Delhi High Court
Viskhapatnam Port Trust & Anr. vs Delhi Paper Product P. Ltd. on 19 December, 2008
Author: Pradeep Nandrajog
Bench: Pradeep Nandrajog, J.R. Midha
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Order: 19th December, 2008
+ RFA 387/2005
VISKHAPATNAM PORT TRUST & ANR. ..... Appellants
Through: Mr. Kailash Vasdev, Sr. Adv. with
Mr. Rohit Singh, Adv.
versus
DELHI PAPER PRODUCT P. LTD. ..... Respondent
Through: Mr. Vikas Arora, Advocate
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE J.R. MIDHA
1. Whether reporters of local papers may be allowed
to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?
: PRADEEP NANDRAJOG, J. (Oral)
1. Respondent‟s suit seeking recovery of Rs.5,77,983.35 (Rupees Five Lac Seventy Seven Thousand Nine Hundred Eighty Three and Paisa Thirty Five Only) has been decreed with RFA 387/2005 Page 1 of 15 pendente lite and future interest @ 12% per annum on the sum of Rs.5,59,578/- (Rupees Five Lac Fifty Nine Thousand Five Hundred and Seventy Eight Only).
2. Respondent‟s case was that it had supplied to the appellant at Vishakapatnam 8000 reams of duplicating paper weighing 20 MT to the appellant and that price payable for the supply was Rs.5,59,578/- (Rupees Five Lac Fifty Nine Thousand Five Hundred and Seventy Eight Only); alleging having received only Rs.88,483/- (Rupees Eighty Eight Thousand Four Hundred and Eighty Three Only); claiming pre-suit interest @ 24% p.a. net balance amount payable was stated to be Rs.5,77,983.35/- (Rupees Five Lac Seventy Seven Thousand Nine Hundred Eighty Three and Paisa Thirty Five Only).
3. It may be noted at the outset that the pleadings pertaining to the quantification of the claim are unhappily worded. We note the same. They read as under:-
"14. That the plaintiff is entitled to and the defendants are liable for following payments to the plaintiff:
(a) Principal amount of the bill dated 31.3.99 for goods supplied. Rs.5,59,578/-
(b) Principal amount of bill with interest @24% compounded quarterly w.e.f. 1.5.99 till the date of payment which comes to Rs.5,93,192.68P upto RFA 387/2005 Page 2 of 15 first quarter 31.7.1999, Rs.6,28,741.84P upto second quarter 31.10.1999 and Rs.6,66,466.35P upto the third quarter 31.1.2000, the date of filing of the suit.
the date of payment which till 31.12.99 comes to
(c) Less payments already received Rs.88,483/-
Net payable on the date of the suit Rs.5,77,983.35P (Five Lakhs Seventy Seven Thousands Nine Hundred Eight Three Rupees and paise Thirty Five only)."
4. The appellant did not deny receipt of the material under the contract but alleged that the paper supplied was defective. Justifying part payment it was stated that though the paper supplied was not as per specifications but since the appellant required the paper very urgently it consumed a part thereof out of necessity for which payment was made. Qua the balance it was asserted that timely rejection was intimated and that the respondent deliberately did not lift the rejected goods.
5. A defence was predicated under the purchase order Ex.PW-1/9 (also exhibited Ex.P-6) that the same ousted jurisdiction of Courts at Delhi. Condition No.20 of the purchase order which stipulated that „any dispute relating to this order shall be subject to jurisdiction of the Court at Vishakapatnam only' was relied upon.
RFA 387/2005 Page 3 of 15
6. Needless to state the two material issues which arose for consideration were, whether Courts at Delhi had jurisdiction to entertain the plaint; the second issue being whether the respondent supplied the requisite goods as per specifications.
7. The respondent examined its Managing Director as PW-1 and one G.N.Gupta Assistant Director, Grade II, DGS&D as PW-2 to prove their case.
8. It is not in dispute that the first query which ultimately led to the contract emanated from the appellant vide a telegram Ex.PW-1/2 as per which the respondent was queried whether it could supply 8000 reams of duplicating paper of the specifications disclosed in the telegram at DGS&D rate contract and conditions governing supplies to be made as per DGS&D conditions, with pre-inspection to be made by an officer of the Director General of Supply and Disposal.
9. The telegram was responded by the respondent vide Ex.PW-1/3 informing that the respondent was in a position to make the necessary supply. It was followed by a letter Ex.PW-1/5 on 5.12.1998 under which the respondent stated that it could effect the supply at DGS&D rates and other conditions of DGS&D. Discussions were held. The respondent wrote Ex.PW-1/6 RFA 387/2005 Page 4 of 15 enclosing the samples. A query was sent to the respondent as to what rate would be charged. On 18.2.1999, vide Ex.PW-1/8 the respondent confirmed that it would be charging @ Rs.57.87 per ream.
10. The purchase order Ex.PW-1/9 was thereafter issued.
11. Pertaining to the quality of the goods, parties were not at variance that the same required an approval by the concerned officer of DGS&D and that the approval had to be as per the inspection note.
12. The inspection note dated 30.3.1999 was proved as Ex.PW-1/10 (also exhibited as Ex.P-7).
13. The goods in question were supplied on various dates. Half quantity was supplied on 20.3.1999. It was transported by road to Vishakapatnam, the place where the delivery had to be effected.
14. It is not in dispute that thereafter, three more consignments were sent till 30.3.1999 to complete the quantity. It is also not in dispute that the inspection note was not sent along with the documents dispatching the goods. It is also not in dispute that when goods were received, at the rear of the goods receipt, the appellant made an endorsement that the goods were RFA 387/2005 Page 5 of 15 being received subject to checking and inspecting since the relevant pre-inspection certificate required to be issued by DGS&D was not forwarded.
15. PW-2 Sh.G.N.Gupta, Assistant Director, Grade II, DGS&D the author of the inspection note Ex.PW-1/10 was extensively cross examined on the issue of having inspected the goods which were consigned. The reason thereof was that each ream did not bear the stamp of DGS&D approved the same. The bundle in which the reams were packed bore the stamp of inspection by the officer of DGS&D. Some of the bundles received were in a torn condition.
16. The very factum of inspection was suspect.
17. Ex.PW-1/10 clearly recorded vide entry at serial No.7-B against the column:-
"Stores inspected on: 23 and 24.3.1999"
18. Under the column „description of stores and total quantity ordered‟ it was recorded "item inspected one only".
19. Since half the consignment was admittedly dispatched through the transporter on 20.3.1999, obviously the inspection note could not relate to the consignment which was delivered to the transporter on 20.3.1999.
RFA 387/2005 Page 6 of 15
20. PW-2 stated during cross examination that his inspection notes would be in the official file. His cross examination being conducted on 21.1.2004 was deferred to 6.4.2004. On said date he stated that the relevant file prior to 7.6.2000 was not available. However, he stated that the inspection report recorded his having carried out the inspection on 23/24.3.1999. A specific question was put to him as under:-
"Q. Can you explain as to how the report was issued on 30.3.1999 for the inspection made on 23/24.3.2999 when the goods were already dispatched on 20.3.1999."
21. He answered:-
"I have no knowledge regarding the dispatch of the goods but I had done the inspection as claimed by me".
22. On further cross examination whether inspection charges were deposited he answered: "In this case, no inspection charges were taken from anybody".
23. The appellant examined only one witness who proved that at the rear of the goods receipt Ex.PW-1/14 when first consignment was received an endorsement was made that the consignment was received without pre-inspection certificate and that the goods were being accepted subject to checking. He proved the rejection of the goods on 21.5.1999. He stated that RFA 387/2005 Page 7 of 15 the goods were defective. When printed, the ink would blot on the paper, he stated that part goods were consumed due to necessity for which payment was made.
24. On issue No.1, holding that Courts have jurisdiction at Delhi learned Trial Judge has opined that the contract concluded before the purchase order Ex.PW-1/9 was issued and hence its terms were irrelevant. View taken is that the contract concluded when letter dated 16.11.1998 was issued.
25. The learned Trial Judge has held that the contract between the parties is governed by the terms and conditions as contained in the letter dated 16.11.19998 to the DGS&D, which is acceptance letter of the tender of the plaintiff for fixed rate contract.
26. With respect to the quality of the goods, view taken by the learned Trial Judge is that PW-2 is an independent witness and his testimony had to be accepted of having inspected the goods and certified quality thereof as per Ex.PW-1/16.
27. We find no letter dated 16.11.1998 on record. Indeed, there is no such letter proved for the reason none was ever exchanged.
RFA 387/2005 Page 8 of 15
28. The first letter proved is Ex.PW-1/5 which is dated 5.1.11998. Prior thereto, two telegrams were exchanged.
29. It appears that the learned Trial Judge has been misled by the testimony of PW-1 who made a reference to the date 16.11.1998 in para 4 of his affidavit by way of evidence wherein he stated as under:-
"4. I say that accordingly the plaintiff submitted its offer in accordance with DGS&D rate contract dated 16.11.1998 dated 5.12.98 followed by clarification negotiation letters dated 9.12.98, 31.12.98, 27.1.99 and 18.2.99. The office copies of all these letters are already on record and be read as Ex. PW-1/5, PW1/6, PW-1/7 and PW-1/8"
30. The first sentence of the paragraph and in particular the second line thereof is most inartistically drafted. Both dated 16.11.1998 and 5.12.1998 have been referred to. Six dates have been referred to in the paragraph but only four documents relatable to four dates have been exhibited.
31. Be that as it may, we have considered the matter de novo. It is settled law that a contract concludes when an officer is unconditionally accepted. It is also settled law that query to a party whether it can supply goods is always treated as an invitation to offer.
32. What better evidence of what constituted the offer can we have other than the version of the respondent in paragraph 4 RFA 387/2005 Page 9 of 15 of the affidavit by way of evidence of PW-1. The respondent has referred to Ex.PW-1/5 as its offer and Ex.PW-1/7 to Ex.PW-1/8 as clarificatory letters. We further note that even in the plaint the respondent has pleaded, qua offer and acceptance as under:-
"3. That the defendants vide their telegrams dated 19.11.98 and 4.12.98, through the agency, consultancy and under the supervision of Director General of Supplies and Disposals, Jeewan Tara Building New Delhi, approached the plaintiff at its head office for supply of the Duplicating Papers. Accordingly the plaintiff submitted its quotations/rates on or vide letter dated 5.12.1998 followed by clarification negotiation letters dated 9.12.98, 31.12.98, 27.1.99 and 18.2.99.
4. That accordingly a purchase order No.11732E (E/1/0254/98-99) dated 22.2.299, with reference to tender enquiry No. DGS&D Rate Contract No.P-3/RC- 06010400/01199/105/D-0488/Duplicating Paper/DPPC/COAD/dated 16.11.98, was placed by the defendants on plaintiff at Delhi Head Office of the plaintiff for supply of 8000 reams of Duplicating Paper. The main conditions of the supply were that the goods were to be supplied and dispatched after inspection and acceptance thereof at Delhi, for and on behalf of the plaintiff by the Office of the Directorate general of Supplies and Disposal, Govt. of India, New Delhi. The 100% payments were to be made within 30 days of receipt of the goods. The supplies were to be made F.O.R. Delhi/New Delhi."
33. It is apparent that the purchase order Ex.PW-1/9 has been referred to by the respondent as the acceptance of the contract and Ex.PW-1/5 as the offer.
RFA 387/2005 Page 10 of 15
34. The learned Trial Judge has ignored the pleadings of the respondent in the plaint and the testimony of the Managing Director of the respondent. Learned Trial Judge has rested the finding on a letter dated 16.11.1998 which is not even filed, much less proved. Indeed, the learned Trial Judge has not referred to the exhibit mark of the said document.
35. The goods were to be supplied at Vishakapatnam. Thus, part cause of action accrued at Vishakapatnam. No doubt, part cause of action accrued at Delhi.
36. It is settled law that where more than one Court has territorial jurisdiction, by consent, parties can oust the jurisdiction of one Court and rest the same only in one Court. In the decision reported as AIR 1989 SC 1239 A.B.C.Laminart Pvt. Ltd. & Anr. Vs. A.P.Agencies, Salem it was held that the use of the expression "alone", "only", "exclusive" and the like evidences the unambiguous intention of the parties to vest jurisdiction only in one Court.
37. Clause 20 of the purchase order vests jurisdiction in the Courts at Vishakapatnam only. Thus, jurisdiction of the Courts at Delhi is ousted.
RFA 387/2005 Page 11 of 15
38. Finding on issue No.1 by the learned Trial Judge is accordingly set aside.
39. The result has to be the return of the plaint.
40. But, the learned Trial Judge has held against the appellant even on merits.
41. Parties are in litigation since the year 2000. To relegate them to a fresh trial at Vishakapatname with the observations that the impugned decision on merits would not bind the parties and that the learned Trial Judge at Vishakapatnam would redecide the matter as per law would add on to the docket explosion in Courts.
42. We thus, propose to decide the appeal on merits.
43. As noted above, on the issue of inspection of the goods the learned Trial Judge has held that there was no reason to disbelieve the testimony of G.N.Gupta, PW-2.
44. No doubt, a presumption arises to the correctness of official actions taken but the said presumption is rebuttable.
45. What better evidence of rebuttal can we find other than what has been recorded by PW-2 on the inspection note Ex.PW-1/10.
RFA 387/2005 Page 12 of 15
46. Ex.PW-1/10 clearly records that the goods were inspected on 23/24.3.1999. A specific query was put to PW-2 as to how could he justify inspection of the goods on 23/24.3.1999 when the goods were dispatched on 20.3.1999. His answer was that he had no knowledge regarding the dispatch.
47. The witness has obviously evaded the question.
48. It is not in dispute that half the goods were admittedly dispatched on 20.3.1999. Obviously, said goods could not be inspected at the factory of the respondent either on 23.3.1999 or 24.3.1999.
49. It is also relevant to note that as admitted by PW-2, no inspection charges were deposited.
50. We are surprised of the fact that a Government servant who is supposed to take inspection charges has proceeded to carry out an inspection without necessary charges being deposited.
51. PW-2 stands discredited with reference to his own document Ex.PW-1/10 and his evasive answer.
52. A feeble attempt was made by learned counsel for the respondent to urge, with reference to the testimony of PW-1, that RFA 387/2005 Page 13 of 15 the inspection was carried out on various dates as deposed to by PW-1 from 17th March onwards.
53. We are afraid, in the teeth of Ex.PW-1/10 which categorically records that the stores were inspected on 23.3.1999 and 24.3.1999 no amount of oral evidence and that too which is self-serving evidence can be looked into.
54. Even on merits we hold that the learned Trial Judge has acted irrationally by applying the presumption of truthfulness to be attached to official acts ignoring that the said presumption may not be strictly applicable to contractual dispute and that in any case is a rebuttable presumption. In the instant case the inspection gets demolished by Ex.PW-1/10 which shows that the goods were inspected on 23.3.1999 and 24.3.1999, whereas half goods were not even in Delhi on 20.3.1999. We hold that Ex.PW- 1/10 is a suspect document.
55. The appeal is allowed.
56. Impugned judgment and decree dated 31.1.2005 is set aside.
57. Suit filed by the respondent is dismissed with costs all throughout.
RFA 387/2005 Page 14 of 15
58. The appellants have deposited Rs.4,00,000/- (Rupees Four Lacs Only) in this Court which have been invested in a fixed deposit. The said amount shall be refunded to the appellant by endorsing the FDR in the name of appellant No.1 or by encashing the same and paying over the amount realized by drawing a cheque in the name of appellant No.1.
PRADEEP NANDRAJOG, J.
J.R. MIDHA, J.
DECEMBER 19, 2008 mm RFA 387/2005 Page 15 of 15