Delhi District Court
Yash Export vs Orient Craft Limited on 11 January, 2023
BEFORE THE COURT OF SH. SURINDER S. RATHI, DISTRICT JUDGE
(COMM.)-03 SHAHDARA, KARKARDOOMA, DELHI.
CS Comm. No.522/2021
Yash Export
Through its Proprietor Ashish Kumar
Office at: H.No. C-5/40, Khasra No. 93
Kabir Nagar, Shahdara, Delhi-110094.
Residence: Flat No.278-B, MIG DDA Flats,
East of Loni Road, Shahdara, Delhi-110093.
....Plaintiff
Vs.
Orient Craft Limited
Through its Managing Director Sudhir Dhingra
R.O: F-8, Okhla Industrial Area, Phase-1
New Delhi-110020.
H.O.: Plot No.80P, Sector-34, Near Honda
Chock, Gurugram-122001, Haryana.
C.O: 7-D, Maruti Industrial Area, Sector-18
Gurugram-122015, Haryana
W.O: D-3, Sector-59, Noida-201301, UP.
......Defendant
Date of Institution : 06.12.2021
Date of Final Arguments : 11.01.2023
Date of Judgment : 11.01.2023
Decision : Decreed
Judgment
1.This suit has been filed by the plaintiff, a proprietorship concern, for recovery of Rs.62,23,454/- along with interest @ 18% per annum.
CS Comm. No. 522/2021 Page 1
Yash Export Vs. Orient Craft Limited and Ors.
Case of the Plaintiff
2. Case of the plaintiff as per amended plaint and the evidence led is that he is proprietor of Yash Export and is engaged in the business of stitching of export garments. He was approached by defendant, a duly incorporated company, claiming that they are leading exporter of garments and are in the same field for the last 40 years. They also claimed that they have 21 production units having a capacity of production of 2 lac pieces per day. Plaintiff started business with the defendant 4-5 years ago by carrying out job work of garment stitching. During the financial year 2018-19 plaintiff carried out job works and issued invoices qua the same. As per the account maintained by the plaintiff there was a debit balance of Rs.22,01,511/- as on 31.03.2019. Plaintiff carried out the job work for defendant company during the financial year 2019-2020 as well and several invoices were issued. The cumulative debit balance on 31.03.2020 was Rs.56,13,539/-. Likewise, plaintiff carried out job work in 2020-21 as well and after adjusting part payments received from the defendant there was a debit balance of Rs.44,02,657/-.
3. The dues were not cleared despite repeated demands and issuance of emails between April-June 2020. Plaintiff issued several reminders on whatsapp number of defendant's Directors between 11.04.2020 and 07.12.2020. Even though plaintiff got hospitalized after he was infected with Covid but no part payment was made. Consequently on 07.01.2020 plaintiff issued a legal demand notice followed by corrigendum notice dated 20.01.2021. A reply was filed followed by a corrigendum notice. Still no payment was made. However, the notice was replied by the defendant. On 22.01.2021 in its reply the defendant company took a stand that plaintiff did not provide them CS Comm. No. 522/2021 Page 2 Yash Export Vs. Orient Craft Limited and Ors.
services as per their satisfaction and that defective job work was carried out and that inferior quality material was supplied to the defendant.
4. Thereafter, plaintff took recourse to Pre-Institution Mediation under Section 12A of Commercial Courts Act, 2015 before Shahdara DLSA. But defendant did not participate in the same and consequently a Non-Starter Report was issued on 04.10.2021. This was followed by filing of the suit in hand as per which the break up of the suit amount of Rs.62,23,454/- includes Rs.44,02,657 as principal amount, Rs.13,20,797 as pre-suit interest @18% per annum and suit for damages for Rs.5 lacs for mental harassment. Pendente lite and future interest is also sought @18% per annum.
5. Summons of the suit was served upon the defendant company wherein a detailed WS was filed. Initially Directors of the defendant company were also impleaded as co-defendants but their names were dropped from the array of defendants under directions of Ld. Predecessor vide order dated 19.07.2022.
Defendant's Case
6. In its WS, the Defendant Company took a plea that the suit is based on false and frivolous averments and is devoid of any cause of action. It was pleaded that plaintiff concealed true facts. Objections que undervaluation of suit property was taken apart from non-payment of appropriate Court fees. However, deficiency in Court fees was made good during the pendency of suit. Objections qua lack of territorial jurisdiction with this Court was also taken. This objection was decided by Ld. Predecessor on 19.07.2022 in favour of the plaintiff and the same was not challenged by defendant before the Hon'ble High Court. Objections qua misjoinder of Defendant's Director was taken but since they were dropped from the array of CS Comm. No. 522/2021 Page 3 Yash Export Vs. Orient Craft Limited and Ors.
defendants, the objection stands satisfied. It was pleaded that plaintiff did not approach this Court with clean hands and that no supplies were made by him to the defendant as per agreed terms pertaining to quality and quantity. Even though objections qua the same were raised but the defective goods were not replaced.
7. On merits the defendant has not denied that they were carrying out business with the plaintiff and that plaintiff was providing the services of fabricator to them on work order basis. It is pleaded that there was defect in the craftsmanship of the plaintiff was under following heads:
i. Stitching SPI (stiches per inch) was not as per the approved specifications.
ii. There were holes in the garments.
iii. There were loose threads in stitching work.
iv. There were instances of washing colour bleed and overlapping of colours.
8. It is defendant's case that on account of poor craftsmanship of the plaintiff, defendant suffered damages at the hand of international buyers. It is their case that plaintiff had assured the defendant of reimbursing the losses suffered by issuing debit notes but no such debit notes were issued. It is their case that since the plaintiff did not provide services on the contractual terms, defendant is not liable to make any payment. In its para wise reply on merits Defendant Company has not denied that they had business relations with the plaintiff for the last 4-5 years. While admitting that plaintiff carried out job work for the Financial Years 2018-19, 2019-20 and 2020-21 as per work assigned but it is denied that there was any unpaid outstanding payments for those job works. It is their case that all the job works carried out to the satisfaction of the defendant were duly paid but it is only qua the defective works when the payments were withheld and that against the same debit notes were issued. There is no specific denial of plaintiff's categorical CS Comm. No. 522/2021 Page 4 Yash Export Vs. Orient Craft Limited and Ors.
assertions that a sum of Rs.22,01,511/- was due on 31.03.2019 or Rs.56,13,539/- was due on 31.03.2020 as mentioned in para 5 of the plaintiff. There is also no specific denial that there was an outstanding due of Rs.44,02,657/- as in July 2020 as mentioned in para 6 of the plaintiff. As per defendant reconciliation of accounts was carried out. Payments of invoice which were defect free was made and now nothing more is payable. Defendant denies that plaintiff issued email and whatsapp reminders for clearing the dues. It is denied that plaintiff demanded money via emails between April to June 2020. As per Defendant Company on account of poor job work they stopped assigning any job to the plaintiff between 2021 and allocated the work to other vendors. It is their case that they informed the plaintiff repeatedly that there is no money due to them. One such email was sent on 07.05.2020 whereby plaintiff was directed to meet the Accounts Department as no amount was due and payable.
9. It is pleaded that even if it is accepted that several invoices remained unpaid, those unpaid invoices were set off against the losses suffered by defendant due to defective and shabby work. However, record reveals that no such detail of claimed losses suffered from the international buyers and the amount purportedly set off qua the unpaid bills is either pleaded on record or established by way of documents. Defendant Company has denied that plaintiff demanded money while he was hospitalized and infected with Covid-19. As per them no money was payable. Defendant accepted receipt of Legal Notice dated 07.01.2021 and its corrigendum dated 20.01.2021. It was duly replied on the lines as detailed supra that no amount is due or payable. Defendant Company accepts that they received Pre-Institution Mediation notice but could not participate on account of Covid related pandemic conditions. Accordingly Defendant pleaded for dismissal of the suit with cost.
CS Comm. No. 522/2021 Page 5 Yash Export Vs. Orient Craft Limited and Ors.
10.No replication was filed on behalf of plaintiff.
11.Upon Completion of pleadings, following issues were identified by this Court vide order dated 29.11.2022:
Issues:
i. Whether the plaintiff is entitled for recovery of Rs.44,02,657.30/- along with interest @18% p.a.?(OPP) ii. Whether the plaintiff is entitled for recovery of Rs.13,20,797/- along with interest @18% p.a. from 01.04.2020 till 30.11.2021?OPP iii. Whether the plaintiff is entitled to damages of Rs.5,00,000/-? OPP iv. Relief
12. Evidence in this case was ordered to be recorded before Ld. LC as per fol-
lowing protocol created by this Court under Order 18 Rule 4 CPC read with Order 15A Rule 6(l) CPC as applicable to Commercial suits. Evi- dence was recorded before Ld. LC Ms. Kshama Soni, Advocate appointed by this Court for the sake of timely disposal of this case. For ready reference the Protocol designed by this Court for recording of Evidence through the LC is reproduced hereunder:
"Protocol for Recording of Evidence before Court Commissioner appointed by Commercial Court, 2022"
Part - 1 Preliminary
1. Short title- This Protocol is titled "Protocol for Recording of Evidence before Court Commissioner appointed by Commercial Court 2022."
2. Statutory Provision- This protocol is prepared as per Order 18 Rule 4 CPC and Order 15A Rule 6(l) CPC as applicable to Commercial Court.
3. Court- Whenever the term 'Court' appears in this Protocol it should refer to Commercial Court as defined under Section 2(b) of Commercial Court Act 2015.
Part - 2 Preparation for Assignment
4. Recording of evidence in Commercial Cases- Recording of evidence in Commercial Cases may be carried out before the Court Commissioner.
Explanation: For reasons to be recorded, Court may retain the case for recording of evidence before the Court.
5. Appointment of Court Commissioner- As per the Protocol, on the first Case Management Hearing when the issues are identified, the Court may pass an order for appointment of Court Commissioner.
CS Comm. No. 522/2021 Page 6 Yash Export Vs. Orient Craft Limited and Ors.
6. Copy of order be shared with parties and Court Commissioner- Copy of the order of framing of issues, appointment of Court Commissioner and the schedule of recording of evidence shall be supplied to the parties as well as the Court Commissioner.
Part - 3 Recording of Evidence
7. Filing of list of witnesses- Both sides shall file list of witnesses preferably within one week but not later than 15 days of identification of issues before the Court while sharing an advanced copy thereof with the opposite party.
8. Order of assignment of Case to the Court Commissioner- While assigning the case, following aspects shall be complied :
(i) Schedule of evidence- Recording of evidence shall start within two weeks of identification of issues.
Evidence shall continue on day to day basis, till conclusion. Any alteration in schedule for recording of evidence, if needed, shall be decided by the Court Commissioner as per convenience of all concerned, as far as possible. However, entire evidence shall be concluded within Eight weeks of initiation.
(ii) Judicial File- Judicial file shall not be sent or summoned for the purpose of recording of evidence by the Court Commissioner.
(iii) Examination-in-Chief- An advance copy of examination in chief by way of affidavit shall be supplied to opposite party preferably one week in advance. However, no adjournment shall be granted in case of non-supply of advance copy.
(iv) Production of documents for cross-examination- In case the opposite side is desirous of production of any document by the witness or any other entity for the purpose of cross-examination, an application requesting the same shall be moved well in advance before the Court.
Part - 4 Duty of Court Commissioner
9. Recording of evidence by the Court Commissioner-
(i) Place and Time- Court Commissioner shall record evidence either in Lawyer's chamber, or Judges/Bar Library, Court Room or any other public place within the Court Complex as mutually agreed by all concerned. Evidence shall be recorded between 10.00 AM to 5.00 PM. It can carry on beyond 5.00 PM as well in case both parties agree. It can be recorded even on a holiday if all the stakeholders are comfortable and agree to the same.
(ii) Chronology of recording- Court Commissioner shall proceed to record the examination by first recording the deposition of litigating party before examining additional summoned witnesses.
(iii) Oath to witnesses- Court Commissioner shall administer oath to the witnesses under examination as a delegatee of the Court as per Oaths Act, 1969.
(iv) Recording of evidence- The evidence shall be preferably typed on a computer but can also be recorded by hand neatly.
(v)Time frame- Court Commissioner shall conclude the recording of evidence, as early as possible, but not later than eight weeks of assignment of a case. In case, for any reason the parties are unable to adhere to the time schedule, extension can be sought from the Court.
(vi)Comfortable sitting space- Witnesses and their Counsel shall be provided comfortable sitting space by the Court Commissioner.
(vii)Exhibition of documents- Court Commissioner shall exhibit all the documents sought to be proved by a party on record. In case of any objection to exhibition of the documents by either side, the objection shall be recorded in some detail and left open with an assurance that mere marking of such exhibits will not be treated as conclusive proof thereof and that admissibility of such document shall be decided by the referral Court at final stage.
(viii)Original documents to be retained by parties- Court Commissioner shall make an observation in the record of evidence of all original documents produced and shall sign the exhibits with an endorsement OSR (original seen and returned) wherever necessary. If a party has filed original documents alongwith pleadings in Court, the same can be taken back as per rules for the purpose of recording of evidence before the Court Commissioner.
(ix)Language- Recording of evidence shall preferably be carried out in English or Court language, as the case may be, unless requested by the parties otherwise.
(x)Adjournments- Once started, the cross-examination shall preferably concluded on the same day or continue on day-to-day basis. In case of any hardship viz. ill health etc. the case can be deferred but preferably for a day or two but not later than a week.
In case an evidence schedule is fixed and adjournment is sought by the opposite side, i.e the side other than who is leading evidence, without 24 hour advance notice.
Explanation: In case a witness scheduled to be examined or under examination is reported to be unwell or unavailable, the party leading the evidence shall produce the next witness in line in the list for recording of evidence.
CS Comm. No. 522/2021 Page 7 Yash Export Vs. Orient Craft Limited and Ors.
(xi)Recording of objections- All the objections raised during cross-examination/reexamination shall be recorded in the deposition under title objections and shall be left open for the decision of the Court at the stage of final arguments. Witness shall not refuse to answer the question asked.
(xii)Questions to be allowed- In case Court Commissioner finds any question not related to the fact and issue, he shall record his objection but shall allow the question to be put and witness must answer.
(xiii)No third person intervention- Court Commissioner shall ensure that the witness is not assisted by his Counsel or any other person while under examination in answering the questions.
(xiv)Recording of demeanour of witness- Court Commissioner shall record the demeanour of the witness wherever it is found pertinent and necessary for sharing with the Court.
(xv)Copy of evidence- All parties shall be provided uncertified electronic/hard copy of the evidence recorded, free of cost by Court Commissioner.
(xvi)Safe keeping of original deposition- Court Commissioner shall keep the original depositions in his safe custody till such time they are filed in the Court in original upon completion of each witness individually.
(xvii)Miscellaneous proceedings- Court Commissioner shall maintain a miscellaneous proceeding sheet for each day of work and shall submit it in the Court at the time of submission of final report. (xviii)Hostile Witness- In case a witness is sought to be declared hostile, then Court Commissioner shall refer both the parties to Court at the earliest and the Court shall decide the issue within three days.
Part - 5 Miscellaneous
10. Summoning of Witness-
(i)Summons from Court- In case a litigating party is desirous of summoning a person for deposition or production of documents, it shall obtain summons from the Court with an endorsement that such person shall appear before the address of Court Commissioner on scheduled date, time and place.
(ii)Diet Money- Diet money shall be paid to such witness by the party desirous of summoning as per rules.
11. Advisory to Court Commissioner- While recording the evidence on commission, the Court Commissioner shall ensure the following:
(i)Impartial- Court Commissioner shall conduct himself in an impartial way and behave in an indiscriminate manner while recording of evidence.
(ii)Polite- Court Commissioner shall be polite with the witness and other stakeholders while recording of evidence.
(iii)Confidentiality- Court Commissioner shall maintain confidentiality during the whole process.
(iv)Keeping professional distance- Court Commissioner shall not solicit professional work from the parties.
(v)Integrity- Court Commissioner shall not accept remuneration or any favour in cash or kind from the parties over and above the honorarium fixed by the Court.
(vi)Non-judgmental- Court Commissioner shall not criticize the professional conduct of lawyers and litigating parties on their understanding of law.
(vii)Punctuality- Court Commissioner shall adhere to time schedules and shall not make excuses like being engaged in some personal or Court work etc.
(viii)Coordination- In case of any unforeseen circumstances warranting change of dates of hearing, for his own case or the request of other side, he shall apprise the other side in advance via phone call, email, SMS, Whatsapp Group etc..
(ix)No third party sharing- Court Commissioner shall not allow the deposition to be inspected by any third party and shall not share a copy thereof with any stranger without permission of the Court.
(x)Inspection- Court Commissioner shall allow any party to inspect the recorded proceedings only in his presence.
(xi)Recusal- In case either of the parties or Counsel for the parties are related or closely known to Court Commissioner, he/she shall recuse self from the case and inform the referral Court.
12. Remuneration of Court Commissioner -
(i)Remuneration- In terms of Order 18 Rule 4 of the Code read with Order 15 Rule 2(l) and Rule 2(o) of the Code, Court Commissioner shall be paid remuneration for the work carried out.
(ii)Mode of payment- Such remuneration shall be paid by the party directly for the work carried out by way of cash, UPI, Bank Transfer, cheque or draft against due receipt.
(iii)Cost to parties- Each party shall individually bear the cost incurred in leading its evidence.
(iv)Fee to be paid- Remuneration fee for recording of evidence is fixed at Rs.10,000/- per witness.
(v)Court Commissioner shall record the Evidence himself and in case the Stenographer services are taken it can either be arranged by a litigating party on its own cost or in case the same is arranged by Court Commissioner, then the actual cost of typing shall be reimbursed by the party to the Court Commissioner.
(vi)Litigation Cost- Expenditure incurred in recording of evidence shall be redeemable as cost of litigation at the end of the suit.
13. Judicial Intervention during recording of evidence-
(i)Parties to cooperate- It is expected that both the sides will cooperate with Court Commissioner as well as with each other in recording of evidence and carry out proceedings in a cordial manner.
(ii)Dissolution of hindrances- In case of any conflict resulting into hindrance recording of evidence, it shall be resolved amicably by the parties at their own level with the active help of the Court Commissioner.
CS Comm. No. 522/2021 Page 8 Yash Export Vs. Orient Craft Limited and Ors.
(iii)Court intervention- However, in case of any unforeseen situation requiring judicial intervention, Court Commissioner shall fix date and time for joint appearance of both sides before the Court for removal of any such impediment.
14. Miscellaneous Applications-
(i)Moving the application- In case either of the parties is desirous of moving any miscellaneous application viz. amending of pleadings, interim injunction etc. it shall share an advance copy with the opposite side and reply thereof, if any, shall be filed and shared within seven days.
(ii)Date of hearing- Upon receipt of reply, both the sides shall get the application fixed for disposal in the Court with the help of Reader of the Court and shall not wait till next date fixed for hearing. All such miscellaneous applications shall be registered, numbered and indexed separately.
(iii)Evidence not to be stalled- It is clarified that, unless Court Commissioner is of the view that the interim application moved by either of the parties is such that evidence cannot be recorded before its disposal, the recording of PE/DE shall continue unabatedly.
Plaintiff's Evidence
13.In the evidence recorded before Ld. LC proprietor of plaintiff company Ashish Kumar examined himself as PW1. Vide his affidavit Ex.PW1/A, he deposed on the lines of plaint and exhibited following documents:
i. Photocopies of the Aadhar Card, original visiting card and GST Registration Certificate are Ex.PW-1/1, Ex.PW-1/2 and Ex.PW-1/3 (3 pages);
ii. Internet downloaded printout of the company's master data downloaded from the site of Ministry of Corporate Affairs is Ex.PW-1/4 (colly.);
iii. Attested copy of the printouts of the ledger accounts of the defendant/Orient Craft Ltd. Maintained in the Books of deponent for the financial year 2018-2019 and 2019-20 are Ex.PW-1/5 (2 pages) and Ex.PW-1/6 respectively;
iv. Photocopy of the Tax Invoice No. 443 dated 29.05.2020 and attested copy of the Ledger Account of the defendant maintained in the Books of deponent for the financial year 2020-21 are Ex.PW-1/7;
v. Printout of the email communications between the month of April 2020 to June 2020 between deponent and different officials of the defendant are Ex.PW-1/9 (colly-11 pages);
vi. Printout of the whatsapp communications between 18.04.2020 to 01.01.2021 between the deponent and MD and Director of defendant are Ex.PW-1/10 (colly. 36 pages);
vii. Office copy of Legal Notice dated 07.01.2021 and Corrigendum dated 20.01.2021 along with Original Speed Post Receipts and Courier Receipts dated 07.01.2021 Original Registered A.D. Receipts dated 08.01.2021 and Original Speed Post Receipts dated 22.01.2021 and Printouts of Internet downloaded Delivery Reports/Proofs of Legal Notices are Ex.PW-1/11, Ex.PW-1/12, Ex.PW-1/13, Ex.PW-1/14, Ex.PW-1/15, Ex.PW-1/16 and Ex.PW-1/17.
CS Comm. No. 522/2021 Page 9 Yash Export Vs. Orient Craft Limited and Ors.
viii. Original Copy of the reply dated 01.02.2021 to the Legal Notice dated 07.01.2021 and Corrigendum dated 20.01.2021 along with Original Speed Envelop are Ex.PW-1/18;
ix. Photocopies of the Mediation Application Form along with payment receipt dated 04.03.2021 amounted Rs.1,000/- and payment receipt dated 24.08.2021 amounted Rs.15,000/- and Non-Starter Report dated 04.10.2021 are Ex.PW-1/19, Ex.PW-1/20, Ex.PW-1/21 and Ex.PW-1/22;
x. Certificate under Section 65B of Indian Evidence Act which is Ex.PW1/23;
xi. Original plaint and mended plaint are Ex.PW1/24 and Ex.PW1/25 respectively.
14.In his cross-examination carried out by Ld. Counsel for Defendant company he deposed that he is a Post-Graduate by education and is in the business of fabrication of garments for the last 10-15 years. He accepted that he has never met MD of the defendant company Mr. Sudhir Dhingra before their business started 4-5 years ago. He used to receive job work through purchase orders issued by the defendant but no such purchase order has been filed and proved on record. He was maintaining day-to-day accounts of his business. He accepted that he has filed only one Tax Invoice issued in the name of Defendant which is Ex.PW1/7. He used to deliver the goods at Noida address of the defendant company and many a time defendant's vehicle used to pick up the goods. He denied that he delivered defective goods.
Defendant's Evidence:
15. On the other hand defendant examined their AR Amar Bahadur Singh as DW1. In his affidavit Ex.DW1/A, he deposed on the lines of his WS and exhibited following documents:
i. Authorization Letter is Ex.DW-1/1 (mistakenly typed as Ex.DW-1/A as per affidavit of DW1);
ii. Office copy of reply dated 22.01.2021 is Ex.DW-1/2; iii. Origiinal Postal receipt dated 22.01.2021 is Ex.DW-1/3;
CS Comm. No. 522/2021 Page 10 Yash Export Vs. Orient Craft Limited and Ors.
iv. Original return envelope is Ex.DW-1/4;
v. Office Copy dated 01.02.2021 is Ex.DW1/5;
vi. Tracking report is Ex.DW1/6;
vii. Original Postal receipt dated 01.02.2021 is Ex.DW1/7; viii. Original return envelope is Ex.DW-1/8;
ix. Proof of payment of fee of DLSA along with email conversation with regard to the same is Ex.DW-1/9.
16.In his cross-examination done on behalf of plaintiff he stated that he is working as Manager (Administration) of the defendant in their Gurugram office since 2008. He accepted that he has no personal knowledge in the matter but has obtained the information as per documents maintained by the company. Mostly the defendant appointed the fabricators of garments verbally. He accepted that they have been doing business with plaintiff for the last 3-4 years. He accepted that the work was assigned to fabricators like defendant through purchase orders and many a time such orders were placed by verbal communication. He stated that he has no personal knowledge qua any specific date, month or year or job number for which defendant found defects in the workmanship of the plaintiff. He accepted that there is a separate Quality Control Department in the company which check the quality of material supplied by the fabricators like plaintiff, however, this Department does not maintain any record of such quality control accounts. He, however, added that the Quality Controller immaterial returns the defective material to the concerned fabricator for rectification but he expressed unawarenss if plaintiff ever issued any debit note to the defendant company.
17.He accepted that he has not obtained any financial information from the Accounts Department of the Defendant Company while preparing his affidavit-in-chief. He expressed unawareness qua any loss claim which could have been incurred by Defendant Company as mentioned in para 14, CS Comm. No. 522/2021 Page 11 Yash Export Vs. Orient Craft Limited and Ors.
15 and 16 of his affidavit-in-chief. He also expressed unawareness if the Defendant Company was ever issued any notice for supply of defective and inferior quality material or for demanding raising of a debit note by the plaintiff. He accepted that he is not aware of the contents of the email filed on record especially email dated 07.05.2020 or ledger of plaintiff maintained by Defendant Company. He is totally unaware of the financial dealings between the parties. He accepted that the emails collectively exhibited as Ex.PW1/9 are the addresses to officials/employees of the Defendant Company at correct email IDs. He also accepted the printout of whatsapp communication collectively exhibited as Ex.PW1/10 as correctly delivered to Directors of the Defendant Company. He denied that Defendant Company is liable to pay the suit amount to plaintiff.
18.I have heard arguments of Sh.Vivek Bhardwaj, Ld. Counsel for the Plaintiff assisted by plaintiff and Sh. Rajesh K. Pandit, Ld. Counsel for Defendant and have perused the case file carefully.
Discussion and Findings on Issues:
Issue No. 1 and 2i. Whether the plaintiff is entitled for recovery of Rs.44,02,657.30/- along with interest @18% p.a.?(OPP) ii. Whether the plaintiff is entitled for recovery of Rs.13,20,797/- along with interest @18% p.a. from 01.04.2020 till 30.11.2021?OPP
19.At the onset, it is observed that both in the pleadings and the evidence led it is admitted case of the parties that plaintiff is a fabicator of export garments while defendant is a big export house. It is also admitted that they were having business relations for the last 4-5 years whereunder plaintiff used to stitch export garments as per purchase orders issued by Defendant to them. It is also admitted that plaintiff used to issue invoices along with the goods supplied and that both the sides were maintaining running accounts qua the CS Comm. No. 522/2021 Page 12 Yash Export Vs. Orient Craft Limited and Ors.
business transactions. The parties fell apart factually at a juncture where according to plaintiff there was a debit balance of Rs.44,02,657/- as of July 2022 but according to the Defendant they do not owe this money to the plaintiff in so far as the goods supplied by plaintiff to them was defective and not as per instructions.
20.It is a settled legal proposition that the primary onus of proving a case rests on the plaintiff as per Section 101 and 102 of the Evidence Act. For ready reference Section 101 and 102 of Evidence Act is reproduced as under:
Section 101 Evidence Act: Burden of Proof Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.
When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.
Illustrations:
(a) A desires a Court to give judgment that B shall be punished for a crime which A says B has committed.
A must prove that B has committed the crime.
(b) A desires a Court to give judgment that he is entitled to certain land in the possession of B, by reason of facts which he asserts, and which B denies, to be true.
A must prove the existence of those facts.
Section 102 Evidence Act: On whom the Burden of Proof lies The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
Illustration:
(a) A sues B for land of which B is in possession, and which, as A asserts, was left to A by the will of C, B's father.
If no evidence were given no either side, B would be entitled to retain his possession. Therefore the burden of proof is on A.
(b) A sues B for money due on a bond.
The execution of the bond is admitted, but B says that it was obtained by fraud, which A denies.
CS Comm. No. 522/2021 Page 13 Yash Export Vs. Orient Craft Limited and Ors.
If no evidence were given on either side, A would succeed, as the bond is not disputed and the fraud is not proved.
Therefore the burden of proof is on B.
21.While defendant admitted having business relations with the plaintiff but denied having any financial liability, the primary onus was on plaintiff to plead, establish and prove on record that he carried out job work for the defendant and raised invoices qua the claimed principal sum of Rs.44,02,657/-. Even though the above amount is a ledger balance at the end of Financial Year 2021 but admittedly it pertains to several invoices which plaintiff might have been issued to the defendant. Surprisingly, even though the above amount might have entailed around 32 invoices but plaintiff has filed and proved only one invoice on record i.e. invoice no. 443 dated 29.05.2020 for Rs.2,89,443/- i.e. Ex.PW1/7. I see no reason as to why plaintiff did not file and proved on record remaining 31 invoices. On being asked, Ld. Counsel for plaintiff concedes that there was no specific reason of not filing and exhibiting these invoices except his impression that since the defendant has accepted the financial liability of paying up to the plaintiff in their reply Ex.PW1/18 to Legal Demand Notice. The conduct of the plaintiff calls for drawing of adverse inference under Section 114 (g) of Evidence Act.
Section 114 Evidence Act: Court may presume existence of certain facts Illustration The Court may presume-
(g) That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;
22.While critically analysing the pleadings and the evidence brought by the parties on record so as to see if there was any admission on the part of the defendant to the plaintiff's claim and supply of material, as mentioned CS Comm. No. 522/2021 Page 14 Yash Export Vs. Orient Craft Limited and Ors.
supra, the defendant has not specifically denied paras 5 and 6 whereby cited unpaid amounts were not specifically denied by the defendant.
23.In reply to legal demand notice issued by the plaintiff i.e. Ex.PW1/11 and Ex.PW1/12, in their reply Ex.PW1/18, Ld. Counsel for plaintiff has cited the following averment by defendant:
"Your client has raised an alleged demand in a sum of Rs.44,02,657.30/- along with interest @ 18% without citing you the fact that your client has failed to perform and deliver services to the satisfaction of my client as the same were defective and not as per the required specifications which renders my client free from your client's purported grievances."......... Para vii "It is further submitted that upon knowledge of such defects an internal inspection report was prepared by my client and all such defects were duly pointed out in the said report and your client was duly intimated of such defects and called upon to issue Debit Notes in respect of the same."
24.In the same reply in Para vii there is a specific reference that certain inspection reports highlighting the defects were prepared and sent to the plaintiff with a demand for issuance of debit notes but no such report has either been filed or proved by the Defendant and also there is nothing on record to show that any such note was ever sent to the plaintiff by the Defendant.
25. Furthermore, apart from evasive denials in the pleadings, Ld. Counsel for plaintiff has rightly pointed out that several emails were exchanged between both the sides as detailed in Para vii of the plaint. The receipt of these emails/exchanged communications between the parties is not denied by the defendant in the WS. Even in the Affidavit of Admission and Denial of Documents filed by Defendant, the emails are mentioned at Sr. No. 8 wherein all that is written by the defendant i.e. "receipt admitted contents denied". This kind of evasive affidavit qua exchanged communications between the parties is anti-thesis to what is provided under Order 8 Rule CS Comm. No. 522/2021 Page 15 Yash Export Vs. Orient Craft Limited and Ors.
3A CPC as also Order 8 Rule 5 (1) CPC as applicable to Commercial Suits.
Order 8 Rule 3A CPC: Denial by the defendant in suits before Commercial Division of the High Court or the Commercial Court--
i. Denial shall be in the manner provided in sub-rules (2), (3), (4) and (5) of this Rule.
ii. The defendant in his written statement shall state which of the allegations in the particulars of plaint he denies, which allegations he is unable to admit or deny, but which he requies the plaintiff to prove, and which allegations he admits.
iii. Where the defendant denies an allegation of fact in a plaint, he must state his reasons for doing so and if he intends to put forward a different version of events from that given by the plaintiff, he must state his own version. iv. If the defendant disputes the jurisdiction of the Court he must state the reasons for doing so, and if he is able, give his own statement as to which Court ought to have jurisdiction.
v. If the defendant disputes the plaintiff's valuation of the suit, he must state his reasons for doing so, and if he is able, give his own statement of the value of the suit."
Order 8 Rule 5 CPC: Specific Denial
1. "Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability:
Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission.
Provided further that every allegation of fact in the plaint, if not denied in the manner provided under rule 3A of this Order, shall be taken to be admitted except as against a person under disability."
26.Bare perusal of the above statutory provision shows that until and unless there is a proper explanation supporting denials, the denials deserve to be rejected and treated as admissions. Interestingly, the word communication used by the plaintiff at Sr. No. 8 does not refer to any one-way communication by plaintiff with the defendant rather it is trail of exchanged emails between the two. Attention of this Court is drawn by Ld. Counsel for CS Comm. No. 522/2021 Page 16 Yash Export Vs. Orient Craft Limited and Ors.
plaintiff to emails whereby he had not only demanded the principal sum of amount but also shared copy of his ledger maintained qua the job work done for defendant. Reference is made to two replies and the attachments made by the defendant to the plaintiff which are available at running page no. 48 and 54 of plaintiff's paperbook. There are Ledgers of the defendant as maintained by them qua the plaintiff. The final Ledger is an acknowledgement of money owed to the plaintiff at page 48 which appears to be a screenshot of an accounting software maintained by defendant qua the plaintiff for the Financial Year 2020-21. Its shows a credit balance (money payable by defendant to the plaintiff) of Rs.51,94,300/-. Likewise at page 54 a similar document adjusts Rs.7 lacs early deducted from the credit balance and acknowledges credit balance (money payable by defendant to the plaintiff) to the tune of Rs.58,69,295.30/-.
27.During the course of arguments it is not denied by Ld. Counsel for defendant that these communications were not issued by the defendant to the plaintiff. Even DW1 examined by the defendant company has, after perusing the emails, accepted that they were exchanged between the plaintiff and the defendant. Once the defendant has accepted the credit balance of Rs.58,69,295.30/- payable to the plaintiff, the onus of proving their defence story of defective goods as propounded in the WS, shifts to the defendant as per Section 103 of the Evidence Act.
Section 103 Evidence Act: Burden of Proof as to particular fact The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence unless it is provided by any law that the proof of that fact shall lie on any particular person.
Illustration:
(a) A prosecutes B for theft, and wishes the Court to believe that B admitted the theft to C. A must prove the admission.
CS Comm. No. 522/2021 Page 17 Yash Export Vs. Orient Craft Limited and Ors.
B wishes the Court to believe that, at the time in question, he was elsewhere.
He must prove it.
28.In order to discharge their side of story, that the goods supplied by the plaintiff and the fabrication done was defective, not an iota of documentary or oral evidence has been led by the defendant. As mentioned supra there is a reference of preparation of defective reports and it is claimed that these communications were issued to the plaintiff, nothing has been placed on record. Likewise, it is claimed that the merchandise supplied by the plaintiff to the defendant was exparted by the defendant to their international buyers but not a single document or email is filed or produced to show that any such consignment was ever rejected by the international buyers or defendant suffered any loss as claimed by them in para 10 of their WS. It is interesting to observe that in the absence of any figment of evidence in support of this defence the 'Set Off' as claimed in the reply to para 7 of merits at page 13, defendant has claimed that the money, if any, payable on their part to the plaintiff stands adjusted as a 'Set Off' against losses suffered by them. There is absolutely no evidence either in support of their claimed losses or in support of any quantification of such losses or any break up of details as to how much amount was set off which can permit the defendant to adjust the principal suit amount of Rs.44,02,657/-.
29.Applying the Doctorine of Preponderance of Probability although it was initially found that the manner in which the suit was framed and sought to be proved by plaintiff on record, it had certain shortcomings. But the categorical admission of credit balance by the defendants in admitted emails exchanged with the plaintiff coupled with utter failure to discharge the onus under Section 103 of Evidence Act to substantiate their defence of defective material or financial losses which could have been 'Set Off' against the suit amount, I have no hesitation in concluding that plaintiff has CS Comm. No. 522/2021 Page 18 Yash Export Vs. Orient Craft Limited and Ors.
been able to prove his entitlement to receive the principal amount of Rs.44,02,657/-.
30.As far as interest component is concerned, although no purchase order or business agreement is filed or relied by the plaintiff but the sole invoice Ex.PW1/7 shows that there is a stipulation of 18% interest.
31.The interest payable in terms of Section 34 CPC is held as under:
Section 34 CPC :
(i)"Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding 6% per annum as the Court deems reasonable on such principal sum from the date of the de-
cree to the date of payment, or to such earlier date as the court thinks fit.
(ii).Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further in- terest may exceed 6% per annum but shall not exceed the contractual rate or interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to com- mercial transactions.
Explanation (i) In this sub-section, "nationalized bank" means a corre- sponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970.
Explanation (ii) For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.
Where such a decree is silent with respect to the payment of further interest (on such principal sum) from the date of the decree to the date of the payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.
32.As per RBI notification dated 30.08.2022 issued vide Press Release no.2022-2023/794 whereby advisory issued by RBI to Schedule Commercial banks of adopting, deposit rates @ 9.05% per annum.
CS Comm. No. 522/2021 Page 19 Yash Export Vs. Orient Craft Limited and Ors.
Issue No. 3iii. Whether the plaintiff is entitled to damages of Rs.5,00,000/-? OPP
33.Plaintiff has sought for damages of Rs. 5 lacs under this head. It is argued by Ld. Counsel for plaintiff that defendant is a large Company and an export house owed large amount of money to the plaintiff. When he got infected and was admitted on Ganga Ram Hospital as a Covid patient defendant did not pay up despite repeated requests made to the Directors of the defendant. It is argued that plaintiff was in dire need of money and the failure on the part of defendant to pay up caused him mental pain and agony. Although what is submitted by Ld. Counsel for the plaintiff is appreciable as a human sentiment and a justified and genuine of a business associate but when the two entitities have a commercial relationship, the defendants cannot be fastened with additional financial burden by way of Tortious Liability in the manner sought. Accordingly no relief is granted to the plaintiff under this head.
Relief
34.Accordingly suit of the Plaintiff is decreed with cost for a sum of Rs.44,02,657/- along with interest @ 9% per annum w.e.f. 01.04.2020 onwards, pendente lite and till realization.
35.Decree sheet shall be prepared accordingly. Deficiency in Court fee, if any, be made good.
36. File be consigned to Record Room after due compliance.
(SURINDER S. RATHI) District Judge Commercial Court-03 Shahdara District, KKD Delhi/11.01.2023 CS Comm. No. 522/2021 Page 20 Yash Export Vs. Orient Craft Limited and Ors.