Delhi District Court
M/S D.N Electronics vs M/S Shivam Enterprises on 25 February, 2022
IN THE COURT OF MS. SARITA BIRBAL, DISTRICT JUDGE
(COMMERCIAL COURT), NORTH-EAST, KARKARDOOMA
COURTS, DELHI
C.S (Comm.) 04/2020
M/s D.N Electronics
Through its proprietor
Shri Sudhir Kumar
Office at: 99, 1st Floor,
Old Lajpat Rai Market, Delhi-110006
......Plaintiff
Versus
M/s Shivam Enterprises
Through its director Shri Nishith Pathak
Presently at:
Flat No.9129, Tower No.9A,
Crossing Republic, Gh. Plot No.7,
Dundahera, Ghaziabad, U.P.-20101
....Defendant
Filed on : 28.09.2018
Reserved for judgement : 19.02.2022
Decided on : 25.02.2022
JUDGEMENT
1. The present is a suit for recovery of Rs.6,77,750/- filed by the plaintiff against the defendant. Initially this suit was filed under Order XXXVII CPC. The defendant entered appearance and then filed an application for leave to defend this suit. That application was allowed on 26.02.2020 and the defendant was granted unconditional leave to defend this suit.
2. It may also be noted here that initially the present suit was filed before the court having territorial jurisdiction over East District, Delhi at Karkardooma courts (Suit No.202/2017). At C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 1 of 21 that time, the defendant raised an objection that since the address of the defendant in the plaint had been shown as at Gautam Vihar, Delhi which falls within the jurisdiction of North East District, Delhi and thus that court had no jurisdiction to try that suit. Vide order dated 03.08.2018, the plaint was ordered to be returned to the plaintiff under Order VII rule 10 CPC for filing the same before the court of competent jurisdiction of North East District, Delhi and the case was then filed in this court.
3. The case of the plaintiff in its plaint is as follows:-
(i) The plaintiff is a sole proprietorship concern and Shri Sudhir Kumar is sole proprietor of this firm. It is running its business under the name and style of M/s D.N. Electronics.
(ii) A director of the defendant firm approached the plaintiff and showed the desire to purchase assorted artificial flowers (hereinafter 'the goods') which were to be imported from China on the import license of the plaintiff. The deal was finalized between the parties to this suit for purchase of twenty one cartons of the goods containing 38,320 pieces @ Rs.25 /- each and thus the total cost of the goods was agreed as Rs.10,77,750/- which was inclusive of VAT @ 12.5 % amounting to Rs.1,19,750/-.
(iii) A representative of the defendant visited China and placed orders in China. That representative of the defendant requested the plaintiff to import the goods from China to India by air. The plaintiff imported the said goods from China on its license and supplied twenty one cartons of the said goods vide invoice No.410, Book No.09 dated 10.10.2014.
(iv) The defendant made part payment of Rs.4,00,000/- in cash for the goods received from the plaintiff. The defendant also issued a cheque bearing No.412537 dated 25.11.2014 for a sum C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 2 of 21 of Rs.6,77,750/- drawn on Indusind Bank, Preet Vihar Branch, New Delhi for payment of the remaining balance amount to the plaintiff. However, the said cheque was dishonoured on presentation with the bank of the defendant with remarks 'Funds Insufficient' on 27.11.2014.
(v) The plaintiff demanded the amount of dishonoured cheque from the defendant and made telephone calls but the defendant did not pay the amount. Thereafter, the plaintiff got issued a legal demand notice dated 12.12.2014 to the defendant but despite service of that notice, the defendant did not pay the amount. The plaintiff has filed a criminal complaint against the defendant under Section 138 of Negotiable Instruments Act, which is pending in the court of Metropolitan Magistrate at Tis Hazari Courts. The plaintiff claims that an amount of Rs.6,77,750/-
remains outstanding against the defendant.
Hence, the present suit for recovery of Rs.6,77,750/- with interest.
4. After grant of leave to defend, the defendant filed its written statement. The defendant by way of a preliminary objections contends that this court has no territorial jurisdiction to try this suit. On merits, it is not disputed that the defendant in the year 2014 was in need of the subject matter goods namely assorted artificial flowers. The defendant alleges that it was in need of these goods for the customers of the defendant firm and to participate in the exhibitions being organized at Noida. The defendant admits that parties to this suit entered into an agreement whereby the plaintiff was to import the subject matter goods on the import license of the plaintiff and was to hand over the same to the defendant and the defendant was to pay the price C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 3 of 21 of the goods to the plaintiff. The defendant claims that at the time of entering into contract, the plaintiff claimed to have experience in import of goods from China. The defendant admits that its representative namely one Shri Maruti Kumar Sinha went to China in the month of May 2014 and said Maruti Kumar Sinha after inspection of the certain goods at a flowers' market at China, selected some samples, placed the orders and collected invoices for the selected goods.
5. The defendant admits that it had collected the goods from the plaintiff in certain cartons and had paid an amount of Rs.4,00,000/- (in two installments of Rs.2,00,000/- each) to the plaintiff in cash and had also issued a cheque bearing No.412537 dated 25.11.2014 for Rs.6,77,750/- drawn on Indusind Bank, Preet Vihar Branch to the plaintiff. The defendant alleges that there was a delay on the part of the plaintiff in importing the goods and getting the same released from the authorities. The defendant alleges that in the first week of August 2014, it had to file nomination for a state exhibition to be held in the month of October 2014 at Noida and thus it was in dire needs of the imported goods. The defendant alleges that it was in these compelling circumstances that it agreed to take the delivery of imported goods. The defendant alleges that at that time, the defendant asked for inspection of the imported goods but it was not permitted by the plaintiff to do so. The defendant alleges that it took delivery of goods on the condition that it would inspect the goods and would make the balance payment only if the goods were in accordance with the orders/specifications.
6. The defendant alleges that after having received the goods in sealed cartons, it brought the same at its office at and inspected C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 4 of 21 the same. The defendant alleges that on inspection, it was noticed that the goods handed over to the defendant were inferior in material and structure; majority of items were missing and the rate charged against those imported goods were exorbitant while the goods of similar quality were available at far cheaper rates in Sadar Bazaar or other wholesale markets in Delhi. The defendant alleges that these defects were intimated in writing to the plaintiff and the proprietor of the plaintiff admitted the deficiencies and assured the defendant to replace the goods whenever another consignment would land in Delhi via sea route but the plaintiff did not do so despite repeated assurances.
7. The defendant admits receipt of legal notice dated 12.12.2014 but states that the same was replied vide its reply dated 27.12.2014. The defendant does not dispute that the cheque issued by it got dishonoured for the reasons "Funds Insufficient'. The defendant does not dispute that the subject matter plaint was initially filed in the court having territorial jurisdiction over East District, Delhi and in pursuance of order dated 03.08.2018 passed by the Additional District Judge, the plaint was returned to the plaintiff and suit was refiled in this court. The defendant does not dispute that the plaintiff has filed a criminal complaint under Section 138 of Negotiable Instruments Act against it, which remains pending. The defendant denies that the plaintiff is entitled to recover any amount from the defendant. The defendant seeks dismissal of this suit with exemplary costs.
8. The plaintiff did not file replication to the written statement of the defendant. The parties filed affidavits of admission and denial of the respective documents of the opposite parties.
C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 5 of 21
9. Vide order dated 07.01.2021, following issues were framed:-
(1) Whether this court has the territorial jurisdiction to entertain and try the present suit? OPD (2) Whether the goods received in the hands of the defendant were defective, if so, its impact on the outcome of the case? OPD (3) Whether the plaintiff is entitled to recover a sum of Rs.6,77,750/- from the defendant? OPP (4) Whether the plaintiff is entitled to interest on the suit amount or any other amount as may be found due by the Court against the defendant, if so, at what rate and for which period? OPP (5) Relief.
10. In support of its case, the plaintiff examined Shri Sudhir Kumar, proprietor of the plaintiff as PW1. PW1 tendered his evidence by an affidavit (Ex.PW1/1). The affidavit of this witness proceeds generally on the same lines as the plaint. PW1 also relied on and proved following documents:-
(i) Copies of Aadhaar card and import and export license (IEC) dated 06.10.1998 (Ex. PW1/A) issued in favour of the plaintiff by Foreign Trade Development Officer.
(ii) Copy of invoice bearing No.410 dated 10.10.2014 (Ex.PW1/B).
(iii) Certified copy of cheque bearing No. 412537 issued by the defendant in favour of the plaintiff (Ex.PW1/C).
(iv) Certified copy of return memo of cheque (Ex.PW1/D).
(v) Certified copy of legal notice dated 12.12.2014 sent to the defendant (Ex.PW1/E).
C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 6 of 21
(vi) Certified copy of postal receipts showing dispatch of above notice to the defendant (Ex.PW1/X).
(vii) Copy of report of postal authorities on the envelope and registered AD card of the notice (Ex. PW1/X-1).
(viii) Copy of order dated 03.08.2018 passed by learned ADJ- 02, Karkardooma Courts in CS No.202/2017 (Ex. PW1/F).
(ix) Copy of certificate of registration under Delhi Value Added Tax Act, 2004 dated 04.02.2014 of the defendant (Mark A).
11. Plaintiff also examined Shri Akshay Kumar, Junior Judicial Assistant/Assistant Ahlmad in the court of learned Metropolitan Magistrate, Negotiable Instruments Act-04, Central District as PW2. This witness has proved the document from the judicial file of CC No. 521313/16 titled as M/s D.N. Electronics versus M/s Shivam Enterprises under section 138 of Negotiable Instruments Act. This witness has deposed that address of Shri Nishith Pathak, the Director of the defendant on his bail bond is mentioned as D-64, Gali No.4, New Govindpura, Delhi-110031 and his former address on this bail bond is mentioned as 45/18, Vedic Marg, Ashok Nagar, New Delhi-110018.
12. PW3 Shri Neeraj Saini, Ahlmad in the court of learned Additional District Judge-02, East, Karkardooma Courts, Delhi brought the summoned record of suit (CS No.202/2017) titled as M/s D.N. Electronics versus M/s Shivam Enterprises. This witness stated that initially the suit was filed against the defendant at its address at K-354, K-Block, Gautam Vihar, Delhi- 110053. Later on the amended memo of parties filed by the plaintiff showed the second address of the defendant as 45/18, Vedic Marg, Ashok Nagar, New Delhi-110018. This witness deposed that as per the records, summons dated 30.03.2017 C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 7 of 21 issued to the defendant at its address at 45/18, Vedic Marg, Ashok Nagar, New Delhi-110018 returned back unserved with the report of process server 'left'. This witness has further deposed that the envelope sent to the defendant through the speed post also came back with the remarks 'left'. This witness has deposed that the summons sent to the defendant at its address K- 354, K-Block, Gautam Vihar, Delhi also came back with the report 'no such person on this address' and the defendant was served in the court of learned Metropolitan Magistrate where the case under section 138 N.I. Act was pending against the defendant.
13. Shri Nishith Pathak, partner of the defendant examined himself as DW1. DW1 led his evidence by an affidavit (Ex.DW1/A). This witness proved the copies of invoices in Chinese language given to the plaintiff for purchase of goods in China and import to India (Mark-A), copy of inspection report allegedly submitted to the plaintiff (Ex.DW1/2) and English translations of the invoices (Ex.DW1/3).
14. The defendant also examined Smt. Renu Pathak, wife of Shri Nishith Pathak another partner of the defendant as DW2. DW2 also led her evidence by an affidavit (Ex.DW2/A). DW2 has also proved the copy of partnership deed dated 03.01.2012 (Ex.DW2/1) of the defendant, copy of resolution dated 18.08.2017 (Ex.DW2/2) passed by the partner of the defendant firm, whereby DW1 was authorized to represent the defendant before all authorities and court of law to initiate legal actions in the name of defendant and to respond to all legal actions against the defendant. True copy of online application for amendment of registration certificate under Delhi Value Added Tax Act, 2004 C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 8 of 21 (Ex.DW2/3) and the certificate under section 65B of Indian Evidence Act qua the online copy of application for the amendment under Delhi Value Added Tax Act, 2004 dated 06.04.2015 (Ex.DW2/4).
15. In addition, the defendant summoned Shri Rajeev Issar, Goods Sales Tax Officer (GSTO), Department of Trade and Taxes, Vyapar Bhawan, ITO, Delhi as DW3. This witness has proved the copy of dealer profile of TIN No.07346910662 of M/s Shivam Enterprises (Ex.DW3/1), copy of Form DVAT 07 bearing No.21422826 dated 06.04.2015 for amendment in the address of the defendant firm (Ex.DW3/2), copy of Form DVAT 11 bearing No.58550346 dated 07.09.2016 whereby cancellation of registration of TIN number of the defendant firm was ordered on 11.08.2016 (Ex.DW3/3), copy of show cause notice dated 11.08.2016 for cancellation of registration of defendant firm (Ex.DW3/4), copy of Form No. DVAT 06 dated 04.02.2014 for registration of TIN of defendant firm (Ex.DW3/5), copy of Form 'B' being certificate of registration of defendant firm dated 04.02.2014 with permission to trade in flowers, item code 705000 (Ex.W3/6), copy of registration under DVAT and CST (Central Sales Tax) Act dated 04.02.2014 in the name of defendant (Ex.DW3/7) and copy of Form DVAT-04, dated 03.02.2014 alongwith document running into 39 pages (Ex.DW3/8-colly.)
16. The defendant also examined one Ms. Kanika Goel as DW4 who brought and proved the translated copies of the original invoices (which were in Chinese language) the same were exhibited as Ex. DW4/1 (colly).
17. The witnesses of the plaintiff and the defendant were cross C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 9 of 21 examined by the counsels for the respective opposite party. The contents of cross examination shall be taken note of to the extent necessary in the subsequent parts of this judgement.
18. I have heard Shri S.S. Tomar, learned counsel for the plaintiff and Shri Lalit Kumar, learned counsel for the defendant. I have also perused the written submissions filed on behalf of the parties.
My issue-wise findings are as follows:-
Issue No.1: Whether this court has the territorial jurisdiction to entertain and try the present suit? OPD
19. It is the case of the plaintiff that this court has territorial jurisdiction to entertain and try this suit as the defendant is having its registered office and principal place of business at K- 354, K-Block, Gautam Vihar, Delhi-110053 under Delhi VAT Act. The plaintiff also points out that the goods were supplied to the defendant vide invoice dated 10.10.2014 (Ex.PW1/B) in which the address of the defendant is also the same and that invoice is signed by a partner (DW1) of the defendant. DW1 in the evidence admitted his signature on this document. The plaintiff also refers to the resolution dated 18.08.2017 (Ex.DW2/2) passed by the partners of the defendant firm whereby DW1 has been authorized to represent the defendant firm before all authorities and courts in all matters. This resolution also notes the address of the defendant firm as K-354, K-Block, Gautam Vihar, Delhi-110053. It was also pointed out that the present suit was earlier filed in the court having jurisdiction over the East District but it was contended by the defendant that K-354, K-Block, Gautam Vihar, Delhi falls within the territorial jurisdiction of the court having jurisdiction over the C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 10 of 21 North East Delhi District and accordingly, the plaint was ordered to be returned and then refiled in the court having jurisdiction over North East Delhi District. PW1 in his evidence claimed that the goods were collected by the defendant from the godown of the plaintiff at Babarpur, Delhi which is stated to be within the jurisdiction of this Court and thus a part of cause of action also arose within the territorial jurisdiction of this Court.
20. The defendant has not disclosed as to which court as per it would have territorial jurisdiction to try this suit. The defendant does not dispute that at the time of filing of the suit in this court, the defendant firm was having its office at K-354, K-Block, Gautam Vihar, Delhi. The case of the defendant seems to be that as no cause of action arose within the territorial jurisdiction of this court, this court would have no jurisdiction to try this case. The case of the defendant also appears to be that though its office at Gautam Vihar was shown as the registered office, the defendant was actually carrying on its business at 45/18, Vedic Marg, Ashok Nagar, New Delhi-110018. DW1 denied that the goods were collected from the godown of the plaintiff at Babapur and claimed that the goods were collected from the godown of the plaintiff at Azad Pur, Delhi.
21. The present suit was refiled in the court on 28.09.2018. DW1 during his cross examination admitted that the registered office of the defendant was at K-354, K-Block, Gautam Vihar, Delhi from the year 2014 to 2018. The plaintiff has filed a photocopy of the registration certificate dated 04.02.2014 (Mark A) issued by the Delhi Authorities, in which the principal place of business of the defendant has been shown as K-354, K-Block, Gautam Vihar, Delhi. DW1 admitted this document in his C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 11 of 21 affidavit dated 24.07.2020 of admission denial qua the documents of the plaintiff. It would be reasonable to presume that the defendant did carry on the business from this address. If the defendant was not carrying on the business from this premises, the burden was on the defendant to prove that fact. Apart from oral assertions of the partners of the firm, there is nothing to substantiate this stand of the defendant. Ex.DW3/8, application dated 03.02.2014 for registration under Delhi VAT Act, 2004, discloses this address as the principal place of business by the defendant. Application for registration under Central Sales Tax Act, 1956 (Ex. DW3/7) also discloses this address. Thus, it is held that the principal place of the business of the defendant was at K-354, K-Block, Gautam Vihar, Delhi within the territorial jurisdiction of this court.
22. Relevant portion of Section 20 of CPC reads as follows:-
"Other suits to be instituted where defendants reside or cause of action arises-subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction stipulates as follows:-
"(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) xx xx xx
(c) xx xx xx Explanation-A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
23. Learned counsel for the defendant contended that the mere fact that the registered office of the defendant was within the territorial jurisdiction of this court and even assuming that C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 12 of 21 business was carried on at this premises; that would not confer territorial jurisdiction on this court to try this suit as no part of cause of action arose within territorial jurisdiction of this court. In that regard reliance was placed by the counsel for the defendant on the judgements reported as Gujarat Insecticides Ltd. vs. Jainsons Mineral And Anr. [140 (2007) DLT 465, Delhi], Unimers India Limited vs. The IFCI Limited & Ors. [Order dated 13.04.2012 in CS (OS) No.1656/2009 by the Delhi High Court] and Union of India and Another vs. Ladu Lal Jain [1964 SCR (3) 624].
24. The judgements relied by the defendant are of no help to the defendant. Those judgements were in relation to explanation attached to Section 20 of CPC (supra). In that context that it was held that where a corporation which expression includes a company, is having a subordinate office and the cause of action also arose at the place having a subordinate office, the court at such place would have the territorial jurisdiction to try the suit. The defendant in this case is neither a corporation nor an incorporated company but a partnership firm. A partnership firm has no separate legal existence. In Deluxe Roadlines vs. National Insurance Co. Ltd. And others [(1987) 2 MLJ 174 ], Hon'ble Madras High Court held as follows:-
"11. The learned Counsel appearing on behalf of the defendant contended that the learned Judge was not right in reading the Explanation in the manner in which he did so as to say that in the case of a Corporation, the suit had to be filed against the Corporation only at the place where it had its subordinate office if a cause of action arose at that place and that in such a case the suit could not be filed at a place where it had its principal office in India. Now for the purpose of the present case, it is not necessary to decide this contention. But it must be mentioned that the learned trial Judge was in error in C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 13 of 21 recording a finding that the suit could not be filed against the defendant at Bangalore because in so far as the present defendant is concerned, the Explanation was not attracted at all. The Explanation was attracted only in case of Corporation. The defendant is only a partnership firm and was not therefore a Corporation. The learned trial Judge therefore was not justified in relying on the ratio of the decision in Prakash Roadlines (P.) Ltd. v. P.M. Gounder and Co., in order to come to the conclusion that the suit could not be filed at Bangalore at all and that Bangalore Court could not have any jurisdiction. In such a case, as already pointed out, the case would expressly fall under Clause (a) of Section 20 C.P.C." (Emphasis added)
25. Moreover, the present suit was initially filed in the court having territorial jurisdiction over the East Delhi District and on an objection raised by the defendant, the plaint was ordered to be returned by the order dated 03.08.2018 (Ex.PW1/F) by the Additional District Judge to refile the same having territorial jurisdiction over the North East Delhi District. Order dated 03.08.2018 appears to be a consent order and in any event, that order attained finality.
26. In view of evidence that has come on record, it is held that this court has territorial jurisdiction to try this suit under section 20 (a) of CPC. This issue is decided in favour of the plaintiff and against the defendant.
Issue No.2: Whether the goods received in the hands of the defendant were defective, if so, its impact on the outcome of the case? OPD
27. The burden to prove this issue was on the defendant. The defendant has not disputed that it had received the goods namely the assorted artificial flowers on 10.10.2014 and at that time it had handed over Rs.2,00,000/- in cash and further issued a cheque bearing No.412537 dated 25.11.2014 for Rs.6,77,750/- C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 14 of 21 drawn on Indusind Bank, Preet Vihar Branch to the plaintiff. The defendant, however, alleges that at the time of taking the delivery of subject matter goods it was not allowed to inspect the goods by the plaintiff and on bringing the goods from the godown of the plaintiff firm to its office, the defendant noticed that the goods delivered were inferior in material and structure, majority of items for which the order was placed were missing and the rate charged by the plaintiff was exorbitant though the same goods of the similar quality were available at far cheaper rates in Sadar Bazaar or other wholesale markets in Delhi. The defendant alleges that these facts were got recorded in an inspection report prepared by the defendant and copy of that inspection report (Ex.DW1/2) was handed over to the plaintiff. DW2 however, stated that this fact was intimated to the plaintiff on phone.
28. This document Ex.DW1/2 is not having signature of the proprietor of the plaintiff or any person on behalf of the plaintiff. The date on which copy of this document was allegedly handed over to the plaintiff is not disclosed. This document was not confronted to PW1 in his cross examination. DW1 in evidence was suggested that Ex.DW1/2 is a forged and fabricated document. Reply dated 27.12.2014 (Ex. PW1/DX2) through the Advocate of the defendant to the legal notice dated 12.12.2014 (Ex.PW1/E) of the plaintiff does not specifically state that any such document was handed over to the plaintiff. PW1 in his cross examination specifically stated that the defendant did not raise any objection about the goods before the reply to the legal notice (Ex.PW1/DX2). I am of the opinion that it is not proved that the document Ex.DW1/2 was handed over to the plaintiff by the defendant. Moreover, DW1 in his evidence admitted that goods C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 15 of 21 were received in two installments i.e. five cartons and sixteen cartons. He also admitted that there was a difference of a few days in receipt of two installments. If, indeed, the goods would have been deficient etc. as is the allegation of the defendant, the defendant would not have collected the second installment. Moreover, assuming for the sake of arguments that there was a delay of couple of months in delivery of the goods as is the allegation of the defendant, the same would be of no consequence as DW1 collected the goods on 10.10.2014 under his own signature without any protest and then used the same in exhibitions.
29. It is the common case between the parties that the goods were selected or purchased by the defendant from certain sellers at China and the plaintiff on its import license, had merely acted as the middleman for import of the goods. For that purpose, a representative of the defendant namely Maruti Kumar Sinha had gone to China, met the seller in the flowers market and placed the orders. Thereafter, the plaintiff imported the goods on its import license, made the payment to the seller and handed over the goods to the defendant in cartons.
30. Shri Maruti Kumar Sinha, representative of the defendant who had gone to China and had selected the goods has not been produced as a witness. Neither DW1 nor DW2 went to China. They did not see the goods for which the contracts were entered into by Shri Maruti Kumar Sinha. Certain samples were stated to have been taken by Shri Maruti Kumar Sinha from the sellers at China but as per the own showing of the defendant, the customs authorities at China did not permit the samples to come to India due to non-fulfillment of the relevant norms. No reason has been C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 16 of 21 assigned as to why Shri Maruti Kumar Sinha has not been produced as a witness. The defendant admittedly raised no objection before the suppliers at China. The contention raised by the defendant in the written submission dated 22.02.2022 that the plaintiff did not collect the goods from the suppliers with which Shri Maruti Kumar Sinha had entered into contract but from some other supplier cannot be accepted as neither such a plea was raised in the written statement nor such a suggestion was given to PW1 nor so stated in the evidence of DW1 and DW2. In view of evidence that has come on record, I am of the opinion that the defendant has failed to establish that it had raised objections about the quality, quantity or the price after taking delivery of goods and before sending the reply dated 27.12.2014 (Ex.PW1/DX2) to the legal notice of the plaintiff.
31. Learned counsel for the defendant submitted that in any event, the defendant had rejected the goods vide reply Ex.PW1/DX2 to the legal notice of the plaintiff and had asked the plaintiff to take back the goods and return the paid amount. He referred to Section 8 (1)(d) of the Delhi Value Added Tax Act, 2004 and submitted that in view of that provision, the defendant had the right to reject the goods and cancel the contract within a period of six months from the date of delivery of the goods. In this regard, he referred to the judgement of Hon'ble Bombay High Court reported as M. Framrose And Company vs. State of Maharashtra, [1977 (40) STC 36 (Bom. DB)]. He also referred to sections 15, 41, 42 and 43 of the Sales of Goods Act, 1930. 32 Learned counsel for the plaintiff submitted that the transaction between the parties was not a sale transaction. The sale was between the suppliers of goods at China and the C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 17 of 21 defendant. It was contended that the plaintiff was only a facilitator for import of goods and not a seller of the goods. In order to show that the transaction between the parties constituted 'sale', the defendant relied on the fact that the plaintiff charged an amount @12.5% as value added tax. For the purpose of present judgement and in the peculiar facts of this case and having regard to the provision of section 4 of The Sales of Goods Act, 1930, I am of the opinion that the transaction between the parties did constitute a sale.
33. I have perused the judgement reported as M. Framrose And Company (supra). That judgement was in the context of liability to pay sales tax under Bombay Sales Tax Act, 1959. That was not a dispute between a buyer and a seller but between an assessee of sales tax and the state. That judgement was in the context of the issue as to whether the return of the defective goods by the purchaser to seller constituted a sale within the meaning of Bombay Sale Tax Act, 1959. In that case the goods were actually returned by the buyer to the seller on being found defective and accepted by the seller. In that case Hon'ble Bombay High Court was interpreting a revenue statute in the context of liability of an assessee to pay tax. The judgement is of no help to the defendant in facts of this case. In this case, the defendant admittedly had actually utilized the goods for the exhibitions at Noida and other places. May be, that it was not able to locate the prospective buyers for these goods for some reason, but such a risk is inherent in all business adventures. The defendant was not having any right to return the goods to the plaintiff at any time within six months as is sought to be contended by the defendant under Section 8(1) (d) of The Delhi Value Added Tax Act. Such a C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 18 of 21 period cannot be considered as reasonable under Section 42 of the Sale of Goods Act, 1930 in the facts and circumstances of this case especially after the defendant utilized the goods in exhibitions. DW1 in his cross examination stated that the goods were exhibited in exhibitions at Noida, Delhi, Lucknow, Gurgaon and at other places.
34. The defendant had issued a cheque of Rs.6,77,750/- which got bounced due to funds insufficient. Section 118 (a) of The Negotiable Instruments Act stipulates that unless the contrary is proved that it shall be presumed that every negotiable instrument was made for consideration. I am of the opinion that the evidence on record is not sufficient to displace this presumption. The defendant firm is in the business of importing and wholesale selling of artificial flowers as is apparent from its visiting card (Mark P-admitted in affidavit of admission denial of documents by DW1) and having experience in this field. In view of evidence that has come on record, it is held that the defendant has failed to establish that the goods were either of inferior quality or in deficient quantity or the price claimed was exorbitant. Issue No.2 is decided in favour of plaintiff and against the defendant. Issue No.3: Whether the plaintiff is entitled to recover a sum of Rs.6,77,750/- from the defendant? OPP
35. In view of my findings on issue No.2, reliance by the counsel for the defendant on the judgement reported as Hasenbhoy Jetha, Bombay vs. New India Corporation Ltd. [AIR 1955 Mad 435] which lays down that in the event, the goods are sold by description by a seller who deals in such goods, in absence to an agreement to the contrary, remains responsible for the latent defects of the goods which rendered them C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 19 of 21 unmerchantable and on sections 42 and 43 of Sales of Goods Act, 1930, is of no help to the defendant. I see no reason as to why the case of the plaintiff to recover Rs.6,77,750/- be not accepted. I accordingly accept the same and it is held that the defendant is liable to pay an amount of Rs.6,77,750/- to the plaintiff.
36. The present suit was filed on 20.09.2018. The defendant has not raised a plea that this suit is barred by limitation. Even otherwise, the present suit was earlier filed in the Court having territorial jurisdiction over East Delhi District and then he re- filed in this Court. In view of section 14 of Limitation Act, the present suit would be within limitation.
37. Issue No.3 decided in favour of the plaintiff and against the defendant.
Issue No.4: Whether the plaintiff is entitled to interest on the suit amount or any other amount as may be found due by the Court against the defendant, if so, at what rate and for which period? OPP.
38. The plaintiff has confined its suit to an amount of Rs.6,77,750/- and has not claimed the pre-litigation interest. The transaction between the parties was purely a commercial transaction. However, I am of the opinion that in the peculiar facts of the case and in view of outbreak of Covid-19, the ends of justice would be met if the defendant is directed to pay interest @ 9% per annum on the amount of Rs.6,77,750/- from the date of filing of the present suit in this Court till its realization. Issue No.4 is decided accordingly.
Issue No.5: Relief.
39. In view of above, a decree for recovery of Rs.6,77,750/- with interest @ 9% per annum from the date of filing of this suit C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 20 of 21 in this court i.e 28.09.2018 till realization of this amount is passed in favour of the plaintiff and against the defendant. The plaintiff shall also be entitled for costs.
40. Decree sheet be prepared accordingly.
41. File be consigned to record room.
Announced on 25.02.2022 (SARITA BIRBAL) District Judge, Commercial Court, North East, Karkardooma Courts, Delhi C.S. (Comm.) 04/2020 M/s D.N. Electronics vs. M/s Shivam Enterprises page 21 of 21