Delhi District Court
Gold Square Sales India Pvt. Ltd vs Kamal Rayon Pvt. Ltd on 30 August, 2025
IN THE COURT OF MS. AMBIKA SINGH, DISTRICT JUDGE - 01,
SOUTH DISTRICT, SAKET COURTS, NEW DELHI
CS DJ No. 267/18
In the matter of :
Gold Square Sales India Pvt Ltd
Having its registered office at
Plot no. 212 & 212-B, L.G.F. Rear Portion
Savitri Nagar, Malviya Nagar, New Delhi-110017
And Corporate office at
Plot No.241, Udyog Vihar, Phase-1,
Gurgaon - 122001, Haryana
Plaintiff.....
Vs.
Kamal Rayon Pvt. Ltd.
B-302, Regency Towers, Dumas Road
Near Rajhans Cinema, Piplod
Surat-395007, Gujrat
(Through its Directors)
.....Defendant
Date of Institution : 16.03.2018
Date on which judgment
reserved : 24.07.2025
Date of Judgment : 30.08.2025
Decision : Dismissed
SUIT FOR RECOVERY OF RS. 13,28,890/- ALONG WITH
PENDENTE-LITE AND FUTURE INTEREST
JUDGMENT
1) The plaintiff has filed the present suit against the defendant, seeking recovery of Rs.13,28,890/- alongwith pendente-lite interest and future interest at the rate of 18% per annum since 13.03.2018.
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2) The Plaintiff Company is engaged in the business of wholesale trading of different fashion products viz. apparels, footwear, fashion accessories, fragrances for gents, ladies and kids, different home and living accessories of different manufacturers and suppliers Companies who are engaged in selling products through e-commerce web portal "fashionandyou.com" and has its goodwill and reputation in market.
3) It is further stated that the plaintiff has been promoting for sale various products online as e-commerce Company. Plaintiff has been purchasing the Products directly from various manufacturers/suppliers. Plaintiff used to place order for the selected products to the concerned manufacturer/supplier and simultaneously also used to promote and market such products to the customers for obtaining purchase orders through its web portal. It is further stated that for promotion and marketing of products, the Plaintiff also used to organize special and promotional events for the products and also had been promoting and advertising the products through SMS/e-mails and other online advertising's and has been spending substantial amount on such promotions. That on the basis of such promotion, marketing and advertising, sale of products was being promoted. Since the orders are placed by the customers to the Plaintiff online, the ordered goods/products are used to be sent to the respective customer within the stipulated period. Moreover, since the transactions was also being done on cash on delivery basis, the products used to be sent by the Plaintiff through the Cargo / Courier / Logistic Companies engaged by it in different regions and substantial amount also used to be incurred for said purpose.
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4) The case of the plaintiff is that it has been also been looking for good suppliers/manufacturer for supply of products in time bound manner and strictly as per the specifications. That during such business transactions, the Defendant through its Directors came in contact with the Plaintiff whereby the Defendant offered to supply different products. During their such business relationship, a Master Suppliers Agreement dated 01.09.2014 was executed by the Defendant at New Delhi containing various terms including the terms of losses, damages and jurisdiction. As per the agreed terms, the Defendant has required to supply the finished products strictly as per the specifications and quantity and within the time stipulated in the Purchase Orders and on supply of goods and on submission of Invoice of valid / salable goods, defendant was entitled for the payment as per agreed terms. It is further stated that defendant also specifically agreed that for each undelivered/short delivery, inaccurate or improper quality product, it shall pay the liquidated damages @ Rs.500/- for per product or the value of product, whichever is less.
5) It is further stated that pursuant to the said Agreement and understanding, the Plaintiff from time to time has been placing Purchase Orders to the Defendant for supply of goods within the stipulated period containing the terms. Despite repeated requests for quality of products, on number of occasions during random quality check, the products supplied by the Defendant were found of inferior and defective quality and accordingly, the same were returned by the Plaintiff to the Defendant and Debit Notes were also issued to the Defendant in this regard and accordingly, the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 3 of 38 Defendant was not entitled for any payment for such products.
6) It is further stated that from time to time, the officials of Plaintiff requested and reminded the Defendant to adhere the delivery schedule and supply the goods as per agreed specification as mentioned in the purchase order but the Defendant continued to default and breach the contract and failed to supply the ordered quantity of products. That as per the agreed terms, the Plaintiff has been making the payment to the Defendant. It is further stated that to meet the demands of the customers and for maintaining stock, quick dispatch and delivery of products, Plaintiff acquired a very large premises and has been paying huge rent and has been bound to pay the same for agreed period to owner/landlord of said premises and also has been maintaining and bearing all other maintenance costs and expenses in respect thereof.
7) It is further stated that during the course of such business transactions, due to late / defective supply of ordered products by Defendant or non-delivery of ordered products, various orders which were procured by the Plaintiff after spending huge amounts were cancelled due to non- availability of products and/or due to inferior quality and different specification. It is further stated that since various products was found defective and against the specifications, the products were not taken by the customers and the orders were cancelled and substantial amount incurred by the Plaintiff for promotion / marketing of products, freight / logistics, maintenance and other administrative costs besides its own profit also went wasted.
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8) It is further stated that whenever any Order was cancelled due to non-availability of product and/or due to inferior quality of product/ delayed delivery, Plaintiff used to give a Sorry Voucher of Rs.250/- to such customer and thus, Plaintiff had been incurring additional amount to maintain its customer base and unsubstantiated losses. Thus, such cancellation of orders by customers and return of goods due to delay and/or defective products has been causing unsubstantiated losses to Plaintiff. Moreover, all such losses and damages suffered to Plaintiff are directly attributable due to the act, omission and breach of contract on the part of the Defendant and the Defendant is bound to make good all such losses to the Plaintiff.
9) It is further stated that due to such breach of contract and defaults on the part of Defendant and similar vendors, the Plaintiff who had been a business turnover of more than Rs. 100 Crores in the financial year 2014-15 came down to about Rs. 68 Crores in the financial year 2015-16 and only about Rs. 2 to 3 Crores in the financial year 2016-17.
10) The Plaintiff further submitted that the business transactions between the Plaintiff and Defendant were continuing one and during the course of such business transactions with Defendant till September 2015, Plaintiff placed Purchase Orders worth Rs. 1,39,39,947/- for supply of products having quantity of 11,074 pieces. It is also submitted that the Defendant, however, breached the contract and in spite of having Purchase Orders placed and payment having been made by the Plaintiff, the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 5 of 38 Defendant failed to supply the ordered products to the Plaintiff and also within the stipulated time. Further, the products supplied to the Plaintiff was of inferior quality and was against the specifications and accordingly, certain products was returned to the Defendant and Debit Notes was issued accordingly.
11) It is further stated that as per the terms of the Agreement and understanding, Plaintiff also paid the amount of Rs. 94,66,090/- to the Defendant towards advance / on account against the supply of goods/products. The Defendant made short supply of products and raised Invoices worth Rs.1,23,69,267/- against the supplies thereby, making short deliveries of products more than 15 Lacs.
12) It is also submitted that out of products supplied and billed by Defendants, products worth Rs. 30,04,842/- were rejected due to inferior quality or deviation of specifications and debit notes were issued and said products were returned against rejection and thus products only worth Rs.93,64,425/- were supplied by the Defendant to the Plaintiff. Therefore, an amount of Rs.1,01,665/-remained as excess payment by the Plaintiff to the Defendant.
13) It is also submitted that the Defendant also failed to supply the ordered products and there had been short quantity of 2,365 products being 1,875 short quantity and 490 being rejected in quality check/inferior quality and accordingly as per the terms of Agreement and Purchase Order, Defendant is bound to pay the liquidated damages @ Rs. 500/- or cost of CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 6 of 38 product, whichever, is minimum per product as per agreed terms of and accordingly, sum of Rs.11,82,390/- has become due and payable by the Defendant to the Plaintiff towards liquidated damages against the undelivered products/short supply and the Defendant is liable to make good the same in terms of Agreement.
14) It is submitted that such liquidated damages being reasonable were agreed considering the costs/expenses being incurred by the Defendant for promotion of products and other incidental and actual expenses.
15) It is submitted that since the Defendant failed to supply the products and all the warehouse, manpower and other resources have gone wasted, the Defendant is bound to make good all such loses being the admitted liability. The Plaintiff also submitted that since such negligence, default and breach of contract on the part of the Defendant has caused unsubstantiated losses in terms of loss of business, profit, goodwill, reputation and also withholding of payment, such losses on account of losses of reputation and goodwill cannot be assessed in terms of money. Moreover, due to such acts and breach of contracts, the Plaintiff is being compelled to stop its business to avoid further losses and loss of goodwill and reputation. The Plaintiff, however, reserves its right to claim damages and compensation from the Defendant.
16) That time and again, the Plaintiff requested to make the payment of all the liquidated damages / losses and costs thereof. The Defendant from time to time admitted its liability but on pretext or the other, failed to pay its CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 7 of 38 admitted debts and liabilities. Thus, the efforts made by the Plaintiff yielded no result. Since the Defendant failed to discharge their admittedly obligations and breached the contract and have also failed to discharge admitted liabilities arising due to such default, negligence and breach of contract, the Plaintiff got issued a Legal Notice dated 6.11.2017 thereby asking the Defendant to pay the admitted and quantified liquidated damages in terms of Agreement. However, inspite of service of said Notice, the defendant has failed to comply with the demand made therein and also to discharge its admitted debt and liability. Since the Defendant breached and violated the contract, defaulted and neglected in supplying the products as per the agreed terms and orders placed by the Plaintiff and such delay, default, non-supply and inferior quality of products by the Defendant has caused losses to the Plaintiff, the following amount is due and payable by the Defendant to the Plaintiff:
Sl. No. Description of Amount Amount (in Rs.)
1 Excess Payment made by Plaintiff against 1,01,665.00
Purchase Order and supply of goods.
2 Interest @ 18% per annum on Rs. 1,01,665/- 44,835.00
from 1.10.2015 till 12.3.2018.
3 Liquidated Damages @ Rs. 500/- or value of 11,82,390.00
products for 2365 undelivered products / short
supplies.
Total 13,28,890.00
17) It is stated that sum of Rs.13,28,890/- is due and payable by the
Defendant to the Plaintiff being admitted amount. It is submitted that since despite demand, Defendant has failed to pay the said admitted amount and the transaction between the parties being a commercial transaction, the Plaintiff is also entitled for interest from the last date of transaction.
CS DJ No.267/2018Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 8 of 38 However, without prejudice to its rights, Plaintiff is claiming pendente lite and future interest @ 18% per annum on the above-detailed amount since 13.3.2018 till realization of entire amount.
18) Written statement was filed by the defendant wherein it is stated that the plaintiff has filed the present plaint without any cause and reason and only to create unwarranted and unnecessary problems and disputes before the defendants and the plaintiff has totally concocted the wrong facts in his present plaint so as to avoid paying the amount due to the defendant. Hence the plaint of the Plaintiff is not maintainable in any manner. Hence, the same is liable to be dismissed.
19) It is further stated that the present suit filed by the Plaintiff is patently false, frivolous, malicious, misconceived and misleading and the same is liable to be dismissed out rightly. It is further stated that the Plaintiff has filled the present suit without jurisdiction of this Hon'ble Court and the same needs to be dismissed on this sole ground only. It is submitted that the Defendant office is situated at Surat, Gujarat and Defendant does not have any branch at Delhi/ New Delhi. It is also submitted that nowhere it was agreed that in case of any dispute, Hon'ble Court at Delhi will have jurisdiction. It is also submitted that no negotiation or meeting between the Plaintiff and Defendant was held at Delhi/ New Delhi. Hence, this Hon'ble Court do not have jurisdiction to entertain the present suit and present suit need to be dismissed.
20) It is further stated that defendant is engaged in the business of CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 9 of 38 distributing and trading of various products through its online portal. Defendant also used to supply various goods on demand raised by its business associates under its brand namel trademark 'atisundar' as well as under other brand name.
21) It is further stated that in the year 2013, Plaintiff approached the Defendant and represented that it is in e-commerce business and as per its business practice, it has been purchasing different goods directly from various manufacturer/ suppliers.
22) That it was agreed that as and when Plaintiff will raise any demand/ purchase order, Defendant will supply the products as per. the specifications, quantity etc. as provided in the purchase order. It was agreed that Plaintiff and Defendant will do business as per market practice. It is further stated that pursuant to the said understanding, Plaintiff raised its first purchase order on 24.09.2013 bearing PO No. GPO/13-14/0005282.
23) It is further stated that plaintiff from time to time has been placing Purchase Orders to the Defendant for supply of goods. Defendant had taken care for the quality of product as per standard business practice and the Plaintiff also satisfied with the same and resulting to growth in business of the Plaintiff. In spite of adequate care taken by the Defendant for the quality of goods, numerous times Plaintiff returned the goods on false grounds i.e. either without clarifying actual defect in quality of the goods supplied or returned the goods after reasonable time, yet the Defendant accept the returned goods and supplied again as per the request of the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 10 of 38 Plaintiff to maintain the business relationship in good manner. A lot of times, the officials of the Plaintiff requested to accept the debit note/goods return after reasonable time due to customers (Plaintiff customer) demand.
24) It is further stated that after continuing for one year, Plaintiff proposed to the Defendant to enter into a definitive agreement to cover up there business model for which Defendant agreed. Plaintiff shared the soft copy of the agreement with the Defendant. Accordingly, a Master Suppliers Agreement dated 01.09.2014 ("Agreement") was signed by the Defendant signed the said Agreement and handover the copy of the Agreement to the Plaintiff. However, later on it was agreed that Parties will continue its business in normal course and as it was doing earlier for last one year and will not execute the said Agreement. Hence, the same was not signed by the Plaintiff.
25) It is submitted that the business transactions between the Defendant and Plaintiff were enduring one and all through the way of such business transactions with Plaintiff, till December 2015, Plaintiff placed purchase order worth Rs.1,39,39,947/- for supply of products having quantity of 11,074 pieces.
26) It is further submitted that if there would have been any breaches of contract by the Defendant during the course of business or the goods supplied were of inferior quality or defective, than there is no reason to continuing and growing the business by Plaintiff. Against the total value of purchase order of Rs.1,39,39,947/-, Defendant raised invoice for CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 11 of 38 Rs.1,29,14,722.00. Against the said invoices, Plaintiff paid the amount of Rs.94,66,090.00 to the Defendant against the supply of products. It is also submitted that out of goods supplied and billed to Plaintiff, goods worth Rs. 30,69,734.00 were rejected by the Plaintiff and debit notes were issued and other debit notes worth Rs.1,04,566.00.
27) After considering all the return goods and debit notes, goods worth Rs. 97,40,422.00 were supplied by the Defendant to the Plaintiff. Therefore an amount of Rs.2,74,331/- remained as receivable payment by the Plaintiff to the Defendant as below :
Sl. No. Particulars Amount (in Rs.) 1. Total purchase order raised for 1,39,39,947/- 2. Invoice Raised for 1,29,14,722/ - 3. Goods return/rejected for 0,30,69,734/- 4. Payment done by the Plaintiff 0,94,66,090/ - 5. Other debit note as claimed by the Plaintiff 0,01,04,566/- 6. Balance to be collected from the plaintiff 0,02,74,331/- 28) As per business practice, each purchase order was closed
financially with a Debit note before payment was made against it. Any penalty that was to be applied for the Purchase order was applied. The nature of business was such that in many cases the rejects and returns were due to reasons beyond Defendant control (perhaps due to order cancellation or non-confirmation on the plaintiff end). In view of the above and other market practices, it was agreed that purchase order is being issued as per Plaintiff's standard template and the terms and conditions mentioned in the purchase orders will not be applicable in their business transaction with the Defendant. Hence, during the normal course of business Plaintiff never raised the current demand for liquidated damages. All Purchase Order were CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 12 of 38 closed financially before payment and no other claim or penalty was applicable. It was under this agreement that the business transaction were carried out and the issue of penalty is malafide in nature.
29) The Plaintiff and Defendant were sharing the details of purchase order, payment etc. on mail. On 22.01.2016, Defendant received a mail from the Plaintiff that as per their account books, an amount of Rs.1,02,720/- is outstanding and requested for the payment of the came. Pursuant to Plaintiff demand of Rs.1,02,720/-, Defendant replied on 17.03.2018 that reconciliation has been done as there was some missing bills and nothing is payable. Defendant received another mail from the Plaintiff whereby asking for some more missing bills which were not in there record and the same was provided by the Defendant vide its mail dated 08.04.2016. On 21.04.2018, they received a confirmation mail from the Plaintiff stating that nothing was outstanding.
30) That a legal notice dated 06.11.2017 was received from the Plaintiff wherein Plaintiff was asking for the liquidated damages and other demands to the extent of Rs. 12,84,055/-. Towards the said legal notice, reply dated 20.11.2017 was sent by the Defendant wherein denying any such outstanding on part of the Defendant. Vide its response, Defendant informed the Plaintiff that instead it has to recover an amount of Rs.2,74,331/-. That the present suit need to be rejected on the sole ground that no cause of action arisen in favour of the Plaintiff.
31) Plaintiff has relied its claim basis upon a document called Master CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 13 of 38 Suppliers Agreement dated 01.09.2014 ("Agreement"). However, Plaintiff has failed to realize that the said Agreement was not validly executed between the parties as mentioned above. In order to constitute a valid agreement, both the parties must consent to the contract. However, as mentioned above and from the perusal of the said Agreement, it appears that Plaintiff has not signed the same as consensus was not made between the parties for the execution of the said Agreement. Hence, no cause of action arose in favour of the Plaintiff and against the Defendant.
32) It is further submitted that Plaintiff cannot take stand that even if said Agreement was not properly executed, conduct of the parties are in implication to the said Agreement. It is submitted that Plaintiff and Defendant were in business relation w.e.f. September, 2013 i.e. one year before the execution of the said Agreement without entering into any agreement and were acting in the same understanding.
33) It is also submitted that even if for the sake of argument only (as Defendant never admit the execution of the said Agreement), it is assumed that the said Agreement was executed, it is to be noted that as per Clause 9 of the said Agreement, Agreement shall be valid for a term of one (1) year i.e. effective from 01.09.2014 and valid till 31.08.2015. Hence, as per claim (excel) sheet shared by the Plaintiff, actual number of short quality/ defective product between the period of 01.09.2014 to 31.08.2015 is 210 and not 2365 (1875 short quality and 490 rejected). Hence, total amount of liquidated damages, if any which Plaintiff can claim will be Rs.1,05,000/- and not Rs.11,82,390/- as claimed by the Plaintiff in its suit.
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34) It is also submitted that last purchase order attached with the Plaint is dated 22.04.2015 and Plaintiff has failed to provide supporting for other purchase order/rejection letter etc. Hence, actual number of short quality/ defective product for Purchase Order raised between the periods of 01.09.2014 to 22.04.2015 is 149 and total amount of liquidated damages which Plaintiff can claim will be Rs.74,500/-. It is once again stated that by mere mentioning the above calculation in this Para does not implicate that Defendant has admitted the execution of the said Agreement or the applicability of the said penalty. Plaintiff claim is time barred any damages against some of the purchase orders which are issued before 06.11.2014.
35) On completion of pleadings for the parties, following issues were framed :
1. Whether the plaintiff is entitled to recovery of Rs.13,28,890/-? OPP
2. Whether the plaintiff is entitled to interest, if yes, at what rate and for which period? OPP
3. Whether this court lacks territorial jurisdiction? OPD
4. Relief.
Thereafter, matter was fixed for plaintiff's evidence.
36) The plaintiff examined Sh. Arun Kumar as PW1 who tendered his affidavit in evidence as Ex.PW1/A and had relied upon following documents:
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1. Ex.PW1/1 (OSR) is copy of Resolution dated 04.04.2018.
2. Ex.PW1/2 is certified copy of Board Resolution dated 30.08.2017.
3. Ex.PW1/3 is printout of Master Data of defendant available in the records of the Registrar of Companies.
4. Mark A is scanned copy of Master Supplier Agreement dated 01.09.2014.
5. Ex.PW1/5 (colly) are copies of various Purchase Orders, Invoices, Debit Notes, Purchase Return Notes, Goods Return Notes. (from internal page nos.10-422 of documents).
6. Ex.PW1/6 is printout of statement/ledger showing transaction details between the parties, calculation of liquidated damages etc. (from internal page nos.423-426 of documents).
7. Ex.PW1/7 is copy of legal notice dated 06.11.2017.
8. Ex.PW1/8 is original postal receipt.
9. Ex.PW1/9 is Certificate under Section 65B of the Indian Evidence Act.
37) During plaintiff's evidence, the AR of the complainant company was changed and Mr.Sudhanshu Shekhar had examined as PW1 and had tendered his examination-in-chief by way of affidavit as Ex.PW1/A wherein he relied upon the documents already exhibited by PW1 Mr.Arun Kumar. He had also relied upon Board Resolution dated 02.08.2023 as Mark PW1/B.
38) During cross-examination, PW1 Mr.Sudhanshu Sekhar Nayak deposed that he was working with plaintiff since 2011 and was holding the designation of Company Secretary and Legal Head with the plaintiff. He further deposed that he was working as a Consultant and had resigned in the year 2018. He affirmed the suggestion that Mark A was never executed by plaintiff nor any communication regarding the same was given to the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 16 of 38 defendant. He neither admitted nor denied that the defendant has ever personally visited to their office at Delhi for any meeting. He further replied that the document Mark A was valid for one year from the date of execution i.e. 01.09.2014 till 31.08.2015 and there was no communication for extension of document Mark A. He denied the suggestion that no purchase order was raised for the period post 22.04.2015. He further replied that there was only oral discussion with the defendant regarding the outstanding as no consolidated details were shared with the defendant prior to sending of legal notice. He denied the suggestion that purchase order was issued under two categories i.e. 'regular on demand' and 'sale or return'. He further replied that he is not aware if there was 'sale or return' purchase order issued to the defendant. He denied the suggestion that courts at Delhi shall have jurisdiction to adjudicate this matter.
39) Thereafter, plaintiff's evidence was closed and the matter was fixed for Defendant's evidence.
40) The defendant had examined Mr.Mayank Jain as DW1, who tendered his affidavit in evidence as Ex.DW1/X and had exhibited the following documents :
1. Written statement, Ex.DWI/A.
2. Copy of Board Resolution dated 07.05.2018, Ex DW1/1 (colly) (OSR).
3. List of sale, list of credit, copy of ledger account w.e.f 01.04.2013 to 31.03.2016, Ex.DW1/2 (colly) (page no.26 to 62).
4. Affidavit under Section 65B IE Act, Ex.DW1/3.
5. Copy of e-mails, Ex. DW1/4 (colly) (page no.66 to 72).
6. Copy of notice dated 20.11.2017 and postal receipt (mentioned as Ex.DW1/5 CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 17 of 38 (colly), de-exhibited and now Mark A, colly).
41) The witness was cross-examined by the counsel for plaintiff and the witness has replied that he is the Director of the Defendant Company. He affirmed the suggestion that the document Mark A dated 01.09.2014 bears his signature on every page at point X. He voluntarily stated that the document was not executed as per the assurance and agreement with the Account Manager of the plaintiff. He replied that he had signed the same after reading it. He voluntarily stated that it was agreed that there would be no change in their existing way of working with the plaintiff. He further replied that as per existing way of working, prior to signing of Mark A, purchase order was being issued and payment was made against supply. He affirmed the suggestion that there is a clause no.14 with regard to the liquidated damages according to which the defendant agreed to provide the plaintiff a sum of Rs.500/- or the value of the product, whichever is less, per every product unit which is not delivered to the plaintiff in accordance with the terms of purchase order. He voluntarily stated that the agreement Mark A was never executed by plaintiff and was deemed as null and void. He replied that he had not placed on record any document/communication sent to the plaintiff to show that the document Mark A was never executed and deemed as null and void. He replied that he had not filed any counter claim with regard to the dues of Rs.2,74,331/- against plaintiff as claimed in para 9 of his affidavit. After seeing the document Ex.PW1/5 the witness replied that the same pertains to them and whatever objections mentioned there, were taken in their written statements/submission. After seeing the document Ex.PW1/6, witness replied that some of the entries are not correct.
CS DJ No.267/2018Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 18 of 38 He further replied that the total shortfall quantity includes orders cancellation on their end, sales or return (SOR), their customers returns and others. He affirmed the suggestion that the clause no.12 of Mark A contains that "to resolve any disputes arising from the agreement, the parties agreed to submit to the exclusive jurisdiction of the Courts of Delhi." He voluntarily stated that it was not relevant as the agreement was not executed. He further replied that some of the entries are not correct and the total shortfall quantity includes orders cancellation on their end, sales or return (SOR), their customers returns and others. He further replied that clause no.12 contains that "to resolve any disputes arising from the agreement, the parties agreed to submit to the exclusive jurisdiction of the courts of Delhi"
He voluntarily stated that it is not relevant as agreement was not executed. He replied that Ex. PW1/5 (colly) at page no. 10 (at Point A1), 16 (at point A2) and 24 (at Point A3) i.e. purchase orders were issued by the plaintiff company to the defendant, subject to terms and conditions mentioned therein as per fixed template of Gold Square and the agreed terms of operation under which they were operating were different as mentioned in the written statement. He replied that there is specific clause 11 of terms and conditions as shown at Point Al "other terms and conditions as per Master Supplier Agreement. He voluntarily stated that no Master Supplier Agreement was exists. He replied that he had objected clause no.11 at point A1, A2 & A3 clause several time during the course of business with their Account Managers. He further replied that he had not filed any document on record to show that they had raised the above objection prior to the institution of the present suit. He voluntarily stated that since the suit refers the Master Supplier Agreement that was not fully executed and sent to them, CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 19 of 38 it is illogical to assume that they will file objections to the Master Supplier Agreement which they came to know as part of the suit itself. He replied that he had not filed any document alongwith the written statement or in evidence to show that an objection with regard to terms and conditions of purchase order and he had assured that the purchase order is as per template and working terms stay as it is. He voluntarily replied that all such assurances were in routine course of business over phone calls with Account Manager etc. He denied the suggestion that there was no such assurance was ever given by the plaintiff company to the defendant. He denied the suggestion that the business transactions were governed by the terms and conditions of Master Supplier Agreement and purchase order as well. He replied that during the entire business transactions there were certain short supplies and QC rejections and debit notes were issued by the plaintiff company to the defendant. He voluntarily replied that the nature of their business is women fashion and as such embroidery and other delicate work items get damaged in transit etc. therefore, short supplies and QC rejections are normal course of business in this vertical. That is one of the reasons why the standard PO template did not apply to their normal working arrangements. He replied that no excess payment of Rs. 1,01,665/- made by plaintiff to the defendant against purchase order and supply of goods. He denied the suggestion that there was no such email wherein plaintiff had confirmed that there was no such excess payment of Rs. 1,01,665/- made by plaintiff to the defendant. He denied the suggestion that the copy of ledger account, list of sale and list of credit note Ex. DW1/2 (colly) is not in accordance with the Master Supplier Agreement/Purchase order. He denied the suggestion that Ex. DW1/2 (colly) is self created document and is CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 20 of 38 fabricated. He denied the suggestion that the plaintiff is entitled and the defendant is liable to pay the excess payment of Rs. 1,01,665/- along with interest @ 18% per annum. He denied the suggestion that the plaintiff is entitled and the defendant is liable to pay the liquidated damages in terms of MSA/purchase order of Rs. 11,82,390/-.
42) I have heard the arguments and perused the record carefully. My issue-wise findings are as follows :Issue No.1 & 2
1. Whether the plaintiff is entitled to recovery of Rs.13,28,890/-? OPP
2. Whether the plaintiff is entitled to interest, if yes, at what rate and for which period? OPP
43) Both the issue no.1 & 2 are taken up together as they require common discussion. The onus to prove both these issue was on the plaintiff.
It is argued by the Ld. Counsel for the plaintiff that the defendant through its Director have come into contact of the plaintiff whereby the defendant offered to supply different products. During their such business relationship, the master supplier agreement dated 01.09.2014 i.e. Mark A was executed by the defendant at New Delhi. As per the agreed terms, the defendant wanted to supply the finished products as per the specifications and quality within time as mentioned in the purchase order. The defendant was entitled for the payment as per the agreed terms. Moreover, the defendant also agreed that on each and every undelivered/short delivery/inaccurate/ improper quality product it shall pay the liquidated damages @ 500/- per CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 21 of 38 product or the value of the product, which ever is less. PW1 Mr.Sudhanshu Sekhar in his evidence by way of affidavit Ex.PW1/A, has been deposed that during the course of such business transaction due to late/defective supply of ordered products by the defendants or non delivery of the products, plaintiff had spend huge amount because of cancellation. Even when the inferior quality product was supplied, customers got the orders cancelled which caused loss to the plaintiff. Further the plaintiff used to give a sorry voucher of Rs.250/- to such customers and therefore, the plaintiff has been incurring an additional amount of Rs.1,01,665/-. It has also been deposed that since the defendant has breached the contract and failed to abide by the terms of contract because of delayed/undelivered/non-supply and inferior quality of products, the defendant had breached and violated the terms of contract, defaulted and neglected in supplying the produces as per the agreed terms and orders placed by the plaintiff and the such delay, defualt, non-supply and inferior quality of products by the Defendant has caused lossess to the plaintiff and the plaintiff has claimed the amount due & payable by the defendant which is reproduced as under :
Sl. No. Description of Amount Amount (in Rs.)
Excess Payment made by Plaintiff against
1. 1,01,665.00
Purchase order and supply of goods.
Interest @ 18% per annum on Rs.1,01,665/-
2. 44,835.00
from 01.10.2015 till 12.03.2018
Liquidated Damages @ Rs.500/- or value of
3. 11,82,390.00
products for 2365 undelivered products/short
supplies.
Total 13,28,890.00
44) On the other hand, it has been argued by the Ld. Counsel for the
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Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 22 of 38
defendant that the plaintiff and the defendant were doing business since the time of their first purchase order dated 24.09.2013 and further continuing for one year. The plaintiff shared the copy of that agreement and accordingly, the MSA dated 01.09.2014 was signed by the Defendant. However, later on it was agreed that party will continue business in normal course as doing business earlier and the master supplier agreement was never executed by both the parties and same did not bear the signature of the plaintiff. It is also deposed that during the ordinary course of business, the plaintiff never raised any demand for liquidated damages and discrepancy on the basis of the purchase order were closed financially before the payment and no other scheme/default was applicable which is clear from the e-mail dated 21.04.2016 sent by the Plaintiff to the defendant shows "Invoice in has been booked and nothing required from your side" (Ex.DW1/1).
45) In the cross-examination of PW1 Sh.Sudhanshu has admitted that Mark A was only executed by the plaintiff and no any communication regarding the same were ever done with the defendant. They have also admitted that Mark A was followed only for a year 2014 to 2015 and there was no documents for extension of documents. DW1 was also cross- examined by the plaintiff in which he has deposed that though it was agreed that clause 14 in Mark A, however, he has voluntarily stated that agreement Mark A was never executed. Even specific questions regarding Master Supplier Agreement was asked to which he had maintained his stand that no Master Supplier Agreement existed between the parties and the payments and purchase orders were governed by the fixed Template of Gold Square and their agreed terms of operation under which they were operating.
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46) To prove his claim, the plaintiff had filed the photocopy of Master Supplier Agreement and admittedly, it does not bear the signature of plaintiff, therefore, it cannot be said that the Master Supplier Agreement was validly executed between the parties. The business between the parties has started prior to 01.09.2014 i.e. the date of Master Supplier Agreement and even the business continued after the expiry of that agreement.
47) Plaintiff has based its claim on the terms and condition of the Master Supplier Agreement dated 01.09.2014. The case of the plaintiff cannot stand on this ground itself. First of all, the Master Supplier Agreement i.e. Mark A was only a photocopy and the original was never placed on record. Secondly, defendant has specifically denied its very existence and they have stuck to their stand during cross-examination. DW1 has deposed that it was agreed that there would be no change in their existing way of working and as per the existing way, the purchase order was being issued and payment was made against the supply. Though he is admitted that there was clause no.14 regarding the liquidated damages according to which they agreed to provide the plaintiff a sum of Rs.500/- or the value of the product whichever is less per every product which is not delivered in terms of the purchase order, however, he has deposed that the agreement mark A was never executed and therefore, the question of clause 14 in existence does not arise. PW1 also on the other hand specifically admitted that Mark A was never executed by plaintiff nor any communication regarding the same was given to the defendant. He has also admitted that Mark A i.e. Master Supplier Agreement was valid only for one CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 24 of 38 year i.e. 01.09.2014 to 31.08.2015 and there has no communication for extension of the same.
48) There is no agreement to suggest that there was claim regarding liquidated damages which has been brought regarding the supply of inferior quality and loss or damage earlier. Had this been the case, why the payment have been settled for the financial year even after making the Master Supplier Agreement. Meaning thereby, even plaintiff admitted that it was not extended and the parties were not on the same page regarding the Master Supplier Agreement Mark A. Even if it is presumed that it was executed even then, it is an admitted case that it was only valid for the period of one year and it was never extended.
49) Plaintiff has also based his claim on the purchased order tamplates which contains a specific clause which says "Penalty Clause - any short receipts or quality rejects will incur an additional charge of Rs.500/- or product value which ever is lower?"
A specific question regarding the same was asked to the DW1 to which DW1 replied that the purchase orders were issued as per the fixed templates of Gold Square and their agreed terms of operation under which they were operating and all the payments have been made as per their working agreement. He has also deposed the all purchase orders are the documents which signify their working arrangements. He has also deposed that they have multiple times in their usual course of dealings have objected to these clauses but importance was not given as it just a standard templates and their working terms was staying as it was. Perusal of these purchase CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 25 of 38 order templates i.e. Ex.PW1/5 (Colly.) shows that there is a penalty clause which is according to the MSA. However, as I have discussed earlier that MSA was never executed between the parties, even PW1 has admitted the same, hence, now the question arises whether defendant admitted to penalty clause as mentioned in the templates.
50) The plaintiff has tried to succeed on his claim by saying that these Purchase Orders were binding in nature. The Hon'ble Superior Courts have held in many cases that the penalty clause from a standard template will not be necessarily binding, however, the Court can given genuine or reasonable compensation for the same. The question that crops up for next in order of reasoning is whether if there was any consensus on part of the defendant in so far as the penalty clause in the purchase order is concerned?
It has to be seen whether a clause printed on a invoice which is a standard template can be accepted as specific acknowledgement of acceptance or any expression of consent or mere signing of the invoice could at best imply the receipt of goods but not sufficient for the purpose of inferring any consensus-ad-idem has been identified to be the essential attribute for the purpose of agreement.
51) While dealing with similar issue, the Hon'ble High Court of Delhi in case M/s Hetampuria Tax Fab vs M/S Daksh Enterprises [FAO (COMM) 169/2022 dated 15.11.2022] pertaining to the Mercantile Association examined the issue of existence of arbitration agreement based on a unilateral clause printed on invoices. The Hon'ble Court observed :-
"In order to constitute an agreement, there must be a consensus CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 26 of 38 between the parties. This Court is unable to accept that the arbitration agreement had come into existence by the appellant unilaterally issuing a delivery challan and the respondent accepting delivery of goods."
The Hon'ble Court observed that an arbitration agreement may be constructed in exchange of letters, telex, telegrams and other means of telecommunication, or can be discerned through claim and defence statements, but stressed upon the necessity of parties being ad-idem. The Hon'ble Court observed:
"However, it is essential for the Court to find that the parties were ad-idem for referring the disputes for arbitration".
32. A similar clause was examined by the Hon'ble High Court of Delhi in its earlier decision Parmeet Singh Chatwal Vs. Ashwani Sahani. A reference to Divsion Bench decision in the case of Scholar Publishing House Vs. Khanna Traders was also made therein by the Hon'ble Court, while dealing with a cause printed in small font at the bottom of invoice. The Hon'ble Court observed:-
"22. The legal position that follows is that what is required to be ascertained is the intention of the parties to settle their disputes through Arbitration. The essential attribute of an arbitration agreement is that it must be expressly or impliedly spelt out from a clause in the agreement that there is an agreement to refer their disputes/differences to arbitration".
While concluding its findings on the aspect, the Hon'ble Court held:-
"29. The above judgments would support the finding recorded above namely that the signatures affixed on the invoice are only the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 27 of 38 acknowledgment of receipt of goods and nothing more. Such a clause would not be an Arbitration agreement. The parties were not ad-idem. As there is no arbitration agreement, the Award and the proceedings to that extent are vitiated.
52) In Priknit Retails Ltd. & Ors. Vs. Aneja Agencies [O.M.P. (COMM) 374/2016 & IA No.9569/2016 dated 22.08.2018], the Hon'ble High Court observed:-
"27. Mere fact, that the delivery of goods had been accepted, would not imply that petitioner no. 1 had also agreed to the arbitration clause. As stated above, the said agreement is inchoate inasmuch as the blanks were never filled in. Further, the agreement remained unsigned. The contention, that petitioner no. 1 had not disputed the invoices would necessarily mean that petitioner no. 1 had also agreed to the arbitration agreement, is unmerited. This is so because in order to communicate its acceptance to the arbitration clause, petitioner no. 1 would require acknowledgment of the goods in the form as indicated in the invoices and further also affix its signatures. Admittedly, petitioner no. 1 has neither signed the arbitration agreement nor communicated its acceptance to the same."
36. The Hon'ble Court relied upon "Taipack Limited & Ors. Vs. Ram Kishore Nagar [2007 (3) ARBLR 402 Delhi]" and reiterated "34. In order to ascertain whether an agreement exists between the parties, it is necessary to establish that there was consensus ad idem between the parties. In the present case, it is not possible to accept that petitioner no. 1 had accepted the arbitration clause printed at the bottom of the invoice, as the same was CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 28 of 38 neither filled in nor signed by petitioner no. 1. It is also not possible to accept that petitioner no. 1 had agreed to the arbitration clause."
In view thereof, the inclusion of some clause being binding in nature have been discussed in aforesaid cases and the observations made by the Hon'ble High Court of Delhi in the aforesaid decisions accords with and aligns closely with the facts involved in the case. The present Court, accordingly, comes to the conclusion that the any clause mentioned in the invoices cannot be said to have fructified into a binding clauses in the absence of any specific consent or acknowledgment in writing by the parties.
53) In view of aforesaid discussion, any kind of penalty clause in a standard template cannot be held to be a form of acceptance in absence of any agreement between the parties. In our case, the MSA Mark A which has been heavily relied by the plaintiff and which is the vary basis of the suit of the plaintiff has not been executed and admittedly not even extended after the period of one year as mentioned in that MSA. Therefore, even the Purchase Order clause would not come to the aid of plaintiff for claim regarding liquidated damages.
54) Proceeding further regarding the outstanding balance and the claim of liquidated damages between the parties, if any, in his evidence by way of affidavit PW1 submitted that the business transactions between Plaintiff and the Defendant were continuing one and during the course of business transactions till September 2015, Plaintiff had placed Purchase CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 29 of 38 Orders worth Rs.1,39,39,947/- (Rupees One Crore Thirty Nine Lacs Thirty Nine Thousand Nine Hundred Forty Seven only) for supply of goods of 11,074 pieces. It is also submitted that despite Purchase Orders was placed and payments have been made by the Plaintiff, the Defendant failed to supply the ordered products to the Plaintiff within the stipulated time. It is further submitted that the product supplied to the Plaintiff was of inferior quality and not as per the specifications. It is further stated that the certain product was returned to the Defendant and Debit Notes were issued. It is further submitted that as per the terms of Agreement and understanding, plaintiff has also paid an amount of Rs. 94,66,090/- (Rupees Ninety Four Lacs Sixty Six Thousand Ninety only) to the Defendant towards advance/ on account against the supply of goods/ products. It is further submitted that the Defendant made short supply of products and raised Invoices wroth Rs.1,23,69,267/- against the supplies and had made short deliveries of products more than 15 Lacs. It is also submitted that out of the products supplied and billed by the Defendants, the products worth Rs.30,04,842/- were rejected due to inferior quality or deviation of specifications and debit notes were issued and said products were returned against rejection and thus products only worth Rs.93,64,425/- were supplied by the Defendant to the Plaintiff. Therefore, an amount of Rs.1,01,665/- (Rupees One Lac One Thousand Six Hundred Sixty Five Only) remained as excess payment by the Plaintiff to the Defendant. It is further submitted that the Defendant also failed to supply the ordered products and there had been short quantity of 2,365 Products (Out of which 1,875 short quantity and 490 being rejected in quality check/ inferior quality). It is further submitted that as per the terms of Agreement and Purchase Order, Defendant was bound to pay the CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 30 of 38 liquidated damages @ Rs.500/- or cost of product, whichever is minimum, as per agreed terms of MSA. Accordingly, an amount of Rs.11,82,390/- (Rupees Eleven Lacs Eighty Two Thousand Three Hundred Ninety only) has become due and payable by the Defendant to the Plaintiff towards liquidated damages against the undelivered products/short supply. The Defendant is liable to pay the aforesaid amount in terms of Agreement. It is argued that such liquidated damages being reasonable were agreed considering the costs/expenses being incurred by the Defendant for promotion of products and other incidental and actual expenses. It is further submitted that since the Defendant breached and violated the contract, defaulted and neglected in supplying the products as per the agreed terms and orders placed by the Plaintiff, such delay, default, non- supply and inferior quality of products supplied by the Defendant has caused losses to the Plaintiff.
55) It is further submitted that thus, a sum of Rs.13,28,890/- is due and payable by the Defendant to the plaintiff being admitted amount. It is submitted that despite being admitted by the defendant, the defendant has failed to pay the said amount. It is further submitted that the transaction being commercial transaction, the Plaintiff is entitled for interest from the last date of transaction.
56) On the other hand it has been submitted in the WS on behalf of defendant that the business transactions between the Defendant and Plaintiff were going on all through the way with Plaintiff, till December 2015. The Plaintiff placed purchase order worth Rs.1,39,39,947 (Rupees One Crore CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 31 of 38 Thirty Nine Lakhs Thirty Nine Thousand Nine Hundred Forty Seven Only for supply of products having quantity of 11,074 pieces. It is submitted that against the total value of purchase order of Rs.1,39,39,947 (Rupees One Crore Thirty Nine Lakhs Thirty Nine Thousand Nine Hundred Forty Seven Only, the Defendant raised invoice for Rs.1,29,14,722.00 (One Crore Twenty Nine Lacs Fourteen Thousand Seven Hundred Twenty Two Only). Against the said invoices, the amount of Rs.94,66,090.00 (Rupees Ninety Four Lacs Sixty Six Thousand Ninety only) was paid by the Plaintiff to the Defendant. It is also submitted that out of goods supplied and billed to Plaintiff, goods worth Rs. 30,69,734.00 (Thirty Lacs Sixty Nine Thousand Seven Hundred Thirty Four only) were rejected by the Plaintiff and debit notes were issued and other debit notes worth Rs.1,04,566.00 (One Lacs Four Thousand Five Hundred Sixty Six only) (which we have to identify). It is further submitted that the goods worth Rs. 97,40,422.00 (Ninety Seven Lacs Forty Thousand Four Hundred Twenty Two only) were supplied by the Defendant to the Plaintiff. Therefore an amount of Rs. 2,74,331 (Two Lacs Seventy Four Thousand Three Hundred Thirty One only) remained to be paid by the Plaintiff to the Defendant.
57) The Hon'ble Supreme Court while discussing the concept of Liquidated Damages in case titled as ONGC vs. Saw Pipes 2003 (5) SCC 705 held that:
1. Terms of contract are required to be taken into consideration before arriving the conclusion whether the party claiming the damages is entitled to same.
2. If terms of the contract are clear and unambiguous stating the liquidated CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 32 of 38 damages in case of breach and they are not unreasonable or in the nature of penalty the party committing the breach is required to pay compensation according to section 73 of the Indian Contract Act.
Section 74 is to be read along with section 73 and, therefore in every case of breach of contract, the aggrieved person is not required to prove actual loss or damage suffered by him before he can claim a decree. The court is armed with power to award reasonable compensation even in the cases if no actual damage is proved to have been suffered in the consequence of breach of a contract. If courts fail to assess the compensation contemplated or if the compensation is not by way of penalty or unreasonable, Court can award the same if it is genuine pre-estimate by the parties as measure reasonable compensation.
58) In the case titled as Fateh Chand v. Balkishan Das, AIR 1963 SCC 1405 Hon'ble Supreme Court adopted the view that under the common law a genuine pre-estimate of damages by mutual agreement is regaled as stipulation naming liquidated damages. The aggrieved party is entitled to receive the compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. It dispenses with proof of "actual loss or damages". Section 74 of the Indian Contract Act does not justify the award of compensation when no legal injury has resulted after breach. Compensation for breach of contract can be awarded to make good of the loss or damage which naturally arose in the usual course of things or which the parties when making the contract were aware of.
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59) It is argued by the Ld. Cousnel for the defendant that as per business practice, each purchase order was closed financially with a Debit Note before payment was made against it. It is further argued that the nature of business was such that in many cases the rejects and returns were beyond the control of the Defendant. It is further argued that in view of the market practices, it was agreed that purchase order is being issued as per Plaintiff's standard template and the terms and conditions mentioned therein will not be applicable in their business transaction with the Defendant. It is argued that during the normal course of business Plaintiff never raised the current demand for liquidated damages. It is argued that all Purchase Orders were closed financially before payment and no other claim or penalty was applicable. It is argued that the Plaintiff and Defendant were sharing the details of purchase order, payment etc. on e-mail. It is further argued that on 22.01.2016, Defendant received an e-mail from the Plaintiff that as per their account books, an amount of Rs.1,02,720/- (Rupees One Lakh Two Thousand Seven Hundred Twenty Only) is outstanding and requested for the payment of the same. It is argued that Pursuant to Plaintiff's demand of Rs.1,02,720/- (Rupees One Lakh Two Thousand Seven Hundred Twenty Only), Defendant replied on 17.03.2018 that reconciliation has been done as there was some missing bills and nothing is payable. It is argued that the Defendant received another e-mail from the Plaintiff whereby asking for some more missing bills which were not in there record, which was provided by the Defendant vide its mail dated 08.04.2016. It is argued that on 21.04.2018, the defendant received a confirmation mail from the Plaintiff whereby stating that nothing is outstanding.
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60) Both the parties have admitted the exchange of e-mail dated 21.04.2018 between them whereby plaintiff had stated that nothing is outstanding. The defendant has exhibited the e-mails as Ex.DW1/4 (Colly.) alongwith certificate under Section 65B Indian Evidence Act as Ex.DW1/3. The plaintiff has admitted the e-mails, though disputed their contents.
61) In the cross-examination, PW1 was specifically shown the emails from page no.66 to 72 filed by the defendant and the same are already admitted but their contents were denied by the plaintiff during admission/denial of documents, same were Ex.PW1/D1. He deposed that it was only oral discussion with the defendant regarding the outstanding as no consolidated details were shared with the defendant prior to sending of legal notice. PW1 denied the suggestion that purchase order was issued under two categories i.e. 'regular on demand' and 'sale or return'. He admitted to be not aware if there was 'sale or return' purchase order issued to the defendant.
62) In these circumstance, the plaintiff has failed to substantiate their claim regarding their being any oral agreement between the parties regarding the liquidated damages or there being any outstanding balance. PW1 has himself admitted in his cross-examination that no consolidated details were shared with the defendant prior to sending the legal notices. Further, he has admitted that no balance sheet has been filed in preceding financial years reflecting outstanding to be recovered from defendant. Regarding the excess payment of Rs.1,01,665/- made by plaintiff to the defendant, the defendant has deposed there is no excess payment made by CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 35 of 38 the plaintiff. As I have discussed earlier, there are e-mail between the parties on record in which the plaintiff has himself admitted that there are no balance amount remaining between the parties. The plaintiff cannot at one hand admit the e-mails and on the other hand disputed their contents. They show the normal course of business communication between parties. Defendant has also filed the certificate under Section 65B IEA for them. Further, defendant has failed to show that there was any previous communication between the parties regarding the outstanding balance or liquidated damages. In fact, PW1 admitted in the cross-examination that defendant was not shared with any consolidated details.
63) In view thereof, the plaintiff has failed to prove its case that he is entitled to recovery of Rs.1,01,665/- i.e. balance amount. As far as the liquidated damages is concerned, the Plaintiff has stated that he used to issue sorry vouchers of Rs.250/-, however, he has not placed on record any such voucher being issued to his customers, which can be one of the governing factor for establishing the quantam of liquidated damages. Plaintiff has submitted that he suffered huge lossess, however, it is not the case that plaintiff was only doing business with defendant, so the entire losses cannot be attributed to defendant in the circumstances of case when plaintiff has failed to provide purchase order/rejection letter etc. Absolutely nothing has been brought on record to prove that in the entire time of plaintiff & defendant doing business together, plaintiff has shown any ledger statement showing details of the transactions done between the plaintiff and the defendant.
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64) In view of the aforesaid discussion, there is nothing on record which suggests that there is any outstanding balance and the liquidated damages have been claimed as per the unexecuted MSA between the parties regarding which the present court had held to not have been validly executed between the parties.
65) In these circumstances, the Court is of the view that the plaintiff has failed to prove its case against the defendant that any amount is due to be recovered from the Defendant. Hence, both the issues are decided in favour of the Defendant and against the plaintiff.
Issue No.3 Whether this court lacks territorial jurisdiction? OPD
66) Onus to prove this issue was on the Defendant. The defendant has not placed any document on record to show that this Court does not have territorial jurisdiction to try the present matter. It is the stand of the defendant that jurisdiction to try the present suit was made on the basis of MSA and that MSA has not even properly executed and also no cause of action arose in Delhi as the goods were supplied in Surat. However, the present case involved the issue regarding MSA being executed between the parties and which was made basis of the present suit and the same was prepared in Delhi, therefore, the part of cause of action has arisen within the jurisdiction of Delhi and therefore, the suit filed by the plaintiff is within the territorial jurisdiction of the present suit. Therefore, the issue no.3 is decided in favour of plaintiff and against the defendant.
CS DJ No.267/2018Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 37 of 38 Relief :
67) In view of the aforesaid discussion, the Court is of the view that the plaintiff has failed to prove its case against the defendant and that any amount is due to be recovered from the Defendant. The present suit stands dismissed accordingly.
Decree sheet be drawn accordingly.
File be consigned to record room after due compliance.
Digitally signed by AMBIKA AMBIKA SINGH Announced in the open court SINGH Date: 2025.08.30 today i.e. 30.08.2025 17:16:13 +0530 (Ambika Singh) District Judge-01/South District, Saket, New Delhi CS DJ No.267/2018 Gold Square Sales India Pvt Ltd Vs Kamal Rayon Pvt Ltd. Page No. 38 of 38