Delhi High Court
M/S. Gmnco Ltd. vs Shri Ravi Gupta on 19 March, 2001
Equivalent citations: 2001VAD(DELHI)350, AIR2001DELHI409, 92(2001)DLT494, 2001(59)DRJ614, 2003(156)ELT476(DEL), AIR 2001 DELHI 409, (2001) 59 DRJ 614, (2001) 92 DLT 494, (2003) 156 ELT 476
Author: Mukul Mudgal
Bench: Mukul Mudgal
ORDER Devinder Gupta, J.
1. This appeal has been preferred by the defendant/appellant questioning the legality and validity of the order passed on 18.2.1999 by learned Single Judge on the plaintiff/respondent's application (IA. 1636/99) filed under Order 39 Rules 1 and 2 of the Code of Civil Procedure whereby learned Single Judge by way of an ex parte ad interim order of injunction restrained the appellant from getting the machines released from the bond of Bombay Customs, which find a mention in the prayer clause of the said application.
2. The main grievance of the appellant has been that though the appellant applied for vacation of the ex-parte ad-interim order of injunction, learned Single Judge did not decide the same within the time limit, as provided in Rule 3(A) of Order 39 C.P.C. and, therefore, appeal against the said order would be maintainable in view of the decision of Supreme Court dated 19.9.2000 in CA No. 5102 of 2000 ( A.Venkatasubbiah Naidu v. S. Chellappan and others).
3. The appellant/respondent put in appearance after show cause notice on 4.12.2000. We called for the record of learned Single Judge for 19.12.2000 and on that date noticed that the learned Single Judge had fixed for hearing the application for the vacation of injunction along with another application for 9.1.2001. As such hearing of the appeal was postponed by us to 22.1.2001. On the adjourned date, we were informed that though arguments were to be addressed on the application under Order 39 Rules 1 and 2 but the said application has been adjourned without a date. It was because of the objection raised by learned counsel for the plaintiff/respondent to the written statement filed by the defendant/appellant to the amended plaint. It was stated at the bar that learned Single Judge had heard the said application moved by the plaintiff for taking off the written statement to the amended plaint from the record. Learned Single Judge had reserved order only on that application. In these circumstances, since learned Single Judge had failed to take decision on the application for vacation of ex parte ad-interim order of injunction that we heard learned counsel for the parties on the merits of the appeal.
4. Four our perusal copies of pleadings and documents were made available by learned counsel for the appellant. We heard learned counsel for the parties, who took us through the entire record.
5. The facts relevant for decision of the appeal are that the appellant is a limited company engaged in the sale of heavy earth moving equipments. The appellant is an agent of Caterpillar Inc. (USA) for Southern and Western Region of India and imports equipments manufactured by the principal and sell the same exclusively in India under the agreement with Caterpillar Company. It is alleged that the appellant company markets, sells and services wide description of engineering equipments in India that are manufactured by M/s. Caterpillar Inc. (USA) at various manufacturing units outside India.
6. The respondent approached the appellant and requested for a quotation indicating the prices of the earth moving equipment. According to the appellant, information was provided along with terms and condition. According to the respondent, after some negotiation the appellant sent its offer dated 12.12.1998 for sale of Bulldozers, Motor graders, Excavators, etc. on high seas sales/transfer of ownership from bond. After further discussions, the appellant gave subsequent offer dated 26.12.1998 thereby offering the machine CAT 320 BL Hydraulic Excavator Model 1998 at a price of Rs. 28,00,000/- per machine on sale on high seas sale basis/transfer of ownership from bond basis. The respondent after getting offer dated 26.12.1998 from the appellant informed the appellant that the respondent will be needing necessary sipping dimensions, Bill of Lading nos., Bill of Entry no., Bond no., Certificate of Origin, Inspection Certificate, etc. to enable the respondent to negotiate with his foreign buyer as proposed by the respondent. The appellant was informed at this stage that initially the respondent would be buying at least 2 no. of Excavators.
7. After making further averments in the plaint, the respondent's case has been that in pursuance to the appellant's offer he negotiated with the foreign buyer and on 14.1.1999 applied for necessary permission from the Customs Authorities for re-export. Necessary permission was granted by the Customs authorities on 25.1.1999 and in the meanwhile, foreign buyer of respondent opened a Letter of Credit on the respondent on 1.2.1999 expiring on 20.3.1999. As per the said letter of credit the last date of shipment was 1.3.1999, which fact was brought to the notice of the appellant. On 15.2.1999 the respondent contacted the appellant on phone, who refused to accept the payment and deliver necessary documents for completing the transaction of sale on high sea sale basis. This led to the plaintiff filing the suit for the following reliefs:-
"(a) A decree for mandatory injunction in favor of the plaintiff and against the defendant thereby directing the defendant to accept the payment of Rs. 56,00,000/- and to complete the necessary documentation in respect of the transaction for sale of two nos. of machinery/equipments, namely CAT320 Hydraulic Excavator Model 1998 bearing Serial No. 6CR03234 and 6CR03236 on sale on high seas sale basis/transfer of ownership from bond basis lying in bond of Bombay Customs:
(b) A decree for permanent injunction thereby restraining the defendant, their employees, their agents, officials, representatives or any other person acting on their behalf from selling transferring, alienating or in any manner negotiating gin respect of the sale of the said two no. of equipment/machines CAT 320 BL Hydraulic Excavator bearing Serial No. 6CR03234 and 6CR03236 lying at Custom or getting the same released from bond of Bombay Customs."
8. The respondent/Plaintiff alleged that the cause of action had arisen to him for filing suit on 12.1.1999 and 13.1.1999 when he placed order on the appellant, which was confirmed by the appellant and thereafter when Letter of Credit was opened, when he offered the entire payment to the appellant and requested the appellant to supply necessary documents and ultimately on 15.2.1999 when Shri D.K. Tehran, Regional Manager of the appellant, refused to accept payment and do the necessary documentation.
9. Along with this suit for mandatory injunction, the respondent an application for temporary prohibitory injunction under Order 39 Rules 1 and 2 C.P.C., which came up before learned Single judge on 18.2.1999. On being satisfied that there was a prima facie case for grant of an ex-parte injunction, the appellant was restrained from getting the machines released from the bond of Bombay Customs. After the appellant was served and appeared in Court, it appears that some efforts was made to have the matter settled, for which purpose adjournment prayed for was granted on 25.2.1999. On 1.3.1999 learned counsel for the appellant stated that the machines would not be sold to any other party without the permission of the Court till the disposal of the injunction application. On 15.7.1999 an application was moved by the appellant seeking modification of the interim order dated 18.2.1999 and being relieved of the statement given on 1.3.1999 that the machines would not be sold by the appellant to any other party without the permission of the Court till disposal of the application. Learned counsel for the respondent on that day submitted that the foreign buyer of the respondent to whom the machines were to be sold was still interested in the purchase of the machines and that the respondent will have terms of Letter of Credit extended since the respondent would still be willing to buy the machines at the price on which the same were being offered by the appellant less customs duty. According to learned counsel for the respondent customs duty was not payable on bond sales for which respondent has obtained permission. Learned counsel for the appellant sought adjournment to seek instructions.
10. It appears that there has been no further progress in the case. the appellant's application under Order 39 Rules 1 and 2 C.P.C. for vacation of the ex parte order of injunction (IA.12589/99) came up before the Court on 20.12.1999 on which notice was given to the respondent. When the same came up before the Court on 28.1.2000 time was sought by learned counsel for the respondent to file reply. Learned counsel for the appellant also raised the question of maintainability of the said suit filed by the respondent. Short synopsis were filed by learned counsel for the parties on the application for interim reliefs. The application was posted for consideration on 24.4.2000. Arguments could not be heard on the next two dates. In the meanwhile, the respondent filed an application (IA.4322/2000) seeking amendment of the plaint. The said application came up for consideration on 24.5.2000. It was not opposed on behalf of the appellant. Accordingly, the respondent was permitted to amend the plaint. To the amended plaint, written statement was filed by the appellant. An objection was raised on behalf of the respondent for taking off the written statement to the amended plaint from the record since the appellant had without permission of the court substantially changed its written statement. Instead of answering to the amended portions of the plaint, the written statement had completely been changed. This led to the Court hearing argument on the respondent's objection raised in separate application on which order is stated to have been reserved.
11. The suit for mandatory injunction initially filed by the plaintiff has now been converted into a suit for grant of decree for specific performance of the agreement dated 12.1.1999 directing the appellant to accept payment of Rs. 56,00,000/- and complete the necessary documentation in respect of the transaction for sale of two machines/equipments, namely, CAT 320 BL Hydraulic Excavator Model 1998 bearing Serial No. 8 CR 03234 and 6 CR03236 on sale on high seas sale basis/transfer of ownership from bond basis lying in bond of Bombay Customs. In the alternative, the respondent has prayed that in case decree for specific performance cannot be passed in favor of the respondent, decree for Rs. 56,00,000/- as damages be passed.
12. We have given out considered thought to the submissions made at the bar and are of the view that in the facts and circumstances of the case, ex parte order of injunction deserves to be vacated.
13. Before proceeding further, we may take note of a categorical submission made by learned counsel for the appellant during the course of argument, which he had made on instructions received from the appellant, that in the event of the respondent being granted a decree for specific performance of the alleged agreement, the appellant will supply to the respondent similar machines of similar specifications and on same costs within a reasonable time to be fixed by the Court.
14. The allegation on which the respondent came to the Court and claimed decree for mandatory and prohibitory injunction against the appellant was that the appellant had committed breach of contract and had failed to deliver the machines. Admittedly, it was not a suit for specific performance of a contract. Only a decree for mandatory injunction had been claimed, as quoted aforementioned. Suit had also not been valued properly. On the facts and circumstances as pleaded, such a suit would not have been maintainable in view of provisions of Section 58 of the Sales of Goods Act, 1930, which in its turn is subject to the provisions of Chapter II of Specific Relief Act, 1877. Section 58 of the Sales of Goods Act reads:-
"58.Specific performance- Subject to the provisions of Chapter II of the Specific Relief Act, 1877, in any suit for breach of contract to deliver specific or ascertained goods, the Court may, if it think fit, on the application of the plaintiff, by its decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. The decree may be unconditional, or upon such terms and conditions as to damages, payment of the price or otherwise, as the Court may deem just, and the application of the plaintiff may be made at any time before the decree."
15. As per the aforementioned provision only a suit for specific performance could be maintained and that also subject to the provisions of Chapter II of the Specific Relief Act, 1877. Thus the suit as laid when the Court granted ad-interim relief was not maintainable. Only after the appellant raised objection about maintainability that the plaint was amended. Now decree for specific performance has been sought.
16. Section 10 of the Specific Relief Act, 1963 is under Chapter II, which enumerates the cases in which Specific Performance of a Contract can be enforced. Grant of decree for specific performance is in discretion of the Court and the same may be granted only on two conditions, namely, (a) when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; and (b) when the act agreed to be done in such that compensation is money for its non-performance would not afford adequate relief. Sub-clause (a) of clause (ii) to the explanation, inter alia, says that where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market, unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money.
17. It has been the appellant's case that the relief sought for is with respect to movable goods, which are ordinary articles of commerce being manufactured by a number of manufactures and are available at a much lesser price than what is being offered. The appellant also supplied list of manufacturers of 20T Hydraulic Excavators as follow:-
"1. TELCO (TATA-HITACHI) Model EX 200LC
2. L & T (L&T - (KOMATSU) MODEL PC 200-6
3. VOLVO (SAMSUNG) Model SE 201 LC
4. JCB, UK (ESCORTS) Model JS 2000"
18. On the facts as pleaded and in view of the provisions aforementioned, we are of the view that there is hardly any prima facie case in favor of the respondent. In any case, even if assuming that the respondent has a prima facie case in his favor, one of the other essential and necessary condition for grant of injunction is absolutely lacking in this case, namely, irreparable loss likely to be caused to the respondent in the event of non grant of injunction. In case ultimately, it is found that the respondent is not entitled to decree of injunction, the respondent will be entitled to decree for compensation, subject of course, to the other defenses to be made in the suit by the appellant. This makes it a case where the respondent is not entitled to an interim protection as granted by learned Single Judge. Moreover, a categorical statement has been made by learned counsel for the appellant at the bar, which we take on record that in the event of the suit for specific performance being decreed in favor of the respondent, two machines o the same and similar specifications will be made available and supplied by the appellant to the respondent at the same costs.
19. For the reasons aforementioned, we are of the view that the impugned order is not liable to be sustained in law. While taking the statement of the appellant on record and holding the appellant to be bound by the same, we allow the appeal and set aside the impugned order and thereby dismiss the respondent's application (IA.1636/99) and allow the application of the appellant (IA.12589/99). Needless to add that the observations made by us are meant only for the purpose of deciding this appeal and will not cause prejudice to the case of either party on merits.