the defendants relied upon Ex.PW-1/D1 & Ex.PW-1/D2, which are two letters dated 31.03.1986 and 10.11.1986. As per the defendants in these two letters the plaintiff agreed to make good the loss suffered by the defendants. It is claimed that until the plaintiff had supplied goods as mentioned in these letters to make good the loss, the plaintiff is not entitled for any payment.
35. These two letters do not record any admission by the plaintiff in favour of the defendants to the effect that the loss had occurred due to the plaintiff, for any reason whatsoever. These letters do not reflect that goods were thrusted upon the defendants. If the plaintiff as a goodwill gesture agreed to supply more goods to the defendants to enable the defendants to mitigate their loss, it does not mean that the payment against goods received by the defendants was subject to supply of those materials. In Ex.PW-1/D1, it is mentioned that the defendants suffered losses and the plaintiff would try to cover it by supply of Bearings. Similarly in Ex.PW-1/D2, it is mentioned that the losses incurred by the defendants was on account of their lifting slow moving Bearings. In the Ex.PW-1/D2, it is also mentioned that the cheques issued by the defendants pending with the plaintiff would be deposited along with the further supply of the Bearings. This fact alone does not disentitle the plaintiff to recover price of goods supplied. After all a CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 17 of 31 h.l.
18purchaser has to pay for the goods received by it. Thus, except bare allegations that the plaintiff company thrusted goods upon the defendants, nothing has been shown to the satisfaction of the Court that the plaintiff indulged into any such activity.
36. The documents relied upon by the defendants itself would show that the goods were purchased by the defendant and not thrusted upon them. The document Ex.D-1, which is a letter dated 11.05.1986 written by the defendant No.1 to the plaintiff, would show that the slow moving Bearings were lifted by the defendants. The first sentence of this letter reads; "You are well aware of the losses sustained by us on account of slow moving Bearing lifted by us........". The words, 'lifted by us' indicates that there was no forcible dumping or thrusting of goods by the plaintiff upon the defendants. Though in this very letter it is mentioned that the plaintiff had assured supply of further goods, which were not supplied, but as mentioned above the said act of the plaintiff at the most can be termed as a generous, kind or a goodwill gesture and nothing more.
37. Similarly Ex.D2, which a letter dated 11.07.1986 written by the defendant No.1 to the plaintiff does not go to prove that any goods were dumped by the plaintiff with the defendants or the goods were thrusted upon the defendants. In fact none of the other exhibited documents by the defendants goes to prove it. Thus, the defendants fail to prove that they were compelled to purchase goods from the plaintiff or that goods were forcibly delivered upon them.
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1938. Issue No.3 is accordingly decided against the defendants and in favour of the plaintiff. The issue No.2 is also decided against the defendants and in favour of the plaintiff to the effect that goods were supplied by the plaintiff to the defendants as per the orders placed by the defendants with the plaintiff.
ISSUE NO. 4.
Whether it was agreed between the parties that the plaintiff will compensate the defendants for any loss suffered by the defendants for non-supply of goods?OPD
39. Onus to prove this issue was upon the defendants and the defendants in order to prove this issue relied upon Ex.PW-1/D1 & D2, which I have already discussed above that these two letters dated 31.05.1986 and 10.11.1986 at the most record that the plaintiff will attempt to reduce/mitigate the losses suffered by the defendants, but these two letters nowhere indicates that the losses suffered by the defendants was on account of any act or omission or fault of the plaintiff. Though the plaintiff agreed to help out the defendants out of the loss situation, but it was at the most a kind, generous and goodwill gesture and nothing more. These letters nowhere record that further goods will be supplied to the defendants at concessional rate or free of cost. The defendants were bound to pay for the goods received by it, through invoices Ex.PW-1/4 to 1/9A. The defendants were bound to pay for the goods received by them, whether or not further supply was made. Thus, even if it is assumed that the plaintiff agreed to supply more CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 19 of 31 h.l.
20goods to the defendants and failed to supply it, the defendants cannot take a stand that they will not make payment until further goods are supplied.
40. At the most the said two letters reflect that the plaintiff stated that the plaintiff would try to compensate the loss of defendants by supplying more goods, but no discount was offered nor any monetary compensation was offered.
41. Though the defendants claimed that had the plaintiff supplied goods during the period April 1986 to March 1987 and April 1987 to March 1988, the defendants would have earned performance incentive as well as profits, no proof has been led by the defendants to show that they were entitled to any such incentive or that they met the eligibility criteria as required under documents Ex.PW-1/D1 & D2 or Ex.D/1 and Ex.D/2.
42. Issue no. 4 is also decided against the defendants and in favour of the plaintiff.
ISSUE NO. 5.
Whether the defendants suffered loss of Rs.70,000/- for the goods not packed in proper cartons as stated in para-7(b) of the WS? OPD
43. The defendants took a stand that it suffered losses to the tune of Rs.
70,000/- on account of non-packing of goods in the proper carton and in this regard the defendants exhibited invoices Ex.PW-1/D3 and Ex.PW-1/D4. On these two invoices there is an endorsement made at CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 20 of 31 h.l.
21point A in which it is mentioned that cartons would be supplied to the defendants in due course. Defendants claim that these cartons were not supplied, thus, causing loss of Rs.70,000/- to them. No basis as to on what price factor or any other criteria for arriving at the said amount, is put forth by the defendants. Both these invoices Ex.PW-1/D3 & D4, does not pertain to any of the seven invoices in question in the present suit. These invoices are separate and distinct, bearing invoice No.D1099 and D879. The amount of recovery involved in the present case is qua the price of seven invoices Ex.PW-1/4 to 1/9A.
44. The noting at point 'A' on Ex.PW-1/D3 & D4, are not proved by the defendants to the effect that it were made by the plaintiff's officers/employees. Though PW-1 admitted signatures of Mr. A.V. Lal on the invoices Ex.PW-1/D3 and D4, which also contains handwritten notes at point 'A', but, attention of this witness was not drawn specifically towards the signatures of the person who made noting at point 'A'. Signatures on the invoices, which exist at the bottom of invoices, were admitted. But attention of witness was not specifically drawn to the signatures under the noting. Thus, in fact the defendants cannot rely on these two noting in their favour.
45. Similarly, the small handwritten note Ex.PW-1/D5 is not proved to be in favour of the defendants. Ex.PW-1/D5, is a small handwritten instruction to give certain 'cases'. It is signed by someone on 11.02.1986. This document nowhere says that the 'cases/cartons' were to be given to the defendants.
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2246. Accordingly, the issue No.5 is also decided against the defendants and in favour of the plaintiff.
ISSUE NO. 6.
Whether the defendants have suffered loss to the tune of Rs.60,000/- as performance incentives for the goods alleged to be taken by the defendants as claimed in para-7(c) of the WS?OPD
47. Though in the written statement the defendants claimed that the loss suffered on account of non-payment of performance incentives by the plaintiff was to the tune of Rs.60,000/-, but in its evidence the DW-1, in paragraph No.34, restricted this amount to Rs.35,000/- only for the period ending 31.03.1986.
48. This claim of the defendant is denied by the plaintiff on the ground that the performance incentive was meant only for those retailers/distributors who are maximizing the sales of company products as also who were giving timely payment. Document Ex.PW-1/D6 relied upon by the defendants, which a letter dated 20.02.1986 reveals that it talks about performance incentive for the period 01.04.1986 to 31.03.1987. This performance incentive was conditional that there should be continuity in off take of the goods, which was an essential criteria for qualifying for claiming performance incentives. The goods supplied through the invoices Ex.PW-1/4 to 1/9A are between the period 31.03.1986 to 10.11.1986. When the defendants did not make payment of these invoices Ex.PW-1/4 to 1/9A and which is being contested till date i.e. for last 24 years, there is no CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 22 of 31 h.l.
23question of release of performance incentives. In any case besides making a bare averment that the defendants were entitled to the amount of Rs.35,000/- as incentive, the defendants have not proved anything to show that they were so entitled. Therefore the defendants cannot claim set off of Rs.35,000/-.
49. Accordingly issue No.6 is also decided against the defendants and in favour of the plaintiff.
Issue No. 7Whether the defendants had paid a sum of Rs.26,734.05 to the plaintiff as claimed in para-7(d) of the WS and no goods in that regard was supplied by the plaintiff to the defendants?OPD.
50. Onus to prove this issue was also on the defendants. In its evidence the defendants claimed that this amount of Rs.26,734/- was paid by the defendants to the plaintiff for supply of 350 nos. each of Bearings with specification Nos.6303. Defendants claim that these bearings were never supplied and therefore, this amount should be set off.
51. In order to prove this claim the defendants proved an invoice bearing no. D-727, Ex.PW-1/D12. Perusal of this document would reveal that this invoice is dated 11.02.1986 and under this invoice total 1050 no. of Bearings with specification No.6303 type of Bearings was ordered. The contents of this document does not reflect that 350 nos. of such Bearings were ordered instead 1050 nos. of such Bearings is shown to be ordered. Defendants claim that vide Ex.PW-1/D5, which is a CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 23 of 31 h.l.
24handwritten small slip, the plaintiff admitted that Bearings were not supplied.
52. As mentioned above, this document Ex.PW-1/D5 has not been proved by the defendants. PW-1 claimed that he had no knowledge about this note Ex.PW-1/D5. This document nowhere says that such number of Bearings were to be released in favour of either of the defendants. All that it records is that "please give 3 cases of 350nos. each. Total quantity 1050 nos. only". It does not contain name of the defendants that these things were to be supplied to the defendants. It does not contain name of anybody to whom the articles were to be supplied. It does not contain the relevant invoice number.
53. Not only this, the defendants did not prove payment of this amount of Rs.26,734/- to the plaintiff by any mode. If it was paid by cheque, the cheque or statement of bank account was not proved. If it was paid by cash, no receipt is proved.
54. In such circumstances, even issue No.7 has to be decided against the defendants.
Issue No. 8Whether the cheques mentioned in para-14 of the plaint were issued by the defendants in blank as alleged in the WS, if so, to what effect? OPP
55. Defendants claimed that the cheques in question were issued by the defendants to the plaintiff in blank and not for the specific amounts mentioned therein. Onus to prove this issue was also on the CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 24 of 31 h.l.
25defendants. It would be pertinent to mention here that it was the claim of defendants, therefore the defendants had to prove it, but it appears that by mistake in the issue No.8 instead of work 'OPD' (onus of proof on defendants) the word 'OPP' (onus of proof on plaintiff) was typed. The phraseology used in this issue is itself clear that onus was on the defendants and not on the plaintiff.
56. In his cross-examination, DW-1 claimed that plaintiff used to take blank cheques from the defendants, and in the year 1986, 2/3 cheques were taken by the plaintiff from the defendants in blank. But he did not remember, on which date or month the said cheques were taken. He admitted that there is no written document to prove that the cheques were taken in blank by the plaintiff. In the plaint the plaintiff gave details of those cheques in Para No.14. In the written statement corresponding to the Para No.14, the defendants simply claimed that these cheques were given in blank in 1985-86. There was no specific denial by the defendants to each of the cheques. Details of these cheques would reveal that the cheque numbers are not in continuity and they bear different numbers. It is not a case where few of the cheque nos. in continuity was issued, which could have given rise to an inference that the cheques were issued by the defendants to the plaintiff in blank.
57. Section 20 of the Negotiable Instruments Act, 1881, provides that where one person signs and delivers to another any negotiable instrument either wholly blank or incomplete, he thereby gives a prima facie authority to the holder thereof to make or complete the said negotiable instrument for any amount specified therein and thereupon CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 25 of 31 h.l.
26the person so signing shall be liable upon such instrument.
58. Thus, even if it is assumed that the defendants issued cheques in blank, the defendants gave authority to the plaintiff company to fill up those cheques against liability and claim the amount. This assumes importance particularly in view of the fact that the defendants in cross- examination of DW-1 admitted having received goods under the invoices in question. The amount of these cheques correspond to the payment due under invoices i.e. Ex.PW-1/4 to 1/9A, except one. Defendants have merely raised a bald plea that these cheques were not against any specific invoices but were given on account subject to supply of Bearings by the plaintiff and subject to honouring its commitments by the plaintiff. When the receipt of goods are admitted by the defendants in the cross-examination, nothing survives in the issue.
59. Defendants have not led any evidence to substantiate that the plaintiff company was in practice of taking blank cheques. Merely bald statements has been made to claim this point.
60. Accordingly, even the issue No.9 has to be decided against the defendants and in favour of the plaintiff.
Issue No. 9Whether the plaintiff is entitled to recover the suit amount from the defendants? OPP.
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2761. As mentioned above, DW-1 in its cross-examination made certain important admissions.
62. DW 1 admitted that the defendant no. 1 was an authorized stockist of the plaintiff in respect of Bearings marketed by the plaintiff, as per the certificates Ex.PW-1/D8 and D9, issued by the plaintiff. In the cross-examination he admitted that the business relationship with the plaintiff started in the year 1985-86, when the plaintiff took over the company M/s Metal Box Limited, with whom the defendants were having business relationship since 1983. He admitted that the agreement was initially executed between the defendants and M/s Metal Box Ltd. and the same continued with the plaintiff. Admittedly the said agreement was of dealership in relation to the Bearings. The witness admitted that material was purchased from M/s Metal Box Ltd. and subsequently from the plaintiff also in pursuance of the said agreement of dealership. He admitted that the defendants never returned any material to the plaintiff company so purchased from the plaintiff. The witness admitted that the material which was sent by the plaintiff to the defendants used to be accompanied with the invoices. He specifically admitted that the defendants received the material from the plaintiff between 31.03.1986 to 11.11.1986 against invoices. The witness also admitted that the defendants used to maintain records relating to the materials purchased by the defendants and sometime even the stock register used to be maintained; sometimes even the accounts was being maintained and the material received from the plaintiff used to be CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 27 of 31 h.l.
28entered in the books kept by the defendants. The witness admitted that no such stock register, account book etc. have been filed or proved by the defendants. Admittedly no receipts, showing cash payment to the plaintiff have been filed on record. Admittedly no books of accounts have been filed by the defendants on record. When the witness was questioned as to whether he can produce those books of accounts, sales tax records or income tax records, the witness stated that it were destroyed since the firm was dissolved. It is claimed that the defendant No.1 firm was dissolved in the year 1998. The present suit is pending since 1989. Despite that fact neither were the records filed by the defendants nor they were preserved, particularly when the defendants knew pendency of this litigation.
63. In view of those admissions it is clear that the defendants received goods from the defendants vide invoices Ex.PW-1/4 to 1/9A.
64. DW-1 even admitted that the material received from the plaintiff used to be sold in the market and the same used to be shown in their sales tax and income tax records. But no such sales tax or income tax records were proved by the defendants. Admittedly no goods were returned to the plaintiff by the defendants.
65. It would be relevant to mention here that in the affidavit in evidence of DW-1 in Para No.34, besides claiming set off of Rs.70,000/- on account of non-supply of cartons; set off Rs.26,734/- against non supply of goods under invoice No.D727 Ex.PW-1/D12 and; set off of Rs.35,000/- as performance incentives, DW-1 also claimed set off of CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 28 of 31 h.l.
29other amount of Rs.2,70,000/- and Rs.2,44,576.73p. Claim of set off of these two last mentioned amounts is beyond pleadings. In fact in the written statement the defendants had mentioned that had the plaintiff supplied additional bearings to cover losses, the defendants would have earned a profit of Rs.2,44,576/- for the year 1986-87. It was claimed in the written statement that this earning of profit along with profit of Rs.3,16,062/- for the year 1987-88 would have wiped out the entire outstanding amount. In fact these two last mentioned amounts cannot be claimed as set off. Thus, the defendants cannot claim set off of Rs.2,70,000/- and Rs.2,44,576.73 as claimed in Para No.34 of his affidavit-in-evidence.
66. Reliance placed by the plaintiff upon following authorities is misplaced as these authorities deal with section 70 of the Indian Contract Act, which does not attract in the present case.
K. Satyanarayana Vs. V.R. Narayana Rao, (1999) 6 SCC 104. State of West Bengal Vs. B.K. Mondal and Sons, (1962) SCR (Supp.) 876.
Mahabir Kishore and Ors. Vs. State of Madhya Pardesh (1989) 4 SCC 1 Vivek Automobiles Ltd. Vs. Lord Krishna Bank Ltd. & Anr. III (2007) BC481 Nepal Singh Vs. Om Pal Singh, AIR 2005 Delhi 330.
Vasudev Publicity Service & Anr. Vs. MRF Ltd.,
MANU/DEL/4294/2010
National Small Industries Corporation Vs. Globe Circuits (India), CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 29 of 31 h.l.
30MANU/DEL/2824/2005.
67. In view of above discussion it is clear that the defendants received goods from the plaintiff vide invoices Ex.PW-1/4 to 1/9A. The total amount of these invoices come to Rs.5,76,445.11. Plaintiff is entitled to recover the said amount from the defendants. Needless to say that the suit has been preferred within limitation as the plaint was presented in February 1989, whereas these invoices pertain to the period 31.03.1986 to 10.11.1986.
68. Thus the plaintiff is entitled to the amount of invoices proved. The plaintiff is held entitled to principle amount of Rs.5,76,445.11.
69. Accordingly issue No.9 is decided against the defendants and in favour of the plaintiff.
Issue No. 10Whether the plaintiff is entitled to interest, if so at what rate and for what amount?OPP.
70. Plaintiff has claimed interest @18% per annum from the date of filing of suit till realization. Admittedly the transaction between the parties was commercial in nature. However, in the invoices Ex.PW-1/4 to 1/9A, there is no agreement of interest mentioned. The plaintiff calculated a sum of Rs.2,42,923.79 as interest @ 18% per annum on the principle amount of Rs.5,76,445.11. It is held that the plaintiff is entitled to CS No.83/08/89 Tata Steel Co. Ltd. Vs. Shakti Bearing dated .24.01.2013 Page No. 30 of 31 h.l.
31interest from the dates of respective bills/invoices EX PW1/ 4 to 9A, till filing of the suit. Keeping in view the commercial nature of transaction between the parties, and all the facts and circumstances, interest @ 9% per annum from the date of bills/invoices EX PW1/ 4 to 9A till the date of recovery is allowed in favour of the plaintiff.
71. Thus the suit of plaintiff is decreed for a sum of Rs.5,76,445.11 with an interest @ 9% per annum from the date of bills/invoices EX PW1/ 4 to 9A, till the date of recovery. Plaintiff is also entitled to the cost of suit. Decree sheet be prepared accordingly.
File be consigned to record room.
Delivered & announced in the open Court on 24th Day of January, 2013 (DIG VINAY SINGH) Additional District Judge-04 (Central), Tis Hazari Courts.
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