Bangalore District Court
Girija K V vs Pukhraj on 19 October, 2024
KABC170011542022
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.OS.No.589/2022
Dated on this 19th day of October 2024
Plaintiff Smt.K.V.Girija,
W/o Varadaraj K.S,
aged about 44 years,
Proprietary of
Prem Textiles,
Office at No.8/1, 2nd Floor,
Sree Krishna Complex,
Opp: Rayal Shelters Layout,
Devarachikkanahalli,
Billekahalli Post,
Bengaluru-560076.
(By Sri.G.V.Sudhakar, Advocate)
// versus //
Defendants 1. Sri. Pukhraj,
Proprietor of
P.R. Enterprises,
Proprietary concern
office at 1st and 2nd Floor, No.24,
9th Cross, H.Siddaiah Road,
Bengaluru-560027.
Deceased by his LRs.
1(a) Sri.Vipin Bhandari,
S/o late Pukhraj,
Aged about 48 years,
1(b) Smt.Dariya Bai,
2
CT 1390_Com.OS.589-2022_Judgment.doc
KABC170011542022
W/o late Pukhraj,
Aged major,
1(c) Sri.Kiran,
S/o late Pukhraj,
Aged Major,
1(d) Sri.Naveen,
S/o late Pukhraj,
Aged Major,
1(e) Smt.Rekha,
D/o late Pukhraj,
Aged Major,
1(f) Smt.Sneha,
D/o late Pukhraj,
Aged Major,
All are residing at:
Office at No.24, 1st & 2nd Floor,
9th Cross, H.Siddaiah Road,
Bengaluru-560027.
(Defendant dead
LRs of defendant by Sri.S.J.Sanghvi,
Advocate)
Date of Institution of suit : 16/04/2022
Nature of the suit : Agreements for sale of
goods or provision of
services
Date of commencement of :
recording of the evidence 20/04/2024
Date on which the : 19/10/2024
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
02 06 03
3
CT 1390_Com.OS.589-2022_Judgment.doc
KABC170011542022
JUDGMENT
This is a suit filed by the plaintiff against defendant (who passed away during the pendency of this suit and who is now represented by his LRs), for recovery of sum of Rs. 2,70,00,000/= (Rupees Two crores Seventy lakhs), as damages for breach of contract for sale of movable Property i.e. branded garments.
2. The plaint averments in brief are that, the plaintiff is in wholesale and retail business of garments. The defendant approached the plaintiff and represented that the defendant is in business of supplying bulk branded garments of United Colors of Benetton (hereinafter referred to as UCB) and the defendant agreed to supply branded goods of UCB consisting of 5,66,772 pieces of MRP value of Rs. 125.86 crores at 10.75% of MRP, that is at discount of 89.25%. The billing value would be Rs. 13.53 crores and in this regard, the parties executed Purchase Agreement dated 08-07-2021. In pursuance of the said agreement, the plaintiff paid advance amount of Rs 25 lakhs on 09-07-2021 and was supposed to pay Rs 3.25 crores on 20-07-2021. However, on 10-07-2021, 4 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 defendant repudiated the contract by sending email stating that due to "internal approval issues from the brand", defendant is unable to supply the garments as agreed. To this, plaintiff sent reply email dated 12-07-2021 stating that, Plaintiff has already mobilized funds and also refused offers of purchase from other vendors, believing that defendant will supply the garments and therefore, will be put into irreparable loss and injury by the unilateral repudiation of the agreement by the Defendant and requesting defendant to honor the agreement and supply the garments. On same day, i.e. 12-07-2021, without consent and knowledge of the plaintiff, defendant transferred the advance amount of Rs. 25 lakhs to the plaintiff's account. Thereby, it is pleaded that, the defendant has committed breach of the agreement for supplying the garments as agreed and as a result of the same, the plaintiff does not have stock to run her business and business of all the Plaintiff's stores has decreased and the plaintiff is also unable to purchase material from other vendors, since, plaintiff refused the offer of other vendors, believing that the defendant will supply the goods. As a result of this, the plaintiff has suffered loss of Rs. 2.70 crore. Hence, 5 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 for recovery of said sum of damages of Rs. 2.70 crore, along with interest, the present suit is filed.
3. In response to the suit summons, the defendant entered appearance through Counsel and filed detailed written statement contending that, suit is not maintainable since plaintiff has not sought for specific performance of the agreement. The defendant admitted entering into agreement dated 08-07-2021 and it was stated that, under the said agreement, plaintiff paid advance of Rs. 25 lakhs and had agreed to pay Rs. 3.25 crores on 20-07-2021, out of which Rs. 1 crore was to be treated as advance for the entire lot and said amount was to be redeemed when 1 lakh pieces of balance stock was to be supplied and the rest of the funds i.e. Rs. 2.5 crores was to be paid at the time of billing of the equivalent stock. It was pleaded that, subsequently, on 10-7- 2021, the defendant informed the plaintiff that due to internal approval issues of the company, the agreement could not be acted upon and defendant could not supply the garments and on 12-07-2021, by mutual understanding, agreement was repudiated and the advance amount of Rs. 25 Lakhs was also 6 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 refunded since plaintiff shared the bank account details. Thereby it was contended that since parties entered into settlement to close the contract by mutual consent, there is no question of plaintiff seeking damages for breach. Even otherwise, it was contended that, the plaintiff never offered to pay the sum of Rs. 3.25 crores on 20-07-2021, which means that plaintiff also treated the agreement as cancelled. It was further contended that, in any event, the plaintiff has not produced any material to show that, plaintiff has suffered damages of Rs 2.70 crores and thereby it was contended that, viewed from any angle, suit is liable to be dismissed.
4. After filing of the written statement, when the matter was at the stage of filing of statement of admission and denial of documents, the death of original defendant was reported to the court and thereafter, plaintiff brought on record one LR of Defendant [i.e. Vipin Bhandari] who filed additional written statement contending that, all the LRs of the defendant are not brought on record and reiterating the defenses earlier taken in the original written statement. Thereafter, plaintiff filed application and brought on record the other Lrs of the 7 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 defendant and after coming on record, said Lrs filed memo adopting written statement and additional written statement already on record.
5. On the basis of the rival pleadings, the following issues are framed;
1) Whether the plaintiff proves that due to illegal acts and non-performing of obligations of purchase agreement dated 08-07-2021 by Sri. Late Pukhraj, Plaintiff has suffered loss of Rs. 2,70,00,000/=?
2) Whether the Plaintiff is entitled for damages of Rs. 2,70,00,000/= from the defendant with interest as prayed?
3) What decree or order?
6. On the basis of Statement of Admission and Denial of Documents of both sides, by consent, Ex. P1 to P3 were marked for Plaintiff and Ex. D1 was marked for LRs of Defendant.
7. Thereafter, in the trial, the attorney holder of plaintiff is examined as PW1 and got marked Ex. P4 to P13, and he has been fully cross-examined by the Learned Counsel for LRs of Defendant. Thereafter, Counsel for LRs of Defendant 8 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 submitted that the LRs of Defendant do not wish to adduce any oral evidence.
8. Thereafter, I have heard the arguments of both sides and perused the records of the case.
9. My answer to the issues are as follows;
Issue No. 1 and 2 : In the negative.
Issue No. 3 : As per final order, for the following :-
REASONS Issue No. 1 and 2 :-
10. These issues are considered together since they require common discussion.
11. The case of the plaintiff in brief is that, the plaintiff is in wholesale and retail business of garments. The defendant approached the plaintiff and represented that the defendant is in business of supplying bulk branded garments of United Colors of Benetton (hereinafter referred to as UCB) and the defendant agreed to supply branded goods of UCB consisting of 5,66,772 pieces of MRP value of Rs. 125.86 crores at 10.75% of MRP, that is at discount of 89.25%. The billing 9 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 value would be Rs. 13.53 crores and in this regard, the parties executed Purchase Agreement dated 08-07-2021. In pursuance of the said agreement, the plaintiff paid advance amount of Rs 25 lakhs on 09-07-2021 and was supposed to pay Rs 3.25 crores on 20-07-2021. However, on 10-07-2021, defendant repudiated the contract by sending email stating that due to "internal approval issues from the brand", defendant is unable to supply the garments as agreed. To this, plaintiff sent reply email dated 12-07-2021 stating that, Plaintiff has already mobilized funds and also refused offers of purchase from other vendors, believing that defendant will supply the garments and therefore, will be put into irreparable loss and injury by the unilateral repudiation of the agreement by the Defendant and requesting defendant to honor the agreement and supply the garments. On same day, i.e. 12-07-2021, without consent and knowledge of the plaintiff, defendant transferred the advance amount of Rs. 25 lakhs to the plaintiff's account. Thereby, it is pleaded that, the defendant has committed breach of the agreement for supplying the garments as agreed and as a result of the same, the plaintiff does not have stock to run her business and 10 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 business of all the Plaintiff's stores has decreased and the plaintiff is also unable to purchase material from other vendors, since, plaintiff refused the offer of other vendors, believing that the defendant will supply the goods. As a result of this, the plaintiff has suffered loss of Rs. 2.70 crore. Hence, for recovery of said sum of damages of Rs. 2.70 crore, along with interest, the present suit is filed.
12. In support of her case, the plaintiff has examined her son and attorney holder as PW1 and got marked Ex. P1 to P13. Amongst these, Ex. P1 to P3 are marked by consent and Ex. P4 to 13 are marked in the chief examination of PW1.
13. Ex. P1 is print out of email. Ex. P2 is the legal notice caused by the plaintiff to defendant dated 17-08-2021 and Ex. P3 is the reply thereto caused by the defendant dated 21- 08-2021. Ex. P4 is again print out of emails. Ex. P5 is an email issued by the Axis Finance Bank to sister concern of plaintiff by name Venkateshwara Garments regarding sanction of loan. Ex. P6 is statement of loss of profit prepared by the plaintiff herself, wherein loss of profit as a result of breach of contract by the defendant is quantified at Rs. 5.11 11 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 crores, whereas the suit claim in the present suit is Rs. 2.70 crores. Ex. P7 is the power of attorney executed by plaintiff in favor of PW1. Ex. P8 is 65-B certificate. Ex. P9 are emails by IDBI First Bank and Growth Source Financial Technologies in respect of loans sanctioned to sister concern of the plaintiff, namely Venkateshwara Garments. Ex. P10 is the OD account statement of Plaintiff. Ex. P11 is Certificate of CA in respect of loans availed by the plaintiff from private parties and interest paid thereon. Ex. P12 is Certificate under Section 63 of the BSA. Ex. P13 is digital copy of "Lot Purchase Agreement dated 08-07-2021", which is the suit agreement and it is for breach of the said agreement that present suit is filed seeking damages.
14. Per contra, the defense raised by the original defendant, which has been adopted by his LRs after his death, is that, suit is not maintainable since plaintiff has not sought for specific performance of the agreement. The defendant admitted entering into agreement dated 08-07-2021 and it was stated that, under the said agreement, plaintiff paid advance of Rs. 25 lakhs and had agreed to pay Rs. 3.25 12 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 crores on 20-07-2021, out of which Rs. 1 crore was to be treated as advance for the entire lot and said amount was to be redeemed when 1 lakh pieces of balance stock was to be supplied and the rest of the funds i.e. Rs. 2.5 crores was to be paid at the time of billing of the equivalent stock. It was pleaded that, subsequently, on 10-7-2021, the defendant informed the plaintiff that due to internal approval issues of the company, the agreement could not be acted upon and defendant could not supply the garments and on 12-07-2021, by mutual understanding, agreement was repudiated and the advance amount of Rs. 25 Lakhs was also refunded since plaintiff shared the bank account details. Thereby it was contended that since parties entered into settlement to close the contract by mutual consent, there is no question of plaintiff seeking damages for breach. Even otherwise, it was contended that, the plaintiff never offered to pay the sum of Rs. 3.25 crores on 20-07-2021, which means that plaintiff also treated the agreement as cancelled. It was further contended that, in any event, the plaintiff has not produced any material to show that, plaintiff has suffered damages of 13 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 Rs 2.70 crores and thereby it was contended that, viewed from any angle, suit is liable to be dismissed.
15. In support of their case, the LRs of the defendant have got marked Ex. D1, which is print out of email, which was marked by consent on basis of statement of admission and denial of documents. However, the LRs of the defendant have not adduced any other oral evidence.
16. It is to be noted that in this case, the emails exchanged between the parties are marked as Ex. P1, P4 and Ex. D1. However, it is sufficient to refer to Ex. P4 because it contains all the emails exchanged between the parties.
17. Having considered the rival contentions of both sides and the oral and documentary evidence on record, it is to be noted that, it is admitted fact that, the parties entered into an agreement dated 8-07-2021, which is marked as Ex. P 13, under which the defendant agreed to sell 5,66,772 pieces of garments of UCB brand of MRP value of 125.86 crores at 10.75% of the MRP, i.e. at a discount of 89.25% on the MRP. The payment terms were that, plaintiff had to pay advance 14 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 amount of Rs. 25 lakhs at time of entering into the agreement and second payment of Rs. 3.25 crores was agreed to be paid on 20-07-2021 and balance payment to be made as and when pro forma invoices are raised by the defendant. It is to be noted that, in the cross-examination of PW1 dated 8-8-2024, a case is sought to be set up by LRs of Defendant that, while sending the agreement at Ex.P 13 by email, defendant, defendant had asked for signed copy by plaintiff, but such signed copy was never sent by the plaintiff. On this basis, a contention was sought to be raised that, since plaintiff has not sent the signed copy of the agreement to the defendant, there is no concluded contract. However, this contention cannot be accepted because sending the signed copy of the agreement by the plaintiff was only a formality, and the contract between the parties and the various terms thereof are clearly forthcoming from the emails exchanged between the parties at Ex. P4 and in any event, the entering into agreement between the parties is categorically admitted by the defendant in written statement at Paragraph 5, wherein it is stated as follows;
15
CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 "It is true that plaintiff had approached defendant to purchase branded garments manufactured by United Colors of Benetton and that an agreement dated 8-7-2021 was entered into between the parties."
18. The terms of the agreement and particularly the payment terms are admitted at paragraph 6 of the written statement. No doubt, at paragraph 5 of the Written Statement, a contention is sought to be raised that the agreement is not executed in accordance with law and same has not been duly stamped and therefore said agreement cannot be looked into. However, essentially, the terms of the agreement are admitted by the defendant and the said terms are also forthcoming from the correspondence between the parties in the emails exchanged. It is to be noted that, under law, there is no prohibition for entering into oral agreement or agreement by correspondence, in respect of sale of movable property viz. branded garments. Therefore, in view of the emails exchanged between the parties as forthcoming at Ex. P4 and as duly admitted in the written statement as noted supra, there was already concluded contract between the parties under which the defendant agreed to supply branded garments of UCB to the plaintiff on specific terms. Therefore, 16 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 the fact that the signed copy of the agreement was not transmitted by email by the plaintiff to defendant or that the formal agreement has not been stamped is inconsequential and therefore, I hold that, the agreement between the parties dated 08-07-2021 under which defendant agreed to supply branded garments of UCB to the plaintiff is an admitted fact.
19. At this stage, it is appropriate to consider the contention raised by the defendant that, the said agreement was voluntarily repudiated and brought to an end by the consent of both sides. In this regard, it is an admitted fact that, under the said agreement, plaintiff had paid advance amount of Rs. 25 lakhs to the defendant on 09-07-2021. As per the said agreement between the parties, the next payment to be made by the plaintiff was Rs. 3.25 crores on 20-07-2021. However, within two days of agreement i.e. on 10-07-2021, the defendant sent an email which is at page 5 of Ex. P4, stating as follows;
"Due to some internal approval issues from brand we will not be able to take this deal forward for 17 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 now. Please share your account details. We will return the advance amount."
20. It is admitted that, the advance amount of Rs 25 lakhs was refunded by transfer to bank account of plaintiff on 12- 07-2021. However, it is the case of the plaintiff that, the said amount was refunded without the consent and knowledge of the plaintiff. Whereas, it is the case of the defendant that, in pursuance of mutual discussions held on 12-7-2021, plaintiff shared her bank account details with the defendant, as a result of which the advance amount was refunded and thereby, the agreement was brought to an end and terminated by the mutual consent of both sides and it is for this reason that, plaintiff never offered to make the second payment of Rs. 3.25 crores on 20-07-2021 because plaintiff also treated the agreement as having been terminated and therefore it is the defense raised by the defendant that, at this point of time, Plaintiff cannot plead that there is breach of contract and cannot claim damages, when plaintiff has voluntarily agreed for terminating the same by receiving the refund of Rs. 25 lakhs.
18
CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022
21. This contention cannot be accepted for two reasons. Firstly, as soon as defendant sent the email dated 10-07-2021 stating that defendant will not be able to supply the garments as agreed, plaintiff has issued reply dated 12-07-2021 which is at page 5 of Ex. P4 stating as follows;
"With regard to the above, this deal is not just discussed from the past couple of days or a week for that matter. It has been almost two months since we have been discussing this United Colors of Benetton stock through Mr. Kumar Shetty. We have been financially planning for this lot and we both had come for mutual decision on how to go about it and thereafter the 'purchase agreement' was made. We have dropped several other offers from other vendors for finalizing this lot. Right now if you are saying that the deal will be cancelled due to some internal approval issues despite several months of discussion is not justifying. You had even confirmed to us that you are authorized dealer for United Colors of Benetton for all of Karnataka and all the liquidation of this brand's stock are decided by you - the reason what you have stated above does not seem genuine basis this. Please honor whatever that we have agreed upon and start supplying the stocks as per our agreement. Otherwise it will result in huge losses for us. Awaiting a positive response from you soon."
22. Therefore from the above reply, it is categorically clear that, plaintiff never agreed for terminating the contract between the parties and instead, raised the contention that, non-supply of material will result in huge loss to the plaintiff. 19
CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 The defendant has not produced any material to show that, the plaintiff voluntarily shared her bank account details for refund of the advance amount. No other material is produced by the defendant to show that, after the email dated 12-7- 2021 in which Plaintiff categorically refused to accept termination of the agreement, the plaintiff has thereafter consented for mutual termination of the agreement. The contention of the Learned Counsel for Defendant that, plaintiff has accepted the refund and kept quiet without again transferring back the amount to the defendant shows that Plaintiff accepted the termination of the agreement cannot be accepted because it is the case of the plaintiff that the said refund was made to Plaintiff's bank account, without her consent and even without her knowledge. It is to be noted that, in the email dated 9-7-2021, which is at page 4 of Ex. P4, under which the plaintiff has communicated to the defendant regarding payment of advance amount, the details of the debit account, i.e. the account of the plaintiff from which payment of Rs. 25 lakhs has been made to the defendant is clearly forthcoming. It is to the same account that defendant has refunded the advance amount of Rs. 25 20 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 lakhs. Therefore, it is clear that, it is not as if the plaintiff consented for refund of the advance amount and shared her bank account details for said purpose, but, since her bank account details of Plaintiff were already available with the defendant, the defendant has refunded the advance amount on 12-7-2021 after unilaterally cancelling the agreement to supply the garments. There is nothing on record to show that, the plaintiff, at any point of time, sought for refund of the advance amount by mutual consent and by agreeing to mutually terminate the agreement. Nor is there any material on record to show that, at any point of time, Plaintiff shared her bank account details with the defendant for refund of the advance amount. Just because plaintiff has not again re- transferred the amount to the defendant, it cannot be said that, plaintiff had agreed for mutually cancelling the agreement. Instead, as per the email dated 12-07-2021, plaintiff has categorically refused to accept the cancellation of the agreement and again called upon the defendant to supply the garments as per the agreement. When there was no positive response to the said email from the side of the defendant, it was not expected of the plaintiff to again 21 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 retransfer the sum of Rs. 25 lakhs to the defendant, when defendant had categorically expressed that defendant is unable to supply the garments as per the contract. Similarly, when in the email dated 10-7-2021, defendant had categorically stated that defendant is not able to supply the garments, it was not expected of the plaintiff to make offer to pay Rs. 3.25 crores to the defendant, on 20-07-2021. Therefore, the contention of the Learned Counsel for LRs of Defendant that, the agreement dated 8-7-2021 was terminated with mutual consent of both sides is unacceptable. On the other hand, from the emails that were exchanged between the parties at Ex.P 4, it is crystal clear that, having entered into agreement dated 8-7-2021 agreeing to supply the branded garments, the defendant unilaterally cancelled the agreement by email dated 10-7-2021 and said cancellation was not accepted by plaintiff by email dated 12- 7-2021. Therefore, I hold that, plaintiff has proved that, there is breach of the contract by defendant, in that, in spite of entering into the contract to supply the branded garments, later on, the defendant unilaterally expressed 22 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 helplessness to supply the branded garments to the plaintiff.
23. Having concluded that plaintiff has proved breach of contract by the defendant, the next question is whether the plaintiff is entitled to the suit relief, viz. damages to the tune of Rs. 2.70 crores for breach of the contract.
24. Before proceeding to consider this contention it is necessary to take note of one contention raised by Learned Counsel for LRs of defendant that the suit for damages is not maintainable without seeking specific performance of the contract. For this, the reply of the Learned Counsel for plaintiff is that, by the time of filing of the suit, the plaintiff had come to know that, the defendant has sold the stock to some other purchaser and therefore, the relief of specific performance was not available and therefore, plaintiff has only filed the suit for relief of damages.
25. In my view, to answer this question as to whether the suit for damages is maintainable without seeking specific performance of the contract, reference may be made to 23 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 Section 57 and 58 of the Sale of Goods Act, 1930, which lay down as follows;
57. Damages for non-delivery.--Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.
58. Specific performance.--Subject to the provisions of Chapter II of the Specific Relief Act, 1877 (1 of 1877), in any suit for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on the application of the plaintiff, by its decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. The decree may be unconditional, or upon such terms and conditions as to damages, payment of the price or otherwise, as the Court may deem just, and the application of the plaintiff may be made at any time before the decree.
(Emphasis Supplied)
26. From plain reading of Section 57 of the Sale of Goods Act, it is clear that, if the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue for damages for non-delivery. From Section 58, it is clear that, the seeking of relief of specific performance is at the option of the purchaser and the purchaser is not bound to seek specific performance and without seeking specific performance, the 24 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 purchaser can seek the relief of damages for non-delivery. Therefore, the present suit for seeking damages for breach of contract is maintainable without seeking relief of specific performance of the agreement at Ex. P13.
27. Having disposed off the above preliminary contentions, let me now focus my attention on the merits of the suit. That is, having held that the defendant has committed breach of the contract at Ex. P13, the principal question to be decided is whether the plaintiff has proved that Plaintiff is entitled to damages of Rs. 2.70 crores for said breach of the contract.
28. At this stage, it is necessary to refer to Section 73 of the Contract Act, which lays down as follows;
73. Compensation for loss or damage caused by breach of contract.--When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
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CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 Compensation for failure to discharge obligation resembling those created by contract.--When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.--In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the nonperformance of the contract must be taken into account
29. On plain reading of Section 73 of the Contract Act, it is clear that damages to which the plaintiff is entitled for breach of contract at Ex. P13, by the defendant, is compensation for any loss or damage caused to the plaintiff, which naturally arose in the usual course of things from such breach or which the parties knew when they made the contract to be likely to result from the breach of it. Therefore, in order to be entitled to damages, the plaintiff has to prove that, as a result of the breach of the contract by the defendant, the plaintiff has suffered any loss or damage which naturally arose in the usual course of things from the breach 26 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 or which the parties knew would be likely to result from the breach.
30. The foundation laid in the plaint for seeking damages is at paragraph 6 and 9 of the plaint, wherein it is pleaded that, due to breach of the contract by the defendant and non- delivery of the branded garments, the business in the stores of the plaintiff decreased due to lack of stock and plaintiff was also unable to purchase the stock from other vendors, since, plaintiff had already refused their offers by relying upon the defendant. Apart from this, another head of loss is pleaded at paragraph 4 of the plaint, wherein it is pleaded that, plaintiff had mobilized funds by obtaining loans for the purchase of the material from the defendant and due to breach of the contract by the defendant, the purpose of availing the said loans has been defeated and thereby plaintiff has suffered loss. Therefore, on close analysis of the plaint averments, it is forthcoming that, the heads of loss or damage pleaded are twofold. Firstly, loss of business since the shops of the plaintiff were left with low stock due to non-supply of material and said stock could not be replenished from other vendors since their offer had already been rejected by the plaintiff by 27 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 relying upon the defendant. Second head of loss pleaded is due to loans taken by the plaintiff for mobilizing the funds. Now, let me see whether the above heads of damage / loss has been substantiated by the plaintiff in the evidence.
31. If the evidence adduced by PW 1 is looked into, it is seen that, a totally different case from that pleaded in the Plaint, is sought to be set up in the evidence of the Plaintiff. At paragraph 8 of the affidavit evidence, it is stated that the defendant had agreed to supply the branded garments at discount of 89.25% percent and if defendant had actually supplied the said material, the plaintiff would have earned profit of 37.28% i.e. Rs. 5,11,17,318/= and at paragraph 10 of the affidavit evidence of PW 1, it is stated that though the actual loss suffered by the plaintiff is Rs. 5,11,17,318/= plaintiff has restricted her claim to Rs. 2.70 crores. In support of this case set up in the evidence, the plaintiff has produced and got marked Ex. P6, which is styled as self-assessment of loss of profit due to non-performing of obligations by the defendant. In Ex. P6, it is stated that, defendant had agreed to supply 5,66,772 pieces of garments and average gross 28 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 profit would have been 37.78% and loss of profit as per the above gross profit margin would be Rs. 5,11,17,318. It is on the basis of this statement at Ex. P6 that, in the affidavit evidence of PWI, it is stated that, plaintiff has incurred loss of Rs. 5.11 crores but restricted the claim to Rs. 2.70 crores. Thereby, it is clear that, in respect of the damages suffered by the plaintiff, plaintiff has set up contrary cases. In the Plaint, it is pleaded that, plaintiff suffered loss because the shops of the plaintiff was left with low stock due to non-supply of garments by the defendant as a result of which business decreased. To prove this pleading, it was necessary for the plaintiff to produce details of the turnover of the plaintiff during the preceding years and during the year 2021-22 to show that there was a decrease in business of the plaintiff due to non-supply of stock by the defendant. However, no such material has been produced by the plaintiff and therefore, this head of damages pleaded in the plaint has not been proved in the trial. The other head of damages claimed is regarding loss suffered by the plaintiff due to taking of loans to mobilize funds for paying the defendant, but the purpose of taking loans was not served because the defendant 29 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 unilaterally terminated the contract. In this regard, no doubt some material is produced by the plaintiff. Ex. P5 is email by Axis Finance in respect of sanctioning loan of Rs 30 lakhs on 9-07-2021. However, Learned Counsel for Defendant was quick to point out that, the said loan is sanctioned to Venkateshwara Garments whereas plaintiff claims to be proprietor of Prem Textiles. For this, the reply of the Learned Counsel for the plaintiff was that, at paragraph 2 of the Plaint, it is pleaded that Venkateshwara garments is sister concern of the plaintiff. No material is produced by the plaintiff to show that, she is the proprietor of Venkateshwara garments as well as Prem textiles. However, in my view, even if it is conceded that Venkateshwara Garments is sister concern of the Plaintiff, it will not take the Plaintiff's case any further, because, even if it is accepted that Plaintiff availed the loan at Ex. P5 of Rs. 30 lakhs for mobilizing funds for the purpose of transaction with the defendant and the said purpose was not served when defendant unilaterally cancelled the agreement, the fact remains that plaintiff has not produced any material to show what is the damage or loss suffered by the plaintiff as a result of taking of the said loan. 30
CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 In this regard, plaintiff has also produced email at Ex. P9 to show that said Venkateshwara Garments was granted loan of Rs. 68 lakhs by IDFC First Bank on 1-6-2021 and also sanctioned loan of Rs. 35 lakhs by Growth Source Financial Technologies Private Limited on 9-7-2021. It is the case of the plaintiff that, all these loans were availed from banks and financial institutions to mobilize funds for making payment to the defendant. Apart from this, Plaintiff has produced Ex. P10 which is the OD account of Plaintiff. Plaintiff has also produced Ex. P.11 which is certificate of CA in respect of various loans availed by Plaintiff from private parties and the interest paid in respect of the same. However, even considering that all these loans were availed by plaintiff and her sister concerns for the purpose of transaction with the defendant, fact remains that plaintiff has not produced any material to show what is the loss or damage suffered by the plaintiff as a result of breach of contract by the defendant. The plaintiff ought to have produced material to show for what period the said funds were lying unutilized due to the breach of contract and what is the loss or damage, by way of excess interest paid or other incidental charges, suffered by 31 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 the plaintiff as a result of same. However, apart from producing the above material to show that some loans were taken by the plaintiff and her sister concerns, the plaintiff has not produced any other material to take the case of the plaintiff forward to show what is the actual loss or damage suffered by the plaintiff as a result of un-utilization of the said funds. It is crucial to note that, the agreement between the parties is dated 8-7-2021 and within two days, on 10-07- 2021, the defendant has communicated that the defendant will not be able to go forward with the said agreement. No doubt Learned Counsel for Plaintiff vehemently argued that, the discussion between the parties to finalize the transaction was going on for more than two months. However the earliest email produced by the plaintiff is dated 3-7-2021 which is just one week prior to 10-7-2021 on which day the agreement was terminated by the defendant. It was necessary for the plaintiff to produce material to show what is the loss suffered by the plaintiff by mobilizing funds and then allowing the funds to go unutilized during the said period of about one week from 3-7-2021 to 10-7-2021, but no such material is produced by the plaintiff. Therefore the plaintiff has been 32 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 unable to prove that, as a result of the unilateral termination of the agreement by the Defendant, the plaintiff has suffered any loss or damage. Therefore the plaintiff has hopelessly failed to prove the heads of damage as pleaded in the plaint.
32. Now, turning to the totally different case which has been set up in the evidence of PW1 regarding the loss of profit, is concerned, firstly, such a case is not pleaded in the plaint. Secondly and more importantly, it is to be noted that, under Section 57 of the Sale of Goods Act, the buyer may sue the seller only for damages for non-delivery and not for loss of profit. Similarly, under Section 73 of the Contract Act, the compensation for breach of contract shall be for any loss or damage caused to the plaintiff which arose in usual course of things from the breach. But, on the ground of breach of contract, the plaintiff cannot claim loss of profits which the plaintiff could have earned, if defendant had fulfilled the contract. In any event, there is absolutely no pleading in this regard and it is trite that plaintiff cannot set up, in the trial, a case which is not pleaded in the plaint. In fact, there is not 33 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 even a whisper anywhere in the plaint that, the plaintiff suffered damages due to loss of profits of Rs. 5.11 crores and plaintiff is restricting the relief to only Rs. 2.70 crores, which is the case which is sought to be made out in the affidavit evidence of PW 1. Therefore, it is clear that, the case set up by PW1 in evidence regarding loss of profit is a totally different case which has not been pleaded and accordingly the same cannot be accepted.
33. Accordingly, I conclude by holding that, although plaintiff has proved breach of contract by the defendant, the plaintiff has hopelessly failed to prove that plaintiff has suffered any loss or damage, much less, loss to the extent of Rs. 2.70 crores, as a result of such breach of the contract by the Defendant. It is to be noted that, as already noted supra, within two days from the date of the contract, the defendant had communicated to the plaintiff that due to certain issues, the defendant will not be able to supply the branded garments. Thereafter, the defendant has been fair enough to immediately refund the advance amount of Rs. 25 lakhs to the plaintiff. Therefore, when the conduct of the defendant 34 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 has been fair throughout, unless the plaintiff proves that plaintiff suffered any actual loss or damage as a result of breach of contract by the defendant, it is not possible to grant any relief to the plaintiff. Accordingly, I hold that, since plaintiff has failed to prove the heads of damage as pleaded in the plaint, the plaintiff is not entitled to any relief for damages for breach of contract by the defendant. Accordingly I answer issue No. 1 and 2 in the negative.
Issue No. 3:-
34. Having answered issue No. 1 and 2 as above, I proceed to pass the following :-
ORDER The suit is dismissed, with cost.
Office to draw decree accordingly.
Office to issue soft copy of this judgment to both sides, by email, if furnished.
[Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 19th day of October, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, 35 CT 1390_Com.OS.589-2022_Judgment.doc KABC170011542022 COMMERCIAL COURT; BANGALORE.
ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW.1 : Dinesh Kumar K.V
2. List of witnesses examined on behalf of Defendants:
NIL
3. List of documents marked on behalf of Plaintiff:
Ex.P.1 : Printout of Email dt.10/7/2021.
Ex.P.2 : Copy of Legal Notice dt.17/8/2021.
Ex.P.3 : Reply notice dt.21/8/2021.
Ex.P.4 : Printout of Emails dt.20/4/2024 (3 sheets)
Ex.P.5 : Printout of Email dt.12/7/2021.
Ex.P.6 : Self Assessment of loss of profit signed by
plaintiff.
Ex.P.7 : Original Power of Attorney dt.10/6/2023.
Ex.P.8 : Certificate U/S.65B of Indian evidence Act.
Ex.P.9 : Printout of Emails along with attachment.
Ex.P.10 : Attested copies of Bank Account Statement
of HDFC Bank.
Ex.P.11 : Certificate issued by CA.
Ex.P.12 : 65B Certificate.
Ex.P.13 : Digital copy of Agreement dt.8/7/2021.
4. List of documents marked on behalf of Defendants:
Ex.D.1 : Printout of Email dt.9/7/2021.
(Sri. S. Sudindranath)
LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.