Delhi District Court
Swati Growth Funds Ltd vs Major D.K. Diwan on 15 September, 2018
IN THE COURT OF SH. HARISH KUMAR : ADDITIONAL DISTRICT
JUDGE -13 : CENTRAL DISTRICT : TIS HAZARI COURTS : DELHI
CS No. 14971/2016
In re :-
Swati Growth Funds Ltd.
Having its registered office at
115, Transport Centre, New Rohtak Road,
Punjabi Bagh,
New Delhi-110 035 ..........Plaintiff
VERSUS
1. Major D.K. Diwan
2. Mr. Vijyant Diwan
S/o Major D.K. Diwan
3. Ms. Rozy Diwan
W/o Mr. Vijyant Diwan
Defendants No. 1 to 3 may be served at:
T R International Buying Services
24 D Green Apartments
Rajouri Garden,
New Delhi-110 027
Also at:
F-42, Mansarovar Garden,
New Delhi-110 015
4. Connection Europe Limited
5, The Wharf
16, Bridge Street, Birmingham
B-1, 2 JS, United Kingdom.
5. Sunrise Traders Ltd.
Unit 2, TULSI Centre,
97, Constitution Hill, Hockley,
Birmingham, B 193 J X,
United Kingdom
6. Opera Global Pvt. Ltd.
D-12/2, Phase II,
Okhala Industrial Area,
New Delhi. ...........Defendants
CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 1 of 20
Date of institution of present suit : 02.06.2007
Date of receiving in this court : 27.08.2016
Date of Judgment : 15.09.2018
SUIT FOR RECOVERY OF Rs.19,00,997/- ALONG WITH PENDENTE-
LITE AND FUTURE INTEREST @ 12% PER ANNUM
JUDGMENT
This judgment shall dispose of the suit filed by the plaintiff for recovery of Rs.19,00,997/- along with pendente lite and future interest @ 12% per annum against the defendants.
Plaintiff's case
1. Briefly stated the case of the plaintiff is that plaintiff a company duly incorporated under the Company Act, is engaged in the business of Merchant Exporter. Defendants No. 1 to 3 are carrying on business of procuring goods on behalf of his overseas customers including the defendant No. 4 and 5 as their Agents/Confirming House. The defendants No. 1 to 3 for and on behalf of his overseas customers for valuable consideration/commission place order on seller/manufacturer in the home market for export to his overseas customers.
2. It is stated that defendants No. 1 to 3 for and on behalf of his overseas customer Connection Europe Ltd. vide Purchase Orders No. 2092 to 2095 placed an order upon for supply of 5760 sets of garments amounting to GBP 16,560/- (hereinafter called the Consignment). The mode of payment was against Letter of Credit. It is stated that HSBC Bank PLC, U.K. on behalf of defendants overseas customer Connection Europe Ltd. sent an irrevocable Letter of Credit bearing No. DPCMKE-120781 dated 04.02.2003 for GBP 16,560/- in the name of T R International, against Purchase Orders No. 2092, 2093, 2094 & 2095.
3. Plaintiff agreed to supply the consignment at the request of CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 2 of 20 defendants No. 1 to 3, the irrevocable Letter of Credit dated 04.02.2003 issued by HSBC Bank PLC, Trade Services, 51 DE MONTFORT STREET, LEICESTER LE1 7 BB, UK on behalf of CONNECTION Europe LIMITED in favour of T R International Buying Services, New Delhi was transferred in the name of the plaintiff by Bank of Punjab Ltd., J-2/4, B.K. Dutt Market, Rajouri Garden, New Delhi-110 027 on 06.03.2003.
4. The plaintiff's fabricator Opera Global Pvt. Ltd./defendant No. 6 fabricated the garments mentioned in the Consignment. Thereafter, the plaintiff sent the consignment to Defendant No. 4 through Kuwait Airways vide Airway Bill Nos. 229-3977-3510 dated 29.05.2003 and 229-2977-3521 dated 30.05.2003 respectively. The plaintiff drew a Bill of Exchange bearing No. BENO/SG/OG/033/034/036/037/2003 dated 30.05.2003 for GBP 16902.08 upon Connection Europe Limited, U.K. The plaintiff sent the Bill of Exchange along with invoices bearing nos. SG/OG/033/03, 034/03, 036/03 and 037/03 all dated 05.05.2003 amounting to GBP 16,902.08, Air-way Bill, Certificate of Origin, Export Certificate, GSP Form A Certificate, Inspection Certificate, Beneficiary Certificate and other related documents for collection through Global Trust Bank (now known as Oriental Bank of Commerce) which were in turn forwarded to HSBC Bank for collection of payment.
5. On 12.06.2003 HSBC Bank PLC, Trade Services, 51 DE MONFORT STREET, LECESTER LE1 7 BB, UK intimated the plaintiff about some discrepancies in the documents, which were subsequently rectified and clarified by the plaintiff. On 18.06.2003 HSBC Bank informed the plaintiff that defendant No. 4, Connection Europe Limited refused to accept the documents. Thereafter, the defendants No. 1 to 3 arranged another buyer i.e. Sunrise Traders Limited, UK, the defendant No. 5. The plaintiff submits that on 19.06.2003 defendants No. 1 to 3 asked the plaintiff to change the name of consignee from Connection Europe Limited to Sunrise Trader Limited, UK and name of the Bank from HSBC to Lloyds TSB Bank PLC CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 3 of 20 respectively. On the same day, the defendants No. 1 to 3 also requested to extend terms of payment for 180 days credit. Thereafter, NOC was requested from Global Trust Bank Ltd. to deliver the goods to defendant No. 5, Sunrise Traders Limited, UK. In pursuance whereof the NOC was submitted to Kuwait Airways on the same day.
6. On 19.06.2003, HSBC Bank was requested to transfer entire set of documents to Lloyds TSB Bank PLC Trade Services (P.O. Box 63) Two Brindley Place, Birmingham, B1 2 AB, U.K; the Banker of defendant No. 5, Sunrise Traders Limited, UK. HSBC Bank showed its inability to transfer title documents as those were in the name of defendant No. 4, Connection Europe Limited. Consequently, on 20.06.2003 the plaintiff wrote a letter to its banker, Global Trust Bank Ltd., New Delhi whereby the plaintiff enclosed the revised Bill of Exchange in the name of defendant No. 5, Sunrise Traders Ltd. and requested to deliver documents to Defendant No. 5 Sunrise Traders Ltd. Thereafter necessary clarification was given by the plaintiff's bank to HSBC Bank with a request to transfer the documents to Lloyds TSB Bank. The revised Bill of Exchange prepared in favour of defendant No. 5 was forwarded by the plaintiff's banker to Lloyds TSB Bank vide its letter dated 20.06.2003. On 25.06.2003, HSBC Bank confirmed transfer/delivery of documents to Lloyds Bank. The receipt of the document was acknowledged by Lloyds TSB Bank on 30.06.2004.
7. On 04.07.2003, Lloyds TSB Bank informed that the defendant No. 5 refused to accept the documents on the pretext that the defendant No. 5 had been negotiating with the supplier i.e. the plaintiff. On 09.07.2003, Lloyds TSB Bank was informed to release documents on "Acceptance Basis" by increasing tenor of the Bill from 60 days to 180 days from the date of Airway Bill. By swift message dated 01.08.2003, Lloyds TSB Bank was instructed to issue letter of release upon the acceptance of the Bill of Exchange by defendant No. 5. On the same day, Lloyds TSB Bank informed that the CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 4 of 20 defendant No. 5 had accepted the Bill of Exchange and would be due for payment on 28.01.2004. The Lloyds TSB Bank further remarked that the Bill would be presented for the payment on the due date i.e. 28.01.2004.
8. It is further stated that on the due date i.e. 28.01.2004 no payment was received. Accordingly, on 29.01.2004 a reminder was sent to Lloyds TSB Bank to check the status of payment. On 30.01.2004, Lloyds TSB Bank informed that the collection remains unpaid and sought further instructions for handling the Bill of Exchange. Lloyds TSB Bank vide its swift message dated 04.02.2004 informed that defendant No. 5, Sunrise Traders Ltd. had requested to hold the payment as it was negotiating with the drawer of Bill of Exchange i.e. the plaintiff.
9. On 30.03.2004, Lloyds Bank again informed that the collection of Bill of Exchange drawn on defendant No. 5 remained unpaid and sought further instructions. The Plaintiff's Banker Global Trust Bank (now known as Oriental Bank of Commerce) vide its swift message dated 20.09.2004 demanded remittance of the amount mentioned in the Bill of Exchange as the Drawee's Bank i.e. Lloyds TSB Bank had released the documents upon acceptance of Bill of Exchange by defendant No. 5. The Bill of Exchange along with the defendants were released to defendant No. 5 after the same was accepted by defendant No. 5 on a clear understanding that payment under the Bill of Exchange would be made in 180 days from the date of Air-way Bill. Lloyds Bank vide its swift message dated 21.09.2004 informed that Original Bill was returned unpaid on 01.06.2004 and the Revised Bill was not returned unpaid and it was holding the Revised bill Lloyds Bank sought advice from Global Trust Bank whether it wanted to get the revised bill returned unpaid.
10. Global Trust Bank vide its swift message on 06.10.2004 requested Lloyds Bank to hold the revised Bill and also to advise Sunrise Traders Ltd. to pay the Bill amount as it had accepted the same. On CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 5 of 20 07.10.2004, Lloyds Bank informed to Global Trust Bank that it had asked its customer (Sunrise Traders Ltd.) for payment of the long outstanding due. Thereafter the plaintiff's bank again vide its swift message dated 27.10.2004 inquired the status of Bill of Exchange fro Lloyds TSB Bank. On 29.10.2014, Lloyd TSB Bank informed that collection remains unpaid with no reasons given and sought further instructions to handle the Bill. On 03.12.2004, Lloyd Bank was again requested for advising the response of Sunrise Traders with respect to the payment of Bill. On 08.12.2004, Lloyd Bank informed that collection is still unpaid, Bill of Exchange has already been returned on 21.09.2004 and documents were released to Sunrise Traders Ltd. on acceptance as per schedule.
11. It is further stated that Mr. Rakesh Jain, the director of the defendant No. 5 vide his e-mail dated 12.05.2005 informed the plaintiff that defendant No. 5 had remitted GBP 5,000/- to defendant No. 6, Opera Global Pvt. Ltd. through T R International. The plaintiff did not receive any amount consequently the plaintiff sent a reply dated 19.05.2005 denying having received any amount towards the Consignment. The plaintiff also wrote a letter dated 07.06.2005 to T R International to confirm whether it accepted the payment of GBP 5,000/- against the Consignment. In the aforesaid circumstances it is evident that the defendants No. 1 to 5 in connivance and collusion with each other fraudulently induced the plaintiff to export the Consignment to Birmingham, UK in a planned manner. The defendant No. 4 refused to accept the documents after the consignment reached its destination thereby compelling the plaintiff either to find a new buyer at that place or get the Consignment back to India, which was a very expensive and cumbersome process. Left with no option the plaintiff agreed to sell goods at Birmingham, UK to a new buyer. The defendants No. 1 to 3 arranged a new buyer (Sunrise Traders Ltd.) and compelled the plaintiff to agree on the terms, which would not have been acceptable to the plaintiff. The refusal to accept documents by Connection Europe and thereafter acceptance of the same by Sunrise Traders CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 6 of 20 Ltd. was a conspiracy to induce the plaintiff to dispatch goods from India. The defendant No. 5 after accepting Bill of Exchange and the documents on 180 days credit from Air-way Bill wrongly withheld the payment on false pretext. Subsequently, defendants No. 1 to 5 denied contractual obligations with the plaintiff and falsely alleged that defendant had contract with the defendant No. 6 despite knowledge that the Bill of Exchange was drawn by the plaintiff and the invoices and other documents were raised or generated by the defendant. Thus, the defendants No. 1 to 5 are jointly and severally liable to pay the plaintiff a sum of GBP 16,902.08.
12. It is stated that defendants No. 1 to 5 failed to pay the amount despite various requests and reminders. Consequently, the plaintiff got a legal notice dated 18.05.2007 (wrongly mentioned as 18 th May 2006 on the notice due to typographical mistake) issued upon the defendants whereby the plaintiff called upon defendants No. 1 to 5 to pay a sum of GBP 16,902.08 towards principle amount and GBP 10,141.25 towards interest component within seven days of the receipt of this notice. It is stated that that the equivalent value of the GBP 16,902.08 on the date of filing of suit is Rs.13,56,899/- calculated at the rate of 1 GBP = Rs. 80.28. The plaintiff submits that defendants No. 1 to 5 are liable to pay the interest @ 18% per annum as the transactions were commercial in nature. However, the plaintiff in the present suit is claiming interest @ 12% per annum. Thus defendants No. 1 to 5 are liable to pay Rs. 5,44,098/- towards interest calculated @ 12% from 28.01.2004 till 31.05.2007. It has been further stated despite service of the notice of defendants No. 1 to 5 has failed to pay the principle as well as interest component to the plaintiff thereby constraining the plaintiff to file the present suit.
Case of defendants No. 1, 2 and 313. Defendants No. 1, 2 and 3 filed common written statement raising preliminary objection that the suit is hopelessly time barred. It is stated CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 7 of 20 that as per the plaintiff's admission in paragraph 11 of the plaint the bill of exchange was due for maturity on 28.01.2004. The suit filed after three years from the said date is liable to be dismissed being barred by Article 31 (Part-II of the Schedule) of The Limitation Act 1963. The claim of the plaintiff is based on non-payment of a bill of exchange purportedly drawn in favour of defendant No. 5 and accepted by the said defendant for payment on 28.01.2004. The copy of said bill of exchange has not been filed along with the suit, hence, suit is liable to be dismissed. Further, the defendants No. 1, 2 and 3 are not the owners or proprietors of M/s T. R. International Buying Services and hence they are not liable for any action of M/s T. R. International Buying Services, hence, the suit is liable to be dismissed for misjoinder of parties. There is no privity of contract between the plaintiff and the answering defendants. No cause of action has arisen in favour of the plaintiff and against the answering defendants. On merits, averments made in the plaint are denied by the answering defendants. It is submitted that the answering defendants are only working for M/s T. R. International Buying Services. The answering defendant or M/s T. R. International Buying Services never had any direct connection/communication with the plaintiff.
14. It is further stated that at the stage of refusal of documents by defendant No. 4, Mr. Sushil Kumar from defendant No. 6 had informed the answering defendants that defendant No. 4 had not accepted the documents being barred by time and the consignment of goods had already reached U.K. incurring heavy demurrage and any further delay in clearing the goods would have caused heavy loss. It was further informed that the plaintiff is unable to bring back the goods as the transportation charges combined with demurrage with godown charges would significantly corrode the value of the goods and could even wipe off the same entirely thereby causing huge loss to the exporter. Defendant No. 6 therefore requested M/s T. R. International Buying Services to find an alternate buyer at U.K. to save the situation. At the request of defendant No. 6 in order to help a longstanding client, the answering CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 8 of 20 defendants contacted defendant No. 5, for accepting and clearing the goods. Defendant No. 5 acceded to the request of the answering defendant subject to modification of the terms of payment of 60 days sight to 180 days from the date of shipment. The plaintiff accepted the said condition and allowed the goods to be received by defendant No. 5 at their condition. The details of the correspondence etc., between the plaintiff, defendants No. 4, 5 and the banks for the transfer of the bill and the goods in the name of defendant No. 5 as detailed in the plaint are not known to the answering defendants. Hence it has been submitted that suit against the replying defendant is not maintainable and is liable to be dismissed.
Case of Defendant No. 4, 5 and 615. Defendant No. 4, 5 and 6 did not contest the suit and hence not filed any written statement.
Replication
16. Plaintiff filed replication to the written statement of defendants No. 1, 2 and 3 thereby reiterating the contents of the plaint and denying the submissions made in the written statement.
17. Defendants No. 4 and 5 were proceeded against ex-parte vide order dated 29.08.2008 and defendant No. 6 was proceeded against ex-parte vide order dated 10.08.2007. None of them had filed any written statement.
Issues
18. From the pleadings of the parties, following issues were framed vide order dated 18.09.2008:-
1. Whether the plaintiff is entitled for a sum of Rs.19,00,997/- OPP
2. Whether the plaintiff is entitled for any pendente lite and future interest? If yes, at what rate and from what period? OPP
3. Whether the present suit is barred by time as stated in para No. 1 CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 9 of 20 of written statement? OPD
4. Whether there is no privity of contract between the plaintiff and defendants? OPD
5. Whether the plaintiff has no cause of action to file the present suit against the defendants? OPD
6. Relief.
Evidence
19. In support of its case, plaintiff examined Sh. K.K. Dogra, Senior Manager, Oriental Bank of Commerce as PW-1 who produced the summoned record and proved swift messages as Ex. PW1/1 to Ex. PW1/27 and copy of letter of credit along with letter dated 06.03.2003 issued by Bank of Punjab Ltd. as Ex. PW1/28 and Ex. PW1/29. He was cross examined by the defendants.
20. Sh. Deepak Daing was examined as PW-2 who tendered his affidavit in examination-in-chief as Ex. PW2/A and relied upon following documents:-
1. Certified copy of the resolution Ex. PW2/1
2. Resolution in favour of Sh. Manoj Jain Ex. PW2/2
3. Certificate of incorporation Ex. PW2/3
4. The Apparel Export Promotion Council Registration Certificate Ex. PW2/4
5. Copy of the commission note Ex. PW2/5
6. Certified copy of the Airway Bill Ex. PW2/6 and Ex. PW2/7
7. Copy of the Bill of Exchange Ex. PW2/8
8. Copy of invoices bearing No. SG/OG/033/03, 034/03, 036/03 and 037/03 all dated 05.05.2003 Ex. PW2/9 to Ex. PW2/12
9. Copy of the packing list Ex. Ex. PW2/13 to Ex. PW2/16
10. Copy of GSP Certificate (Form A) Ex. PW2/17 to Ex. PW2/20
11. Copy of the No Objection Certificate dated 19.06.2003 Ex.PW2/22
12. Copy of the request letter dated 19.06.2003 to Global Trust Bank Ex. PW2/23 CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 10 of 20
13. Copy of the letter dated 20.06.2003 issued by Global Trust Bank Ex. PW2/24 14. Copy of e-mail Ex. PW2/25
15. Attachment sent through electronic generated report of e-mail Ex. PW2/26
16. Electronic generated report of the mail Ex. PW2/27
17. Copy of reply dated 19.05.2005 Ex. PW2/28
18. Original postal receipt bearing No. 4008 Ex. PW2/29
19. Electronic generated fax report Ex. PW2/30
20. Carbon copy of letter dated 07.06.2005 Ex. PW2/31
21. Original postal receipt bearing No. 2317 Ex. PW2/32
22. Office copy of notice Ex. PW2/33
23. Original postal receipt bearing No. 1520 to 1528 Ex. PW2/34 to Ex. PW2/42.
He was cross examined by the defendants.
21. Sh. Raj Kumar was examined as PW-3 who produced the original minute book including minutes recorded on 01.06.2007 and 06.05.2010 and proved the same as Ex. PW2/1 and Ex. PW2/2. Sh. Arun Kurich was examined as PW-4 (wrongly numbered as PW-3) who deposed that Bank do not have the record pertaining to Ex. DW1/A i.e. Letter of Credit and the documents filed along with the same and produced a certificate Ex. PW3/1 issued by Chief Manager. Thereafter, PE was closed.
22. In defence, Sh. Vijyant Diwan was examined as DW-1 who tendered his affidavit in his examination-in-chief as Ex. DW1/A. He was cross examined by the plaintiff. Thereafter, DE was closed.
Findings
23. After going through the pleading, evidence, material on record and appreciating arguments of respective counsels for parties, issues wise findings are as under:-
CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 11 of 20 ISSUE No. 1:- Whether the plaintiff is entitled for a sum of Rs.19,00,997/-? OPP
24. Onus to prove this issue is upon the plaintiff. Plaintiff has pleaded that it exported goods/garments worth 16,650 GBP upon purchase order bearing No. 2092 to 2095 placed by defendant No. 1 to 3 who were carrying on business of procuring goods on behalf of their overseas customers as their Agents/Confirming House, on behalf of defendant No.4 against the letter of credit issued in favour of the T.R. International Buyer Services which was subsequently transferred in the name of the plaintiff.
25. Defendant No. 4, 5 and 6 did not file any written statement in the present case. Defendant No. 1, 2 and 3 in their written statement denying their personal liability submitted that purchase order bearing No. 2092 to 2095 were placed upon defendant No. 6 by M/s T.R. International Buyer Services for which defendant No. 1, 2 and 3 are working and of which they are neither owner nor proprietor. They admitted that Letter of Credit (LC) was transferred in the name of plaintiff albeit at the request of defendant No. 6 with whom M/s T.R. International Buyer Services had longstanding business relation. Defendant No.1 to 3 further submitted with respect to exporting of goods that they had no participation in the same after the transfer of LC. They further pleaded that at the stage of refusal of documents/goods by defendant No.4, Mr. Sushil Kumar from defendant No.6 had informed them that defendants No.4 had not accepted the documents being barred by time and the consignment of goods had already reached U.K. incurring heavy demurrage. Any further delay in clearing the goods would have caused heavy loss. It was further informed that the plaintiff was unable to bring back the goods as the transportation charges combined with demurrage with godown charge would significantly corrode the value of the goods and could even wipe off the same entirely thereby causing huge loss to the exporter. Defendant No.6 therefore requested M/s T. R. International Buying Services to find an alternative buyer at U.K. to save the situation. At the request of defendant No.6 in order to help CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 12 of 20 a longstanding client, defendant No. 1 to 3 contacted defendant No.5 for accepting and clearing the goods and defendant No.5 acceded to the request subject to modification of the terms of payment of 60 days sight to 180 days from the date of shipment. As per defendant No.1 to 3 plaintiff accepted the said conditions and allowed the goods to be received by defendant No.5 at its conditions.
26. Thus, from the stand of the defendant No. 1 to 3 it is clear that plaintiff had exported goods worth 16,500 GBP and goods reached U.K and upon refusal by defendant No.4, goods were delivered to defendant No.5 upon the payment period being extended by the plaintiff. There is no complaint of goods being deficient in quantity of or in quality. Thus, plaintiff is certainly entitled for the price of the goods exported by it. But the million dollar question is who is liable to pay for it? Whether it is defendant No. 4 alone or 5 alone or 6 alone or Defendant No. 1 to 3 jointly or all of them jointly.
27. Plaintiff has pleaded that defendant No. 1 to 3 were acting as agent for their overseas customer Connection Europe/defendant No.4 placed order for supply of garments. Defendant No. 1 to 3 pleaded that defendant No. 1 to 3 working for M/s T.R. International Buying Service and on its behalf placed purchase order upon defendant No.6 for supplying garments to its overseas principal Connection Europe/defendant No.4. and thus plaintiff, it is pleaded, has no privity of contract with defendant No. 1 to 3 and for that matter with M/s T. R. International Buying Service. Plaintiff in replication denied the same.
28. Plaintiff has neither placed the original purchase order nor copy thereof on record not to speak of proving the same. Defendant have also not placed on record the copy of purchase order to enable this court to know upon whom the order for supply of garments was placed. However, plaintiff itself has relied upon and proved on record commission note Ex PW2/5. Perusal of CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 13 of 20 commission note Ex PW2/5 shows that same was issued to Opera/defendant No.6 through Sushil. It also has reference to purchase order No. 2092 to 2095 and value of goods is also shown as 16,500 GBP. DW1 in his cross examination also specifically deposed that purchased orders were in the name of Opera Global Pvt. Ltd/defendant No. 6. No contrary suggestion was given by the plaintiff. If purchase order were at all placed on plaintiff then the same should have been produced and proved on record. Plaintiff's reliance on this document Ex PW2/5 coupled with plaintiff's failure to place and proved on record purchase orders lead this court to draw adverse inference against the plaintiff thereby inferring that purchase orders were not placed upon plaintiff and in fact same were placed upon Opera Global/defendant No.6 as has been pleaded by defendant No. 1 to 3.
29. However, there is no dispute that Letter of Credit Ex PW1/28 which was in favour of M/s T. R. International Buying Services, was transferred in the name of the plaintiff. Defendant No. 1 to 3 pleads that such transfer took place at the request of defendant No.6. Even in cross examination DW1 admitted that Letter of Credit was transferred in the name of the plaintiff but volunteered that it was done on the asking of Sushil of Opera Global. No contrary suggestion was given by the plaintiff. Thus, perusal of Ex PW2/5 together with plaintiff's failure to place and prove on record purchase orders and the fact that Letter of Credit was transferred in the name of plaintiff at the request of the defendant No. 6, all go to show that there was some arrangement between plaintiff and defendant No.6 otherwise plaintiff's coming into picture is not explainable given the above noted material evidence i.e. purchase order was placed on defendant No.6 and at the asking of defendant No. 6 Letter of Credit was transferred in the name of plaintiff. It also goes to prove that supply of goods by the plaintiff was not at the instance of the defendant No. 1 to 3 or M/s T.R. International Buyer Services but was at the instance of defendant No. 6. and hence, there was no privity of contract between the plaintiff and defendant No. 1 to 3 or M/s T. R. CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 14 of 20 International Buying Services. Hence, defendant No. 1 to 3 cannot be held liable for making payment.
30. Further perusal of the Commission Note Ex PW2/5 shows that it was issued on behalf of M/s T. R. International Buyer Services and signed by Major D.K.Dewan as an authorised signatory. Thus, it also clarifies that defendant No.1 and for that matter defendant No 2 and 3 also were working for the M/s T. R. International Buyer Service and as a precautionary measure plaintiff should have impleaded M/s T.R. International Buyer Services as party even if plaintiff did not know of its constitution. Therefore, the contention of the plaintiff that it was dealing with defendant No. 1 to 3 in their individual capacity, is not tenable as the document Ex PW2/5 clearly shows that defendant No.1 was working for M/s T. R. International Buyer Services. Further plaintiff has not placed and proved on record that purchase order was placed upon the plaintiff by defendant No. 1 to 3. Hence, defendant No. 1 to 3 or M/s T. R. International cannot be held liable to pay the price of the goods.
31. Next it is the case of the plaintiff that upon consignment reaching UK, defendant No.4 refused to accept and thereafter defendant No. 1 to 3 arranged another buyer i.e. defendant No. 5. Plaintiff accepted the terms of payment of the defendant No. 5 and allowed defendant No. 5 to take the deliver of goods after executing necessary documents in favour of defendant No. 5 and issuing necessary instruction to the concerned agency. It is not the case of the plaintiff that defendant No. 5 had agreed to take delivery at lower price. It is also not the case that plaintiff agreed to sell the goods to defendant No. 5 reserving its right to take appropriate action against the defendant No.4 for refusal to take delivery. It is also not the case of the plaintiff that if defendant No.5 had paid the price of the consignment then also plaintiff would have instituted suit against the defendant No. 4 to recover difference of price, if any or expenses incurred or for damages for breach of contract/harassment.
CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 15 of 20
32. Further, Letter of Credit was valid upto 14.03.2003 and there is nothing on record to show that validity of Letter of Credit was extended. Admittedly, plaintiff consigned the goods on 29.05.2003 and 30.05.2003. It is also not the pleaded case of the plaintiff that validity was extended or there was an assurance of extending the validity of Letter of credit or fresh Letter of credit would be issued. Contention of the plaintiff that transfer of Letter of Credit took place on 06.03.2003 and goods could not have been cosigned by the 14.03.2003 was within the knowledge of all concerned may be true but that reason was all more important for plaintiff to insist for extension of validity of Letter of Credit before the dispatch of goods. Bank's letter dt 06.03.2003 Ex PW1/29 clearly shows that transfer of Letter of Credit has been done without there being any change in other terms and condition of the original Letter of Credit and one of the term of Letter of Credit was that it was valid only up to 14.03.2003. Plaintiff has not explained why he sent consignment under expired Letter of Credit.
33. Perusal of swift message dt 12.06.2006 sent by HSBC bank shows that one of the initial discrepancy pointed out was expiry of Letter of Credit. Further perusal of swift message dt. 18.06.2003 Ex 1/1 sent by HSBC bank shows that defendant No. 4 refused to settle the bill due to late shipment. Vide swift message dt 19.06.2003 HSBC Bank PLC expressed its inability to forward the documents to Lloyds Bank as all the documents were in the name of defendant No.4. Vide letter dt 19.06.2003 Ex PW2/23 plaintiff wrote letter to its Bank Global Trust Bank Ltd. requesting it that since buyer required to change the consignee and notify's name on the airway bill to clear the shipment, therefore, requested to issue no objection certificate to make desired change. On 19.06.2003 itself Global Trust Bank Ltd vide its letter Ex PW2/22 informed the Kuwait Airways to arrange delivery of goods to defendant No. 5. Global Trust Bank Ltd vide its swift message dt 19.06.2003 requested HSBC bank to transfer entire set of documents to Llyods TSB Bank PLC Trade Services. As despite such request when HSBC Bank expressed inability to CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 16 of 20 transfer, Global Trust Bank Ltd against vide its swift message dt 20.06.2003 requested HSBC bank to transfer the documents while treating those documents not under Letter of Credit. Vide swift message dt 25.06.2003 HSBC Bank informed about the transfer of documents and closing of file with complete discharge. Finally with the consent of the plaintiff goods were released to defendant No.5.
34. Plaintiff dispatched the goods under the expired Letter of Credit and it can be seen from above that on refusal to accept goods by defendant No. 4 on 18.06.2003 plaintiff immediately i.e. on 19.06.2003 readily made arrangement for release of the goods to defendant No.5. and thereafter plaintiff has been dealing with defendant No. 5 and did not look for payment upon defendant No.4 till it issued legal notice dt 18.05.2006. It has also come on record that plaintiff had filed suit for recovery only against defendant no. 5 in UK which fact was not disclosed by the plaintiff on its own and it was only upon disclosure by the defendants no. 1 to 3 that plaintiff admitted of filing such suit in UK. The said suit was not continued as plaintiff found it costly as has been explained before this Court. Hence, plaintiff's own conduct shows that plaintiff has discharged the defendant no. 4 of any liability whatsoever in respect of the consignment. To say that all defendants had colluded with each other to put the plaintiff in precarious situation so as to deliver the goods at loss is not acceptable unless plaintiff satisfactorily explain at whose instance it dispatched goods and why it sent goods long after the expiry of Letter of Credit period. Hence, defendant No.4/Connection Europe is not liable to pay the price of goods either severely or jointly with other defendants. It has also been noted that plaintiff has failed to prove privity of contract with defendant No. 1 to 3 hence they too are not liable to pay either jointly or severely. Plaintiff has not held defendant No. 6 liable for payment. Hence, since admittedly goods were received by the defendant No. 5 Sunrise Traders Ltd, therefore Sunrise Traders is liable to pay the price of goods to the plaintiff, particularly when it has not contested the claim of the plaintiff on any ground CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 17 of 20 whatsoever.
Hence, issue No. 1 stands decided accordingly.
ISSUE No. 2:- Whether the plaintiff is entitled for any pendente lite and future interest? If yes, at what rate and from what period? OPP
35. Onus to prove this issue is upon the plaintiff. Admittedly, transaction between the parties is commercial and there is no agreement for payment of interest. Plaintiff has claimed interest at the rate of 12 % p.a. Since there was no agreement for payment of interest and plaintiff approached the court not immediately after expiry of period under taken by the defendant No.5 to make the payment therefore plaintiff is not entitled to interest for pre- litigation period.
36. Section 34 of CPC provided for grant of pendente-lite and future interest at the discretion of the court at any rate upto 6% p.a. In case of commercial transaction may be granted at the rate higher than 6% p.a but not beyond the contractual rate of interest and if there is no contractual rate of interest than beyond the rate of interest at which nationalised bank advance commercial loan. Hence, keeping Section 34 in mind and the fact that transaction is commercial, interest of justice would be better served if pendentelite interest is granted at 6% p.a and future interest is granted at the rate of 9% p.a. on 16,500 GBP whose at value in Indian rupees has not been disputed to be Rs.19,00,997/-. Issue No.2 stands decided accordingly.
ISSUE No. 3:- Whether the present suit is barred by time as stated in para No. 1 of written statement? OPD
37. Onus to prove this issue is upon the defendant. Admittedly, goods were dispatched on 29.05.2003 and 30.05.2004. It has already been noted above that defendant No. 4 refused to accept delivery on 18.06.2003. Even if it is held that defendant No.4 was liable to make payment independently then plaintiff's suit is time barred on 2.06.2007 against defendant No.4. Similarly, it is time barred against the defendant No. 1 to 3 as CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 18 of 20 well because admittedly defendant No. 5 had undertaken to honour the Bill of Exchange on 28.01.2004 as informed by Lloyds TSB Bank and therefore upon failure to honour on 28.01.2004 plaintiff was required to file the against defendant No. 1 to 3 on or before 28.01.2007, if at all they were liable.
38. Defendant No. 5 has not contested the present suit. Plaintiff has pleaded that director of defendant sent an email Ex PW2/25 attaching a letter dt 12.05.2005 Ex PW2/26 where in he admitted to have paid 500 GBP to Opera/defendant No.6 through M/s T. R. International Buying Services and balance payment was to be settled once the total goods would be sold. Defendant No. 5 has not disputed issuance of this letter as it is not contesting the suit. Perusal of this letter amounts to acknowledgement of liability albeit in different manner than pleaded by the plaintiff. Under Section 18 of the Limitation Act, 1963 acknowledgement of liability in writing and duly signed before the expiry of limitation period gives fresh period of limitation. Thus, since the attachment has been received by the plaintiff by way of an attachment in the email sent by the director of the defendant No.5 hence it could be taken as a signed document and thus constitute acknowledgement of liability as required under Section 18 of the Limitation Act and thus it give fresh period of limitation and therefore suit is well within limitation against the defended No.5 from 12.05.2005.
39. Although it has already been held that defendant No. 1 to 3 and defendant No. 4 are not jointly liable with defendant No. 5 but for academic discussion if they happened to be jointly liable with defendant No. 5 then acknowledgment of liability by defendant No.5 by letter dt 12.05.2005 Ex PW2/26 would give fresh period of limitation against all and in that eventuality suit would be within limitation against all of them.
Issue No.3 stands decided accordingly.
ISSUE No. 4:- Whether there is no privity of contract between the plaintiff and defendants? OPD CS No. 14971/2016 Swati Growth Funds Ltd. Vs. Major D.K. Diwan & Ors. Page No. 19 of 20
40. Onus to prove this issue is upon the defendants. Defendants here mean defendant No.1 to 3 as defendant No. 4 to 6 are not contesting the present case. While deciding issue No. 1 it has already been held that there is no privity of contract between the plaintiff and defendant No. 1 to 3. Hence issue No. 4 is hereby decided accordingly.
ISSUE No. 5:- Whether the plaintiff has no cause of action to file the present suit against the defendants? OPD
41. Onus to prove this issue is upon the defendants. Defendants here mean defendant No.1 to 3 as defendant No. 4 to 6 are not contesting the present case. While deciding issue No.1 it has already been noted that plaintiff failed to prove that there was any privity of contract between the plaintiff and defendant No. 1 to 3 and once there was no privity of contract between the plaintiff and defendant No. 1 to 3, there can not be any cause of action against the defendant No. 1 to 3. Hence, issue No.5 is decided against the plaintiff and in favour of defendant No. 1 to 3.
RELIEF In view of the findings recorded on all issue, suit of the plaintiff against defendant No. 1 to 4 is hereby dismissed and a decree for recovery of Rs.19,00,997/- (Rupees Nineteen Lacs Nine Hundred and Ninety Seven only) is hereby passed in favour of the plaintiff and against the defendant No. 5 M/s Sunrise Traders Ltd. along with simple interest @ 6% p.a. from the date of institution of the suit i.e. 02.06.2007 till the date of decree and future simple interest @ 9 p.a. from the date of decree till realisation.
Cost of the suit is also awarded in favour of the plaintiff. Decree sheet be prepared accordingly.
File be consigned to Record Room after necessary
compliance. HARISH Digitally signed by
HARISH KUMAR
KUMAR Date: 2018.09.17
16:05:53 +0530
(Harish Kumar)
Announced in open Court ADJ-13(Central)/THC
(Judgment contains 20 pages) Delhi/15.09.2018
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