Karnataka High Court
The Regional Manager vs Shri Venkatesh on 23 October, 2020
Bench: B.Veerappa, K.Natarajan
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF OCTOBER, 2020
PRESENT
THE HON' BLE MR. JUSTICE B. VEERAPPA
AND
THE HON'BLE MR. JUSTICE K. NATARAJAN
REGULAR FIRST APPEAL No.546/2013
BETWEEN:
1. THE REGIONAL MANAGER,
KARNATAKA STATE FOREST INDUSTRIES
CORPORATION LTD.,
PADILU,
MANGALORE-575007.
2. THE REGIONAL MANAGER,
KARNATAKA STATE FOREST INDUSTRIES
CORPORATION LTD.,
"VANA VIKAS", 18TH CROSS,
MALLESHWARAM,
BANGALORE-560093
BUT REPRESENTED BY
MANAGING DIRETOR. ... APPELLANTS
(BY SRI M.V. CHARATI, ADVOCATE)
AND:
SHRI VENKATESH,
S/O CHENGAIAH,
SRI MANJUNATH TIMBER TRADERS,
No.1, DODDABOMMASANDRA,
VIDYARANYAPURA MAIN ROAD,
BANGALORE-560097. ... RESPONDENT
(BY SRI G. KRISHNAMURTHY, SENIOR COUNSEL A/W
SRI K. CHANDRAKANT PATIL, ADVOCATE)
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THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 READ WITH ORDER 41 RULE 1 OF THE CODE OF CRIMINAL
PROCEDURE, PRAYING TO SET ASIDE THE JUDGMENT AND
DECREE DATED 02.01.2013, PASSED BY THE COURT OF THE
PRINCIPAL SENIOR CIVIL JUDGE, MANGALORE IN O.S.
No.99/2009 AND TO PASS SUCH ORDER AS THIS HON'BLE
COURT DEEMS FIT UNDER THE FACTS AND CIRCUMSTANCES
OF THE CASE, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS REGULAR FIRST APPEAL COMING ON FOR HEARING
THIS DAY, B.VEERAPPA, J, DELIVERED THE FOLLOWING:
JUDGMENT
This Regular First Appeal is filed by the defendants against the judgment and decree dated 02.01.2013 made in O.S.No.99/2009 on the file of the Principal Senior Civil Judge and CJM, Mangaluru, decreeing the suit of the plaintiff in part declaring that the termination letter dated 17.01.1997 will not affect the liability of the defendants to pay the cost of the materials received from the plaintiff upto 30.11.1996 as noted in Exs.P.8 to P.12 and P.16, and directing the defendants to pay `17,00,000/- with current and future interest at the rate of 7% per annum to the plaintiff. 3
2. The respondent who is the plaintiff before the Trial Court, filed suit for declaration and recovery of money, contending that he being a timber contractor, on the oral request of the defendant No.1 submitted quotation on 21.08.1996 as per Ex.P.1 for supply of door, windows and beams, etc. to be used for the houses under special component plan and tribal sub plan with terms and conditions quoting price at `9,260/- per set. As against the quotation dated 21.08.1996, the defendant No.1, issued the work order dated 20.09.1996 for supply of 356 sets of doors, windows, beams etc., at the rate of `9,260/- per set total value of which comes to `32,96,560/- and the material had to be supplied on or before 30.11.1996. In order to supply the materials as per the work order dated 20.09.1996, the plaintiff borrowed money from the bank, secured the required quantity of materials and in the presence of the officials of the defendant No.1 at the work spot, at Bengaluru, prepared the materials and then sent the 4 same to the work yard of the defendant No.1 at Mangaluru with an intention to assemble there for further dispatch to the place indicated in the work order. The materials were supplied at the intervals after due inspection by the officials of the defendant No.1 which have been duly acknowledged by the defendant No.1.
3. When things stood thus, on 17.10.1996, without any reason, the defendant No.1 sent a telegram insisting to stop fabrication of further materials. As on the said date, the plaintiff had supplied the material worth `15,00,000/- and defendant No.1 failed to give specific reason for sending the telegram dated 17.10.1996 and issued another telegram insisting to stop further fabrication of the doors, windows, etc. Thereafter, through the notice dated 17.01.1997, the defendant No.1 intimated the cancellation of the work order for the reason of non-supplying of the materials before 5 30.11.1996 and quality of the wood supplied differed from the quality of the wood noted in the work order. As per the instruction given by the defendant No.1 even before the expiry of 30 days and before the deadline dated 30.11.1996, supply and fabrication was stopped and due to no fault on the part of the plaintiff, the defendant Nos.1 and 2 issued termination intimation dated 17.01.1997, in respect of the work which was already carried out by the plaintiff by spending huge amounts. Notwithstanding the termination order, the defendants are liable to pay to the plaintiff amount claimed in the suit. Accordingly, the plaintiff claimed a sum of `17,00,000/- towards the material supplied vide delivery memo duly acknowledged and `5,35,500/- towards interest, totally a sum of `22,35,500/-.
4. The defendants filed the written statement admitting the issuance of the work order dated 20.09.1996 insisting the plaintiff to supply wood 6 materials fabricated from Nandi, Mathi, and Marva wood, on the basis of the quotation as per Ex.D.1. The material submitted by the plaintiff are tardy, sub- standard and in pursuance of the expert report, intimated the plaintiff about the bad quality and slow rate of supply and sought urgent attention in the matter. The defendants denied the allegations that the plaintiff had supplied the materials worth of `15 lakhs and acknowledgment by defendants and plaintiff has unnecessarily raised the controversy of soft wood vs. hard wood without addressing himself to the issue of not supplying the wood material specified in the quotation dated 20.09.1996. The plaintiff has not performed his part of the contract and therefore, question of payment of interest would not arise and sought for dismissal of the suit.
5. Based on the aforesaid pleadings, the Trial Court framed the following issues:
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"1. Whether the plaintiff proves that he was supplying the doors, windows, beams, as per the oral agreement beams between plaintiff and defendant as per the quotations and the same were in the intervals?
2. Whether the plaintiff proves that the termination of the contract of supply of timber doors, frames, etc. by issuing telegram dated 17.10.96 is void and without any reason?
3. Whether the 1st defendant proves that the woods and materials supplied by plaintiff were not of the type of wood and the same differed with the kind of wood agreed to be supplied?
4. Whether the plaintiff proves that the order of termination of contract dated 17.10.1996 is illegal, arbitrary, without any basis and the same is not binding on the plaintiff in respect of the work which was already carried by spending huge amount?
5. Whether the plaintiff is entitled for recovery of the total amount of Rs.22,35,500/- with 18% p.a.?
6. Whether the defendant proves that the plaintiff has not performed his part of the contract in supplying the woods and wood materials agreed between the parties?
7. Does defendant further proves that the plaintiff has supplied inferior quality of material and he is liable to pay the rent of the 8 supplied goods which had occupied the space in the defendant's premises?
8. Whether the defendant proves that the defendant Forest Department of State Government is justified in refusing the further orders for supply of worth of Rs.2 crores?
9. Whether the claim of the plaintiff is barred by limitation?
10. What order or decree?"
6. In order to prove his case, the plaintiff got examined himself as P.W.1 and marked the documents Exs.P.1 to 22. On behalf of the defendants, D.W.1 to D.W.3 were examined and documents Exs.D.1 to D.6 were marked.
7. Considering the entire material on record, the Trial Court recorded the finding that, the plaintiff proved that he was supplying the doors, windows, beams as per the oral agreement between plaintiff and defendants as per the quotations and the same were in the intervals; plaintiff proved that the termination of the 9 contract of supply of timber doors, frames etc. by issuing telegram dated 17.10.1996 is void and without any reasons; the first defendant failed to prove that the woods and materials supplied by the plaintiff were not of the type of wood and the same differed with the kind of wood agreed to be supplied; plaintiff proved that the order of termination of contract dated 17.01.1996 is illegal, arbitrary, without any basis and the same is not binding on the plaintiff in respect of the work which was already carried by spending huge amount; plaintiff proved that he is entitled for recovery of `17,00,000/- with current and future interest at the rate of 7% per annum; defendants failed to prove that the plaintiff has not performed his part of the contract in supplying the woods and woods materials agreed between the parties; defendants failed to prove that the plaintiff has supplied inferior quality of material and he is liable to pay the rent of the supplied goods which had occupied the space in the defendants' premises; and the defendants 10 failed to prove that the claim of the plaintiff is barred by limitation. Accordingly, the Trial Court by the impugned judgment and decree, decreed the suit of the plaintiff in part, directing the defendants to pay `17,00,000/- with current and future interest at the rate of 7% per annum to the plaintiff towards cost of the materials supplied. Hence the present Appeal is filed.
8. We have heard the learned counsel for the parties to the lis.
9. Sri M.V.Charati, learned counsel for the appellants- defendants contended that the impugned judgment and decree passed by the Trial Court decreeing the suit in part directing the appellants/ defendants to pay a sum of `17,00,000/- with interest at 7% per annum is erroneous and contrary to the material on record and cannot be sustained. He further contended that the Trial Court failed to notice that the original quotation which was produced at Ex.D.1 11 specifically prescribes the kind and species of the wood. The quotation Ex.P.1 has been denied by the appellants. The Trial Court has not applied its mind to the documents placed on record and has come to the wrong conclusion that the appellants are liable to pay `17 lakhs with interest at 7% per annum, even though the respondent/plaintiff has supplied inferior quality of materials.
10. The learned counsel for the appellants further contended that trial Court failed to notice that the documentary evidence Exs.P.1, P.2, P.7 to P.12 clearly depicts that the materials supplied are not as per the quotation and the work order. The plaintiff himself has admitted that he has not supplied the finished goods like doors, windows and hence there was no supply as per the work order. Therefore, the question of paying the amount would not arise. He further contended that the Trial Court failed to notice that the plaintiff has 12 accepted the termination and has admitted that he has not supplied the finished goods to the work place at Kundapur within the stipulated time and the breach of contract is admitted by the plaintiff. Hence the plaintiff is not entitled to recover the suit claim as the claim is based on the contract between the parties. He further contended that in the absence of any agreement with regard to payment of interest, the Trial Court is not justified in directing the appellants/ defendants to pay interest at 7% per annum from the date of the suit. Therefore, he sought to allow the Appeal.
11. Per contra, Sri G.Krishnamurthy, learned Senior Counsel along with Sri K.Chandrakant Patil, learned counsel for the respondent/plaintiff sought to justify the impugned judgment and decree and contended that Ex.P.1-Quotation by the plaintiff was accepted by the defendants and issued the work order dated 20.09.1996 as per Ex.P.2. Accordingly, the plaintiff has supplied 13 the materials as per Exs.P.8 to 12 and 16. The delivery challans are of different dates and once the delivered materials are accepted by the defendants, now they cannot turn back and state that, the inferior quality materials are supplied by plaintiff and therefore not entitled to the decretal amount.
12. The learned Senior Counsel further contended that D.W.3 has admitted in his cross-examination that he made signature on the documents marked as Exs.P.8 to 12 confirming the receipt of materials noted in those documents and has not denied the signature on document Ex.P.16 confirming the receipt of that document. The Trial Court, considering both oral and documentary evidence on record, in proper perspective, has rightly proceeded to pass the impugned judgment and decree, decreeing the suit of the plaintiff in part and the same is just and proper. Therefore, sought to dismiss the Appeal.
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13. In view of the rival contentions urged by the learned counsel for the parties, the points that arise for our consideration in the present Regular First Appeal are:
(i) Whether the defendants/appellants have made out a case to interfere with the impugned judgment and decree passed by the Trial Court directing the defendants to pay `17,00,000/- to the plaintiff?
(ii) Whether the Trial Court is justified in awarding current and future interest at the rate of 7% per annum on the decretal amount, in the facts and circumstances of the present case?
14. We have given our thoughtful consideration to the arguments advanced by the learned counsel for the partiers and perused the entire material including original records, carefully.
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15. It is not in dispute that the plaintiff being a timber contractor, on the oral request of the defendant No.1 made quotation on 21.08.1996 as per Ex.P.1 for supply of door, windows and beams, etc. The defendants accepted the quotation and issued the work order as per Ex.P.2. In terms of the work order, the plaintiff supplied the materials to the defendant No.1 as per Exs.P.8 to 12 and 16 and the same was acknowledged by the first defendant on different dates. The oral contract between the plaintiff and defendants and the supply of wood materials by the plaintiff to the defendants are not in dispute. Though the learned counsel for the appellants/defendants contended that the inferior quality wood was supplied and therefore, the plaintiff is not entitled to the amount awarded by the Trial Court, the same cannot be accepted for the simple reason that defendant Nos.1 and 2 in their evidence and in the written statement, have not disputed the oral agreement between them, and the 16 quotation given by the plaintiff and the work order issued by the defendants, in pursuance of the quotation.
16. The plaintiff examined as P.W.1 has reiterated the averments made in the plaint and has stated on oath that as per the work order, he has supplied the wood materials and the same was acknowledged by the defendants. Having accepted, now it is not open for the defendants to deny the claim made by the plaintiff in view of the provisions of Sections 42 and 44 of the Sale of Goods Act.
17. It is undisputed fact that, D.W.1, in his cross- examination has stated that he has no personal knowledge about the transaction taken place prior to 08.09.2008 and admitted that the material documents Exs.P.8 to 12 and 16 bear the seal of the office, confirming supply of the materials by the plaintiff. D.W.2 admitted that the institute which issued the 17 certificate marked at Ex.P.7 is a reputed institute. In the cross-examination, D.W.2 has admitted that except the name of trees, contents of Ex.P.1 and Ex.D.1 (quotations) are one and the same. He further admitted that Mr.H.Y.Koloor has received the materials noted in Exs.P.8 to 10 and shown ignorance to the question as to for what reasons office of the defendant No.1 has not refused to receive the materials noted in Exs.P.8 to 10 on the ground that they are not in consonance with the work order-Ex.P.2. The said ignorance cannot be accepted. D.W.2 has further admitted that after verifying the quality and measurement, the materials noted in Exs.P.8 to 12 have been received and shown ignorance about the name of the Officer who made signature on Exs.P.11 and 12. He also admitted that the quality of the materials noted in Exs.P.8 to 10 are satisfying with the materials noted in Ex.D.1. He admitted that there are no materials to show that copy of Ex.D.3 has been sent to the plaintiff. 18
18. D.W.3, in his cross-examination, has stated that he made signature on the documents marked as Exs.P.8 to 12 confirming the receipt of the materials noted in those documents and he made signature on Ex.P.16 confirming the receipt of that document. It is not in dispute that Ex.P.2-work order reveals that on 20.09.1996, defendant Nos.1 and 2 instructed the plaintiff to prepare 356 sets containing doors, windows, reaps, rafters worth `9,260/- each, totaling to `32,96,560/-. The documents Exs.P.8 to 12 and 16 reveals the supply of the materials that on 16.10.1996, 19.10.1996, 29.10.1996, 29.11.1996 and 30.11.1996, the D.W.2 being an employee of defendant No.1 received the materials from the plaintiff. In Ex.P.7 it is noted that at the instance of the plaintiff, Institute of Wood Science and Technology, F.R.L. Complex, Malleshwaram, Bengaluru, examined/inspected one sample wood and certified that the sample wood belongs 19 to category of hard wood. In Ex.D.2, it is noted that on 14.11.1996, defendant No.1 dispatched letter to the plaintiff alleging that 228 door frames stored in the office of the defendant No.1 are prepared from soft wood.
19. The Trial Court, considering both oral and documentary evidence on record, has come to the conclusion that the plaintiff has supplied wood materials as agreed between the parties. The plaintiff has proved that he has supplied the doors, windows, beams as per the oral agreement, as per the quotations and the word order issued at different intervals as per Exs.P.8 to 12 and 16; and the plaintiff has proved that termination of the contract of supply of timber doors, frames etc. by issuing telegram dated 17.10.1996 is void and without any reason. The Trial Court further recorded a finding that the defendant acknowledged the supply of wood and plaintiff is entitled to cost of the 20 wood supplied and accordingly, awarded a sum of `17,00,000/- with interest at 7% per annum.
20. The plaintiff filed suit for declaration to declare that the plaintiff is entitled to a sum of `22,35,500/- towards the value of the materials supplied with future interest at the rate of 18% per annum on `17,00,000/- on the basis of the materials supplied as per Exs.P.1 to 12 and 16. The suit is decreed in part for a sum of Rs.17,00,000/- with 7% interest per annum from the date of the suit. Admittedly, the plaintiff has not filed any suit for disallowing the remaining claim sought by the defendants in the suit. The impugned judgment and decree passed by the Trial Court is based on the oral and documentary evidence of P.W.1 and the material documents Exs.P.1 to 22 and the evidence of D.Ws.1 to 3 and the material documents Exs.D.1 to 6. The same is in accordance with law. The defendants have not made out any ground to interfere with the 21 impugned judgment and decree, insofar as the decretal amount of `17,00,000/- in exercise of powers under Section 96 of the Code of Civil Procedure.
21. In the absence of any contract between the parties with regard to payment of interest, the Trial Court is not justified in awarding interest at 7% per annum on the decretal amount of `17,00,000/-, in view of the provisions of Section 61(2) of the Sales of Goods Act. At this stage, Sri Krishnamurthy, learned Senior Counsel for the plaintiff, on instructions, fairly submits that the plaintiff restricts the claim of interest at the rate of 5% per annum as against 7% per annum awarded by the Trial Court. The said submission is placed on record.
22. In view of the above, the impugned judgment and decree of the Trial Court requires modification only in respect of awarding of interest. The respondent/plaintiff is entitled to interest at the rate of 5% per annum as agreed by the learned Senior Counsel 22 for the respondent/plaintiff, as against 7% per annum awarded by the Tribunal.
23. For the reasons stated above, the first point raised in the present Appeal has to be answered in the negative holding that the defendants/appellants have not made out a case to interfere with the impugned judgment and decree passed by the Trial Court directing the defendants to pay `17,00,000/- to the plaintiff. The second point is also answered in the negative holding that the Trial Court is not justified in awarding current and future interest at the rate of 7% per annum on the decretal amount in the absence of any contract.
24. In view of the above, the present Regular First Appeal is allowed in part, the impugned judgment and decree passed by the Trial Court is modified. The defendants are liable to pay `17,00,000/- with current and future interest at the rate of 5% per annum to the 23 plaintiff from the date of the suit, till realization along with costs awarded by the Trial Court.
25. The parties shall bear their own costs in the present Regular First Appeal.
Ordered accordingly.
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