Bangalore District Court
By Applying The Price Adjustment ... vs Has Chosen Not To Make Payment On The ... on 20 April, 2021
1
Com.O.S.No.10170/2015
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 20th DAY OF APRIL 2021.
PRESENT:
SRI.DEVARAJA BHAT.M., B.COM, LL.B.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com. O.S. No.10170/2015
BETWEEN:
M/s ACC Limited, Sales Unit
Office, The Estate, 003A,
Ground Floor, 121,
Dickenson Road, Bengaluru
-560 042, represented by its
Senior General Manager
Sales (Sales Unit) Sri. Satish
M. Chandran.
: PLAINTIFF
(Represented by M/s Kumar
& Kumar Advocates -
Advocates)
AND
Karnataka Rural
Infrastructure Development
Ltd., Grameenabhivruddi
Bhavana, 4th & 5th Floor,
Anandrao Circle, Bengaluru -
2
Com.O.S.No.10170/2015
560 009, represented by its
Managing Director.
: DEFENDANT
(Defendant is Represented
by Sri. Gururaj Joshi -
Advocate)
Date of Institution of the 14.12.2015
suit
Nature of the suit (suit on
pronote, suit for declaration &
Possession, Suit for injunction Recovery of Money
etc.)
Date of commencement of 12.09.2019
recording of evidence
Date of First Case Not held (transferred suit)
Management Hearing
Time taken for disposal from 15 days
the date of conclusion of
arguments
Date on which Judgment was 20.04.2021
pronounced
Total Duration Year/s Month/s Day/s
05 04 06
(DEVARAJA BHAT.M),
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru.
3
Com.O.S.No.10170/2015
JUDGMENT
This is a suit for recovery of Rs.1,61,38,710/- from the Defendant with interest at the rate of 18% per annum from the date of suit till the date of realisation.
2. The contentions of the Plaintiff, in brief, are as follows:-
The Plaintiff is a Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of manufacturing cement and Ready Mix Concrete, that the Defendant is a Government of Karnataka undertaking for developing the rural infrastructure in Karnataka State, that the Defendant issued a Tender Notification for the year 2006 for supply of cement to the projects of the Defendant, that the Plaintiff was the successful bidder and the Defendant accepted the bid of the Plaintiff since 2006 to 2011, that there was no issues with regard to the price and payment of invoice amount to the Plaintiff, that the Defendant issued a fresh tender on 27.05.2011 for the period from May 2011 to May 2012 and the Defendant issued a Letter of Acceptance to the Plaintiff for supply of 2,60,000 bags of PPC Cement amounting to Rs.13,22,96,000/-, that there was no tender between June 2012 to December 2012, that at the request of the Defendant, the Plaintiff supplied cement on the basis of the 4 Com.O.S.No.10170/2015 earlier Tender and the same has been accepted by the Defendant, that on 27.12.2012, the Defendant issued Tender Notification for the period from January 2013 to June 2013 and the Plaintiff participated in the said bid and was successful bidder and accordingly the Defendant issued a Letter of Acceptance dated 27.12.2012 for supply of OPC (Ordinary Portland Cement) 933 bags and PPC (Pozzolona Portland Cement) 33,567 bags totally amounting to Rs.93,49,999/-, that there was no tender between January 2013 to October 2013, that the Defendant issued a fresh Tender Notification on 15.10.2013 for the period from November 2013 to April 2014, that upon considering the quality of cement and efficiency in supplying the cement within the time fixed, the Defendant has continuously renewed the Plaintiff's contract every year and has issued Letter of Acceptance from 2006 to till date, that according to the Price Adjustment Clause , wherever the wholesale price index of the cement is reduced, the Defendant has deducted the amount and made reduced payment to the Plaintiff and when it was increased, the Defendant is under an obligation to pay the increased price/value to the Plaintiff, that whenever the wholesale price of the cement has decreased, the Defendant has promptly made reductions in the payments to be released to the Plaintiff by applying the Price Adjustment Formula, but the Defendant has chosen not to make payment on the increased price of cement, though the Plaintiff has specifically requested the 5 Com.O.S.No.10170/2015 Defendant on several occasions to make the payment by calculating the difference amount on the increased price of the cement for the period from June 2011 to May 2012, June 2012 to December 2012, January 2013 to June 2013, July 2013 to October 2013 and November 2013 to April 2014 as per Clause Nos.25 and 26 (earlier 20) of the Tender Bulletin, that inspite of specific demand by the Plaintiff the Defendant has been assuring the Plaintiff that the same would be looked into and the difference of the payments would be released, but the Defendant has been protracting the matter on one or the other pretext, that the Defendant has completely failed and neglected to pay the Plaintiff the difference amount on the basis of the Wholesale Index, which is contrary to the terms and conditions agreed between the parties at the time of accepting the Tender, that the Defendant is liable to pay a sum of Rs.1,61,38,710/- to the Plaintiff towards difference in the increase in the Wholesale Price Index of Cement as detailed in Para No.7 of the Plaint, that the Plaintiff has borrowed funds for its business purpose at huge rates, but in spite of repeated requests, the Defendant has not made payment of the said amount, that the Plaintiff got issued a Legal Notice on 05.05.2015 calling upon the Defendant to make payment of the said amount, but the Defendant neither replied the said notice nor made any payment.
Hence, the Plaintiff has filed the present suit for the above- mentioned reliefs.
6Com.O.S.No.10170/2015
3. The contentions of the Defendant in its written Statement are as follows :-
That the suit of the Plaintiff is not maintainable either in law or on facts and as such, the same is liable to be dismissed in limine, that there is no cause of action to file this suit, that as per the General terms and conditions of the Tender, the Plaintiff at the first instance has to approach the Managing Director for any of his grievances/disputes which will be referred to an Office of the rank of Joint Director of the Corporation who shall Act as an Arbitrator, and whose decision is final and binding on both the parties, that without exhausting the said procedure, this suit is filed by the Plaintiff and therefore, it is premature and hence, liable to be rejected, that the Plaintiff never approached the Defendant's Managing Director for settlement of disputes under Clause No.36 of the General Conditions of Contract, that there is no contract between the Plaintiff and Defendant regarding payment of any interest for delayed payment or unpaid payments from the Defendant and hence, the Plaintiff is not entitled to claim any interest from the Defendant, that as the Legal Notice sent by the Plaintiff was not appended with requisite supporting documents, the same was not considered, however whenever the representatives of the Plaintiff have approached the Defendant, it was made clear that 7 Com.O.S.No.10170/2015 the Plaintiff is not entitled to any payments on the grounds of price-variation and price adjustments, that the suit claim is barred by the law of limitation and therefore, the Defendant prayed to dismiss the suit.
4. Based on the above pleadings, the following Issues are framed by the then Presiding Officer on 04.07.2019 :-
1. Whether the Plaintiff proves that Defendant is liable to pay sum of Rs.1,61,38,710/- towards differences in the increase of the wholesale price index of cement supplied ?
2. Whether the Defendant proves that price variation and price adjustment clause is not applicable for the supply of cement by the Plaintiff in view of the Gazette Notification of Government of Karnataka dated 27.1.2005 vide order No. FD-59-PRO-Cell-2004, Bangalore dated 26.11.2004 as contended ?
3. Whether suit is barred by limitation ?
4. Whether the Defendant proves that suit filed without exhausting Arbitration for settlement of dispute pertaining to the contract, is not maintainable ?
5. Whether Plaintiff is entitled to recover suit claim amount with interest from the defendant ?
6. What Decree or Order?
5. In order to prove the contentions of the Plaintiff, the Senior 8 Com.O.S.No.10170/2015 General Manager and the General Power of Attorney holder of the Plaintiff Company got examined himself as P.W.1 and got marked documents as Exs.P.1 to Ex.P.26. The Defendant has not chosen to adduce evidence on its behalf.
6. I have heard arguments of the learned Advocate for Plaintiff Sri. Abhinav Ramanand and the learned Advocate for Defendant Sri. Gururaj Joshi. Heard the Reply arguments of the learned Advocate for Plaintiff Sri. Rahul. The Advocates for the Plaintiff and Defendant have also submitted their Written Arguments.
7. My findings on the above issues are as follows:-
Issue No.1 :- In the Affirmative Issue No.2 :- In the Negative Issue No.3 :- In the Negative Issue No.4 :- In the Negative Issue No.5 :- In the Affirmative Issue No.6 :- As per the final Order for the following reasons.
REASONS
8. Issue Nos.1 & 2:- Since these two issues are inter-linked with each other, I discuss the same jointly in order to avoid repetition.
9Com.O.S.No.10170/2015
9. According to Plaintiff, he was the successful bidder and the Defendant has accepted the Tender of the Plaintiff since 2006 to 2011. There is no dispute about the said period. The further case of the Plaintiff is that the Defendant issued a fresh Tender on 27.05.2011 for the period from May 2011 to May 2012. The said Tender was accepted by the Defendant issuing the Letter of Acceptance as per Ex.P.13. According to the Plaintiff, though there was no tender between June 2012 to December 2012, at the request of the Defendant, the Plaintiff has supplied the cement on the basis of earlier tender and the same has been accepted by the Defendant. The further contention of the Plaintiff is that on 27.12.2012, the Defendant had issued the Tender Notification for the period from January 2013 to June 2013 and the Plaintiff participated in the said process and Defendant had accepted the Plaintiff's Tender as per Ex.P.2. Ex.P.6 is the General Terms and Conditions of the said Tender. Clause No.26 of the said Tender deals with price-adjustment. The Plaintiff has based this suit on the said Clause. Ex.P.5 is the Monthly Wholesale Price-Index for the year 2011 to 2014 issued by the Ministry of Commerce and Industry. There is no dispute this document between the parties.
10. Thereafter, 19.03.2013, the Plaintiff sent Ex.P.7/Letter to the Defendant asking the Defendant to pay the price difference 10 Com.O.S.No.10170/2015 as per the Price adjustment along with the details of supplies. The Plaintiff has sent similar Letters to the Defendant on 11.06.2013 and 03.08.2013 as per Ex.P.8 & P.9. Ex.P.20 is the Account Statement for the month of September 2013 and Ex.P.19 is another Account Statement for the month of October 2013, which were maintained by the Plaintiff pertaining to various sub-divisions of the Defendant Company.
11. The Defendant issued a fresh Tender Notification on 15.10.2013 for the period from November 2013 to April 2014. The Plaintiff participated in the said process and the Tender quoted by the Plaintiff was accepted by the Defendant as per Ex.P.3/Letter of Acceptance. Ex.P.16 and P.17 are the Account Statements of the month November 2013.
12. On 16.04.2014, the Defendant issued Ex.P.4/Letter to all their Engineers directing them to apply the price-adjustment clause and reduce the amounts to be paid.
13. Ex.P.21 to P.23 are the Account Statements for the month of May 2014. On 25.07.2014, the Plaintiff issued Ex.P.10/Letter to the Defendant asking to pay the price-adjustment difference as per the price-adjustment along with details of supply. A similar Letter was sent to the Defendant on 07.08.2014 as per 11 Com.O.S.No.10170/2015 Ex.P.11. Ex.P.18 is the Account Statement for the month of September 2014.
14. Ex.P.14 is a Letter sent by the Defendant (Pandavapura Sub-Division) on 01.10.2014 to the Plaintiff admitting that the amount is still payable and that they are awaiting instructions from their Head Office. Ex.P.15 is another Letter sent by the Defendant (Chamarajanagara Sub-Division) on 20.12.2014 to the Plaintiff admitting that they are reducing an amount of Rs.90,024/- from the money payable to the Plaintiff.
15. Thereafter on 05.05.2015, the Plaintiff sent Legal Notice to the Defendant as per Ex.P.12. The said Legal Notice was served on the Defendant as could be seen from the Postal Acknowledgement marked as Ex.P.12(b). The Defendant has not issued any reply to the Ex.P.12. Ex.P.24 and P.25 are the Tabulations of the difference of amounts receivable by the Plaintiff from different Divisions of the Defendant.
16. As could be seen from Ex.P.4, a communication was issued by the Defendant to its Officers that whenever there has been a decrease in the price of the cement, the Defendant Company has applied the price-adjustment formula and reduced the payment to the Plaintiff. But, when there has been 12 Com.O.S.No.10170/2015 an increase in the price of cement, the Defendant has not applied the price-adjustment formula nor increased the payment. Based on Ex.P.5, the Plaintiff has sent several letters requesting the Defendant to make balance payment as per the price-adjustment clause. As could be seen from Ex.P.14 and P.15, the Defendant has admitted its liability and assured the Plaintiff that it would be released after clearance from the Head Office.
17. The Defendant has not adduced any evidence to show that the price-adjustment clause does not apply to cement. At Para No.8 of the written statement, the Defendant has contended that the price-adjustment and price-variation is not applicable to the supply of cement by the Plaintiff as the "Cement" is only a goods and is not covered in the works of the Contract or in the Works Contract, that as per the proceedings of the Government of Karnataka bearing Order No.FD-59-PWD- CELL-2004 dated 26.11.2004, the price-variation and price- adjustment clause will be applicable only in the case of Works Contract in which the steel, cement, metal, sand, labour will be component and cement will be part of the said work, that if the supply of cement is the only goods in the Supply Order, the price-variation and price-adjustment clause will not be applicable. The Defendant has produced the Copy of the said 13 Com.O.S.No.10170/2015 Notification along with written statement as Annexure-D.1. Though the said Notification is a relevant fact under Section 37 of the Indian Evidence Act, in order to apply the contents of the said Notification to the transaction involved in the present suit, some oral evidence is required. However, the Defendant has not adduced any such oral evidence. The PW.1 has also not been cross-examined in respect of said Notification. Further, as could be seen from Ex.P.4, P.14 and P.15, the Defendant has been applying the price-adjustment clause while making the payment even after the said Order or Notification. Therefore, the Defendant has not proved that the price-adjustment clause is not applicable to the supply of cement.
18. The Advocate for the Defendant has argued that the PW.1 had never participated in the suit transaction and he had no proper valid legal authorization to continue the suit and though he has filed Ex.P.1/Certified Copy of the Power of Attorney, there is no authorization to institute or to depose the present suit and hence, the evidence of PW.1 cannot be considered and hence, the Plaintiff has failed to prove all its contentions. In support of the said contention, he has relied on a decision reported in 2011 (11) - S.C.C. - 524 (State Bank of Travancore vs. M/s. Kingston Computers (I) P.Ltd.). However, I cannot 14 Com.O.S.No.10170/2015 accept the said argument of the learned Advocate for the Defendant for the following reasons.
19. Order XXIX Rule 1 of the Civil Procedure Code uses the term "Corporation" which will naturally include companies within its definition.
20. The Hon'ble Supreme Court in the decision reported in 1996 (6) - S.C.C. - 660 = A.I.R. - 1997 - S.C. - 3 (United Bank of India vs. Naresh Kumar) has held at Para No.10 as follows :-
"It cannot be disputed that a company like the bank can sue and be sued in its own name. Under Order VI Rule 14 of the Civil Procedure Code a pleading is required to be signed by the party and its pleader, if any. As a company is juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order XXIX Rule 1 of the Civil Procedure Code, therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order VI Rule 14 together with Order XXIX Rule 1 of Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order XXIX can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition 15 Com.O.S.No.10170/2015 thereto and dehors, Order XXIX Rule 1 as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order VI Rule 14. A person may be expressly authorized to sign the pleadings on behalf of the company, for example by the Board of Directors, passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be expressed or implied. The Court can on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer"
21. Even the Hon'ble Supreme Court in the aforesaid judgment has used the terms "Company" and "Corporation" interchangeably.
22. Coming to the present case, the Plaintiff has specifically pleaded in the cause title of the plaint that the Plaintiff Company is represented by its General Manager Sales (Sales Unit) Sri. Satish M. Chandran. The Defendant in its written statement has not specifically denied that the said General Manager Sales (Sales Unit) Sri. Satish M. Chandran has no authority to institute the suit. Further, the PW.1 has deposed based on a Power of Attorney marked as Ex.P.1. This being so 16 Com.O.S.No.10170/2015 even if there is no express resolution to prove the authority of PW-1 to depose on behalf of the Plaintiff, by virtue of Order XXIX Rule 1 of the Civil Procedure Code, PW- 1 being the Senior General Manager of the Plaintiff Company was competent to depose about the facts of the case and no express authority is in fact required. Furthermore, the Plaintiff Company has never disputed or challenged the acts of PW-1 and thereby has impliedly ratified his acts and conducts with regard to the conduct of the trial. Hence, the argument advanced by the Learned Counsel for the Defendant that the PW.1 has no authority to depose on behalf of the Plaintiff, is without any merits and the same stands rejected.
23. The learned Advocate for the Defendant has argued that Exs.P.3 to P.11 and Exs.P.14 to P.25 are all fabricated documents and that the same were purported to be signed by the General Manager of the Defendant and that there is no post of General Manager in the Defendant Corporation and he has also filed the list of Officers in the Defendant Corporation both at Head Office and at various Branch Offices. During the course of cross- examination of PW.1 also, he has made such a suggestion to the PW.1. PW.1 has denied the said suggestion. Mere putting a suggestion and its denial does not amount to proof of the said contention. If the Defendant has really disputed the existence, 17 Com.O.S.No.10170/2015 execution, validity, genuineness and binding nature of Exs.P.3 to P.11 and P.14 to P.25, he should have adduced some evidence in support of said contentions. For the reasons best known to the Defendant, he has not adduced any oral evidence. He has also not produced any documentary evidence. When such being the case, mere arguments about the said aspect cannot be considered at all. Further, the Advocate for the Plaintiff has argued that the list of Officers and Officials of the Defendant Corporation submitted by the Advocate for the Defendant pertains to 2020, whereas the transaction took place prior to 2015 and hence, the Defendant has not proved that at that point of time, there was no such post called 'General Manager'. It is to be noted here that the Legal Notice marked Ex.P.12 was issued to the Manager of the Defendant Company. The same was served on the Defendant Company as could be seen from the Postal acknowledgement marked as Ex.P.12(b). When such being the case, the contentions of the Defendant that no such post in the Defendant Corporation, cannot be accepted at all.
24. One more thing to be noticed here is that the Advocate for the Plaintiff on 16.03.2021 has served a Notice to produce the documents for inspection which were referred to in Ex.P.11 on the Advocate for the Defendant. On 23.03.2021, the Defendant had filed an answer to the said Notice stating that 18 Com.O.S.No.10170/2015 the Ex.P.11 itself is a fabricated document and the documents stated in the Notice are not with the custody and possession of the Defendant. It is to be noted that all the said documents called upon to be produced are the bills submitted by the Plaintiff for the relevant period for the supply of cement to the Defendant. The Reply issued by the Defendant is contrary to the various documents issued by the Defendant Corporation itself marked as Ex.P.2, P.3, P.4, P.14 & P.15. When such being the case, the Defendant has suppressed the material facts just because to defeat the claim of the Plaintiff by non-examination of any witnesses on behalf of the Defendant and also non- production of the documents asked by the Plaintiff in the said notice.
25. Further, the Advocate for the Plaintiff has relied on a decision reported in 1999 (3) - S.C.C. - 573 (Vidyadhar vs. Manikrao & Another) , wherein it is held that where a party to the suit does not appear in the witness box and states his own case on Oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct. It is to be noted that the Plaintiff has made a huge claim against the Defendant stating that he was the successful bidder in a Tender Process initiated by the Defendant. The Defendant has denied the said Tender Process 19 Com.O.S.No.10170/2015 itself and participation of the Defendant in the said Tender Process and denied various documents relied on by the Plaintiff at Para No.6 & 7 of the written statement. Having denied the said Tender Process itself, it is the bounden duty of the Defendant to adduce oral and documentary evidence in support of the said contentions, but the Defendant has not adduced any oral or documentary evidence for the reasons best known to him. If really the Plaintiff has fabricated the said documents with seal and signature of the General Manager, which post itself is not in existence in the Defendant Corporation, then it is a serious matter and the Defendant ought to have taken suitable actions against the Plaintiff at that stage itself. However, no such action is taken against the Plaintiff also. When such being the case, as per the ratio of the above- mentioned decision, the said contentions of the Defendant cannot be accepted at all.
26. The learned Advocate for the Plaintiff has relied on a decision reported in I.L.R. - 2009 - KAR - 1534 (N. Basavaraj since deceased by his LRs vs. V. Sridhar and Others). In the said decision also, similar principles are reiterated for non-examination of the Defendant and an adverse inference is also drawn under Illustration (g) of Section 114 of the Evidence Act.
20Com.O.S.No.10170/2015
27. Exs.P.16 to P.25 are the Computer Print-outs. For the admissibility of the said documents, a Certificate as required under Section 65-B of the Evidence Act is produced by the Plaintiff. During the course of cross-examination of PW.1, it is elicited that one Mr. Sachin Kale is Accountant of the Plaintiff who is having custody of the Computer from which Exs.P.16 to P.25 were taken and that the Certificate of said Mr. Sachin Kale has not been taken relating to Exs.P.16 to P.25. Based on the said evidence, the learned Advocate for the Defendant has much argued that the said documents are not proved in accordance with law and hence, the same cannot be accepted at all. However, as per the decision reported in 2020 - S.C.C. OnLine - S.C. - 571 (Arjun Pandit Rao Khotkar vs. Kailash Kushanrao Gorantyal & Others), it is held as follows:-
"It may also be seen that the person who gives this certificate can be anyone out of several persons who occupy a 'responsible official position' in relation to the operation of the relevant device, as also the person who may otherwise be in the 'management of relevant activities' spoken of in Sub-section (4) of Section 65B. Considering that such certificate may also be given long after the electronic record has actually been produced by the computer, Section 65B(4) makes it clear that it is sufficient that such person gives the requisite certificate to the "best of his knowledge and belief" (Obviously, the word "and" between knowledge and belief in Section 65B(4) must be read as "or", as a person cannot 21 Com.O.S.No.10170/2015 testify to the best of his knowledge and belief at the same time)".
28. Therefore, the Certificate issued by PW.1 can be considered and hence, the said arguments of the learned advocate for the Defendant cannot be accepted at all.
29. The learned Advocate for the Defendant has argued that all the Engineers of the Defendant Corporation are not made as a party to the suit. Under the provisions of Order XXIX of Civil Procedure Code, there is no such requirement to implead all the Officers of the Defendant Corporation and if necessary, the Court may require personal appearance of any such Officer as per Rule 3 of the said provision. Further, there is no issue about non-joinder of necessary parties. When such being the case, the said argument of the learned advocate for the Defendant cannot be accepted at all.
30. In view of the said discussion, I come to the conclusion that the Plaintiff has proved the aspects involved in Issue No.1 and that the Defendant has failed to prove the aspects involved in Issue No.2. Hence, I answer Issue No.1 in the Affirmative and Issue No.2 in the Negative.
31. Issue No.3 :- The Defendant has contended that the Suit of the Plaintiff is barred by law of limitation. The suit 22 Com.O.S.No.10170/2015 transactions took place in the year 2012 to 2014. The suit is filed in the year 2014. As per Ex.P.14, the Defendant was still awaiting the instructions from the Head Office to release the payments. Therefore, there is an acknowledgement of the liability by the Defendant also. The Plaintiff has been requesting the Defendant to release the payment as per Ex.P.7 to P.11. Further, the Defendant has not replied Ex.P.12/Legal Notice issued by the Plaintiff. The Defendant has neither refused the claim of the Plaintiff nor replied to any of the representations or Legal Notice. When there is no such denial of the claim of the Plaintiff, the suit cannot be held as barred by time.
32. For the said purpose, I wish to refer to a decision reported in 2018 (12) - S.C.C. - 393 (Aries & Aries vs. Tamilnadu Electricity Board), wherein it is held that the suit is to be filed within the limitation from the date of rejection of the Claim by the Defendant and the said suit is governed by the Article 113 of the Limitation Act. In that suit, after receipt of final payment, the Plaintiff demanded further payment on 16.05.1981, which was rejected by the Defendant on 06.11.1981. The Hon'ble Supreme Court has held that cause of action in respect of the said rejected claim arose on 06.11.1981 and the suit filed was well within limitation. The fact of the said case is applicable to 23 Com.O.S.No.10170/2015 the present case also and in the present case there is no rejection of claim at all. Hence, this suit is within limitation. Therefore, I answer this Issue in the 'Negative'.
33. Issue No.4 :- The Defendant has contended that as per Clause No.36 of Ex.P.6, the Plaintiff has to approach the Managing Director for any of his grievances or disputes which will be referred to an Officer of the rank of the Joint Director of the Corporation, whose decision shall be final and binding on both the Parties. According to the Defendant, the said Clause is an Arbitration Clause and hence, the Suit is not maintainable. The learned Advocate for the Plaintiff has argued that the Clause No.36 of Ex.P.6 is not an Arbitration Clause, that even assuming that it is an Arbitration Clause, the Defendant ought to have pointed out to the Court by filing necessary application before submitting first Statement on the substance of the dispute, that the Defendant having filed its written statement, cannot claim that there is an Arbitration Clause in Ex.P.6.
34. In order to decide the said fact, it is better to reproduce the Clause No.36 of the Ex.P.6 here itself, which reads as follows:-
24Com.O.S.No.10170/2015 "All disputes pertaining to the Contract will be referred to an Officer to be appointed by the Managing Director KRIDL not below the rank of Joint Director of the Corporation whose decision shall be final and binding on both the parties."
35. One thing to be noted here is that the Plaintiff has made repeated representations as per Ex.P.7 to P.10 to the Defendant. If the Defendant really wanted to resolve the dispute as per the terms of Ex.P.6, he should have referred the matter to the Authority mentioned in Clause No.36. However, he did not make any such attempt. When the Defendant himself has not acted in terms of the Clause No.36, he cannot blame the Plaintiff on the said ground. Further, the learned Advocate for the Plaintiff has referred to a decision reported in 2014 (2) - S.C.C. - 201 (P. Dasaratharama Reddy Complex vs. Government of Karnataka & Another), wherein it is held that an Officer or Authority of one of the parties overseeing for having jurisdiction over subject matter of the contract, cannot be an Arbitrator nor can a Clause empowering such person to resolve the dispute be an Arbitration Clause. It is further held that Clause empowering Chief Engineer/Engineer/Board of Director of one of the parties (Government Company) who had jurisdiction/was responsible for subject matter of contract, to settle disputes between parties at the first instance and making it final and binding on them, cannot be an Arbitration Clause.
25Com.O.S.No.10170/2015
36. He has also relied on another decision reported in 2016 (16) - S.C.C. - 661 (Master Tours & Travels vs. Chairman, Amarnath Shrine Board and Others) wherein it is held that Clause providing "in case of any dispute, the matter shall be referred to the Chief Executive Officer, Amarnath Shrine Board, whose decision in the matter shall be final" not an Arbitration Clause for settling the dispute between the parties.
37. In view of ratio of the said decisions of Hon'ble Supreme Court, the Clause No.36 of Ex.P.6 cannot be considered as an Arbitration Clause. Hence, I answer this Issue in the Negative.
38. Issue No.5 :- In view of my above discussions, observations and findings, the Plaintiff is entitled to recover a sum of Rs.1,61,38,710/- with interest at the rate of 18% per annum from the date of suit till realization. The interest claimed by the Plaintiff at the rate of 18% per annum is just and proper by considering the provisions relating to awarding interest under Section 80 of the Negotiable Instruments Act and also the provisions of MSME Act. Therefore, I answer this Issue in the Affirmative.
26Com.O.S.No.10170/2015
39. Issue No. 6 : -Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed.
The Defendant is directed to pay a sum of Rs.1,61,38,710/- (Rupees One Crore Sixty One Lakhs Thirty Eight Thousand Seven Hundred and Ten only) to the Plaintiff with interest at the rate of 18% per annum from the date of Suit till realization.
The Defendant is hereby directed to pay cost of this suit to the Plaintiff. The Advocate for the Plaintiff is directed to file Memorandum of Cost before the Office within 5 days from today as required under Rule 99 and 100 of Karnataka Civil Rules of Practice.
Draw up Decree accordingly.
The Office is directed to send copy of this Judgment to Plaintiff and Defendant to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Judgment Writer, typed by her, corrected and then pronounced by me in open Court on this the 20th day of APRIL 2021).
(DEVARAJA BHAT.M), LXXXII Addl. City Civil & Sessions Judge, Bengaluru.
27Com.O.S.No.10170/2015 ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE PLAINTIFF P.W.1 Sri. Somu Goundar LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 Certified Copy of Power of Attorney dated 12.07.2018 Ex.P.2 Original Letter of Acceptance dated 27.12.2012 Ex.P.3 Original Letter of Acceptance dated 15.10.2013 with annexures Ex.P.4 Copy of Letter dated 16.04.2014 issued by the Defendant Company to their Engineer.
Ex.P.5 Copy of Monthly Wholesale Price Index of
Cement for the year 2011 to 2014
Ex.P.6 Copy of Tender Bulletin
Ex.P.7 Office Copy of Letter dated 19.03.2013 sent
by the Plaintiff to the Defendant
Ex.P.8 Office Copy of Letter dated 11.06.2013 sent
by the Plaintiff to the Defendant
Ex.P.9 Office Copy of Letter dated 03.08.2013 sent
by the Plaintiff to the Defendant
Ex.P.10 Office Copy of Letter dated 25.07.2014 sent
by the Plaintiff to the Defendant
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Com.O.S.No.10170/2015
Ex.P.11 Office Copy of Letter dated 07.08.2014 sent
bythe Plaintiff to the Defendant
Ex.P.12 Office Copy of Legal Notice dated 05.05.2015
Ex.P.12(a) & 12(b) Postal Receipt and acknowledgement Ex.P.13 Certified Copy of the Letter of Acceptance dated 27.05.2011 Ex.P.14 Letterdated 01.10.2014 sent by the Defendant to the Plaintiff Ex.P.15 Letter dated 20.12.2014 sent by the Defendant to the Plaintiff with details of reduced payments Ex.P.16 Accounts Statement of the Defendant Company (Bidar Division) from 13.11.2013 to 26.06.2014 in the books of Plaintiff Company Ex.P.17 Accounts Statement of the Defendant Company (Humnabad Division) from 13.11.2013 to 26.06.2014 in the books of Plaintiff Company Ex.P.18 Accounts Statement of the Defendant Company (Basavana Bagewadi Division) from 09.09.2014 to 30.09.2019 in the books of Plaintiff Company Ex.P.19 Accounts Statement of the Defendant Company (Pandavapura Division) from 01.10.2013 to 01.12.2014 in the books of Plaintiff Company Ex.P.20 Accounts Statement of the Defendant Company (Kollegal Division) from 01.09.2013 to 30.06.2014 in the books of Plaintiff 29 Com.O.S.No.10170/2015 Company Ex.P.21 Accounts Statement of the Defendant Company (KRIDL Division) from 01.05.2014 to 31.05.2014 in the books of Plaintiff Company Ex.P.22 Accounts Statement of the Defendant Company (Bijapur Division) from 01.05.2014 to 31.05.2014 in the books of Plaintiff Company Ex.P.23 Accounts Statement of the Defendant Company (Deputy Director, KRIDL) from 01.05.2014 to 31.05.2014 in the books of Plaintiff Company Ex.P.24 Tabulation of the Price Difference Details -
KRIDL Bidar Division Ex.P.25 Tabulation of the Price Difference Details -
KRIDL Humnabad Division Ex.P.26 Certificate under Section 65B of the Indian Evidence Act LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT
- NIL -
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT 30 Com.O.S.No.10170/2015
- NIL -
(DEVARAJA BHAT.M), LXXXII Addl. City Civil & Sessions Judge, Bengaluru.
31
Com.O.S.No.10170/2015
The Judgment is pronounced in
Open Court. The operative
portion of the said Judgment is as
follows:-
ORDER
The Suit of the Plaintiff is
decreed.
The Defendant is
directed to pay a sum of
Rs.1,61,38,710/- (Rupees One
Crore Sixty One Lakhs Thirty
Eight Thousand Seven
Hundred and Ten only) to the
Plaintiff with interest at the
rate of 18% per annum from
the date of Suit till
realization.
The Defendant is hereby
directed to pay cost of this
suit to the Plaintiff. The
Advocate for the Plaintiff is
directed to file Memorandum
of Cost before the Office
within 5 days from today as
required under Rule 99 and
100 of Karnataka Civil Rules
of Practice.
Draw up Decree
accordingly.
The Office is directed to
send copy of this Judgment to
32
Com.O.S.No.10170/2015
Plaintiff and Defendant to
their email ID as required
under Order XX Rule 1 of the
Civil Procedure Code as
amended under Section 16 of
the Commercial Courts Act.
(vide my separate detailed
Judgment dated 20.04.2021).
(Typed to my dictation).
LXXXII ACCJ, B'LURU.