Delhi District Court
M/S Agrico Organics Ltd vs Bharat Minerals And Chemicals Ind on 28 January, 2023
In the Court of Shri Dinesh Bhatt, District Judge
(Commercial Court)01, Tis Hazari Courts, West District,
Delhi
CS (Comm.) No.642/2021
CNR No. DLWT010095622021
M/S Agrico Organics Ltd.
7H, 7th Floor, Gopala Tower,
Rajendra Palace,
Delhi110008
Through its authorized representative
Sh. Diwakar Mishra
Whatsapp: 9873767378
EMail: [email protected]
........Plaintiff
Versus
Bharat Minerals and Chemicals Ind.
1, Old Industrial Area,
Alwar, Rajasthan 301001
Through its authorized representative
Whatsapp: 7947114660
........Defendant
Date of Institution : 09.12.2021
Date of hearing of arguments : 21.12.2022
Date of decision : 28.01.2023
JUDGMENT
1. This is a suit for recovery of Rs.1,33,13,266/ on account of balance payment of goods supplied to the defendant alongwith interest.
2. Plaintiff's case is that plaintiff is a Company and CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.1 of 1 authorised Sh. Diwakar Mishra, Executive (legal) to file the present case.
3. Plaintiff is a reputed manufacturer of insecticide, pesticides etc. Defendant was a regular customer and therefore, a running account was being maintained. Plaintiff supplied goods vide invoices and all entries relating to goods and payments were made in the books of accounts. As per the books of account as on 12.12.2018, there was an outstanding amount of Rs.70 Lakh to be paid by the defendant. Defendant despite repeated requests and personal visits did not clear the outstanding amount. Consequently, legal notice dated 28.07.2020 was sent to the defendant. Defendant, instead of making payment sent a frivolous reply justifying withholding of the outstanding amount. Defendant had raised a false plea of overcharging but the invoices was raised on agreed and settled price. Defendant had received the goods without any objection or protest and had made the plea in its reply to the legal notice as an afterthought. It is stated that plaintiff was also entitled for 18% interest and thereby claimed the suit amount.
4. Defendant filed written statement on the ground that plaintiff had concealed material facts and filed this suit with malicious and ulterior motive. Plaintiff has concealed letter dated 20.01.2020 issued prior to the legal notice in CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.2 of 2 question. Defendant had also appeared before the pre litigation mediation on two dates but plaintiff has falsely averred about his absence. Defendant further stated that defendant was supplying goods to several govt. bodies through tender. They had been purchasing Alfa Cyper Methrin Technical from the plaintiff for many years and there had not been any dispute at any other time of their business relationship. In August 2016, defendant had submitted a tender with Central Medical Services Society for supply of Alfa Cyper Methrin Technical 5% WP and had approached the plaintiff for discussion before submitting the bid. Plaintiff assured to supply the said chemical at agreed price of Rs.1,000/ per KG for the complete period of the tender. They had issued letter dated 20.09.2016 for ensuring the capability and capacity to supply the required quantity. The tender was accepted in favour of defendant and defendant was to supply goods latest by 19.03.2017 and plaintiff was duly intimated about the same. Plaintiff supplied 1150 KG @ Rs.925 per KG due to the fact that the shelf life of the product was very short i.e. 12 months. From December to February, plaintiff on two occasions raised invoices @ Rs.50/ per KG extra than the agreed price and it was objected. Both the parties had agreed and plaintiff had assured that the payment would be adjusted at the time of final payment/settlement of account @ Rs.1000 per KG only. Thereafter, without intimating to the defendant, plaintiff CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.3 of 3 again started raising invoice @ Rs.1,250/ per KG against the mutually agreed terms and also knowing that defendant had to supply the material as per fixed tender rates to Central Medical Services Society (hereinafter referred to as CMSS). Defendant again raised the issue and it was finally decided that the plaintiff would keep raising invoices @ Rs.1,250/ per KG but the bill would be settled at the originally agreed rate of Rs.1,000/ per KG only at the time of final settlement of the account. Plaintiff even after the mutual understanding served legal notice to the defendant which was duly replied as plaintiff was illegally claiming Rs.70 Lakhs alongwith the interest. Defendant had cleared the payment @ Rs.1,000/ per KG and there was no outstanding to be paid. On merits, defendant denied that they were liable to pay Rs.70 Lakhs alongwith interest and prayed that the suit may be dismissed.
5. Plaintiff filed replication denying preliminary objections and preliminary submission and reiterated the contents of the plaint.
6. From the pleading of the parties, following issues were framed on 06.07.2022:
1. Whether the plaintiff is entitled for recovery of Rs.1,33,13,266/ alongwith interest from the defendant as alleged?(OPP)
2. Whether the suit is not maintainable?
(OPD)
3. Whether the plaintiff has not approached CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.4 of 4 court with clean hands and has concealed material facts? (OPD)
4. Relief.
7. Plaintiff has examined its AR as the sole witness and thereafter closed the evidence.
8. Defendant examined its Partner as the witness and also closed the evidence.
9. PW1 deposed as per the contents of the plaint and relied upon documents Ex.PW1/1, Ex.PW1/2, Ex.PW1/8, Ex.PW1/14, Ex.PW1/16, Ex.PW1/18, Ex.PW1/19, Ex.PW1/20, Ex.PW1/21, Ex.PW1/22, Ex.PW1/23 and Ex.PW1/27 and also relied upon documents already Ex.P 1 to Ex.P15, which are mentioned as Ex.PW1/3, Ex.PW 1/4, Ex.PW1/5, Ex.PW1/6, Ex.PW1/7, Ex.PW1/9, Ex.PW1/10, Ex.PW1/11, Ex.PW1/12, Ex.PW1/13, Ex.PW1/15, Ex.PW1/17, Ex.PW1/24, Ex.PW1/25 & Ex.PW1/26 in his affidavit in evidence.
10.In cross examination stated that he was working with the plaintiff Company since 2000 and was deposing on behalf of the Company on the basis of the record. He had no knowledge or had never been part of any deliberations or meetings with the defendant pertaining to the transactions or fixing of the rate. He stated that all the meetings were done by Directors/Managers of the plaintiff's Company.
CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.5 of 5 They were maintaining a running account due to regular transactions with the defendant. There was no outstanding amount against the defendant as on 19.08.2016. He was not aware if plaintiff had entered into supply arrangements with the defendant as defendant had got contract/bid from CMSS. Document Ex.D1 was sent on behalf of the plaintiff Company. With regard to the question that plaintiff had supplied goods on the basis of fixed price contract of the defendant with CMSS, witness stated that they had supplied goods only to the defendant. He stated that he could not comment on how the rates were finalized between the parties and he was not part of discussion or negotiation. The variations in the invoices about rates were due to market rates but admitted that they had not filed any documents in support of the market rates of the goods. He denied that the goods were supplied on the basis of Clause 6 of the defendant contract with CMSS. He denied that no amount was due from the defendant or that the plaintiff had claimed a false amount.
11.DW1 also deposed on lines of the Written Statement and relied upon documents Ex.DW1/2, Ex.DW1/3, Ex.DW 1/4 & Ex.DW1/6 and Mark A to Mark D. Ex.DW1/6 is already Ex.P2.
12.In cross examination stated that there was no written agreement between the parties for supply of goods @ CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.6 of 6 Rs.1,000/ per KG. They were maintaining books of account as per which there was amount of Rs.70 Lakhs payable to the plaintiff. He produced the documents Ex.DW1/PX1 in terms of notice dated 05.03.2022. Further, he denied that defendant had made payment bill wise. He denied that after making payment of Rs.28,82,500/ against bill of Rs.98,82,500/ the remaining amount was Rs.70 Lakhs and volunteered that the dispute was only relating to the difference of the rate claimed by the plaintiff. He admitted that they had not filed any document in writing to show that they had raised the issue of rate change for the goods in question and volunteered that they had raised the issue on telephone. He denied that plaintiff had never agreed to raise bill @ Rs.1,000 per KG. He denied that considering the nature of the articles and fluctuating market, the rate cannot be predecided as claimed by the defendant. He denied that they were liable to make the payment and was deposing falsely.
ISSUE NO. 113.The facts relating to supply of goods, the invoices in question and delivery of goods between the parties are not disputed. The payment made by the defendant is also not disputed. The only dispute is relating to the rate of the goods fixed by the parties.
14. According to the plaintiff, the rate of the product Alfa Cyper Methrin Technical could not be fixed but was varying based on market rate and as per agreement CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.7 of 7 between the parties invoices were issued which were never objected to by the defendant. According to the defendant the goods were required to be supplied against a fixed price tender to CMSS and therefore the price was fixed @ Rs. 1000/ per kg for the entire tender period. Since there is no written document executed by the parties to show any agreed sale price of goods in question, the said fact has to be ascertained from oral evidence, facts and circumstances of the case as well as the other corroborative documents available on record.
15. PW1 stated that all deliberations etc. were held by the plaintiff's directors / managers but he was never part of the same. DW1 stated that he was a partner of defendant and the rate was fixed with the promoters of the plaintiff company @ 1000/ Per KG. Thus the first and foremost question which arises in the issue is as to who, when, how and what price was agreed for the product to be supplied by the plaintiff to the defendant.
16.Plaintiff's stand during the trial is that considering the nature of the articles and the fluctuating market rate of the product could not be predecided but was based on market variations while defendants stand was that since the product was to be supplied as per tender, prices had to be fixed. On this issue, DW1 stated that price was fixed after deliberation with the plaintiff's promoters. There was no crossexamination or suggestion given to DW1 that his preposition that price was fixed with plaintiff's promoters CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.8 of 8 was not correct though it was suggested that he could not produce any written document to this effect. Plaintiff's main stress was that since the prices were market driven therefore not fixed but did not lead any evidence to show any variation of market prices or any other evidence to this effect. PW1 also suggested that price was fixed by plaintiff 's Directors / Managers. Thus it is established on record that plaintiff's Directors / Promoters deliberated with defendants management for fixing the price of goods in question.
17. When and How -
Plaintiff stated that the prices of the product could not have been prefixed considering the nature of the product and the fluctuating market rates, meaning thereby that according to the plaintiff, rate was never finalized but was agreed between the parties to be fixed as per the prevailing market rate. Defendant's plea is that they had to supply the product to CMSS as per the tender for a fixed period on a fixed price. Therefore, they held meetings with the plaintiff's promoters and had shown all the documents on the basis of which they had to file the bid for supplying the product to the said society. Plaintiff had also issued letter Ex. D1 in support of the same and on the basis of the said letter they had quoted the price and submitted tender which was finally accepted.
18. Plaintiff admitted the document Ex. D1 letter dated 2009 2016. The contents of this document are important for CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.9 of 9 consideration of this issue. It mentions that, plaintiff were ready and had the capacity to supply the product Alfa Cyper Methrin Technical during the year 201617 and the product was as per WHO specification and WHO compliant. This means plaintiff was not only aware about the product but was also aware about the recipient and the period for which supply was to be made.
19.Defendant has also placed on record the copy of their agreement with CMSS as per which they were required to supply 1746.25 metric tons of the aforesaid chemical at the base rate of Rs.92,600 per metric ton exclusive of excise, sales tax and transportation etc. and the supply was to be made between 19.12.2016 to 17.06.2019. Thus the rate at which defendant had to supply the goods to CMSS was fixed at Rs. 926/ per kg excluding taxes and transportation etc.
20. These two documents clearly establishes the fact that defendant would not only have communicated the filing of his tender with CMSS but also suggested their probable price which they were quoting or expecting from plaintiff for the product in question. The product was to be supplied only for the tender where not only the prices, quality but even the period was fixed. Thus, fixing the price of good was not only the probable but also the only option with the defendant before applying for tender. This is also corroborated from the fact that plaintiff had issued their letter Ex D1 dated 20092016 to the defendant CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.10 of 10 before applying for tender. Plaintiff also did not prove any market variable rate of the product in question.
21.Thus, plaintiff's claim that neither the price was fixed nor the same could have been fixed considering the market fluctuations has neither been proved nor shown to be reasonable.
22. The next point for deliberation is as to what would be the price fixed by the parties of the product in question. As discussed above, defendant had brought this fact to the plaintiff's notice that they were to purchase goods from the plaintiff and thereafter supply to the CMSS where the rate and period were fixed. The probable price of the product could have been fixed somewhere nearer to the price quoted by the defendant in his bid with CMSS. The price of product in question which is visible from the agreement of CMSS with the defendant is around Rs. 92,600/ per metric ton or Rs. 926/ per kg exclusive of tax, transportation etc., and about Rs.1,10,000/ per metric ton or Rs.1100/ per kg inclusive of taxes. Defendant stated that they had agreed to purchase the product @ Rs. 1000/ per kg i.e. Rs. 1,00,000/ per metric ton. Plaintiff's case is that the price for disputed period was fixed as per agreement between the parties @ Rs. 1250/ per kg.
23. However, if the price quoted by the CMSS is compared with the old and new price of the plaintiff then it became clear that defendant voluntarily could not have agreed for the new price of Rs. 1250/ per KG as the quoted price for CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.11 of 11 the product Alfa Cyper Methrin as per the award was Rs. 926/ per kg excluding taxes etc. or Rs.1,18,154.63 P including tax & transportation or about Rs.1100/ per kg including tax but excluding transportation. Plaintiff was originally supplying the said products @ Rs. 1000/ per kg to the defendant. Thus defendant's cost price would be Rs.1000/ and selling price Rs.1100/ per kg to CMSS, thereby, defendant would be earning net profit of about Rs. 100/ per kg. However, if the defendant's cost price from plaintiff is taken as Rs. 1250/ per kg and selling price is Rs.1100/ per kg then defendant would have to bear a loss of about Rs. 150/ per kg of goods supplied to CMSS. It would thus, be highly improbable that defendant would have agreed to enter into business for loss or on the cost price at any rate more than Rs. 960/ per kg without tax (or Rs.1100/ per kg including tax) offered by them in their tender filed with the CMSS. As has already been discussed that defendant had ample opportunity for negotiating the price with the plaintiff which is clear from Ex. D1 dated 20092016 and the tender submitted by the defendant and opened on 20102016 as per Mark C dated 13122016. Thus, there seems to be no reason why defendant would not have preferred to fix or atleast negotiate the price before submitting the tender for supply of the chemical to CMSS. In view of letter Ex. D1, plaintiff was also aware that he had to negotiate within the outer limits of the price being quoted by the defendant in CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.12 of 12 his tender with the CMSS.
24.Ld Counsel for the defendant pointed out to the statement of account wherein the prices prior to the disputed period in question were almost at the fixed rate of Rs. 1000 per KG. Ld counsel for the plaintiff argued that defendant was raising this issue as an after thought as they had neither objected to the invoices nor had shown any documents whereby they had raised this issue that the plaintiff had any time prior to the issue of legal notice by them. Defendant tried to explain that they had orally raised the issue with the plaintiff which was accepted by them. They were having old business relationship and therefore they had believed the plaintiff's stand that they would continue to raise the invoices on quoted prices but the amount would be finally settled at the agreed rate of Rs. 1000/ per kg. Ld Counsel for the plaintiff also stated that defendant's own document filed on record corroborated the plaintiff's stand that the outstanding amount to be paid to them was Rs. 70 Lacs. Defendant did not dispute this fact and stated that their accounts were showing the said figure but mentioned that it was being done as agreed between the parties that the final figures would be settled @ Rs. 1000/ per kg but plaintiff had taken a false stand and filed a false suit.
25.On this issue, defendant had examined their partner as DW1 but plaintiff examined only their AR who was neither conversant with the facts relating to price fixation CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.13 of 13 nor was aware as to how the price was fixed. Plaintiff despite having knowledge of the defendant's stand have omitted to examine their Director / promoter on this issue. There is no explanation why plaintiff did not produce the best evidence available with them as it was the case of both the parties that the rate was fixed orally and they had no document to this effect with them.
26.In view of this, an adverse inference can also be drawn against the plaintiff on this issue. The preponderence of probability of facts therefore suggest that the defendant's version on rate fixation is the most reasonable and probable explanation in the facts and circumstances of the case.
27.Plaintiff has claimed the amount of Rs. 70 Lacs on account of rate difference of the product between Rs. 1250/ and Rs. 1000/ per kg but has failed to substantiate that the prices were fixed @ Rs. 1250/ per kg. Accordingly, issue no. 1 is decided against the plaintiff.
ISSUE NO. 228.Defendant stated that the suit was not maintainable as there was no cause of action against them. However, in regard to the filing, plaintiff has mentioned that on the basis of the invoices there was an outstanding amount to be paid by the defendant. Defendant also did not dispute the invoices but only disputed the price. Thus, on the basis of the document and the pleadings available on the record, the maintainability of the suit is not disputed. Accordingly, CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.14 of 14 issue no.2 is decided against the defendant.
ISSUE NO. 329.Defendant states that plaintiff has concealed material facts but except for stating that plaintiff has claimed recovery on the wrong price of the product no other evidence has been lead. As discussed in issue no. 1, the issue of price fixation was based on oral evidence rather then any written or other corroborative evidence. The documents filed by the plaintiff were similar to the documents filed by the defendant and, therefore, deliberate concealment can not be presumed. Issue no. 3 is decided against the defendant. Relief.
30.In view of findings on issue no. 1, plaintiff's suit is dismissed.
Decree sheet be drawn accordingly.
File be consigned to record room.
Announced in open Court on 28th January, 2023 (Dinesh Bhatt) District Judge (Commercial Court)01 West, Tis Hazari Courts, Delhi CS (Comm.) No.642/2021 M/S Agrico Organics Ltd. v. Bharat Minerals and Chemicals Ind. Page No.15 of 15