Delhi District Court
M/S Third Millennium Business ... vs . M/S Hpl Addictives Ltd. on 1 October, 2012
M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
IN THE COURT OF MS. SHREYA ARORA, CIVIL JUDGE1,
ROOM NO. 1, SAKET COURTS, SOUTH DISTRICT, NEW DELHI
In the matter of :
Suit No. 536/10
Case ID No. 02403C0128102010
M/s Third Millennium Business Resources Associates Pvt. Ltd.
D.D. A. Flat No. 13C,
Masjid Moth PhaseI,
New Delhi110 048.
...... Plaintiff
Versus
M/s HPL Additives Ltd.
Formerly Known as
M/s High Polymer Labs Ltd.
803, Vishal Bhawan,
95, Nehru Place,
New Delhi110 019
...... Defendant
Date of Institution : 20.04.2010
Date of reserving the Judgment : 22.09.2012
Date of pronouncement : 01.10.2012
Decision : Decreed
SUIT FOR THE RECOVERY OF RS.1,41,520/ ( RUPEES ONE LAC FORTY
ONE THOUSAND FIVE HUNDRED TWENTY ONLY) RS.98,755/ TOWARDS
PRINCIPAL & RS.39,500/ TOWARDS INTEREST UPTO 30.03.2010.
Suit No.536/10 Page 1 of 15
M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
JUDGMENT
1. The Plaintiff is a company incorporated under the Companies Act, 1956 having its registered office at DDA Flat No. 13C, Masjid Moth PhaseI, New Delhi110048. Plaint has been signed and instituted by Mr. Sumit Chaudhary who has been authorized for the same.
2. The Defendant is a company incorporated under the Companies Act having its Corporate office at 803, Vishal Bhawan, 95, Nehru Place, New Delhi110019. It is averred that the Defendant approached the Plaintiff company for creation of HR Manual for the Defendant company vide letter dated 11.12.2006. The Defendant is a Management Law Consultation company primarily in the field of HR Department. The total fees was settled at Rs.2,00,000/ plus taxes as applicable besides travelling expenses for visits to factories. It is stated that the Plaintiff started work on drafting HR Manual and sought the relevant information for the same purpose. A lot of sittings, visits have been made for this purpose between the parties. The Plaintiff sent proposed draft, redraft and corrections were carried out as per requirement of the Defendant.
3. It is further averred that on 18.04.2007, the Plaintiff raised a bill of Rs. 2,24,720/ (Rs.2,00,000/ as professional fee and Rs.24,720/ as service tax). The Defendant had earlier paid a sum of Rs. 56,634/ being 30% of the total fees after deducting TDS on the basis of gross amount of Rs.60,000/ on 23.12.2006. A further sum of Rs.56,601/ was paid on 30.04.2007 after deducting TDS on the basis of gross amount of Rs.60,000/. Thus, the Defendant paid 60% of the total fees and issued two TDS certificates. It is averred that as per second TDS certificate dated 09.07.2008, a sum of Rs.
Suit No.536/10 Page 2 of 15M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
1,65,200/ is shown as credited when only Rs. 56,601/ was actually paid. In reply to the legal notice, it has been stated that Rs. 1,25,965/ was paid. The Defendant deducted TDS of Rs.9364/ on the basis of amount of Rs. 1,65,200/ whereas this amount was not paid to the plaintiff.
4. It is further averred that on 27.04.2008, the Plaintiff sent the complete HR Manual through email to the Defendant. A demand letter dated 10.12.2008 was also sent requesting the Defendant to pay outstanding amount of Rs. 1,04,720/. Another reminder was sent on 23.10.2008 demanding interest @24% per annum. Letter dated 23.10.2008 was replied vide letter dated 26.12.2008. The Defendant in the said letter expressed inability to response due to slow down and its quest for survival in the market dynamic. The Plaintiff sent a response on 07.01.2009 stating that the information from the Defendant was the key on the basis of which manual was being prepared and it was not possible to prepare it otherwise. The Defendant always delayed in providing feedback which caused some delay in preparation of final HR Manual which was prepared and sent on 27.04.2008. It is averred that despite having final draft, Defendant has failed to make balance payment of 40% of Rs.2,00,000/. It is averred that therefore, the Plaintiff is entitled to balance of Rs.80,000/ alongwith Rs.24,720/ towards service tax and Rs.36,800/ towards interest @24% per annum from May, 2008 to March, 2010. It is stated that the Defendant has its business within the territorial jurisdiction of this court and hence this court has territorial jurisdiction. It is averred that the cause of action for filing the suit first arose on 11.12.2006 when the order was placed. Again arose on 18.04.2007 when the bill was raised. It further arose when part payment was received and lastly when the order was completed and balance payment was demanded in April, 2008.
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5. The Defendant entered appearance and filed its written statement. It has been averred that it was the Plaintiff who approached the Defendant with the proposal to prepare HR Manual for the Defendant and also proposed to provide on spot training and guidance to the Management Personnel. It is averred that Plaintiff adopted dillydalling approach towards the completion of HR Manuals and meeting, sittings and visits were not held as alleged. The Plaintiff failed to perform its work properly. Hardly one or two visits were made by officials of the Plaintiff and even the final print was not up to the mark. It is averred that the Defendant had provided its previous HR Manual to the plaintiff. It had been specified to the Plaintiff that the manual should contain the legal directions on the basis of which rules had been framed. However, the Plaintiff made improvement with additions or alterations to the previous manual. However, the same was not up to the mark, both in terms of quality and presentability. It is averred that the Plaintiff admitted the fact that HR Manual was not up to mark. Numerous discrepancies were pointed out by the Defendant and after few amendments; draft was resent without taking care of the objections. It is averred that the bill dated 18.11.2007 was issued illegally even without performing its part of the contract. The alleged final cut of the HR Manual sent by the Plaintiff is of no use for the Defendant. It is averred that even though the manual was not up to mark, the Defendant bona fide released the additional 30% payment taking the total amount paid to 60% of the contract amount. TDS certificate was also issued by the Defendant bona fide with the firm belief that the Plaintiff would complete its part of contract. It is averred that Defendant wrote letters dated 26.12.2008 and letter dated 17.01.2009 requesting the Plaintiff to complete its part of contract. Various communications were Suit No.536/10 Page 4 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
exchanged between the parties. The averments that there is any outstanding amount or HR Manual completed by the Plaintiff have been denied. Reliance has been placed upon the communications exchanged between the parties. The averments that the Defendant had delayed flow of information to the Plaintiff as required for preparing HR Manual have all been denied. The Defendant has prayed that the suit be dismissed.
6. The Plaintiff has filed replication and denied that only few meetings were arranged between the representatives of the parties and has given dates on which the meetings took place and for which conveyance charges were paid through cheque dated 30.04.2007. It has been reiterated that manual has been prepared as per contract and the contents of the written statement have been denied while those of the plaint have been reiterated.
7. On the basis of the pleadings of the parties, following issues are framed vide order dated 05.08.2011: 1 Whether the Plaintiff failed to complete its part of the contract? If so its effect? OPD 2 Whether the Plaintiff is entitled to the sum of Rs.
1,41,520/ as prayed for or any amount what so ever?
OPP 3 Relief.
8. The Plaintiff produced Sh. Sumit Chaudhary as the only witness whereas Defendant produced Sh. R.K. Behl, Manager (Finance & Accounts) as the only witness on its behalf. It is pertinent to note that at the stage of admission / denial itself, documents exhibited as PW1/1, PW1/2, PW1/3, Suit No.536/10 Page 5 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
PW1/4, PW1/5, PW1/8, PW1/9, PW1/11, PW1/12, PW1/13, PW1/14, PW1/16, PW1/17 and PW1/18 were all admitted by the Defendant. The Defendant also executed documents as Ex.PW1/D1, PW1/D2, PW1/D3, which were admitted by the Plaintiff besides the Defendant also exhibited Ex.DW1/1 and DW1/2.
9. I have gone through the documents, evidence, cross examination as well as the pleadings. My issue wise findings are as under:
Issue No.1
10. I have already pointed out above that in this case both the parties have filed various documents which are admitted by each other. To my mind there is no dispute as far as documents which have been placed on record by the parties are concerned, the only question which needs to be determined is the effect of these documents and their interpretation in the light of the oral evidence led by the parties. For the ease of reference, relevant portion of letters/emails exchanged between the parties are reproduced hereinbelow. The relevant portion of the letter dated 11.12.2006 containing nature and scope of assignment reads as under:
"You shall bring and provide us with requisite knowledge, skills and experience to create this document, so as to strengthen our HRM systems. It shall cover all manufacturing sites nd offices of the company.
• HR Manual shall take cognizance of all statutory and legal aspects, wherever applicable.
• Before start up of the assignment, if required we could organize a meeting with our functionaries of HR department for idea sharing. Of course we shall provide you with whatever base material we have for incorporation of same in HR Manual. During the process of creation and preparation Suit No.536/10 Page 6 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
of HR Manual, if required you shall have to visit our Ballabhgarh office, the focal point of HR function, and where functional team is located.
• The scope and areas to be covered in HR Manual shall be as per scope detailed in your letter ref CTY/2005/0053 of 18th August. Apart from these we would like you to include best practices on corporate governance and ethics. • These shall be grouped into following areas:
HR Policy and Planning Strategic Rewards (Compensation Management) Employment / Procurement / Acquisition / Hiring (Recruitment and Selection) Performance Management and Human Resource Development Integration (Employee / Industrial Relations) Maintenance (Employee Welfare and Services) Attribution / separation • The methodology for the assignment would include:
A detailed study of the existing HR policies and practices Understanding the need for bringing about the changes through discussions with your management and benchmarking with comparable companies, if such a decision is taken Preparing the Draft HR Manual outlining proposed policies and practices for implementation. Discussions with your top management regarding their implementation Finalising the Manual for implementation • The whole exercise shall be completed in next three months, say by 15th March, 2007.
• You shall also hold necessary interaction sessions for our team members in mutually accepted schedule and modules, for dissemination of all relevant aspects of newly created HR Manual.
• In case some amendments are required to be made after implementation due to factors not anticipated now, same shall be carried out by you.
• For this exercise you shall be paid a lump sum amount of Rs. 2,00,000/ (Rs. Two Lac only). Taxes as applicable shall be extra. Travelling expenses for visits to our factories if required shall be reimbursed as per company's rules. We shall release Suit No.536/10 Page 7 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
30% of the agreed upon sum as advance. Balance shall be released on submission of final HR Manual."
Vide email dated 18.12.2006, the Plaintiff stated that: "We have one request to make, since you have agreed to release only thirty percent of the consulting fee as advance, we now request you to release another thirty percent on submission of the draft manual for which the estimated date shall be February 15, 2007. We propose to complete the assignment by March 15, 2007 as desired by you. However, it shall be dependent on receiving your management team's comments on the draft manual as they would be essential for finalising the manual."
Vide email dated 23.08.2008, the Defendant wrote as under:
"We have circulated HR Manual to our key team members, including JMD for their opinion/comments, which once received would be factored in it.
I shall also request you to see our offer letter, which specifies that:
• You shall also hold necessary interaction sessions for our team members in mutually accepted schedule and modules, for dissemination of all relevant aspects of newly created HR Manual. My request is that let us go through the cycle and on completion of same we shall release balance payment which is 40% only."
Whereupon the relevant portion of the response sent by the Plaintiff on same date reads as under:
" Thanks for responding and clearing the position. We shall be happy to get some kind of time line for the same, if possible. If that is not possible, we once again request the release of the percentage payment that you are comfortable with for now. We are requesting this because you will surely agree that much more than 60% work has been done long back."
Vide email dated 06.10.2008, the Defendant stated as under:
"Regret could not reply your message earlier. Issue has not been Suit No.536/10 Page 8 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
concluded as yet, hence difficult to put a time line to it. We ourselves are keen to set it rolling, hence would try to expedite. Please bear with us.
Regards."
Vide email dated 10.12.2008, the Plaintiff communicated the following:
"1. That we were assigned the task of developing a HR Policy Manual for your organisation vide your letter No HPLL/HPO/CD/200607/12 dated December, 11,2006, which was accepted by us vide our letter no.CTY/2006/0007 dated December, 18,2006.
2. That the task was completed and the Final Manual from our side was submitted to you through email on May, 11, 2008."
The Defendant letter dated 26.12.2008 states the following :
"1. The assignment to create an HR Manual as per mutually discussed and agreed upon work scope was awarded to you vide our letter HPLL/HO/CD/200607/12 dated 11.12.2006. 2 As per this, the assignment was to be completed by 15.03.2007. You were to be provided with base material by company. With this and expected level of your knowledge and skill set, you were to create a contemporary document for us.
3. 30% payment was relased as advance.
4. While accepting this assignment vide your letter CTY/2006/0007 of 18.12.2006 you confirmed completion of assignment by 15.03.2007.
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8. Despite not having anything worthwhile with us, we released another 30% of contracted payment amount to you.
9. A final cut of HR Manual in electronic form was sent by you on 28.04.2008. After going through same, we gave our comments on its contents, quality, layout and form vide our email of same day.
10. You sent an improved version in eform on 11th May, 2008, acknowledging that it still lacked some aspects.
11. Same version is being claimed by you to be the final submission of HR Manual as per assignment as balance payment being sought. You started asking for balance payment of 40% from 21st May, 2007 without giving a due consideration Suit No.536/10 Page 9 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
to the quality, presentability of final cut of HR Manual submitted in eform, which have been below our expectations from you and without considering other relevant conditions of assignment, which are reproduced below for your ready reckoning.
• You shall also hold necessary interaction sessions for our team members in mutually accepted schedules and modules, for dissemination of all relevant aspects of newly created HR Manual.
• In case some amendments are required to be made after implementation due to factors not anticipated now, same shall be carried out by you.
12. Supposed final cut of HR Manual was put in a presentable format for discussion with our team members and their comments as per process. The comments thereon are still awaited as the team lost interest due to delay in completion of assigned project by you.
13. We ourselves are willing to settle this issue, which has been conveyed to you personally, but the whole process has to be completed. Due to market turmoil world over and its subsequent impact on us, our team is busy in addressing our response for survival in current dynamics of the markets. As soon as we are able to do so, we shall let you know and seek your inputs for completion of two points as given above for signing off and releasing balance payment."
On 07.01.2009, the Plaintiff replied:
"3. That you letter awarding the contract to us (reference you letter no HPLA/HO/CD/200607/12 dated December, 11.2006) clearly mentions " Balance shall be released on submission of final HR Manual" which was done on April 28, 2008 and May, 11,2008 which you have accepted in your letter under reference.
4. That point number 1 of you letter is a matter of fact and accepted.
5. That point number 2 of you letter is a matter of record and accepted, with the proviso that the draft and final manual was to be created based on timely availability of data and information from your side. It is obvious that such a compilation is not possible otherwise. It is a matter of fact that much of the information was received in small parts and gradually Suit No.536/10 Page 10 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
incorporated to make the manual more and more complete.
6. That point number 3 of your letter is true and accepted.
7. That point number 4 of your letter is true but it has to be read and understood in the context of the proviso in the next sentence of our acceptance letter, which reads " However, it shall be dependent on receiving your management team's comments on the draft number as they would be essential for finalising the manual." Raising of this issue by you at this stage when payment has become overdue by seven months and after two letters from us demanding payent is an obvious attempt to unnecessarily deny us our legal dues.
8. That point number 5 of your letter is true but it is on record that such meetings were held over a much longer time frame and the last such meeting was held at your Ballahgarh factory premises as late as April 9,2008 which is clearly indicative of the fact that we provided service which was much beyond the terms of our contract to accommodate your views and incorporated the same in the final manual.
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11. That point number 8 of your letter is false and malicious. You had more than ninety percent of the manual with you when you released the second installment as only minor typographical errors and your final comments were to be incorporated at that stage to make it final. Let us put it on record that in spite of seven months having passed from that stage, no final views have come in from your side. Let us also put it on record that you have deducted TDS on the entire bill amount and issued us the certificate, which is clearly indicate of the fact that the entire money has become due to us in April, 20007 itself. To now say what you are saying is nothing but a delaying tactic.
12. That point number 9 of your letter is a matter of fact as far as the date of submission is concerned but the second part of the para is your subjective judgment and cannot be taken to be the truth.
xxxxx
15. That point number 12 of your letter is just a delay tactic and an excuse for not paying up our legal dues. You will appreciate that no service provider can wait endlessly for you team members to provide their comments. In our view, a period of one month is more than sufficient to give comments which lapsed on June 11, 2008 at the very latest."
Suit No.536/10 Page 11 of 15M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
On 17.01.2009, the Defendant communicated:
"In brief we would like to state once again that payment shall be released subject to resolution of all pending and unattended points, which is a fair stand. Of course, no overdue interest is acceptable or payable as matter got delayed due to late submission of HR Manual, that too in a deficient form."
11. From the reading of the aforesaid correspondence following aspects clearly emerge on record. After the contract was entered into between the parties, the Plaintiff was to prepare the manual, this manual was supplied by the Plaintiff to the Defendant on 27.04.2008 and finally vide email on 11.05.2008. It has also come on record that the Defendant made advance payment of 30% against the agreed amount and balance was to be made on the submission of the final manual. It is the specific case of the Plaintiff that this manual was given in complete on 11.05.2008 which fact is not disputed by the Defendant in the replies to the email sent by the Plaintiff in this regard. However, the defence put forth by the Defendant is that this manual was not complete and was defective. The question is whether any such plea is raised by the Defendant after receiving the email on 11.05.2008. The sequence of events narrated above discloses that no such step was taken by the Defendant. From 11.05.2008 when the final manual was received by the Defendant, the Defendant did not respond till the Plaintiff sent email dated 10.12.2008 i.e. after 7 months from the date when the final manual was sent by the Plaintiff to the Defendant via email.
12. In this email dated 10.12.2008, the Plaintiff has again categorically mentioned that the Plaintiff had submitted complete manual in final form on 11.05.2008 and demanded balance payment. It is only in reply to this e Suit No.536/10 Page 12 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
mail the Defendant for the first time came out with the plea that the HR manual sent was not complete or was defective. In the cross examination of Defence witness, DW was specifically asked whether any document after 11.05.2008 specifically pointing out the defects has been placed on record. On this DW pointed out letter dated 17.01.2009. The DW has not deposed as to any verbal or oral requests made by the Defendant to the Plaintiff pointing out alleged defects. This factor raise heavy in favour of the Plaintiff as the normal conduct of a human being on receiving incomplete or defective draft would be to atleast immediately respond thereto and state that the manual was defective or incomplete.
13. There is yet another aspect which leads to the same conclusion. Even in the communication/ email dated 26.12.2008 or thereafter though the Defendant had started alleging that the manual was defective, at no stage specific defects are ever pointed out. The witness for the Defendant who has appeared has again not mentioned any specific defects.
14. At this stage I would like to meet another defence of the Defendant. It is pleaded that the work was to be completed by 15.03.2007 and the Plaintiff delayed the execution of the work and prepared the HR Manual belatedly and gave it only in May, 2008. No doubt it is correct. However, the Defendant has acquiesced in to this delayed act on the part of the Plaintiff by not only allowing him to have the leeway of this delay, but accepting the draft in May, 2008. It clearly shows that time was not the essence of the contract. If time was the essence of the contract and the Plaintiff had not performed its part of the contract by March, 2007 the Defendant should have repudiated the contract. Instead of doing so the Defendant in fact accepted the HR Manual Draft sent to it by the Plaintiff. Therefore, this delay is of no consequence. It Suit No.536/10 Page 13 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
is also a matter of record that Defendant while making the payment deducted the TDS on the entire amount of the bill.
15. In view of the aforesaid discussion, issue No.1 is decided in favour of the Plaintiff and against the Defendant holding that the Plaintiff completed its part of the contract. The Defendant has not been able to prove to the contrary.
Issue No.2
16. Insofar as this issue is concerned, it does not pose any problem. The total contract price at which the manual was to be prepared and supplied by the Plaintiff to the Defendant has already been agreed upon.
17. As pointed out above the Defendant had agreed to pay and the Plaintiff had agreed to charge a sum of Rs.2 lacs plus taxes for the work in question. It is also an admitted fact that the Plaintiff had raised a bill of Rs.2,24,720/ which included Rs.2 lacs as professional fee and Rs.24,720/ as service tax. This bill is not disputed by the Defendant and on the contrary 30% of this bill amount was released and balance is to be paid. Thereafter, another 30% was released leaving a balance of Rs.1,04,720/. Thus, the Plaintiff is entitled to balance payment of Rs.1,04,720/ against the aforesaid bill.
18. Since this amount is not paid the Plaintiff is naturally entitled to interest thereupon. The Plaintiff has claimed interest @ 24% per annum and in this manner calculated a sum of Rs.39,500/ towards interest till the filing of suit i.e. 30.03.2010. However, I am of the opinion that claim of interest @ 24 % Suit No.536/10 Page 14 of 15 M/s Third Millennium Business Resources Associates Pvt. Ltd. Vs. M/s HPL Addictives Ltd.
per annum is on the higher side. Since it was a commercial transaction between the parties, the Plaintiff is awarded interest @ 12 % per annum. Thus, interest @ 12 % per annum on Rs.1,04,720/ shall be calculated with effect from 10.01.2009. I have chosen this date keeping in view that the demand for making this bill amount was raised on 10.12.2008 and giving some leeway within which the amount should have been paid, date from which the interest should become payable is fixed as 10.01.2009. The interest @ 12% per annum thus shall be calculated on Rs. 1,04,720/ with effect from 10.01.2009.
19. Issue No. 2 is decided in the aforesaid manner in favour of the Plaintiff and against the Defendant.
RELIEF
18. Having regard to the aforesaid discussion, decree in the sum of Rs.1,04,720/ is passed along with interest @ 12% per annum with effect from 10.01.2009 till its realization.
19.Suit is therefore decreed in the aforesaid terms. Costs of the suit are awarded in favour of the Plaintiff and against the Defendants.
20.Decree sheet be prepared accordingly. Thereafter, file be consigned to the record room.
Announced in the open (SHREYA ARORA)
Court on 1st October, 2012 CIVIL JUDGE1 (SOUTH DISTRICT)
(Judgment contains 15 pages) SAKET COURTS, NEW DELHI
Suit No.536/10 Page 15 of 15