Bangalore District Court
M/S Technosys vs Arvind Lifestyle Brands Limited on 12 December, 2024
KABC170005762024
IN THE COURT OF LXXXIV ADDL. CITY CIVIL AND
SESSIONS JUDGE (CCH-85) (COMMERCIAL COURT),
BENGALURU
DATED THIS THE 12th DAY OF DECEMBER 2024
PRESENT
SRI.RAMAKANT CHAVAN,
B.Com., LL.B.(Spl)
LXXXIV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.O.S.No.308/2024
PLAINTIFF:
M/s Technosys
A Sole Proprietorship
being a Regd. MSME
Having its Regd. office at
No.402, 1st Floor,
Ramanjaneya Road, Srinagar
Bengaluru - 560 050
Rep. by its
Sole Proprietor and Managing Director
Ramachandran R.
S/o Gopalkrishnan Ramesh
Aged about 34 years
(By Smt.Sruti Chaganti, Adv.)
AND
DEFENDANT:
Arvind Lifestyle Brands Ltd.,
Having its Regd. office at
Arvind Mills Premises,
Naroda Road, Railwaypura Post,
Ahmedabad - 380 025
2 Com.O.S.No.308/2024
Having its corporate office at
Du Parc Trinity, 8th Floor,
17 M. G. Road,
Bengaluru - 560 001
Rep. by its Authorized representative
(By Sri.Raunaq Chatterjee, Adv.)
Date of Institution 26.02.2024
Nature of suit For recovery of money
Date of First Case 16.07.2024
Management Hearing
Date of commencement of 20.07.2024
recording of evidence
Date on which judgment
12.12.2024
pronounced
Time taken for disposal Years Months Days
1) From the date of First 00 04 26
Case Management Hearing
2) Total duration 00 09 16
LXXXIV Addl. City Civil & Sessions Judge
(CCH-85) Commercial Court, Bengaluru
JUDGMENT
This is a suit filed by the plaintiff against the defendant for directing the defendant to pay the value of 25 Debit Notes bearing Nos.001/DR/22-23 to 025/DR/22-23 dated 25.05.2022 3 Com.O.S.No.308/2024 for a total sum of Rs.25,22,750/- with interest at the rate of 18% p.a. from the date of the suit till recovery and cost of the suit.
2. Brief facts of the plaintiff's case are that, the plaintiff is a registered proprietorship concern, dealing in the business of providing private safety and security systems and services for homes and businesses. The plaintiff was initially owned by Gopalkrishnan Ramesh and it is registered under GST also. The said Gopalkrishnan Ramesh died on 02.04.2021. The business passed to the hands of his son Ramachandran R. who became the sole proprietor of the plaintiff firm.
It is further pleaded that, on 22.10.2019, the defendant entered into a Service Agreement to avail remote surveillance and monitoring services at stores belonging to it from the plaintiff for a period of 60 months on payment of a service fee. A sum of Rs.11,47,500/- also came to be paid in advance by the defendant to the plaintiff upon the terms agreed. The remote surveillance and monitoring services offered by the plaintiff entailed the installation and operation of various Security and Communication Devices (Intrusion Alarm, CC TV systems, SIM cards, Wi-Fi routers and other allied devices) at the premises of the defendant. The plaintiff installed the Remote Surveillance and Monitoring Device Kits between 23.01.2020 and 03.03.2020, each unit costing about Rs.85,500/- excluding tax, in 44 stores belonging to the defendant. The Delivery Challans in respect of the same were duly acknowledged by the defendant. The 4 Com.O.S.No.308/2024 complete list of installations was also furnished to the defendant through service reports and was duly acknowledged by it.
It is further pleaded that, as per the Clause No.16(iv) of the Service Agreement, it was agreed by the parties that, the absolute ownership of all Security and Communication Devices installed would exclusively rest with the plaintiff and that the defendant would be their custodian obligated to extend them to the same degree of care as it would its own assets. It is also agreed that, in the event inter alia of the loss of the installations, the defendant would bear the costs of service, repair or replacement of such installations. Once the devices came to be installed in the stores of the defendant, the plaintiff commenced its remote surveillance and monitoring services on 05.03.2020 and submitted its monthly service reports along with invoice for service charges as agreed.
It is further pleaded that, despite the plaintiff fulfilling its obligations under the Service Agreement and providing continuous services, even under the harsh circumstances created by Covid-19 pandemic, the defendant failed to make timely payments in respect of the invoices raised. On 03.09.2021, the plaintiff sent an email to the defendant with invoice for services rendered in August 2021 along with details of payments. On 04.09.2021, the defendant reverted requesting for services in 36 stores to be stopped forthwith and seeking for adjustment of pending invoices against deposit with the plaintiff. The plaintiff 5 Com.O.S.No.308/2024 suspended services as requested, but, asserted its right to forfeit the deposit and sought payments against the pending invoices. Instead of making payment, the defendant issued a notice on 15.09.2021 of its intention to terminate the Service Agreement effective from 15.10.2021. In clear violation of the terms of the Service Agreement, the defendant called the plaintiff in the said notice to adjust the outstanding amount of Rs.4,71,726/- and refund the advance amount of Rs.5,04,411/- to it. However, the actual outstanding amount payable to the plaintiff as on 15.09.2021 was Rs.5,21,083.50.
It is further pleaded that, the plaintiff replied on 28.09.2021, it drew the attention of the defendant to Clause No.17(iii) of the Service Agreement wherein it is stipulated that, refund of balance advance amount would arise only in the event of the plaintiff terminating the Service Agreement and not in a case as in the present instance, where the defendant terminates the said Agreement. The plaintiff called upon the defendant to settle the outstanding payments. Once the Service Agreement came to be terminated by the defendant, the plaintiff made best efforts to retrieve all installations in the stores belonging to the defendant. While installations in stores situated in Karnataka were retrieved, assets from stores outside Karnataka could not be retrieved on account of travel restrictions in force due to Covid-19. The defendant failed to cooperate with the plaintiff to enable the retrieval of these assets.
6 Com.O.S.No.308/2024It is further pleaded that, in the rejoinder dated 25.10.2020, the defendant denied the reply given by the plaintiff and reiterated its demand for set off and refund of the advance amount. When the travel restrictions eased and the plaintiff's agents were able to travel to stores out of state again, the plaintiff discovered to its shock and horror that, the defendant had sold its stores to V-Mart without prior intimation to the plaintiff and without restoring/returning installations made therein belonging to the plaintiff. Installations made in 25 stores were missing / lost for which the defendant is liable to the plaintiff under the contract. The plaintiff made best efforts to retrieve all installations by communicating with the defendant. An email was sent by the defendant on 11.04.2022 to the plaintiff and other emails dated 22.04.2022, 26.04.2022 and 16.05.2022 for retrieval of the plaintiff's devices from the V-Mart stores are an admission of the defendant's liability for missing devices. There were email communications exchanged between the parties during 04.04.2022 to 16.05.2022. When the devices were not restored, the plaintiff addressed an email on 16.05.2022, to the shock and surprise bounced. The plaintiff wrote a letter to the defendant regarding the bounced emails on 23.05.2022.
It is further pleaded that, pursuant to extended and exhausting follow up on the part of the plaintiff, the defendant made a payment of Rs.3,98,228/- on 02.08.2022 against the outstanding payments. However, the defendant failed to address the grievance of the plaintiff with respect to installations 7 Com.O.S.No.308/2024 lost/missing from 25 stores, despite the defendant admitting in his email dated 07.07.2022 that the plaintiff is entitled to return of assets upon termination of the contract and that assets worth Rs.21,37,500/- had not been restored to the plaintiff. However, the defendant has tried to claim that, only Rs.4.20 lakhs is outstanding in their books of account, which is completely false. The value of the debit notes dated 25.05.2022 raised by the plaintiff on the defective in respect of the missing / lost assets is Rs.25,22,250/- (including taxes on the sum of Rs.21,37,500/- acknowledged by the defendant). Despite repeated attempts and follow up, the defendant has not settled the amounts owing to the plaintiff under the debit notes. The plaintiff has also approached the DLSA Bengaluru filing an application, but, owing to the defendant's non-cooperation, the mediation failed and issued non starter report on 12.02.2024. Hence, the plaintiff is constrained to file this suit.
3. After service of summons, the defendant has put its appearance through its counsel and filed written statement. The defendant has denied most of the plaint averments. It is further stated that the suit is devoid of merit and not maintainable. The plaintiff has suppressed material facts that it issued a Non Due Declaration dated 29.06.2022 to the defendant stating that, there remained no dues of payment to the plaintiff from the defendant except for a sum of Rs.4,20,684/-. The suit is to be dismissed for non joinder of necessary parties. The plaintiff has not made V-Mart Retail Ltd., a party to the instant suit. In para 8 Com.O.S.No.308/2024 16 of the plaint, it is admitted that, 25 unlimited stores were sold to V-Mart Retail Ltd., and therefore, V-Mart Retail Ltd., is a necessary party to the present proceedings. The defendant has sold its business in the unlimited stores along with all rights and liabilities to V-Mart Retail Ltd., in September 2021. After the sale of the stores and the business to V-Mart, the question of the plaintiff raising claims against the answering defendant does not arise.
It is further stated that, the defendant is a company, primarily in the textile business. The defendant has brought an expansive range of fashions brands to the country across categories. The defendant's bouquet of brands - both homegrown (such as Flying Machine) and global (such as Calvin Klein, Tommy Hilfiger, Arrow, ED Hardy, US Polo Association) straddle lifestyles, categories and price points. The defendant is represented in these proceedings by Mr.Srinivasan R. V., Head Work place services. The plaintiff and the defendant entered into a Service Agreement dated 22.10.2019 for a term of 60 months with a lock-in period of 12 months starting from the date of first invoice, the defendant availed Remote Surveillance and monitoring services from the plaintiff for 45 Unlimited fashion stores. As per Clause 1.4 of the Agreement, either party was entitled to terminate the Agreement without cause by giving 30 days' notice to the other party in writing. Clause 1.5 provided that if the defendant terminated the Agreement after the lock-in period, the defendant's obligation would be limited to payment 9 Com.O.S.No.308/2024 for services delivered up to the date of termination at the agreed rate within 30 days of such termination. In terms of Clause 17(ii), the defendant paid an advance amount of Rs.11,47,500/- to the plaintiff towards service fee, which is admitted in para 5 of the plaint. As per Clause 17(iii), the sum paid towards advance would be adjusted at Rs.19,125/- per month in the monthly invoices over a fixed term of 60 months.
It is further stated that, by email dated 04.09.2021, the defendant requested the plaintiff to withdraw services from 36 stores and to adjust the payable amount with deposit amount and refund the balance amount. By email dated 07.09.2021, the plaintiff requested the defendant to provide an official "Service Termination Notice" through email and post. The plaintiff also requested the defendant to inform the stores (including Dindigul) that the defendant's service teams would be withdrawing all assets from the stores after receipt of notice. The defendant issued Termination notice on 15.09.2021, terminating the Agreement. The defendant requested the plaintiff to adjust the outstanding payable of Rs.4,71,726/- with the advance amount and thereafter refund Rs.5,04,411/-. In response to the Termination Notice, the plaintiff, based on an incorrect reading of the Agreement, sent email dated 16.09.2021 stating that since the Agreement was terminated by the defendant, there was no liability on the plaintiff to refund or adjust the remaining advance. By email dated 17.09.2021, the defendant stated that, it was nowhere mentioned in the Agreement that the advance 10 Com.O.S.No.308/2024 amount paid by the defendant could be forfeited by the plaintiff in case of termination by the defendant.
It is further stated that, the plaintiff thereafter issued an untenable reply dated 28.09.2021 contending that, the plaintiff had no liability to refund the advance amount since the defendant terminated the Agreement and that the right to forfeit was implied. The defendant issued a response dated 25.10.2020 stating that, there was no provision in the Agreement providing for forfeiture. The defendant once again requested the plaintiff to pay the balance amount of Rs.5,04,411/-. In the interregnum, the defendant sold the unlimited Fashion stores to V-Mart Retail Ltd. in September 2021. The plaintiff is aware of the same, as admitted in para 16 of the plaint. The sale of the Unlimited stores by the defendant to V-Mart was not only informed to the plaintiff but, was also widely reported in the media in July 2021. The defendant, being a publicly listed company also submitted intimation dated 22.07.2021 to the stock exchanges regarding the execution of definitive Agreements for strategic sale of assets of Unlimited business to V-Mart Retail Ltd.
It is further stated that, more than 6 months after the termination of the Agreement, the plaintiff issued email in April 2022 stating that, their assets/devices were allegedly missing from some stores. The defendant issued an email dated 04.04.2022 stating that, the plaintiff had already been informed about V-Mart taking over 'Unlimited' and to take the assets based 11 Com.O.S.No.308/2024 on the list of stores available with the plaintiff. The plaintiff has not denied that they were informed about V-Mart taking over 'Unlimited'. On the other hand, the plaintiff was aware that, the defendant terminated the Agreement since V-Mart was not interested in continuing the services of the plaintiff. Even by way of email dated 11.04.2022, the defendant has stated that, the plaintiff had been told to take out the devices, and questioned as to why there was delay from the plaintiff's end. The defendant requested the plaintiff to take it up with V-Mart. In spite of having no obligation to do so, in good faith, the defendant issued emails requesting V-Mart to assist the plaintiff to recover their surveillance equipment. It would be pertinent to note that, the plaintiff in its email dated 07.09.2021 stated that, it would be withdraw all assets upon receipt of termination notice. The Termination Notice was issued on 15.09.2021 itself. The plaintiff has given no cogent reason as to why they did not remove or make attempts to remove the surveillance equipment from 15.09.2021 till April 2022.
It is further stated that, in para 15 of the plaint, it is admitted that, the plaintiff was able to retrieve installations in stores situated in Karnataka. The plaintiff has raised an untenable plea that assets outside Karnataka could not be retrieved due to travel restrictions in force due to the Covid-19 pandemic. When the termination notice was issued, there were no Covid restrictions. The sole responsibility for withdrawal/removal of the surveillance equipment from the 12 Com.O.S.No.308/2024 stores was upon the plaintiff and the defendant was the custodian of the said equipment only as long as it was availing services from the plaintiff. The plaintiff has admittedly delayed taking out their assets and has instead sought to illegally shift the blame on the defendant for the alleged loss of the surveillance equipment. Further there is no whisper in the plaint in relation to any complaint being filed in relation to the missing assets, which shows that the present proceedings have been filed as an afterthought to harass the defendant.
It is further stated that, the plaintiff's claim in the present suit is based on 25 debit notes (all dated 25.05.2022 for Rs.1,00,890/-) in relation to the alleged missing surveillance equipment. The 25 debit notes have not been received by the defendant and have been concocted for the purpose of filing this suit. Pursuant to discussions and clarifications between the plaintiff's accounts team and the defendant's accounts team, and admittedly, after the plaintiff was aware of the alleged missing surveillance equipment, the plaintiff issued a Non Due Declaration dated 29.06.2022 declaring that there remained no dues of payment to the plaintiff from the defendant except for a sum of Rs.4,20,684/- towards the services availed by the defendant from the plaintiff. By email dated 16.07.2022, the defendant sent the reconciliation statement to the plaintiff and sought details of invoices and credit notes that were not accounted for. By email dated 16.07.2022, the plaintiff provided the requested invoices and credit notes. The email trail dated 13 Com.O.S.No.308/2024 16.07.2022 shows the reconciliation statement considered by the parties. If the alleged 25 debit notes dated 25.05.2022 had indeed been issued, the plaintiff would have brought the same to the defendant's attention at this point in time. Thereafter, the plaintiff signed Vendor Reconciliation statement on 18.07.2022 which indicated that the sum payable to the plaintiff was a sum of Rs.4,20,684/-. The plaintiff has suppressed these material facts and has filed the present suit to make illegal gains. The defendant paid a sum of Rs.3,98,228/- (after deducting tax) on 02.08.2022, has been admitted in para 17 of the plaint. The institution of the present proceedings, especially after issuance of No Dues Declaration and by suppressing the issuance of the same, is in bad faith and constitutes an abuse of process of court, and the suit is liable to be dismissed. Hence, prays for dismissal of the suit of the plaintiff.
4. Based on the above, this court has framed the following:
ISSUES
1. Whether the plaintiff proves that the defendant has failed to make timely payments as agreed in the Service Agreement?
2. Whether the plaintiff proves that without fulfilling the terms and conditions of the Service Agreement, the defendant has issued Termination Notice on 15.09.2021?
3. Whether the plaintiff proves that the defendant is in due of Rs.25,22,250/- with interest at the 14 Com.O.S.No.308/2024 rate of 18% p.a. towards the value of Debit Notes, as pleaded?
4. Whether the defendant proves that the plaintiff has suppressed by issuance of No Dues Declaration on 29.06.2022 except for a sum of Rs.4,20,684/-?
5. Whether the defendant proves that the plaintiff requested to provided an official "Service Termination Notice" through email dated 07.09.2021?
6. Whether the suit is bad for non joinder of necessary parties?
7. Whether the plaintiff is entitled for the reliefs sought?
8. What order or decree?
Issue No.4 recasted as under:
4. Whether the defendant proves that the plaintiff has suppressed by issuance of No Dues Declaration on 29.06.2022 and Vendor Reconciliation Statement on 18.07.2022, except for a sum of Rs.4,20,684/-?
5. To prove the case, the plaintiff's sole proprietor is examined as PW1 and got marked some documents at Ex.P15 to P47 and Ex.P1 to P14 are marked during admission and denial of documents. The authorized signatory / Head-Workplace Services of the defendant is examined as DW1 and also produced the documents at Ex.D13 to D17 and Ex.D1 to D12 are marked during admission and denial of documents.15 Com.O.S.No.308/2024
6. The learned counsel for the parties have submitted their written arguments.
7. My findings on the above issues are:
Issue No.1: Strike off as per order dated 22.10.2024 Issue No.2: In the affirmative Issue No.3: In the negative Issue No.4: In the affirmative Issue No.5: In the affirmative Issue No.6: In the negative Issue No.7: Partly in the affirmative Issue No.8: As per the final order for the following REASONS
8. Issue Nos.2 and 3: The burden of proving these Issues lies on the plaintiff. The plaintiff's proprietor has filed his affidavit and he is examined as PW1. He has narrated the contents of the plaint in his affidavit. He has produced some documents at Ex.P1 to P47 i.e. Service Agreement dated 22.10.2019, Copies of Delivery challans, Copy of E-way bills, Copies of Service Reports, Email communications, Copy of Termination Notice dated 15.09.2021, Reply to Termination Notice dated 28.09.2021, Reply to response dated 25.10.2020, Copy of the PIM application, Copy of the Failure Report dated 30.01.2024, Copy of the GST registration certificate, Death certificate, Copy of the Form GST - ITC - 02, Copy of the GST registration certificate, Copies of emails exchanged between the parties between 04.04.2022 to 16.05.2022, Copies of 02 bounce 16 Com.O.S.No.308/2024 emails, 25 debit notes of same date but different transactions and Certificate U/Sec.65B of the Evidence Act.
9. In the cross examination of PW1, it is forthcoming that, the security systems installed at the unlimited store premises does not constitute the supplies, but, it is installed as a part of the Service Agreement. The plaintiff itself has done the installation work in stores outside Karnataka. The installation work done by the employees of the plaintiff. The plaintiff firm has Five email IDs. He has admitted that, the plaintiff firm had requested the defendant to provide an official service termination notice and also admitted that, as per Ex.D3, the plaintiff firm had stated that, it would be withdrawing all its assets from the store after receipt of termination notice. The termination notice was issued on 15.09.2021. He has denied that, in pursuance of the termination notice, the obligation of the defendant under the Service Agreement ceased and the plaintiff firm is not responsible for retrieval of the assets. He has not stated regarding the number of assets that were lost or damaged. According to him, as on that day, still he had not taken the stock of assets situation. He does not recollect whether there is forfeiture clause in Ex.P1. He has denied that, the plaintiff firm has to refund the deposit to the defendant. The stores are located in Tamilnadu, Kerala, Telangana and Andhra Pradesh, where the installations are already missing. He retrieved the assets in Karnataka by sending his staffs. Because of Covid-19 travel restrictions, the 17 Com.O.S.No.308/2024 plaintiff firm prevented for engaging agents outside Karnataka to check on the assets.
10. It is further forthcoming that, he has not produced any email or letter regarding missing installations prior to 11.04.2022, according to him, many of times over telephone he intimated the same. He has not lodged any criminal complaint in respect of missing installations against the defendant. He has denied that, the only due from the defendant as per Ex.D10 was Rs.4,20,684/-. He has admitted that, there is no reference in Ex.D10 in respect of missing installations. He has also admitted that, the vendor reconciliation statement dated 18.07.2022 was signed by the plaintiff firm, after defendant sent an email on 07.07.2022. The Ex.P21 to P45 do not contain the signature of the defendant company, he has not produced any documents to show that the defendant company has received these debit notes. But, he can produce the same. He has further admitted that, the debit notes dated 25.05.2022 are prior to the no due declaration and vendor reconciliation statement. He has denied the other suggestions.
11. The authorized signatory / Head-Workplace Services of the defendant is examined as DW1 and produced documents at Ex.D1 to D17 i.e. copy of the Service Agreement, email communications, termination letter, reply, No due declaration, Vendor Reconciliation statement, Board Resolution, letter of authority, extract of news article, copy of the intimation and certificate U/Sec.65B of the Evidence Act.18 Com.O.S.No.308/2024
12. In the cross examination, it is forthcoming that, the Ex.P1 is the Service Agreement dated 22.10.2019, the duration is for 60 months and lock-in period is 12 months. The plaintiff firm has to provide equipment. The conditions mentioned in page No.25 of Ex.P2 i.e. delivery challan are correct. In the same way, the particulars mentioned in Page No.94 of Ex.P3 regarding place of delivery is also correct. The page No.30 of Ex.P3 is service report, the conditions mentioned in the said document are also correct. He has admitted that, the plaintiff firm has supplied the remote surveillance and monitoring device kit for all the stores covered under Ex.P1. During his further cross examination, he has also admitted that, the defendant company is having various businesses, the unlimited business has been sold to V-Mart Retail Ltd. He has not produced documents pertaining to the defendant company communicated the plaintiff firm regarding sale of Unlimited stores to V-Mart Retail Ltd. The Ex.P10 is an email dated 16.05.2022. One Mr.Varadarajan, earlier working with defendant company, now he is working with V-Mart Retail Ltd. He has admitted that, Ex.P16 i.e. the letter, wherein it has intimated the sale of its unlimited assets of stores to NSE of India for an expected consideration of Rs.150 Crores. He has not produced any documents to show that, the assets of the plaintiff company have not been sold to V-Mart. He has also identified the Ex.P47 i.e. the email dated 29.06.2022. He has categorically admitted that, at the time of termination of the Agreement, Covid-19 restrictions were there. Also admitted that, the outstanding payments of service fee was only made in the month of August 19 Com.O.S.No.308/2024 2022. He is not sure whether the debits notes were raised by the plaintiff firm regarding missing assets were received by the defendant company. He has denied the other suggestions.
13. The learned counsel for the plaintiff has submitted her written arguments basing on the plaint averments, evidence of PW1, DW1 and the documents referred above. She has pointed out towards the documents produced on behalf of the plaintiff and evidence of PW1. The suit claim is for recovery of the value of 25 debit notes. This is being the value of missing Remote Surveillance and Monitoring Device Kits installed by the plaintiff firm. The Ex.P1 is the Service Agreement, the Ex.P2 is the e-way bills, Ex.P3 is the proof of the fact that, the Remote Surveillance and Monitoring Device Kits in respect of which the debit notes have been raised were delivered to the defendant's stores. The Ex.P10 is the email dated 12.04.2022. The Ex.P2 to P4 are admitted, the Ex.P10 is also admitted in part regarding its existence, execution and receipt of email dated 12.04.2022. The installations were missing, it is admitted by the defendant through its email as per Ex.P12, it is also admitted by the DW1 during his cross examination.
14. She has further pointed out towards the memo dated 23.11.2024 filed on behalf of the plaintiff firm. It is an admitted fact that, Remote Surveillance and Monitoring Device Kits in respect of which the debit notes marked as Ex.P21 have been raised are the property of the plaintiff firm. The defendant has 20 Com.O.S.No.308/2024 not disputed the same in its written statement and also evidence.
The defendant has also admitted that, the said kits were delivered too and installed in its stores under the Ex.P1. The defendant also admitted the Ex.P12. The DW1 has admitted that, there was no Police compliant lodged in respect of the missing assets. The presumption arises that, the defendant has sold the assets belonging to the plaintiff firm to V-Mart received consideration.
15. She has further pointed out towards the defence made out by the other side, Clause No.16(iv) of Ex.P1, since the defendant does not dispute regarding missing installations are the properties of the plaintiff firm and they are in the custody of the defendant upon a contract, the delivery and installation of the assets by the plaintiff in the defendant's stores, constitute a bailment as defined U/Sec.148 of the Contract Act. She has also pointed out towards the provisions of Sec.160 and 161 of the Contract Act. She has pointed out towards the Ex.D4 (Ex.P7) and also Ex.D2. Termination of Agreement would not extinguish all the rights and liabilities that arose during the pendency of the Agreement. The bailment having been made upon contract, it cannot be deemed to have been terminated until the assets belonging to the plaintiff firm are fully restored to it or it is compensated for there value. She has further stated that, the claim of the plaintiff firm is within the limitation, the law of limitation extinguishes only the remedy and not the right.
21 Com.O.S.No.308/2024Moreover, it is not the case of the defendant company that, the suit of the plaintiff firm is barred by law of limitation.
16. She has also pointed out towards the evidence of DW1 and documents produced on behalf of the defendant. The defendant company has failed to mark the email dated 29.06.2024 along with no dues declaration i.e. Ex.D10. It is an admitted fact that Mr.Varadarajan, whom the plaintiff firm was asked to contact regarding the missing assets was an employee Aravind at the time of termination of the Agreement. The defendant company has failed to prove the debit notes are concocted and it is well settled position of law fraud has to be proved by the party alleging it. The plaintiff firm cannot be precluded from raising a money claim for the missing assets, as the plaintiff firm is entitled.
17. During her arguments, she has relied upon the decisions reported in AIR 1958 SC 274 in Dhian Singh Sobha & Anr. Vs Union of India, it is held that, "In that case, the principle that a man intrusted with property for safe custody cannot better his position by wrongfully parting with possession of it, but must be answerable as if he retained the possession, was applied both in this Court and in the Exchequer Chamber to the action of detinue ......... and this is agreeable to the maxim, " Qui dolo desiit possidere pro possidente Damnatur." and AIR 1924 Cal 1056 in Kush Kanta Barkakati Vs Chandra Kanta Kakati and Ors., it is held that-
22 Com.O.S.No.308/2024"Section 160 of the Indian Contract Act "provides that it is the duty of the bailee; to return or deliver according to the : bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished. Section 161 provides that if, to the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time. The rule thus enunciated is in agreement with the principle formulated by Sir James Mansfield, C.J., Mills v. Graham (1804) 1 Bos. & P. (N.R.) 140. The substance of the matter is, in the phraseology familiar to students of archaic English law, that trespass lies where the bailee has destroyed the bailed property or lost it, while where the bailee has been guilty of a conversion of the bailed property either by a user of it in a different manner or for a different purpose from that agreed upon or by failure to re-deliver it or to deliver it over in accordance with the terms of the contract, the bailor may sue him in trover, Loeschman v. Machin (1818) 2 Srtark 311, Bryant v. Wardell (1848) 2 Exch. 479, Fenn v. Bittleston (1851) 7 Ex. 152 and Cooper v. Willomat (1845) 1 C.B. 672. We are not now concerned with the question, whether the bailee would be liable if his failure to re-deliver the goods were due to an act of State or an act of God or an act of the King's enemies; Williams v. Llyod W. Jones 179, Menetone v. Athawes (1764) 3 Burr. 1522, Taylor v. Caldwell (1863) 3 B.& S. 826, Cunningham v. Dunn (1878) 3 C.P.D. 443 and U.S. v. Thomas 15 Wallace 337. It is plain that in the case before us, the bailee was in default."
18. Per contra, the learned counsel for the defendant has submitted his written arguments and he has pointed out towards the defense made by the defendant. He has also drawn my attention towards the evidence of PW1 and documents as well as the evidence of DW1. He has pointed out towards the cross examination of PW1 and the admissions made by him. He has pointed out towards the Ex.P1 i.e. Service Agreement. Clause 23 Com.O.S.No.308/2024 No.1.3 to 1.7 do not cast any obligation on the defendant company to return the assets of the plaintiff firm upon termination of the Agreement. The clause No.16(iv) of Ex.P1 provides that the defendant shall be the custodian only as long as the Service Provider's services are being availed by the defendant.
19. He has further pointed out that the plaintiff firm agreed to withdraw its own assets upon receipt of office notice of termination of Ex.P1 through email dated 07.09.2021 as per Ex.D3, which is also in terms of the undertaking between the parties under Ex.P1. On 16.09.2021, the plaintiff firm has sent an email as per Ex.D5 stating that, it has received the notice of termination of the Agreement. More than Six months after the termination of the Agreement, the plaintiff firm has issued email as per Ex.P10 in the month of April 2022, stating that, their assets were missing from some stores. The plaintiff firm has not proved the said devices were missing from the stores or when they went missing, if at all, from the stores. The plaintiff firm has not proved that, the said assets were lost or went missing at the time the services being availed by the defendant company.
20. He has further pointed out towards the Ex.P10 i.e. email dated 04.04.2022 issued on behalf of the defendant company, states that, the plaintiff firm had already been informed about V-Mart taking over Unlimited and to take the assets based on the list of stores available with the plaintiff firm.
24 Com.O.S.No.308/2024The plaintiff firm has not denied that it was informed about V- Mart taking over Unlimited. The plaintiff firm was aware that, the defendant company terminated the Agreement, since V-Mart was not insisted in continuing the services of the plaintiff firm. He has also pointed out towards the Ex.P10 and D9. The defendant company issued emails requesting V-Mart to assist the plaintiff firm to recover their surveillance equipment. He has pointed out towards the Ex.D19 also. The contention raised by the plaintiff firm are not tenable. He has also pointed out towards the cross examination of PW1, he has admitted that, the Ex.P21 to P45 do not contain the signatures of the defendant company. He has not produced any documents to show that, the defendant company has received the same. But, he can produce the same. There is no evidence to show that the defendant had received the debit notes. By considering all these facts and evidence, the plaintiff firm has failed to prove that, the defendant company is in due of the amount claimed in the suit. The defendant company has paid a sum of Rs.3,98,228/- on 02.08.2022. There is no clause in the contract regarding rate of interest. The suit of the plaintiff firm is not maintainable. Since the V-Mart Retail Ltd. is not made as party.
21. During his arguments, he has relied upon a decision reported in (2010) 14 SCC 38 in Ramjas Foundation & Anr. Vs Union of India & Ors, it is held that-
"Practice and Procedure - Abuse of Process of Court/Law/Fraud on Court - Denial of relief to unscrupulous 25 Com.O.S.No.308/2024 litigant - Suppression of material fact - Held, a person who does not come to court with clean hands is not entitled to be heard on merits of his grievance and, is not entitled to any relief - Object underlying this principle is that court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any respect for truth and who try to pollute stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have bearing on adjudication of the issue(s) arising in the case - On facts held, appellants are not entitled to any relief because despite strong indictment by Supreme Court in Ramjas Foundation Case, 1993 Supp (2) SCC 20, they deliberately refrained from mentioning details of cases instituted by them and rejection of their claim for exemption under Cl.(d) of Noti. dt. 13.11.1959 by High Court and Supreme Court - Land Acquisition Act, 1894 - Ss. 4 and 6 - Constitution of India Arts.136 and 226.
The principle that a person who does not come to the Court with clean hands is not entitled to be heard on the merits of his grievance and, in any case, such person is not entitled to any relief is applicable not only to the petitions filed under Articles 32, 226 and 136 of the Constitution but also to the cases instituted in others courts and judicial forums. The object underlying the principle is that every Court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have bearing on adjudication of the issue(s) arising in the case".
22. After going through the written arguments by the parties, I have also gone through the evidence and pleadings of the parties. The admitted fact is, the plaintiff firm is dealing with providing services regarding Remote Surveillance and Monitoring Services. Another admitted fact is that the defendant company entered into a Service Agreement to avail the services from the 26 Com.O.S.No.308/2024 plaintiff firm, thereby entered into a Service Agreement on 22.10.2019 (Ex.P1).
23. The defence by the defendant company is, since it has sold its stores / units to V-Mart and the services of the plaintiff firm is not continued by the V-Mart Retail Ltd., hence, the defendant company is not liable to pay the amount sought in the suit. Moreover, the defendant company has to intimate regarding the termination of Agreement, and it was intimated to the plaintiff firm by sending an email. It is the further defence that, the question of payment regarding misplacement of the equipment of the plaintiff firm.
24. I have discussed the evidence of PW1 and DW1. I have gone through the terms and conditions of Ex.P1 - Service Agreement dated 22.10.2019. The Clause No.1.3 of Ex.P1 reads
- "Arvind reserves the right to terminate this Agreement with immediate effect in the event of Service Provider committing any act which is contrary to law or which may affect the reputation of Arvind." Clause No.1.5 reads - "If Arvind terminates this Agreement after the "Lock-in Period", Arvind's obligation to the Service Provider shall be limited to the payment for the services delivered upto the date of termination, at the agreed rate, within Thirty (30) days of such termination". The Clause No.1.6 of Ex.P1 reads - "If Arvind terminates this Agreement before the realization of the "Lock-in Period", Arvind's obligation to the Service Provider shall be limited to the payment the entire sum 27 Com.O.S.No.308/2024 for the services, whether delivered or not, upto the date of realization of the "Lock-in Period", at the agreed rate, within Thirty (30) days of such termination".
25. The Clause No.1.7 of the said Service Agreement reads - "If the Service Provider terminates this Agreement, the Service Provider's only obligation shall be limited to handover in an orderly fashion to authorized representatives of Arvind, all documents, write-ups, notes, reports and other material related to the Services under this Agreement, within Thirty (30) days of such termination".
26. Clause No.16(iv) of Ex.P1 reads - "The absolute ownership of all the installations ("Security and Communication Devices") shall exclusively rest with the Service Provider while Arvind shall be the custodian as long as the Service Provider's services are being availed by Arvind. Arvind shall maintain the installations in confidence with the same degree of care as their own assets." Clause No.16(v) reads - "In the event of loss or malfunctioning of the installations due to causes, other than those that are reasonably beyond the control of Arvind, including natural disasters, Arvind shall bear the costs of service, repair or replacement of such installations."
27. I have also gone through the documents produced on behalf of the plaintiff firm. The Ex.P21 to P45 are 25 debit notes of different transactions between the plaintiff firm and the defendant company, Ex.P19 is the copies of emails exchanged 28 Com.O.S.No.308/2024 between the parties during April 2022 to 16.05.2022, the Ex.P20 consists Two bounced emails. The defendant company has admitted the Ex.P1 to P14 at the time of statement of objections and denial of documents. The Ex.P4 consists Five delivery challans dated 25.01.2020, 25.01.2020, 23.01.2020, 24.01.2020 and 24.01.2020. Ex.P47 is the email dated 29.06.2022. Ex.P47(a) i.e. the email dated 29.06.2022 at 12:56 PM, the DW1 has admitted the same - "Technosys will not claim any assets or payment from Arvind and the agreement signed between Technosys and Arvind will be null and void" and the DW1 has categorically admitted that, this email was sent by him.
28. I have also gone through the documents produced by the defendant. The Ex.D1 to D12 are admitted by the other side. The Ex.D16 is the copy of the intimation dated 22.07.2021. It is intimation regarding the execution of definitive Agreements for strategic sale of assets of Unlimited business to V-Mart Ltd. Ex.D10 is the No dues declaration dated 29.06.2022, it is issued from plaintiff firm. Ex.D9 is an email dated 11.04.2022 from the plaintiff firm regarding demand ALBL i.e. defendant company to make good the losses or provide a reasonable explanation, it has replied on the very same day stating that, "We have updated you well in advance about V-Mart taking over Unlimited and you had been told to take out the devices, why there is a delay in your action." Once again it is replied by the plaintiff firm on the very same day through email - "Our teams have contacted all the stores and were able to retrieve only Five of systems. The 29 Com.O.S.No.308/2024 remaining 32 systems belonging to Technosys are missing. We request you to kindly look into the missing assets at the earliest and revert back." There is one more email on 04.04.2022 sent by the plaintiff firm that, "With respect to our assets installed across 45 Unlimited stores, we hereby request you to kindly furnish the details of the assets that have been returned and those that are yet to be returned to us." It is replied by the other side on the same day that, "You had been already informed that, Unlimited stores is no more with Arvind. You should have the list of stores where the equipment is installed, please check and take your assets."
29. By going through these email conversation between the parties to the suit, it is clear and admitted that, some of the assets installed by the plaintiff company with 45 stores belonging to the defendant company were with the defendant company and its stores. Since, the defendant company sold the Unlimited to V-Mart Retail Ltd., as per the terms and conditions mentioned in Ex.P1 - Service Agreement and by considering the business relationship between the plaintiff firm and the defendant company, the plaintiff firm is able to prove that, without fulfilling the terms and conditions of Ex.P1, the defendant company has issued termination notice on 15.09.2021.
30. In regard to interest claimed by the plaintiff firm is concerned on the dues, there is no clause regarding charging of interest. But, in Ex.P21 to P45 referred above, the plaintiff firm 30 Com.O.S.No.308/2024 sought interest at the rate of 24% p.a. Since it is not the amount regarding service. But, the amount sought in the suit is towards missing instruments. Therefore, the plaintiff firm is able to prove the Issue No.2. But, unable to prove Issue No.3. In view of the discussions made supra, I answer the Issue No.2 in the affirmative and Issue No.3 in the negative.
31. Issue Nos.4 to 6: The burden of proving these issues lies on the defendant company. In view of the discussions made while answering the Issue No.1, the defendant company has able to prove that, the plaintiff has suppressed by issuance of No Dues declaration on 29.06.2022 and reconciliation statement on 18.07.2022. It has produced the Ex.D10 dated 29.06.2022, the plaintiff firm has issued this No dues declaration. The plaintiff firm has not produced this document. After going through Ex.D10, it states that, "We at Technosys appreciate the opportunity to provide you our best services. Further to the discussions and clarifications between Technosys Accounts Team and ALBL Reconciliation team, we hereby declare that, as of 29 th June 2022, there remains No Dues of payments to Technosys from ALBL - except for a sum of Rs.4,20,684/- towards the services availed by ALBL from Technosys. We hereby request you to kindly clear the payment at the earliest. The outstanding payment shall be remitted to the below mentioned bank account".
31 Com.O.S.No.308/202432. The defendant had issued an email as per Ex.D3 regarding Service Termination Notice through email and post. It is dated 07.09.2021. It shows that the defendant company has issued this email regarding the termination of services of the plaintiff firm. Therefore, the defendant company is also able to prove this aspect by producing cogent evidence. In regard to suit is bad for non joinder of necessary parties is concerned, since the Ex.P1 is between the plaintiff firm and the defendant company, the defendant company in turn sold the Unlimited to V-Mart Retail Ltd., the contract is only between plaintiff firm and the defendant company. Therefore, V-Mart Retail Ltd. is not a necessary party. In view of the discussions made supra, I answer the Issue Nos.4 and 5 in the affirmative and Issue No.6 in the negative.
33. Issue No.7: The plaintiff firm has sought recovery of amount of Rs.25,22,250/- with interest at the rate of 18% p.a. The plaintiff firm is able to prove the Issue No.2 by producing cogent evidence. The defendant also succeeded in proving Issue Nos.4 and 5. After going through the clause No.16(iv) of Ex.P1 which is an admitted document by the parties. It is very clear that, the absolute ownership of all the Security and Communication Devices installed would exclusively rest with the plaintiff and the defendant would be their custodian, obligated to extend them to the same degree of care as it would its own assets. It is very clear that, the defendant company has undertaken to take care of the devices installed by the plaintiff 32 Com.O.S.No.308/2024 firm in its various stores. Merely because the defendant company issued an email on 07.09.2021 regarding Service Termination as requested by the plaintiff firm, is not sufficient. The defendant company has take care towards the belongings i.e. installation of CC TVs etc. but, the defendant company has not taken care, even it is come on record that, the plaintiff firm has taken back some of the instruments from some of the stores. But, due to Covid restrictions, it could not go out of State and collect the instruments.
34. I have also gone through the provisions of Sec.160 and 161 of Contract Act, it reads -
"160. Return of goods bailed, on expiration of time or accomplishment of purpose - It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.
161. Bailee's responsibility when goods are not duly returned - If by the fault of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time."
35. I have also gone through the decisions relied upon by the learned counsel for the plaintiff firm. The principles laid down in these decisions are well founded. These decisions are come to the aid of the plaintiff firm. I have also gone through the decision relied upon by the learned counsel for the defendant company. This decision is not come to the aid of the defendant. The facts 33 Com.O.S.No.308/2024 and circumstances of the decided case and the case on hand are different. Therefore, in the light of discussions made supra, the plaintiff firm is entitled for a sum of Rs.25,22,250/-. The plaintiff firm is not entitled for the interest. Accordingly, I answer the Issue No.7 partly in the affirmative.
36. In regard to the documents marked at Ex.P47 to P244, the application came to be allowed by this court. The order was challenged before the Hon'ble High Court of Karnataka by the other side and the order passed by this court on IA No.4 dated 13.09.2024 is set aside in W.P.No.25869/2024 dated 23.09.2024. Hence, those documents are not considered.
37. Issue No.8: In the result, I pass the following :
ORDER Suit of the plaintiff is decreed in part with cost.
The plaintiff is entitled for Rs.25,22,250/- from the defendant.
The defendant is directed to pay the amount as ordered within Three months from the date of this order, failing which the defendant is liable to pay future interest at the rate of 6% p.a. till realization.
Draw decree accordingly.
Issue copy of the judgment to the parties through email as provided 34 Com.O.S.No.308/2024 U/Or. XX Rule 1 of CPC if email ID is furnished.
(Dictated to the Stenographer typed by her directly on the computer, corrected and then pronounced by me in the open court on this the 12th day of December 2024) (RAMAKANT CHAVAN) LXXXIV Addl. City Civil & Sessions Judge, (CCH-85) Commercial Court, Bengaluru.
ANNEXURE List of witnesses examined for the plaintiff:
PW1 Ramachandran R.
List of documents marked for the plaintiff:
Ex.P1 Service Agreement dated 22.10.2019
Ex.P2 Copies of Delivery challans
Ex.P3 Copy of E-way bills
Ex.P4 Copies of Service Reports
Ex.P5 Email communications
Ex.P6 Email communications
Ex.P7 Copy of Termination Notice dated 15.09.2021
Ex.P8 Reply to Termination Notice dated 28.09.2021
Ex.P9 Reply to response dated 25.10.2020
Ex.P10-
Email communications
P12
Ex.P13 Copy of the PIM application
Ex.P14 Copy of the Failure Report dated 30.01.2024
35 Com.O.S.No.308/2024
Ex.P15 Copy of the GST registration certificate Ex.P16 Death certificate Ex.P17 Copy of the Form GST - ITC - 02 Ex.P18 Copy of the GST registration certificate Copies of emails exchanged between the parties Ex.P19 between 04.04.2022 to 16.05.2022 Ex.P20 Copies of 02 bounce emails Ex.P21 25 debit notes of same date but different transactions to P45 Ex.P46 Certificate U/Sec.65B of the Evidence Act Ex.P47 Email communication List of witnesses examined for the defendant:
DW1 Srinivasan R.V.
List of documents marked for the defendant:
Ex.D1 Copy of the Service Agreement dated 22.10.2019
Ex.D2 Copy of email dated 04.09.2021
Ex.D3 Copy of email dated 07.09.2021
Ex.D4 Copy of Termination letter dated 15.09.2021
Ex.D5 Copy of email dated 16.09.2021
Ex.D6 Copy of email dated 17.09.2021
Ex.D7 Copy of reply dated 28.09.2021
Ex.D8 Copy of reply dated 25.10.2020
Ex.D9 Copy of email dated 11.04.2022
36 Com.O.S.No.308/2024
Ex.D10 No Dues Declaration dated 29.06.2022
Ex.D11 Copy of email dated 16.07.2022
Ex.D12 Copy of the Vendor Reconciliation statement Ex.D13 C/c of the Board Resolution dated 14.02.2023 Ex.D14 Letter of authority dated 18.03.2024 Ex.D15 Extract of the New Article - The Economic Times Ex.D16 Copy of the intimation dated 22.07.2021 Ex.D17 Certificate U/Sec.65B of the Evidence Act (RAMAKANT CHAVAN) LXXXIV Addl. City Civil & Sessions Judge, (CCH-85) Commercial Court, Bengaluru.