Delhi District Court
Mrs. Baljit Kaur Bedi vs ) M/S Cbs Technologies Pvt. Ltd on 29 November, 2022
IN THE COURT OF SHRI SANJAY SHARMAI :
DISTRICT JUDGE (COMMERCIAL COURT)
EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm) No. 133/2022
Mrs. Baljit Kaur Bedi
W/o Shri AS Bedi
Proprietor M/s Messons Electricals
Office at : 200G, DDA Flats,
Rajouri Garden
New Delhi - 110 027 ................Plaintiff
Versus
1) M/s CBS Technologies Pvt. Ltd.
Through its Managing Director/CEO
Office at : 40C, PocketC, SFS (HIG) Flats,
Mayur Vihar PhaseIII,
Delhi - 110 096
2) Mr. Sanjay Kumar Aggarwal
Managing Director/CEO of M/s CBS Technologies Pvt. Ltd.
110111, Rishabh Ipex Mall,
Patparganj,
Delhi - 110 092
3) M/s CBS Technologies Pvt. Ltd.
Office at : H56, Site 5, UPSIDC Industrial Area
Kasna, Greater Noida
Uttar Pradesh 201310 ................Defendants
Date of institution : 06.6.2019
Date of reserving judgment : 17.10.2022
Date of judgment : 29.11.2022
JUDGMENT:
The plaintiff has filed the present suit for recovery of a sum of Rs.75,15,700/ against the defendant along with interest @ 15% per annum.
CS (Comm) No. 133/2022M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 1 of 29 1.1 In brief, the facts as averred in the plaint are that the plaintiff is the proprietor of M/s Messons Electricals and she had purchased an Ultra High VACC Transformer Oil Filtration Plant of 12000 Liters Per Hour capacity (herein after referred to as the plant) from defendant No. 1 company, for a consideration of Rs.19,05,700/ including GST @ 18%. The plaintiff made an advance payment of Rs.8 lacs on 06.10.2017 and the remaining amount of Rs.11,05,000/ was transferred to defendant No. 1 on 06.3.2018. The plant was delivered to the plaintiff on 12.3.2018 at the site at Jahrsuguda, Orissa on 17.3.2018, after a delay of 13 weeks. A proforma invoice No.Ref71/1718 dated 27.2.2018 was generated by the plaintiff vide PO No.ME/CBSFM PO/057/201718 dated 06.10.2017.
1.2 It has been averred that the plant delivered by defendant No. 1 did not perform satisfactorily even for a single day and was having multifarious defects and despite various requests and complaints, the defendants failed to rectify the same, due to which the plaintiff had to suffer exorbitant loss and harassment. It has further been averred that a predelivery inspection was conducted by a team headed Shri AS Bedi, the Technical Consultant of the plaintiff firm and husband of the plaintiff, having technical expertise and long experience in this field who pointed out the defects in the plant at that time. It has been averred that the defendants misled the plaintiff to sell the defective machine with assurance to rectify the defects and provide service at the site. The plaintiff had informed about various defects during inspection as well as before CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 2 of 29 commissioning of the plant at the site through several verbal, written as well as telephonic communications but the defendants failed to make the plant operational even after four visits of their technical team at the site.
1.3 After about five months and being aggrieved and dissatisfied by the operation of the plant, M/s Vedanta Aluminum Ltd., at whose site the work was being performed by the plaintiff company, dispatched the plant to the defendants on 14.8.2018 which was duly received at the factory of the defendants at Noida on 17.8.2018, which added additional burden of transportation upon the plaintiff. 1.4 It has further been averred that the principal employer of the plaintiff firm namely M/s Siemens Ltd. deducted a sum of Rs.6 lacs from the bill of the plaintiff due to delay in work caused due to the defective plant. In the last week of December 2018, the defendants informed the plaintiff firm that all the defects in the plant have been rectified but again in the trial run of the plant, it tripped for a number of times and the required vacuum of 01 millibar could not be achieved and further, the plant was found to be having rust. Finally, on 28.1.2019, the plaintiff became confident that the plant was having multifarious defects in its design which could not be rectified and thus, it decided not to again accept the plant. 1.5 It has been averred that the plaintiff had lot of communications with the defendants seeking refund of all its damages caused due to the plant and finally, the plaintiff sent a legal notice dated 21.2.2019 to the defendants demanding cost of CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 3 of 29 the plant and damages from them but they flatly refused for the same, vide reply through email dated 30.3.2019. Hence the present suit.
2. Defendants were duly served and their Counsel Ms. Shweta Bari Advocate entered appearance and filed written statement. A preliminary objection regarding territorial jurisdiction was taken by the defendants, besides stating that the present suit is bad for nonjoinder of necessary parties namely, M/s Vedanta Aluminum Ltd. and M/s Siemens Ltd. who have not been made parties in the present suit. It has been stated that the plaintiff had got delivered the plant at Jahrsuguda, Orissa as per her own agreement with Vedanta Aluminum Ltd. and Siemens Ltd. and at her own risk and cost. It is further stated that the plaintiff herself accepted the plant regardless of the breach of the condition for description and quality and it was her duty to get it thoroughly examined. Thus, the plaintiff is not entitled for any refund as the defendants never breached the contract. 2.1 On merits, it was stated by the plaintiff that the defects pointed out by the plaintiff in the plaint are wrong, false and misconceived and the claim made by the plaintiff is baseless. It was claimed that the plant supplied to the plaintiff was in operating condition and was not faulty and the same was delivered in time at the site. It was also stated that the plaintiff had complete opportunity to inspect the plant and have it thoroughly examined before delivery and also at the time of delivery and it was only after being satisfied that she took the delivery and therefore, she could not have rejected the plant. It CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 4 of 29 was submitted that this amounts to waiver of condition. It was submitted that at the most, it is a case of breach of warranty and not of breach of contract and therefore, the buyer is not entitled to reject the goods. The defendants further averred that the notice of breach of warranty was not within a reasonable time after discovery of the breach. Rest of the averments made in the plaint on merits have been vehemently denied by the defendants.
3. The plaintiff also filed replication to the written statement of defendant, reiterating the contents of the plaint and denying the counter allegations.
4. From the pleadings of the parties, following issues were framed on 30.7.2022 :
1) Whether the plaintiff is entitled for a decree against the defendant in the sum of Rs.75,15,700/ with interest, if any, and if yes at what rate and for which period? OPP
2) Whether this Court has no territorial jurisdiction to try and decide the present suit? OPD
3) Whether the present suit is bad for nonjoinder of M/s VAL & Siemens Ltd. ?
OPD
4) Relief.
5. Case management hearing was conducted and both the parties led their evidence at the trial. The plaintiff examined herself as PW1. She deposed the facts as stated in the plaint, by way of affidavit Ex.PW1/A and also proved various documents which are as under :
Copy of Tax Invoice No.CBS/GN/1718/246 dated 12.3.2018 Purchase order dated
06.10.2017 as ExPW1/1. (Admitted CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 5 of 29 document).
Copy of PO No.ME/CBSFM/PO/057/2017 18 dated 06.10.2017 as Ex.PW1/2. (Admitted document) Copy of details of advance payment of Rs.8 lacs on 06.10.2017 alongwith cheque alongwith last final payment of Rs.11,05,700/ dated 06.3.2018 as Ex.PW1/3.
(Admitted document) Proforma Invoice of total payment of Rs.19,05,700/ dated 06.10.2018 as Ex.PW1/4. (Admitted document) Copy of cheque of last final payment of Rs.11,05,700/ dated 06.3.2018 as Ex.PW1/5. (Admitted document) Copy of offer letter vide email dated 03.10.2017 from the defendant to me as Ex.PW1/6. (running into four pages) (Admitted document) Copy of quotation dated 03.10.2017 as Ex.PW1/7 (Admitted document).
Copy of communication dated 22.2.2018 by the plaintiff to the defendant for delay in delivery as Ex.PW1/8. (Admitted document) True copy of communications dated 03.4.2018 by the plaintiff to the defendant for defect in the plant as Ex.PW1/9. (Admitted document) Communication dated 07.5.2018 by the plaintiff to the defendant for dispatch of non performing defective plant back to the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 6 of 29 defendant as Ex.PW1/10. (Admitted document) Communication dated 18.5.2018 by the plaintiff to the defendant for refund of amount as Ex.PW1/11. (Admitted document) Communication 06.10.2017 by the defendant to the plaintiff for service at the site as Ex.PW1/12. (Admitted document) Email dated 03.4.2018 as Ex.PW1/13.
(Admitted document) Email dated 16.5.2018 as Ex.PW1/14.
(Denied) Email dated 18.5.2018 as Ex.PW1/15.
(Admitted document) Copy Nonnegotiable Consignment Note dated 14.8.2018 for dispatching of plant back to the defendant alongwith the office note as Ex.PW1/16. (running into two pages) (Denied) Communication dated 07.8.2018 by the plaintiff to the defendant as Ex.PW1/17.
(Admitted document) Communication dated 28.1.2019 by the plaintiff to the defendant as Ex.PW1/18.
(Admitted document) Office copy of legal notice dated 21.2.2019 as Ex.PW1/19. (Denied) Email dated 22.6.2018 as Ex.PW1/20.
(Admitted document) CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 7 of 29 Communication by the plaintiff dated 10.4.2019 as Ex.PW1/21. (Admitted document) Email dated 30.3.2019, dated 15.4.2019, dated 17.4.2019, dated 20.4.2019 as as Ex.PW1/22 , Ex.PW1/23 , PW1/24 and PW1/25 respectively. (Admitted document) Communication by M/s Siemens to the plaintiff dated 02.1.2018 as Ex.PW1/26 and another dated 22.7.2018 as Ex.PW1/27.
(Denied) (Original of both letters were seen and returned).
Affidavit under Section 65B of the Indian
Evidence Act in support of emails and
computer generated documents as
Ex.PW1/28.
5.1 The plaintiff also examined her husband Shri AS
Bedi as PW2 who was also the Technical Consultant in her firm. He led his evidence by way of affidavit Ex.PW2/A and relied upon the documents already relied by PW1 in her statement. 5.2 The plaintiff also examined PW3 Shri Gaurav Srivastava - Project Manager of M/s Siemens Ltd., the principal employer of the plaintiff's firm. He deposed that the plant could not perform at the site despite continuous followups with the Technical Advisor and team of the plaintiff. He also deposed that the plant reached the site after an inordinate delay and that it could not be commissioned. He also deposed that after five months, M/s VAL, who was the client of M/s Siemens Ltd. refrained from keeping the defective plant at their premises and therefore, it was dispatched by the plaintiff firm from their site.
CS (Comm) No. 133/2022M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 8 of 29
6. The defendants examined their authorized representative Shri Vaibhav Singh as DW1. He proved the authorization made by the Board of Directors of the defendant company in his favour as Ex.DW1/B, to depose in the present suit. He tendered his evidence by way of affidavit Ex.DW1/A and relied upon the tax invoice dated 12.3.2018 (already Ex.PW1/1) and emails Ex.PW1/21 to PW1/25 as already relied upon by PW1.
7. I have heard Ms. Shikha Sharma - Ld. Counsel for the plaintiff, Ms. Shweta Bari - Ld. Counsel for the defendant and have also gone through the written submissions filed by both the Ld. Counsels. I have also gone through the records of the case.
My issuewise findings are as under:
ISSUE No.2 :
8.1 The burden to prove this issue was upon the defendant. It was submitted on behalf of the defendant that no part of cause of action ever arose in Delhi. It was argued by Ld. Counsel for the defendant that the plant was manufactured at the factory premises of the defendant at Greater Noida, the tax invoice Ex.PW1/1 and proforma invoice Ex.PW1/4 were both issued from the factory office at Greater Noida and the plant was to be commissioned at Jarhsuguda, Orissa and therefore, this Court has no territorial jurisdiction to try the present suit. 8.2 It is to be observed that the transaction between the parties started pursuant to the purchase order raised by the plaintiff upon the defendant which is Ex.PW1/2 and is the main CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 9 of 29 contract. The said purchase order was issued to the defendant at their registered office at Patparganj, Delhi. DW1 in his cross examination deposed that the plaintiff firstly visited their plant and upon inspection and on being satisfied with the quality, approached the defendant company at the Delhi Office for the purchase of plant. Thus, when the contract was made at Delhi and according to DW1 also, the plaintiff approached for the plant at Delhi only, the contract is deemed to have been executed at Delhi. The fact that the plant was manufactured at the factory of the defendant at Greater Noida or it was to be commissioned at Orissa have no bearing on the jurisdiction of the Court as these facts were subsequent to the execution of the contract. Once it is accepted that the contract was executed at Delhi, this Court has the territorial jurisdiction to decide the present suit. 8.3 Secondly, the payment was also made by the plaintiff to the defendant at its Mayur Vihar Branch of the Bank at Delhi. It is a settled law that where no place of payment is specified, the debtor has to seek the creditor. Once it is held that the payment was made at Delhi, part cause of action arose in Delhi and therefore, on that count as well this Court has the territorial jurisdiction . Reference can be made to the judgment relied upon by Ld. Counsel for the plaintiff in Satyapal Vs. Slick Auto Accessories Pvt.Ltd.& ors. (indiankanoon.org/doc/ 45596792). This issue is decided against the defendant. ISSUE No.3 :
9. It was agitated on behalf of the defendants that the present suit is bad for nonjoinder of the necessary parties as M/s CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 10 of 29 Vedanta Aluminum Ltd. and M/s Siemens Ltd. have not been made party in the present suit. I disagree with this contention as the said companies were never a part of the contract between the plaintiff and the defendant and infact, they were only the principal employers of the plaintiff. There is nothing to suggest that the suit cannot or could not have been effectively decided without their presence. They had no role to play either with the main contract or any terms and conditions mentioned therein. Hence, they are neither necessary nor proper parties.This issue is also decided against the defendant.
ISSUE No.1 :
10.1 At the outset, Ld. Counsel for the defendant objected that the suit was filed in the name of the proprietorship firm which was incorrect. This objection was decided vide a detailed order passed on 22.10.2022 directing the plaintiff to file amended memo of parties. It has also been objected that the plaintiff filed, signed and verified copy of the plaint in the absence of any specific order of this Court and hence the suit is barred by limitation . This is again incorrect. The present suit was earlier filed as an ordinary civil suit but subsequently, observing that it involves commercial dispute was transferred to this Court vide orders of the Ld. Principal District Judge dated 28.4.2022. Thereafter, this Court directed to amend the pleadings in terms of the provisions of the Commercial Court Act and it was pursuant to the said order that the signed and verified copy of the plaint was filed. Hence, this objection is also not sustainable.
CS (Comm) No. 133/2022M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 11 of 29 10.2 The plaintiff also raised objection that the written statement was not accompanied by any Board Resolution in favour of the person signing it namely Shri Sanjay K Aggarwal nor there was any authority for him to depose in the present suit and therefore, the written statement has to be rejected. I differ with this submission. Shri Sanjay K Aggarwal is the Managing Director of defendant No. 1 company which fact is undisputed. According to Order 29 Rule 1 CPC, in a suit by or against a Corporation, the Secretary or any Director or other Principal Officer of the Corporation who is able to depose to the facts of the case, might sign and verify on behalf of the company. 10.3 In IFCI Venture Capital Funds Ltd. vs Smt. Santosh Khosla & Ors.(RFA 80/2004) dated 22.02.2012, the Hon'ble High court of Delhi held that once the person who signs and verifies the plaint is a principal officer, then it ought to be held that the suit is validly instituted in terms of Order 29. 10.4 In United Bank of India vs Naresh Kumar & Ors. (http://JUDIS.NIC.IN) dated 18.09.1996, the Hon'ble Apex Court held that in cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. It was further held that Order 29 Rule 1 CPC therefore, provides that in a suit by or against a corporation, the Secretary or any Director or other Principal officer of the corporation who is able to depose to the facts of the case, might sign and verify on behalf of the company. The court also held that a person may be expressly authorized to sign the pleadings on behalf of the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 12 of 29 company, for example, by the Board of directors passing a resolution to that affect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers, a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The court can on the basis of the evidence on record, and after taking all circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer. 10.5 Hence, the objection raised by the plaintiff in this respect is not tenable and it is held that Shri Sanjay K Aggarwal could have signed and verify the written statement and could have deposed even without any formal Board Resolution in his favour. Even otherwise, he is also defendant No. 2 in the present suit.
10.6 The plaintiff has laid claim towards the cost of the plant, transportation cost, business loss, deduction by M/s Siemens Ltd. for the delay in work due to delay in dispatch of the plant at the site and other damages related to labour cost, reputation of the plaintiff and her goodwill. 10.7 The main contention of the plaintiff had been that the plant supplied by the defendants was defective since very beginning and was having design defect but it was sold and delivered to the plaintiff on the assurance that the defect, if any, would be rectified at the site upon commissioning. Since the plaintiff had already paid advance money and had also paid the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 13 of 29 balance amount, she was forced to take the delivery of the plant on the said assurance. These contentions were countered by the Ld. Counsel for the defendants on the plea that the plaintiff had already conducted predelivery and prepurchase inspection 23 times through a team headed by the Technical Consultant of the firm having vast experience and therefore, she cannot seek refund of the price of the plant upon rejecting it. 10.8 The question is, was the plant defective when it was delivered to the plaintiff or was the defect curable and it was corrected at the site and the plant was commissioned. 10.9 PW1 deposed in the crossexamination that the plant was checked before purchase and it was found tripping. However, the defendant assured the fault to be corrected and further assured to correct the fault at the field, if any arises, after the purchase and hence it was purchased. She admitted that in para 6 of her affidavit, she deposed that there was defect in the plant found at the prepurchase inspection but it was not mentioned that it was tripping. There was no further cross examination of the witness except mere suggestion to the contrary. She also deposed that it was disclosed to the defendant at the time of purchase of the plant that it was to be commissioned at Jarhsugoda , Orissa.
10.10 Similarly, PW2 - the Technical Consultant of the plaintiff, deposed that he had noticed a fault during the pre purchase trial run and pointed it out to the defendant. He further deposed that at the time of purchase, the defendant told him that the fault has been rectified and assured that in case of any CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 14 of 29 problem in the plant at the time of commissioning, they would rectify it at the site. He added that he asked the defendant to get the plant checked before delivery but he was told that they had no time as lorry was waiting for transporting the plant to the site. It means that there was no predelivery inspection and it was delivered on 'as is where is basis'. There was no further cross examination of this witness on this point.
10.11 In further crossexamination, PW2 admitted that he had outrightly objected to the design of the plant in the pre purchase inspection but accepted the purchase of the plant despite objection on the assurance of the defendant that the defect would be rectified when the plant would be commissioned at the site and further assurance that services would be provided to rectify all the faults at the site. Again there was no further crossexamination except mere suggestions to the contrary. 10.12 Thus, both PW1 and PW2 corroborated each other in all material particulars regarding the defect found and noticed in the plant at the time of prepurchase inspection. They further corroborated each other on the fact that the plant was sold/delivered on the assurance that defects in the plant have been corrected and fault, if any, would be rectified at the site. 10.13 PW2 further deposed that three technicians of the defendant had gone to the site for commissioning the plant but because of the fault in it, it could not be commissioned. He then elaborated about the defect in the plant in his further cross examination deposing that the plant was found tripping at the time of predelivery inspection while changing over to internal CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 15 of 29 circulation. He deposed that if there was no tripping, the process of vaccumization would have started. He also deposed that at the time of commissioning, the plant again tripped of the internal circulation but there was no problem of vaccumization. He added that the vaccum pump got damaged at the time of commissioning but could not depose the cause of damage which was not there at the time of predelivery inspection. He categorically deposed that the vaccum pump could not have got damaged during transportation. He further added that the outlet pump also got damaged at the site at the time of commissioning. He was confronted with his affidavit and plaint wherein these facts were not mentioned. However, these were answers to the specific questions put by Ld. Counsel for the defendant and therefore, were not required to be incorporated in the plaint or affidavit. There was again no further crossexamination and hence this part of the testimony of the witness remained unrebutted except for mere suggestions to the contrary.
10.14 PW3, the employee of M/s Siemens Ltd was termed as an interested witness by Ld. Counsel for the defendant, simply because he was not summoned through the process of the Court and was examined by the plaintiff on her own. That does not make the witness interested since admittedly, he was an employee of M/s Siemens Ltd., the principal employer of the plaintiff and was in no way interested in the result of the present suit as the said company has already put penalty upon the plaintiff by deducting a substantial amount from her bill. 10.15 PW3 was also a qualified person. He deposed in the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 16 of 29 crossexamination that the malfunctioning as noted in the plant, could not have been caused due to transportation from Delhi to Orissa as it was a caged machine. He deposed that the first job of the plant was vaccumization which it was not conducting and therefore, the process of filtration was also not done by the plant which was subsequent to it. He also deposed that the fault was curable but the technicians of the defendant company could not rectify the error. He admitted that the said defects were not mentioned in any of the communications made to the plaintiff by his company. But again these were answers to the specific questions put in his crossexamination 10.16 It was admitted by PW3 that the said faults in the plant were noted by him for the first time at the time of commissioning when the team responsible for it reached there and started the plant and found it to be not functioning because of the said faults. However, he could not say if the said faults were because of manufacturing defect or design defect in the plant. He further deposed that the fault could not be rectified despite repeated visits of the technicians of the defendant company and it remained unoperational.
10.17 It is, thus, clear from the testimonies of all the three witnesses that they corroborated each other in all material particulars and deposed that there was a defect in the plant and fault in the vaccum pump because of which the plant could not be commissioned at the site and remained unoperational despite repeated visits and efforts of the technicians of the defendant company.
CS (Comm) No. 133/2022M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 17 of 29 10.18 The only witness examined by the defendant was the Deputy General Manager (Private Sales) of defendant No. 1 company. He admitted in the crossexamination that he was not present at the time of predelivery inspection and therefore, could not say if the plant was tested at its full capacity. He also admitted that the plant was to be commissioned by them at the site at Jahrsugoda, Orissa on the request of the plaintiff though it was not a condition in the purchase order. He deposed that his Engineers visited the site on 31.5.2018 pursuant to the letters received from the plaintiff regarding fault in the plant and corrected it but no acknowledgement could be obtained as the plant was at the site of a third party. He further deposed that no written report or intimation about correction of fault was given to him but he was only verbally informed about the correction of the fault. He admitted that the plant was returned to his factory on 17.8.2018 and also admitted that in July 2018 when his team visited the site, the plant was not functioning. He also deposed that the plant was returned to the factory as the centrifugal pump was not functioning, the booster pump was making noise and it was tripping due to the said pump. He deposed that the defects in the machine were caused due to transportation but these facts could not be proved by him and were rather contrary to the deposition of PW2 and PW3 who had the expertise on the subject. Further the onus was upon the defendant to prove that the damage was caused to the plant because of transportation but no expert witness was examined by it to prove this fact. It is also to be noted that DW1 himself deposed that he was not present at CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 18 of 29 the time of predelivery inspection and therefore, he was not the best witness to depose about the defects noted at that time. He was also never present at the site and therefore, he was also not competent to depose about the defects noted there which were responsible for the noncommissioning of the plant. No engineer or person who was part of the team of the defendant which reached the site to rectify the errors, was examined. 10.19 Once it is held hat the defects, as noted above and deposed by the witnesses, could not have been caused due to transportation, it leads to the inference that there was a design defect which could not be rectified by the defendant despite assurance and despite sending its technicians at the site. It is also clear that the plant could not be commissioned because of the said faults and ultimately had to be returned to the factory of the defendant. It also confirms and verifies the contention of the plaintiff that the delivery of the plant was taken without any further inspection because of the assurances given by the defendant that the faults, if any, would be rectified at the site and also in order to avoid further delay. It is also clear from the deposition of PW1 that there was no time for further inspection between the predelivery inspection and the delivery as the said inspection was conducted on 09.3.2018 and the delivery was taken on 12.3.2018. The entire payment had been given to the defendant by that time.
10.20 There was also a delay on part of the defendant in delivering the plant. The plant was to be delivered within a period of 68 weeks of the purchase order. However, it was CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 19 of 29 delivered after a delay of about 13 weeks. DW1 deposed the reasons for delay to be that certain parts were required to be purchased from outside from different vendors who supplied the articles after substantial delay. There is no evidence on part of the defendant on this aspect. Further, the defendant knew about the purchase of various parts from outside and therefore, they should have added this time while assuring the delivery in a given time frame. The other reason for delay deposed by DW1 was that the plaintiff asked them to modify the plant by adding a trolley which caused delay in completion of the plant. This deposition is contrary to the purchase order which stipulated a condition of providing a trolley with four wheels with towing arrangement. Hence, the defendant cannot take advantage of either of the two grounds for causing the delay and it is held that there was undue delay on part of the defendant to deliver that plant.
10.21 It was argued by Ld. Counsel for the defendant that the plant tripped at the time of prepurchase inspection as there was not sufficient power to run the plant in the factory of the defendant. This argument is also not tenable as the tripping was again noted at the time of commissioning of the plant at the site and was not the only fault which was found there. 10.22 On legal aspects, Ld. Counsel for the defendant submitted that once the plant was accepted by the plaintiff regardless of the breach of condition as to description and quality, she is precluded from rejecting the plant and claim refund of price. She submitted that once it was accepted by the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 20 of 29 plaintiff despite objections, it amounted to giving up of all the grievances as to its quality. It was submitted that the breach of condition cannot be taken as a ground for repudiating the contract and at the most, it is a case of breach of warranty. She also raised the plea of caveat emptor. Reliance was placed on the judgment in AIR 1959 Mad. 112 wherein it was held that 'where the buyer accepts the goods regardless of the breach of condition as to the description and quality, he is precluded from rejecting the goods and suing for refund of the price. He can however, treat the breach as one of warranty and sue for damages'. Almost similar observations were made in the other judgments relied by the Ld. Counsel in AIR 1962 Mad. 426 and AIR 1992 Bom 55 (DB).
10.23 Section 12 of the Sales of Goods Act, 1930 defines condition and warranty. Subsection (1) states that :
"A stipulation in contract of sale with reference to goods which are the subject thereof maybe a condition or a warranty."
Subsection (2) defines condition as :
"A condition is a stipulation to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated."
Subsection (3) states that :
"A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated."
Subsection (4) provides that :
"Whether a stipulation in a contract of sale CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 21 of 29 is a condition or a warranty depends in each case on the construction of a contract. A stipulation maybe a condition , though called a warranty in a contract."
Section 13(2) of the said Act provides that :
"Where a contract of sale is not severeable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, expressed or implied, to that effect."
10.24 The contract between the parties which is the purchase order Ex.PW1/2 provided warranty of 12 months from the date of commissioning. It was submitted by Ld. Counsel for the plaintiff that since the plant was never commissioned, the warranty never started or commenced and therefore, there was a breach of condition of the contract and the contract stood repudiated.
10.25 Admittedly, there was no condition in the contract of rejecting the goods in case they were found defective. It is a matter of common prudence that a person would never buy any defective product or goods. Hence, it was implicit in the contract that the plant sold to the plaintiff was to be of the desired specification and in working condition and without any defect. In such circumstances and in terms of Clause 4 of Section 12 of the Sales of Goods Act, the condition or warranty has to be construed as a condition of the contract.
10.26 It is also worth noting that though the plant was examined at the prepurchase stage and certain deficiencies were CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 22 of 29 pointed out by the plaintiff but she had no occasion nor was given any opportunity to reexamine it before taking the delivery despite PW2 asking for it. As already observed, it has come in the unrebutted testimony of PW2 that at the time of purchase, the defendant told him that the fault has been rectified and in case of any problem at the time of commissioning, it would be rectified at the site and added that the defendant asked to take the delivery as the lorry was waiting for transportation and they had no time. 10.27 Ld. Counsel for the plaintiff relied upon the judgment in Thyssen Krupp Materials AG Vs. The Steel Authority of India 2017 SCC Online Del. 7997. In that case, it was held that :
"While in an FOB Contract, the risk passes to the buyer once the goods are put on board the ship and thereafter, the seller's obligations are complete, this does not imply that the buyer does not have any right to claim damages or repudiate the contract in case the goods are subsequently found to be defective."
10.28 Section 41 of the Sales of Goods Act provides as under :
"(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract."CS (Comm) No. 133/2022
M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 23 of 29 10.29 In the instant case, though prepurchase inspection was conducted but the plaintiff had no reasonable opportunity to examine the goods before they were loaded on the lorry to ascertain whether the plant was in conformity with the contract. The defects in the plant came to the notice of the plaintiff only at the time of its commissioning at the site. It is a matter of record that various communications were made by the plaintiff to the defendant pointing out the defect in the plant and those communications have been admitted by the defendant. In Ex.PW1/9, a letter dated 03.4.2018, it is mentioned that the plant reached the site on 17.3.2018 and the commissioning Engineer arrived on 26.3.2018 and on 27.3.2018, he tried to commission the plant but it could not start as it was found that there was flash over in the control wiring at a number of places which wires were covered with PVC tape but the same cable was not replaced. In Ex.PW1/10 dated 07.5.2018, the grievance was again addressed to the defendant while also informing that M/s VAL had arranged for another plant on hire @ Rs.3 lacs per month for which they have deducted a sum of Rs.6 lacs from the running bill of the plaintiff. It was also informed that the plant be commissioned latest by 15.5.2018 else it would be dispatched to the factory of the defendant. In Ex.PW1/11 dated 18.5.2018, the plaintiff repudiated the contract and demanded the cost of the plant.
10.30 It has thus, to be appreciated that the plaintiff was sold the plant under misrepresentation that it was in working order and fault, if any, would be rectified at the site at the time of CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 24 of 29 commissioning. It is also clear from the above admitted communications that the plant was faulty and therefore, could not be commissioned despite various attempts by the technical team of the defendant which took a considerable time of about three months to rectify the faults.
10.31 It was argued by Ld. Counsel for the defendant that rejection has to be made within a reasonable time in terms of Section 42 of the said Act but in the given circumstances and as discussed above, the period of three months was reasonable for the plaintiff to have rejected the plant as during this period attempts were made by the defendant to rectify the fault. In regard to the plea of the defendant of caveat emptor, it has already been observed that the plaintiff objected to the defects but was sold and delivered the plant under misrepresentation. 10.32 It is also to be noted that pursuant to the mail of the plaintiff dated 21.02.2019, the defendant agreed to rectify eight points in the plant as against 13 requested by the plaintiff, vide their mail dated 30.03.2019 Ex.PW1/22, which also fortify the claim of the plaintiff that the machine had inherent defects regarding its design. Hence, this Court is of the view that there was a breach of condition of the contract and not merely a breach of warranty and therefore, the contract was repudiated. In light of the aforesaid and in view of this position, the plaintiff is entitled for the refund of the cost of the plant Rs. 19,05,700/. 10.33 The plaintiff has also sought the transportation charges of Rs.1,10,000/. As referred to above, the plaintiff vide their communication dated 07.05.18, Ex. PW1/10 had told the CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 25 of 29 defendant that they will have to bear the transportation charges if the plant was to be dispatched to their Noida factory. The plaintiff filed on record a copy of the road carrier dated 14.08.18, Ex. PW1/16 for the transportation of the plant from Orissa to the factory of the defendant. However, it is observed that it is only a photocopy and the original of the same was never produced. The defendant has denied the said receipt and as such it was incumbent upon the plaintiff to examine the witness from the said road carrier and prove the receipt which was not done and therefore, the amount of transportation charges cannot be granted as asked for.
10.34 The plaintiff has further sought business losses at the rate of Rs. 3 lac per month for 13 months till February 2019 amounting to Rs. 39 lacs. However, again neither these loses have been elaborated nor evidence was led in this respect by the plaintiff as to how this amount has been calculated or if actual loss to that effect was caused to the plaintiff. 10.35 The plaintiff further claimed a sum of Rs. 6 lacs which was deducted by M/s Siemens Ltd. for the delay in work due to delay in dispatch of the plant at the site. This fact was stated by the plaintiff in the letter Ex. PW1/10 which is an admitted document and it was also deposed by PW3, the witness from M/s Siemens Ltd. This loss was occurred to the plaintiff because of the delay caused on part of the defendant and hence, the plaintiff is entitled for this amount.
10.36 The plaintiff has further claimed a sum of Rs. 10 lacs towards vindictive damages i.e. labour cost, damage to CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 26 of 29 company's reputation and goodwill. Though no direct evidence was led on this score but it can be very well appreciated that the damage and goodwill of the plaintiff suffered because of the delay in commissioning of the plant and finally,on its failure to be commissioned. It has already come on record that M/s VAL Ltd. forced the plaintiff to remove the plant from the site and another plant had to be hired at the rate of Rs. 3 lacs per month. 10.37 Section 73 of the Indian Contract Act provides as under: "When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party, who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote or indirect loss or damage sustained by reason of the breach.
Explanation: In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non performance of the contract must be taken into account."
10.38 In ONGC Ltd. vs Saw Pipes Ltd. (2003) 5 SCC 705, the Hon'ble court while deliberating upon the compensation to be granted under Section 73 and 74 of the Contract Act, relied upon the judgment of Maula Bux Vs. Union of India (1969) 2 SCC 554, wherein it was specifically held that :
"It is true that in every case of breach of contract the person aggrieved by the breach CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 27 of 29 is not required to prove actual loss or damage suffered by him before he can claim a decree and the Court is competent to award reasonable compensation in a case of breach even if no actual damage is proved to have been suffered in consequence of breach of contract."
10.39 Hence, the plaintiff is entitled for compensation for the breach of contract apart from the cost of plant for breach of condition. Accordingly, the plaintiff is held to be entitled for the cost of the plant of Rs.19,05,700/. She is also granted an amount of Rs.6 lacs, the amount deducted by M/s Siemens Ltd. for the delay due to noncommissioning of the plant. Apart from that, this Court is of the view that even though the plaintiff could not prove actual losses, yet in light of the judgment in Maula Bux's case(supra), the plaintiff should also be granted a reasonable compensation for the loss of her business, reputation and goodwill and considering all the circumstances, assess the same at Rs.10 lacs. This issue is accordingly decided in favour of the plaintiff.
ISSUE No.4/Relief :
11. In view of the findings made herein above, the suit of the plaintiff is hereby decreed in her favour and against the defendant with directions to the defendant to pay to the plaintiff a consolidated sum of Rs.35,05,700/ towards cost of the plant, amount deducted by the principal employer and compensation for losses etc., alongwith interest @ 8% per annum on the said amount, from the date of filing of the suit till its realization . Cost of the suit are also awarded to the plaintiff.
CS (Comm) No. 133/2022M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 28 of 29 Decree Sheet be prepared accordingly. File be consigned to Record Room.
ANNOUNCED IN OPEN COURT ON 29th day of November 2022 (SANJAY SHARMAI) District Judge (Commercial Court) East District Karkardooma Courts, Delhi CS (Comm) No. 133/2022 M/s Messons Electricals Vs. M/s CBS Technologies Pvt. Ltd. etc. 29 of 29