Bangalore District Court
M/S. Kothari Containers Pvt. Ltd vs Green Agro Pack (P) Ltd on 26 November, 2020
IN THE COURT OF XV ADDITONAL CITY CIVIL &
SESSIONS: JUDGE AT BENGALURU (CCH.NO.3)
Dated this 26 th day of November 2020.
O.S. No.1218 /2016
Present :- Sri. Jaishankar. B.Sc.,LL.M.
XV Additional City Civil &
Session Judge, Bengaluru.
Plaintiff :- M/s. Kothari Containers Pvt. Ltd.,
No.9, Kemplai Industrial Area,
P.B. Road, New Gabbur Village,
Hubli - 580 028.
Represented by its Director
Mr. Manoj Kothari.
(Rep.by B.S.M.,Advocate)
V/s
Defendant :- Green Agro Pack (P) Ltd.,
No.232, 13th Cross,
Indiranagar II Stage,
Bengaluru - 560 038.
Represented by B.M. Deviah.
(Rep.by G.M., Advocate)
Date of Institution of the 09.02.2016
suit
Nature of the Suit (suit
for pronote, Suit for Money Suit
declaration and
possession, Suit for
injunction, etc.):
Date of the 17.02.2017
commencement of
recording of the Evidence:
Date on which the
Judgment was 26.11.2020
pronounced:
Total duration: Year/s Month/s Day/s
04 09 17
JU D GM E N T
The plaintiff has filed this suit for recovery of a sum
of Rs.15,43,423/- with interest at the rate of 36% per
annum.
2. The brief averments of the plaint are as follows:-
That the plaintiff is a Company involved in the
manufacture of Plastic Containers. The defendant has
entered into several transactions with the plaintiff which
is now spread over two years. The defendant has
purchased plastic containers from them. They have
maintained accounts with the defendants and it is found
that the defendant Company is due in a sum of
Rs.15,43,423/- with effect from 04.03.2015. The plaintiff
has been repeatedly demanding defendant to pay the
outstanding amount, but they have not paid the same.
They have made phone calls and also visited the office of
the defendant. In one such visit, the defendant furnished
copy of the account extract maintained by them and it
also confirmed the outstanding balance. The defendant
has assured that the balance payment would be made.
They have utilised the plastic containers supplied by
them and inspite of the several demands made by them,
the defendant has not paid the amount due. In their
reply notice, the defendant has admitted the
transactions. They got issued another legal notice dated
25.01.2016 and no reply is received by them with regard
to the same. The defendant instead of making the
payment, has sent an untenable reply stating that the
containers supplied by them were contaminated and
therefore loss is caused to them. They have claimed
imaginary loss. The said allegations of the defendant are
false and there is no monetary loss caused to the
defendant. They have clearly mentioned all terms and
conditions in the invoices. One of the terms relates to
liability which states that under no circumstances they
are responsible for any damages, beyond the value of
supplies. If any supplies are defective, buyers must
discontinue their use and notify them immediately so
that the matter may be investigated promptly. The
defendant has not lodged any complaint to the plaintiff
about any such defects. The invoices dates from
04.06.2014 to 04.03.2015. Repeatedly, the defendant has
done the transactions evidenced by invoices. The
defendant had several opportunities to raise complaint if
there were any defects and they would have discontinued
the transactions. In the circumstances, it is clear that
only when the payment is demanded, such false
allegations are made to avoid payment. In the reply notice
dated 05.02.2016, the defendant has admitted the
transaction and also the statement of account furnished
to the plaintiff. In the terms and conditions it is also
stated that if the payment is not made immediately,
interest at the rate of 36% per annum is chargeable on a
pro rate basis for the period of delay. As such, the
defendant is liable to pay interest at the rate of 36% per
annum. Hence, the suit.
3. The defendant Company has appeared through
its Counsel and has filed its written statement and has
contended as follows:-
That the suit is unsustainable in law and it is not
maintainable. The defendant is a 100% export oriented
unit engaged in food processing. It produces semi
finished gherkins both in vinegar and brine for the food
processing industry. They have purchased plastic
containers of a specified quality from the plaintiff in order
to store the aforementioned gherkins which are then
exported to its customers in various European Countries.
They follows the highest level of diligence and quality
control in its production and were assured of similar
quality standards from the plaintiff as well. During
several meetings, it was communicated to the plaintiff
about their requirements that they require containers
made of HDPE virgin plastic pellets (widely understood to
be food grade plastic) to store the gherkins which were to
be exported to European countries. As per common
industry knowledge, HDPE plastic or food grade plastic
would mean only virgin plastic and not recycled plastic.
On the basis that the plaintiff would only supply such
containers made of such virgin plastic, they had decided
to purchase containers from the plaintiff. While
conducting its business, they started receiving various
emails from its customers in Europe with complaints
about the smell of hydrocarbon/detergent emanating
from the containers which also affected the taste of the
gherkins i.e., the product sent by them. On this basis,
the containers along with the gherkins were rejected by
their customers. Upon a subsequent inspection of the
rejected containers, they became aware that the
aforementioned taste and smell were attributable to the
containers being contaminated as the same were not
made of virgin food grade plastic. They also informed the
plaintiff that the containers supplied by it were
contaminated and had resulted in the rejection of their
product. Upon receiving this information, the plaintiff in
fact appealed to them not to proceed against them for
the loss caused. Further, the plaintiff's representatives
on more than one occasion visited their factory to inspect
the rejected containers. It was further discussed that the
amount set out in the invoices was to be set off against
the monetary loss caused to them. In this background, it
came across as a great shock to them when the plaintiff
sent an untenable and baseless notice seeking payment
of the money towards the containers. The averments
made by the plaintiff in paras 2, 4 and 6, 10 and 11 are
all false. The averments made in para 5 is true. They had
made discussion that the plaintiff regarding the
contaminated containers and loss caused on account of
the same. The authorized representative of the plaintiff
firm had visited the factory as well to examine the
containers and to discuss the issue regarding the same.
The averments made by the plaintiff that they did not
complain are all false and baseless. The plaintiff has not
produced a single letter/email wherein the payment for
the containers has been demanded by them. The same is
evident because the plaintiff was fully aware about the
loss caused to them on account of the contaminated
containers. In their reply notice issued to the plaintiff,
they had also stated that the plaintiff's authorized
representatives could visit the factory at Davanagere to
identify the containers supplied by them so that a piece
form such barrel be sent to an independent third party
laboratory which can confirm that the containers were
contaminated. But, the plaintiff Company knowing that
their claim is true, chose not to send its authorized
representative. They reserves liberty to make a claim with
regard to the contaminated containers. They are in no
way liable to make the repayment of either the principal
sum payable or the interest rate set out by the plaintiff in
the plaint. On all these grounds, they have prayed for
dismissal of the suit.
4. Basing on the above pleadings,the following issues
have been framed in this case:-
I SSU E S
1.Whether plaintiff Company proves that in the course of business defendant became due of Rs.15,43,423/- to the plaintiff Company?
2. Whether plaintiff Company is entitled to recover the suit claim of Rs.15,43,423/- from the defendant with interest?
3. What order?
5. In order to prove its case, the plaintiff Company has examined its Director as P.W.1 and got marked 9 documents as Ex.P.1 to P.9. On behalf of the defendant Company, the Managing Director has examined himself as D.W.1 and he has got marked 13 documents as Ex.D.1 to D.13.
6. I have heard the arguments of the both sides and perused the entire materials on record. Having regard to the arguments heard and the materials on record, I answer the above points as hereunder:-
Issue No. 1 :- In the affirmative
Issue No. 2 :- Partly in the affirmative
Issue No. 3 :- As per final order
R E A S ON S
7. Issue No.1:- It is not in dispute in this case that the plaintiff is a company involved in the manufacture of plastic containers. It is also not in dispute that the defendant has entered into several transaction with the plaintiff Company and has purchased the plastic containers from the plaintiff Company. The plaintiff Company has contended that as on 04.03.2015 the defendant Company was due in a sum of Rs.15,43,423/-. The Managing Director of the plaintiff Company who is examined as P.W.1 has produced two invoices and also the account register extract and they have been marked as Exs.P.1, P.2 and P.9. Exs.P.1 and P.2 show the transaction between the plaintiff and the defendant Companies. Ex.P.9 show that a sum of Rs.15,43,423/- was due as on 04.03.2015. The transaction is not seriously disputed by the defendant Company. They have neither denied Exs.P.1 and P.2 invoices nor the account extract marked as Ex.P.9. P.W.1 has also stated that their representatives had visited the Company of the defendant and at the time they had furnished copy of the account extract made by them and it confirmed the outstanding balance maintained by them. This fact is also not denied by the defendant Company. D.W.1 has also not denied the outstanding amount in his evidence. As such, as for as the transaction is concerned, there is no dispute between the plaintiff and the defendant Companies.
8. The claim of the plaintiff Company is that they are entitled for a decree of Rs.15,43,423/- with interest at the rate of 36% per annum. On the other hand, the defendant Company has contended that the containers supplied by the plaintiff Company was not up to the mark and they were of sub standard. D.W.1 has stated that they started receiving various e-mails from their customers in Europe with complaints about the smell of hydrocarbon/detergent emanating from the containers which affected the taste of the gherkins. As such, their product and containers along with the gherkins were rejected and they suffered loss. When they asked the plaintiff Company with regard to the same, the representative of the plaintiff Company visited their factory to inspect the contaminated containers and later told them that they would set off the amount. D.W.1 has also got marked the E-mails sent by their customers as Exs.D.1 to D.5 and also the documents regarding the visit of representative of plaintiff Company as Exs.D.6 to D.11. He has also got marked the copies of E-mail sent to the plaintiff Company as Ex.D.12.
9. During the Course of the arguments, the learned Counsel for the plaintiff argued that the defendant Company has admitted the transaction and also the account extract. The containers supplied by them were of good quality. After inspecting the same, the defendant Company has purchased it. The allegation of the defendant that they had set off the amount is totally false. The defendant Company has not suffered any loss and as such they had never agreed to set off the amount due to them. Recycled plastic is not used for manufacturing the containers as contended by the defendant Company. As such, the claim of the plaintiff Company cannot be rejected and they are entitled to recover the amount due to them by the defendant Company.
10. On the other hand, the Counsel for the defendant argued that though the transactions are admitted since the business of the defendant is a food relating export, strict compliance has to be made. Since the product is to be exported to European Countries, if the products are not of good quality, they will not be accepted. But, the barrels supplied by the plaintiff Company were not of good quality. Complaints were received from their customers regarding the smell of the barrels and their products were rejected. Directly gherkins will be put into the barrels and they will be sealed. The gherkins can be consumed for over a period of two years. As such, the containers should be of very high standard. But, the plaintiff has failed to supply good quality containers. After the rejection of the containers by their customers, the defendant Company contacted the plaintiff Company and they agreed to make good the loss caused to them and they also agreed to set off the amount. In spite of that, this suit has been filed. The plaintiff is relying on the term and conditions mentioned on the invoices. But, they cannot be accepted since there is no written agreement with regard to the said condition. As such, it cannot be accepted that the terms and conditions mentioned in Exs.P.1 and P.2 invoices are binding.
11. In support of his arguments, he has relied on a decision reported in 2007 SCC OnLine Delhi 804 in which in the case of Taipack Limited and Others Vs. Ram Kishore Nagar Mal, it is held that "the mere printing of condition on the reverse of the invoice at the highest, an offer made by the seller. Unless the said offer was accepted by the purchaser, it could not result in a binding and enforceable contract. The inclusion of terms and conditions at the back of the invoice, unilaterally issued by the seller while affecting delivery of the goods in terms of the purchaser order, would not bind the purchaser. As such, the Arbitration Clause shown in the invoices cannot be treated as binding on the purchaser". He has also relied on another decision reported in 2018 SCC Online Delhi 8687 in which in the case of IMV India Pvt. Ltd., Vs. Stridewel International through its sole proprietor Mr. Mahesh Chaudhri and Another and also the judgment of the Hon'ble High Court of Delhi passed in O.M.P.1445/2014 in the case of Parmeet Singh Chatwal and Others Vs. Ashwani Sahani in which similar principle is laid down. By relying on these decisions, the Counsel argued that the plaintiff is not entitled for the suit claim.
12. I have perused the entire materials on record. As observed above, the transaction is not in dispute in this case. It is also not in dispute that as on 04.03.2015 an amount of Rs.15,43,423/- was due by the defendant Company to the plaintiff Company towards the supply of plastic containers. In Exs.P.1 and P.2 which are the invoices, there is a clause regarding specification which say that the goods are supplied under weight specification as per the customer requirements. The variation in weight may be +/- 5%. There is also a clause regarding the liability which states that "under no circumstances they are responsible for any damage beyond the value of supplies. If any supplies are defective, buyers must discontinue their use and notify them immediately so that the matter may be investigated promptly". As such, the terms and conditions are clearly mentioned in the invoices with regard to specification and liability. The defendant has received the containers by making a note regarding the delivery of the containers on the invoices. Under Ex.P.1, 109 barrels are supplied and under Ex.P.2, 115 barrels are supplied. Ex.P.9 is the account extract and it reveal that hundreds of barrels have been supplied by the plaintiff Company to the defendant Company under different invoices. Though, the defendant Company has got marked 5 E-mails sent by their customers as Exs.D.1 to D.5, it can be seen that under Ex.D.1, 14 drums/containers have been rejected due to hydrocarbon taste and under Exs.D.2 to 5 one drum/container each have been rejected due to detergent taste and smell. Further, it can also be seen that Exs.D.2 to 4 e-mails are with respect to complaints bearing Nos:GPA 08/2014, 07/2014, 11/2014 and Exs.D.1 and D.5 are complaints bearings Nos:GPA 11/2015 and 15/2015. As such, the said e-mails show that though they have received complaint in the year 2014, the defendant Company continued to purchase the barrels/containers even during the year 2015 as per Exs.D.1 and D.5. Further, Exs.D.1 to D.5 are the e-mails regarding the complaints with respect to only 18 barrels/containers. Exs.D.1, D.2 and D.9 show that hundreds of barrels have been supplied by the plaintiff Company to the defendant Company. If the manufacture of the barrels itself was defective, then all the barrels should have been rejected. If all the barrels manufactured had hydrocarbon test or detergent taste and smell, then the entire goods should have been rejected. But, Exs.D.1 to D.5 does not show the same. They show that only few barrels which are very negligible in number have been rejected. Further, it is for the defendant Company to examine and obtain scientific with regard to the quality of the barrels/containers at the time purchase and also after the supply of the barrels/ containers. They should have inspected the barrels properly, before filling gherkins into the barrels. When they have received complaint in the year 2014, they should not have placed order in the year 2015. They should have initiated legal action against the plaintiff Company. They have not even issued a legal notice. If they had found that the barrels/containers are defective, they should have returned the same immediately. But, they have not done so. When they are supplying the gherkins to Foreign Countries and when they have been asked to maintain a very high standard, it should have been their duty to ascertain about the quality of the barrels/containers. Though, they have produced the visitors pass and visitors declaration which are marked as Exs.D.6 to D.9, the said documents only show that the officials of the plaintiff Company have visited their premises. But, they does not show that the barrels were defective. The defendant Company has not produced any scientific report which show that the barrels were defective. Even the defendant Company has not produced any document as to the agreement between them and the plaintiff Company regarding the standard or quality of barrels to be supplied to them. The plaintiff Company has contended that they have supplied proper and good quality plastic containers to the defendant Company. P.W.1 has stated in his evidence that they are manufacturing the containers for the purpose of food grade and export products. He has also stated at para 10 of his cross examination that their products are required to have hydraulic pressure test and also leakage test. They have their own testing place in their factory premises to test the quality of the plastic containers. He has also stated that he has obtained certificate from CIPET, Mysore to manufacture plastic containers. They are manufacturing HDPE quality plastic containers. As such, P.W.1 has clearly stated about the manufacturing of the containers and also of their quality. There is nothing on record to show that they have supplied sub standard plastic containers. Further, though the defendant Company has contended in their written statement and though the D.W.1 has stated in his evidence that the plaintiff Company had agreed to set off the amount with respect to the barrels, no documents are produced by them to prove the same. They have not placed any materials on record to show that the plaintiff Company had agreed to set off of the amount claimed in this suit. Though, they have got marked Ex.D.12 E-mail, it will not in any way prove the contention of the defendant Company that the plaintiff Company had agreed to set off the amount claimed in this suit. As such, the materials on record show that though hundreds of barrels were supplied by plaintiff Company only few have been rejected by the customers of the defendant Company. As such, it cannot be said that the barrels supplied to the defendant Company were defective. There are also no materials to believe the contention of the defendant Company that the plaintiff Company had agreed to set off the amount. As such, absolutely they are no materials to believe the contention of the defendant Company. Exs.P.1 and P.2 and P.9 and also the admission of defendant Company regarding the transaction clearly show that the defendant Company is liable to pay an amount of Rs.15,43,423/- and as such the plaintiff Company is entitled for recovery of the suit claim of Rs.15,43,423/-. Hence, I answer this issue in the affirmative.
13. Issue No.2 :- In view of the above finding on issue No.1, the plaintiff Company is entitled for recovery of a sum of Rs.15,43,423/-. As for as the interest is concerned, the plaintiff Company has claimed interest at the rate of 36% per annum. They have relied on the terms and conditions mentioned in Exs.P.1 and P.2 in which it is stated that if the payment is not made in time, the defendant Company is liable to pay the interest at the rate of 36% per annum. Though, it is a commercial transaction, the claim of interest at the rate of 36% per annum is too exorbitant and as such the same cannot be accepted. Considering the nature of the transaction and also the present day bank interest, it is just and proper to direct the defendant Company to pay interest at the rate of 12% per annum. Hence, I answer issue No.2 partly in the affirmative.
14 . Issue No.3:- In view of the above findings on issue Nos.1 and 2, the suit of the plaintiff is liable to be decreed in part. Hence, the following is made:-
O R DE R The suit of the plaintiff is decreed in part with costs.
The plaintiff Company is entitled for recovery of a sum of Rs.15,43,423/-
from the defendant Company with
interest at the rate of 12% per annum
from 04.03.2015 till the date of
realization.
The defendant Company is directed
to pay the said amount within 4 months
from the date of this order.
Office is direct to draw decree
accordingly.
(Dictated to the Stenographer, transcribed and typed by her, corrected and then pronounced by me in the open court on this the 26 th day of November 2020.) (Jaishankar) XV Addl.City Civil & Sessions Judge, Bengaluru.
A N N E X U R E WITNESSES EXAMINED FOR THE PLAINTIFFS :-
PW.1 : Manoj Kothari DOCUMENTS MARKED ON BEHALF OF PLAINTIFFS:-
Exs.P.1& P.2 Two invoices dated 04.06.2014 and
24.01.2015
Ex.P.3 Copy of the legal Notice dated 18.11.2015
Ex.P.4 Postal Acknowledgement
Ex.P.5 Reply notice received from the defendant
Ex.P.6 Copy of the Legal Notice dated 25.01.2016
Ex.P.7 Corresponding postal acknowledgement
Ex.P.8 Reply dated 05.02.2016
Ex.P.9 Account register extract
WITNESSES EXAMINED FOR THE DEFENDANTS:-
D.W.1:- B.M. Devaiah DOCUMENTS MARKED ON BEHALF OF THE DEFENDANTS:-
Exs.D.1toD.5 The copies of 5 E-mails
Exs.D.6& D.7 Visitors pass
Exs.D.8& D.9 Visitors declarations
Exs.D.10&D.11 Visitors registers
Exs.D.10(a)& The entire regarding the visit of
D.11(a) representative of plaintiff Company
Ex.D.12 Copies of E- mails
Ex.D.13 Authorization letter
(Jaishankar)
XV Addl.City Civil & Sessions
Judge, Bengaluru.