Delhi District Court
La Skin Clinic vs Timpac Healthcare Private Limited on 7 August, 2023
IN THE COURT OF MS VINEETA GOYAL,
DISTRICT JUDGE (COMMERCIAL)-03,
PATIALA HOUSE COURTS, NEW DELHI
CS (COMM)- 286/2020
CNR No. DLND01-001820-2020
In the matter of:
LA Skin Clinic
Through its partner:
Harjeev Sethi
Sushant Lok-I, A Block-609,
Gurgaon
........ Plaintiff
Versus
1. Timpac Healthcare Private Limited
Through its Director
Rajesh Khurana,
C-168, 1st Floor, Naraina Industrial Area,
Phase-I, New Delhi
2. Asclepion Laser Technologies GMBH
Brusseler Str. 10
07747 Jena, Germany ...... Defendants
Date of institution of suit : 26.02.2020
Judgment reserved on : 15.07.2023
Date of Judgment : 07.08.2023
Appearance: Sh. Aman Leekha, Ld. Counsel for the
plaintiff.
Sh. Saurabh Sharma and Ms. Pooja
Kumari Shaw, Ld. Counsels for
defendants.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 1 of 47
JUDGMENT
1. The plaintiff has filed the present suit for recovery of Rs. 60,93,236/- ( Rs. Sixty Lakhs Ninety Three Thousand Two Hundred Thirty Six) along with interest @18% per annum against the defendants.
2. Facts as epitomized in the plaint are that plaintiff, registered partnership firm, is engaged in the business of Dermatology and Cosmoteology treatment and services. Sh. Harleen Sethi is the partner of plaintiff and is competent to file the present suit on behalf of plaintiff. It is stated that defendant no.1, a company incorporated under the Companies Act, 1956 is leading player in the business of supplying equipment and Machines for Cosmoteology, Clinics/Departments; Clinical Obesity Management Facilities;Wellness Clinics and Medispas; Anti-Aging Clinics and Dermatology Clinics. The defendant no.1 is a partner/distributor of defendant no.2. The defendant no.2 is a leading manufacturer of the optics industry worldwide and supply its Machines to its distributors all over the world.
2.1. It is averred that some time in March, 2017, the defendant no.1 representing itself to be the distributor of defendant no.2, assuring that defendant no.1 is the most efficient and trusted company in the field of laser Machines, approached the plaintiff and showed various products to suit the requirements of plaintiff.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 2 of 47The defendant no.1 represented that the products being offered by it, will achieve better and speedy assistance in the treatment of patients. The defendant no.1 after understanding the requirements of plaintiff persuaded that MeDioStar Next PRO 2400 watt Diode Laser with Large Hand Piece (hereinafter referred to as 'Machine') manufactured by defendant no.2, is a State of Art Machine, in as much as, the same will reduce the time of laser treatment i.e. while a normal Machine takes about 5 to 6 hours to perform the laser treatment, the Machine being offered by the defendant no.1 will perform the same within one hour.
2.2. It is further averred that after having discussion with Ms. Neelam Khurana and Sh. Rajesh Khurana, Directors of defendant no.1 and believing their representations and assurances, the plaintiff requested for a quotation of the said Machine. Accordingly, the defendant no.1 through its mail dated 28.03.2017 submitted its quotation for the said Machine. After receiving the said quotation from defendant no.1, the parties between the period March, 2017 to December 2017, had various rounds of discussions and negotiations regarding price, warranty period, payment, GST, delivery time, price for the part of Machine i.e. the Hand Piece and Tips, training sessions provided by defendant no.1 and service offered by defendant no.1. The defendant no.1 in its email dated 05.12.2017 apart from offering various other services assured that breakdown calls will be answered within 24 hours and in case, the Machine faces a problem and more than two days are required for CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 3 of 47 repair, then defendant no.1 will provide a stand-by Machine subject to availability.
2.3. It is next averred that through the first offer i.e. March, 2017, a quotation for a sum of Rs. 38,25,000/- was submitted by defendant no.1, the same was revised on 08.07.2017 and 10.07.2017, leading to a final quotation for a sum of Rs. 29,00,000/- on 04.12.2017. Accordingly, the defendant no.1 raised a proforma invoice dated 04.12.2017 stating that following:-
"i) manufactured by M/s Asclepion Laser Technologies, Germany"
ii) Full Body in 1 hour."
2.4. It is further averred that along with the proforma invoice, the defendant no.1 also attached the terms of the warranty, which are reproduced as under:
Warranty Terms Dear Sir, As per your inquiry please see the following term of warranty Machine- 36 months after date of invoice on parts. Handpiece- 12 months after date of invoice (misuse, parts linked to pulse counters and consumables excluded).
2.5. It is further averred that plaintiff after receiving above quotation, through its mail dated 04.07.2017, raised certain queries with regard to the said Machine to defendant no.1. The defendant no.1 through its mail dated 05.12.2017 responded to the said queries and also responded to certain other queries raised by plaintiff. The terms of warranty were also confirmed by defendant CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 4 of 47 no.1 through email dated 07.12.2017. It is averred that these exchange of emails between 04.12.2017 to 15.12.2017 lead to a revised quotation dated 15.12.2017 retaining the price of Machine as in the quotation dated 04.12.2017, however certain changes were made to the terms of warranty and post installation services to be provided by defendant no.1.
2.6. It is next averred that after having received the revised quotation, plaintiff vide its email dated 20.12.2017 issued a purchase order calling upon the defendant no.1 to supply the Machine. The plaintiff as stated in its email dated 13.12.2017 and as was discussed between the parties handed over to defendant no.1 four cheques, the details of which are as under:-
S.No. Cheque no. and Date Amount in Rs.
1. Cheque no. 000603 dated December 15, 2017 1,00,000/-
2. Cheque No. 000604 dated January 25, 2018 66,000/-
3. Cheque No. 000605 dated February 25, 2018 68,000/-
4. Cheque No. 000606 dated March 25, 2018 66,000/-
Total 3,00,000/-
2.7. It is further averred that for the balance amount of Rs.
26,00,000/-, the plaintiff applied for a loan at an interest of 11.65% per annum from Siemen Financial Services Pvt Ltd, Gurugram and same was released to the defendant no.1 and accordingly, the plaintiff vide email dated 27.12.2017 confirmed that total amount of Rs. 29,00,000/- have been transferred/paid/credited to the account of defendant no.1.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 5 of 472.8. It is next averred that the Machine was delivered to the plaintiff on 01.01.2018 and was installed by Service Engineer of defendant no.1 in the presence of Sh. Rajesh Khurana, Managing Director of defendant no.1. During the installation process itself, the patent defect in the Machine came to the notice of plaintiff i.e. water leakage from Hand Piece. Accordingly, an installation report clearly highlighting the defect 'Water Leakage from Hand Piece' was prepared and was signed by all the parties. Noticing the said defect, the Service Engineer as well as Sh. Rajesh Khurana assured that defect will be rectified at the earliest and further that the qualified Engineers will visit the plaintiff to provide necessary training and to check the defect. Believing the assurance and advice of Sh. Rajesh Khurana, the plaintiff started using the Machine with a hope that water leakage problem will be resolved and proper trainers will assist the plaintiff to use the said Machine. Having waited for almost five days from the date of installation, with no sign of trainers as well as Engineers to resolve the water leakage issue, the plaintiff vide email dated 05.01.2018 informed Rajesh Khurana that water leakage problem continues from both the tips and same needs immediate attention of defendant no.1. The plaintiff has also informed that there is also a yellow liquid discharge on the tip, requesting the defendant no.1 to rectify and/or resolve the problem at the earliest as the same may lead to further damage to the said Machine.
2.9. It is further averred that defendant no.1 rather than paying CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 6 of 47 immediate attention to the problems faced by the plaintiff, after three days, sent a whatsapp dated 08.01.2018 and email of the same date informed that defendant no.1 is in touch with defendant no.2 for resolution of said problem. Noticing that defendant no.1 was not taking the matter seriously, the plaintiff vide email dated 08.01.2018 approached the defendant no.2 informing it about the problem in respect of said Machine. The defendant no.2 vide its response to the said email requested the plaintiff to provide; i) serial no. of device and Hand Piece; ii) leaks the Hand Piece or the applicator (tips), whether the plaintiff has tried another (virgin) applicator; iii) the contact of the Local Distributor. The plaintiff being anxious about investments made and realized that there is inherent problem in the said Machine, vide email dated 11.01.2018 called upon defendant no.1 to immediately resolve the issue and /or in case, if Machine is faulty, then replace the said Machine with the new one. The defendant no.1, despite the emails as well as repeated reminders and requests did not rectify the said defects. Strangely, the defendant no.1 rather requested the plaintiff to use the said Machine and to check if the problem still persists. Based on the advice of defendant no.1, the plaintiff used the Machine, however, was surprised to note that intensity of water leakage had increased. Accordingly, the plaintiff vide email ated 24.01.2018 informed the defendant no.1 about the same and called upon the defendant no.1 to replace the Machine as it was the manufacturing defect and a serious concern.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 7 of 472.10. It is further averred that after much deliberations and repeated follow ups, the defendant no.1 through its email dated 25.01.2018 admitted that there was a fault with Machine stating "Engineer visited and saw the problem. Root cause identified is the Tip 10X30 mm. We are getting a new one for you to replace."
2.11. It is further averred by the plaintiff that a Machine which the plaintiff has purchased for a huge sum of Rs. 29,00,000/- with a view to put the same for immediate use for treatments, due to an inherent defect was lying idle and/or was only being used for testing purposes. What was even more frustrating to note that water leakage was not only from one hand tip but was from both the hand tips supplied by defendant no.1. The plaintiff vide email dated 27.01.2018 called upon the defendant no.1 to replace the Hand Piece as the defect in the Machine has rendered the Machine unusable leading to the loss of revenue.
2.12. It is further averred that defendant no.1 vide its email dated 27.01.2018, once again assured the plaintiff that Engineer will come and look at the issue and further that defendant no.1 will arrange for both the tips. The plaintiff waited for the replacement of tips for five days, however, when no action was taken by defendant no,1 , the plaintiff vide email dated 02.02.2018 requested the defendant no.1 to resolve the problem as it was more than a month that the Machine was lying defective and unused without being replaced and/or receiving new tips from the defendant no.1.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 8 of 47By the said email, the plaintiff also informed defendant no.1 that Machine is showing yet another error and that the same is lying as a showpiece causing loss of revenue to the plaintiff. The plaintiff also requested the defendant no.1 to extend warranty period of Hand Piece, since the warranty period ought not to start from 01.01.2018, in as much as the Machine was lying defective from the date of installation.
2.13. It is further averred that since all the above correspondences exchanged with defendant no.1 were not leading to any satisfactory resolution or replacement of Machine by defendant no.1, the plaintiff vide email dated 02.02.2018 replied to the queries raised by defendant no.2 in its email dated 08.01.2018. The plaintiff highlighted its concern with regard to the said Machine requesting the defendant no.2 to intervene the matter, resolves a problem and in case, the defect cannot be rectified, then to replace the same. The defendant no.2 vide its email dated 02.02.2018 informed the plaintiff that request of plaintiff has been transferred to Service Department and also informed that issues raised by plaintiff have been sent to Local Distributor. The defendant no.2 despite being aware of manufacturing defect in the Machine rather than addressing the issue, was trying to pass its responsibility on the defendant no.1, accordingly, the plaintiff feeling dejected by the evasive replies of defendant no.1 and 2, through email dated 02.02.2018 asked the defendant no.2 about its role in the entire process. The defendant no.2 in its email dated 02.02.2018, CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 9 of 47 informed that defendant no.1 and JOTO (which is another local distributor of defendant no.2 in India) are the partners of defendant no.2 and both the companies are contractually bound to follow the guidelines as specified by defendant no.2. It was also clarified that trainers of defendant no.1 are trained by defendant no.2. The defendant no.2 by another email of the same date informed the plaintiff that issues have been communicated to the defendant no.1 and also apologized for the trouble being caused in the Machine.
2.14. It is further averred that since the issue raised by plaintiff were not being resolved, the plaintiff through its email dated 05.02.2018 once again requested the defendant no.1 either to resolve the issues and/or in the light of its assurance, extended during the negotiation providing stand-by Machine. Despite all the above efforts, no response was forthcoming either from defendant no.1 or from defendant no.2, accordingly, the plaintiff expressing complete dissatisfaction with the services offered by defendants vide email dated 06.02.2018 to the defendant no.2 highlighted the following:-
i) that from the date of installation the Machine has lying defective ii) that the defendant no.2 and defendant no.1 are not resolving the issue.
iii) that the defendant no.1 is not even providing a stand-by Machine.
iv) that the plaintiff has never seen such poor after sales services like that of defendant no.1 and 2.
2.15. It is averred that rather paying heed to the issues raised by plaintiff, the defendant no.2 in most casual manner through its CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 10 of 47 reply informed that it has spoken to the defendant no.1 and an Engineer will visit the office of plaintiff.
2.16. It is further averred that plaintiff once again vide two separate emails of 07.02.2018 requested the defendant no.1 to send a stand by Machine and resolve the issues. The defendant no.1 was once again put to the notice that because of the lackadaisical attitude of the defendant no.1, the plaintiff is facing revenue loss and the same is also damaging the reputation of the plaintiff. Based one assurances and representations of the defendant no.1, the plaintiff had spent a huge sum of money on the advertisement and had booked a number of appointments assuring the patients that the treatment will not take more than an hour. The defects in the Machine rendered the same unusable, leading to a situation that the entire advertisement campaign by the plaintiff went in vain, amounting to huge revenue loss, in as much as, the plaintiff had to either cancel the appointments and return the monies collected or had to shift the patients to the old Machine(s) performing the same treatment in 5 to 6 hours. .The defendant no.1 in reply to the said email informed the plaintiff that Managing Director of defendant no.1 will personally visit the plaintiff along with the Engineer and will bring a new tip to replace the leaking tip. The defendant no. 1 also assured that the problem will be taken care of. It is averred that the plaintiff had spent a sum of Rs. 29,00,000/- to purchase the said Machine. It also based on the assurances and representations of the defendant no. 1, had spent a sum of Rs. 19,00,000/- towards CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 11 of 47 advertisement and promotions of the its new Machine and paying an EMI Of Rs. 84,000/- per month. However, the defects in the Machine rendered the entire investments of the plaintiff fruitless as the plaintiff was unable to put the Machine for any useful purposes.
2.17. It is further averred that the defects in the Machine were noticed and pointed out at the installation stage itself and the defendant nos. 1 & 2 were time and again put to notice about the defects in the Machine, therefore, the plaintiff in its email dated 07.02.2028 requested the defendant no. 1 to replace the Machine rather than replacing the tip and / or to refund the money, in case the defendant no. 1 is unable to replace the Machine. Despite the above said email, neither any Engineer nor Mr. Khurana visited the plaintiff, therefore, the plaintiff vide emails dated 08.02.2018, 10.02.2018 and 19.02.2018 requested the defendant no. 1 to replace the Machine and / or refund the amount of Rs. 29,00,000/- along with damages. It is next averred that after 8 days of constant follow up with the defendant no. 1, Mr. Rajesh Khurana vide email dated 19.02.2018 informed the plaintiff that "am in USA in consult with Echkart International Marketing Manager. Have discussed it with him and company is not only sending us the O rings responsible for leakage which is really small but also a brand new tip just in case it is required. Out of 2 tips XLL and XLS. In XLS rubber ring is to prevent water leakage and that needs to be changed. However, it has taken us some time to come to root cause but would sincerely request you to let us handle it and we CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 12 of 47 will do it to the entire satisfaction". The defendant no. 1 further informed the plaintiff that it is sending the Engineer at the office of plaintiff.
2.18. It is further averred that finally on 26.03.2018, the Engineer of the defendant no. 1 visited the office of the plaintiff, however, changed only one tip. Since, the Engineer was not able to provide satisfactory answers, the plaintiff vide its email dated 26.03.2018, though acknowledged that one tip has been changed, however, requested the defendant no. 1 to ensure that i) the problem of hand piece and water leakage is resolved permanently; ii) to provide a technician to check the water level in the Machine and iii) to extend the warranty period. Despite having no response from the defendant no. 1, the plaintiff again vide email dated 31.03.2018 had requested to reply to the issues and / or emails of the plaintiff. It is further averred that the defendant no. 1 had at all stages assured and represented that it will provide necessary training and service to the plaintiff, however, after the replacement of one tip, the plaintiff was left on its own without any help or guidance of a qualified engineer of the defendant no. 1. Accordingly, the plaintiff vide email dated 11.05.2018 requested the defendant no. 1 to provide energy and shot charts for the Machine. The training and energy shot charts were integral to the use of the said Machine and were well within the scope of the defendant no. 1, without which it was difficult for the plaintiff to administer treatments. Since, no response was received on the request for shot charts, the plaintiff CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 13 of 47 once again vide emails dated 19.06.2018, 21.06.2018 & 26.06.2018 requested the defendant no. 1 to provide shot charts. The said emails were followed by an email dated 16.08.2018 informing the defendant no. 1 that the Machine has not been delivering the desired result, therefore, once again the plaintiff requested for shot charts and training from the defendant no. 1. On 03.09.2018, the plaintiff in the presence of the representative of the defendant no. 1 informed that the Hand Piece with tip no. 407100609 & 407200636 was not working. The plaintiff accordingly through email dated 07.09.2018 requested the defendant no. 1 to send someone to check the Hand Piece. The request to change the Hand Piece was repeated by the plaintiff through emails dated 16.09.2018, 22.09.2018 & 28.09.2018.
2.19. It is averred that disappointed by the conduct of the defendant no. 1, the plaintiff once again vide email dated 20.10.2018 asked the defendant no. 1 why are they not sending the Engineers to rectify the problem in the Machine and if they cannot provide a service then why the Machine at the first place was sent to the plaintiff. The plaintiff further informed that because of the callous attitude on the part of the defendant no. 1, the work of the plaintiff is suffering and if no action is taken by the defendant no. 1 then the plaintiff will be forced to take legal action against defendant no. 1. It is submitted that on 30.10.2018, Mr. Prahlad visited the GK Branch of plaintiff to repair the Hand Piece error, however, since he was unable to repair the Hand Piece at the CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 14 of 47 premises, he suggested that the Hand Piece with its 2 tips be handed over to him. Acting on the advice of Mr. Prahlad, initially the plaintiff agreed to hand over the Hand Piece and two tips with a request to have the same repaired and returned within two days. However, keeping in mind the past conduct and delayed responses of the defendant no.1, the plaintiff requested the defendant no.1 to send experts at the premises of the plaintiff to repair the Hand Piece. The defendant no.1 rather than agreeing to the request of the plaintiff, once again, kept silent for the period of two days, leaving little option with the plaintiff but to handover the Hand Piece and the tips to defendant no.1, accordingly, on November 2, 2018, the Machine as well as the hand piece along with two tips was handed over to Mr. Prahlad from the GK 2 Branch of the plaintiff firm. Further, defendant no.1, vide its email dated 03.11.2018 informed the plaintiff firm that Machine is working properly, however some fault was found with the Hand Piece and they are in talks with manufacturer i.e. defendant no.2 for repair or replacement which would take about 30-45 days. Accordingly, plaintiff received the Machine without the Hand Piece which was informed to defendant no.1 through email dated 09.11.2018 and plaintiff requested the defendant no.1 to provide for a replacement of the Hand Piece and the large tip.
2.20. It is further stated that due to non hearing from defendant no.1 for period of 10 days, the plaintiff once again vide email dated 19.11.2018 asked the defendant no.1 about the status of the Hand CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 15 of 47 Piece, however, despite acknowledging that the Machine and the Hand Piece were defective and needed replacement/repairing, the defendants had taken no steps and caused loss to the plaintiff. Therefore, plaintiff vide legal notice dated 19.12.2018 called upon the defendant no.1 to refund a sum of Rs. 29,00,000/- along with 24% interest. However, despite receipt of the legal notice, the defendant no.1 neither replaced/repaired the said Machine nor refunded the amount of Rs. 29,00,000/-.
2.21. It is further averred that plaintiff is also seeking further sum of Rs. 31,93,236/- towards damages, loss of business, loss of reputation/goodwill and also towards payment of interest on sum of Rs. 26,00,000/-. The suit is within the period of limitation and this court has territorial jurisdiction to try the present suit as the registered office of defendant no.1 is situated at Naraina, which falls within the jurisdiction of this court. On these grounds, a prayer was made that the suit may be decreed for a sum of Rs. 29.0 lakhs in favour of the plaintiff and against defendant no.1 and 2 and further, a decree of Rs. 31,93,236/- towards cost of advertisement/promotion; interest on loan and due to loss in business/reputation/goodwill along with interest @ 18% per annum from the date of payment till its realization and costs. Hence, this suit.
3. Pursuant to summons issued, the defendants appeared and filed separate written statements. Defendant no.1 in its written CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 16 of 47 statement raised various preliminary objections/submissions stating that defendant no.1 is a lawfully registered company under the Companies Act, 1856. It is a pioneer institution who launched Gold Standard Products and Lasers from the World Market of Aesthetics. Defendant no.1 had taken the plea that the plaintiff was in search of a Machine for its clinic which would be approved by US FDA (US Food and Drug Administration) and possessed US FDA Certification because of which the plaintiff approached the defendant no.1. Then the representatives of defendant no.1 went to the office of plaintiff to show catalogue of the best quality US FDA based approved Machine as per the requirement of the plaintiff. The plaintiff selected Machine in question and also opted for large Hand Piece. The CE (European quality Standard) and US FDA Certification itself speaks that Machine or any of its parts are of highest quality and only allowed to sale after approval of US Drug and Regulators by US Health Department. It is further submitted that defendant no.1 is not the manufacturer of the Machine and only selling the Machine in open market and the Machines which are sold by defendant no.1 are exclusive and their installation require expertise and for that purpose, defendant no.1 had a team of some Engineers who got training from the manufacturer of these kinds of exclusive Machines regarding installation. Most of the manufacturers of these kind of exclusive Machines are from Germany, France, China, Japan, Tiaban etc., so for every small problems and installations, Engineers of these manufacturing company cannot visit India which can only add to the cost of CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 17 of 47 Machine. Just to provide little help to the buyers, the defendant no.1 has a team of Engineers who got training from every manufacturer of the Machine to handle the small problems. It is also stated that nonetheless, for the problems which are beyond the expertise of defendant no.1 and for training was not given, for those, defendant no.1 sends defaulting parts to the manufacturer, either to fix them or to change them depending upon the situation and period of warranty.
3.1. It is further submitted that proper demonstration of Machine was given to the plaintiff as many times as insisted by the plaintiff and the said Machine was used and tried upon number of patients in their clinic as a clinical trial used by the plaintiff before buying such Machine and thus, the plaintiff had expressed its intention to buy the Machine. The plaintiff, after going through complete due diligence of Machine and seeing all the certificates of Machine, then made decision to buy the Machine and also, preferred the large Hand Piece as per the choice of plaintiff from defendant no.1. Generally, with the said Machine, the manufacturer provides standard Hand Piece but has the option to buy the larger one by making additional payments.
3.2. It is further submitted that defendant no.1 is not manufacturer of the said Machine and only import these Machines from the manufacturer as per order placed by any customer and also looks after sales service and maintenance of these Machines CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 18 of 47 for whatever training the defendant no.1 got from the manufacturer. It is further submitted that the value of the Machine in question is of Rs. 60,00,000/- however, the plaintiff had persuaded the defendant no.1 to give him discount in the said Machine. The defendant no.1 after discussion with the manufacturer i.e. defendant no.2 agreed to sell the said Machine to the plaintiff for Rs. 29,00,000/- after which defendant no.1 sent the revised quotation to the plaintiff.
3.3. It is further submitted that while selling the Machine to the plaintiff, the defendant no.1 also offered the warranty of 36 months on the said Machine, whereas, warranty for the Hand Piece was only for 12 months including any misuse, part linked to pulse counter and consumables. The delivery certificate issued by defendant no.1 and the Machine was duly installed at the place of plaintiff on 01.01.2018. It is further submitted that whenever plaintiff has raised its complaint with defendant no.1 regarding the said Machine, the defendant no.1 always responded to such complaint and tried to resolve the complaint/issue of the plaintiff on time. Not only this, the defendant no.1 had even imported the part of said Machine for the plaintiff, infact plaintiff told about the water leakage from the tip of the Hand Piece, the defendant no.1 imported a new tip for the Hand Piece of the plaintiff from Germany and also gave an extra tip to the plaintiff after fixing the new tip in the Hand Piece, thereafter, the said Hand Piece was working fine and the plaintiff was satisfied with its working.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 19 of 473.4. It is further submitted by defendant no.1 that at the time of installation, there was minor issue of water leakage from tips, defendant no.1 provided the tips on 08.02.2018 and also given additional tips after getting it from German Manufacturer on 20.02.2018. Problem of tip was resolved thereafter afterwards and no complaint was lodged so far as regarding the tip afterwards.
3.5. It is further submitted that plaintiff had issued four cheques to defendant no.1 to make initial payment for the said Machine. However, at the time of presentation of one such cheque bearing no. 000605 having amount of Rs. 68,000/-, it did not get clear by the bank of the plaintiff. It is further submitted that defendant no.1 tried to contact the plaintiff about the payment but the plaintiff did not make the said payment to the defendant no.1 till date. It is further submitted that tip which was arranged by defendant no.1 initially is worth Rs. 3,75,000/- and all the services were done by the defendant no.1 free of cost. The defendant no.1 has provided prompt services and many of the parts imported from Germany were even provided. It is further submitted that answering defendant has provided adequate training to the plaintiff regarding use of Machine but in every 10 days, plaintiff comes with same excuse that they require more training.
3.6. It is further submitted that plaintiff, to avoid the arrears due of the defendant is in the habit of saying that water is leaking from the Hand Piece and one day, plaintiff had told the defendant no.2 CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 20 of 47 that Hand Piece is not working, he is facing difficulty in using the same. After which, the Engineers from defendant no.1 visited the plaintiff's clinic to check the problem with the Hand Piece and when the Engineer went to the clinic of plaintiff, he was not able to find out as to why the that Hand Piece is not working. Thereafter, the defendants' Engineer told the plaintiff that they would have to send these non working Hand Piece to the manufacturer in Germany to find out actual reason behind for non working and in the meanwhile, the defendant no.1 will provide a stand by Hand Piece to the plaintiff so that work of the plaintiff does not suffer till the time manufacturer inspect and repair the said non working Hand Piece. The plaintiff was supposed to pay monthly rent of Rs. 30,000/- per month to defendant no.1 for using the stand-by Hand Piece of defendant no.1 but till date, the plaintiff has not given any rent to the defendant no.1. It is further submitted that when the complaint regarding the Hand Piece was raised by the plaintiff, defendant no.1 immediately provided spare Hand Piece which is still with the plaintiff, it was given on 16.11.2018 by defendant no.1 and duly received by one Vipin on behalf of plaintiff.
3.7. The defendant no.1 further submits that when Hand Piece was sent to the manufacturer for checking, he was told that manufacturer had checked the Hand Piece by using three inspection methods and it was found that said Hand Piece was dropped on the floor by the user of Hand Piece which has caused an internal damage in the Hand Piece and repairing of the said CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 21 of 47 Hand Piece will be charged from the owner as it is not covered under guarantee, will cost around 3000 Euros including Fright and Custom duty and same was informed to the plaintiff by the defendant no.1. It is alleged that the plaintiff was never intended to pay repairing charges rather pressurized the defendant no.1 that it should be covered under warranty whereas, the misuse/damage by one's own mistake is excluded from the warranty. It is alleged by the defendant no.1 that plaintiff is liable to pay Rs. 2,45,000/- charges to the defendant no.1 for repairing of Hand Piece. It is also stated that plaintiff has not returned defendant no.1 stand-by Hand Piece till date and he has not even paying the monthly rent for the Hand Piece through defendant no.1. Plaintiff has arrear rent of Rs. 10.0 lakhs till date to defendant no.1 for using their stand by Hand Piece. It is also alleged by the defendant no.1 that plaintiff is liable to pay total amount of Rs. 13,03,300/- to defendant no.1 and defendant no.1 is entitled to recover the same from the plaintiff along with damages for the loss suffered by defendant no.1 due to non payment of arrears of rent. On these grounds, it is prayed that the plaint deserved dismissal.
4. Defendant no.2 in its written statement denied the averments made by the plaintiff in the plaint inter alia submitting that defendant no.2 is the Hi-Tech German based company and has no office in India. Defendant no.2 through Directors instructed defendant no.1 to file proper reply. It is submitted that defendant no.2 is in a Laser technologies, has been operating as a leader in CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 22 of 47 the International Medical Laser market since 1977. It is certified according to ISO-13485 and meets the European Medical Device Directive 93/42/EEC, Appendix2 requirements. In addition to the pleas taken by defendant no.1 in its written statement, it is alleged that defendant no.2 is the manufacturer of said Machine and each Machine manufactured goes through a line up inspection and test process to get approval of internal certifying agency after passing all stages, then only Machine gets the certificate from the certifying agency. So, there is no chance that these Machines having manufacturing defect. Suggesting the customer/buyer to purchase any Machine, according to customer specification, it is the work of defendant no.1 and perusal of buyer to purchase the same is done by defendant no.1 by giving demonstration of Machine or additional offers or after sales service etc. to buyer which is a privilege communication between the buyer and defendant no.1 where manufacturer has no role in that communication. Thereafter, defendant no.1 places order with manufacturer of the Machine which the buyer wants to purchase. It is further submitted that by selling the said Machine to the plaintiff, the defendant no.2 on the request of defendant no.1 offered the warranty of 36 months on the said Machine. Warranty is only and only against the manufacturing defect. When the defendant no.1 received a confirmation order from its buyer, thereafter, defendant no.1 places the order with defendant no.2/manufacturer after which defendant no.2 processed the order received from defendant no.1 and delivered the Machine to defendant no.1. Then defendant no.1 delivers the Machine to the CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 23 of 47 buyer and then trained Engineer of defendant no.1 install the Machine at buyer's place and after sale, service of the Machine is looked after by defendant no.1.
4.1. It is further submitted that defendant no.2 is manufacturer of Machine which was sold to the plaintiff by the defendant no.1 and the said Machine being sold to the plaintiff was duly attested and passed all the quality tests performed by certifying authority. It, being the manufacturer is only concerned with the selling of best quality and certified Machine approved by the concerned certifying authority. The defendant no.2 even after selling the Machine to their customer, entertained their customer's query/complaints and sometimes even replace part/Machine if requires. The defendant no.2 is serious about their customer satisfaction which is evident from the fact that at the time of installation of plaintiff's Machine, there was minor issue of water leakage from the tips which defendant no.1 informed and within the short time, defendant no.2 provided the two tips to the defendant no.1 for plaintiff's Machine whereas, the plaintiff was just required only one tip for its Machine. It is further submitted that defendant no.1 had sent the plaintiff's non working Hand Piece to defendant no.2 in Germany to find out actual reason for non working. The defendant no.2 inspected /checked the Hand Piece of the plaintiff while using three inspection methods and it came to know that the said Hand Piece was dropped on the floor by the user of Hand Piece which has caused the internal damage in the Hand Piece. Since it was not CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 24 of 47 covered under warranty, the repairing of Hand Piece was to be charged from the owner of Hand Piece. Accordingly, it was informed to the defendant no.1 and who in turn informed to the plaintiff but no reply was received from the side of the plaintiff. He further stated that as per policy of the company, if the Machine is not repaired within three months, then same will be sent back to the authorized agent with the inspection charges of 225 Euros. As per communication received from defendant no.1, the defendant no.1 from its own expenses paid the amount for repair of Hand Piece of the plaintiff. It is submitted that it was the plaintiff who was not able to use the Machine and not getting desired customers. On these grounds, a prayer was made that suit deserves dismissal.
5. It is relevant to mention here that counter-claim on behalf of counter-claimant / defendant no.1 was filed claiming Rs. 13,03,000/- against the plaintiff alleging that the plaintiff is entitled to recover the same from the respondent/plaintiff for the loss suffered due to non payment of arrear amount which are as follows:-
a. Arrear payment consideration for Machine purchased- Rs. 68000/-. b. Arrear Rent of Stand-by Hand Piece (from November, 2018 till date)- Rs. 9,90,000/-.
c. Cost of repairing the Hand Piece of plaintiff- Rs. 245000/-. Total- Rs. 13,03,000/-
6. In the reply to the counter-claim filed by the plaintiff / respondent to the counter-claim, the averments made in the counter-claim were denied inter alia stating that it is not CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 25 of 47 maintainable. In addition to that, it is alleged that the claim of Rs. 68,000/- towards balance payment as sought is not maintainable due to the fact that counter-claimant was duly informed that there was defect in the Machine and hence, the payment was stopped, the defect was noted at the stage of installation itself. It is further submitted that the claim of Rs. 9,90,000/- is illusionary, baseless and devoid of any merits for the reasons that there was no agreement between the parties with request to pay monthly rental for the use of stand by Hand Piece. It is further alleged that the claim of Rs. 2,45,000/- for cost of repair of Hand Piece is not maintainable for the reason that counter-claimant, prior to the filing of present counter-claim has never communicated to the plaintiff to the counter-claim about the repairing charges. It is further submitted that the counter-claimant rather than informing of the said charges or taking an approval, unilaterally chooses to give his consent towards the cost. It is further submitted that the defendant no.2 has taken a stand that the Hand Piece was dropped /mishandled and therefore, defendant no.2 is not liable for the said defect. It is alleged that in the instant case, on 01.01.2018, there are two reports; I) being a pre-delivery inspection report and ii) installation report. While the pre-delivery inspection report is a document of defendant no.1 / counter-claimant, the installation report is signed by both the parties. If the pre-delivery action report is taken to be correct, then when the Machine was in possession of defendant no.1, the same was okay. The Machine was opened in the presence of defendant no.1 / counter-claimant and the CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 26 of 47 installation report was prepared in presence of defendant no.1, if this is the case, then there cannot be any mishandling of the Hand Piece. It is also submitted that defendant no.2 has placed on record a letter dated 30.07.2021 showing different serial nos.
"407010470" and "402002637" and the reason which is stated is "by pulling too hard on the cable or dropping the Hand Piece".
This shows that counter-claimant and defendant no. 2 are trying to defraud the plaintiff by creating false and fabricated documents. On these grounds, a prayer was made that the counter-claim deserves dismissal.
7. The plaintiff filed separate replication to the written statement filed by the defendants whereby objections made by the defendants are reputed and pleadings made in the plaint are re- affirmed.
8. From the pleadings of the parties, following issues were framed on 25.02.2022 by my Ld. Predecessor:-
1. Whether the plaintiff is entitled to recovery of a sum of Rs. 60,93,236/-? OPP.
2. Whether the plaintiff is entitled to interest, if so, at what rate and for which period? OPP.
3. Whether the counter-claimant/defendant is entitled to counter-claim of Rs. 13,03,300/- as prayed for? OPCC.
4. Whether the counter-claimant/defendant is entitled to interest, if so, at what rate and for which period? OPCC.
5. Whether the counter-claims of counter-claimants are CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 27 of 47 maintainable in the absence of payment of court fees? OPCC.
6. Relief.
9. In order to prove its case, the plaintiff had examined Ms. Jessica Sethi working with plaintiff as PW-1 thereafter, closed its evidence. It is relevant to mention here that the plaintiff during the course of trial, dropped PW-2 Sh. Harjeev Sethi, Partner of plaintiff and statement to this effect was recorded on 30.05.2022. On the other hand, the defendants examined Sh. Rajesh Khurana, Director of defendant no.1 as DW-1 and thereafter, closed their evidence.
10. I have heard arguments advanced by ld. Counsel for the parties and gone through the record. My issue-wise findings are as under:-
Issue no.1 and 2:-
11. Both these issues are being taken up together being interconnected. The onus to prove these issues is upon the plaintiff. Both these issues were framed to the claim of the plaintiff for Rs. 60,90,236/- which has two components, one being Rs. 29,00,000/- being the cost of defective Machine supplied to the plaintiff by the defendants and another sum of Rs. 31,93,236/- (being expenses incurred on advertisement, interest on loan, loss of goodwill and reputation) and interest thereupon.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 28 of 4712. At the outset, it is relevant to mention here that plaintiff during the course of arguments did not press for the claim of Rs. 31,93,236/- and thus, issue is now restricted to Rs. 29,00,000/- towards transaction between the plaintiff and defendants being sale of Machine which the plaintiff claims to be defective.
13. The controversy between the parties is about supply of Machine by the defendants allegedly having inherent defects. In order to decide this controversy, at the outset, it is relevant to discuss about the evidence adduced by the parties. The plaintiff examined Ms. Jessica Sethi as PW-1. She tendered her evidence by way of affidavit as Ex.PW-1/A and reiterated the contentions of the plaintiff in her evidence. She relied and proved documents as follows:-
i. Email dated 28.03.2017 is Ex. PW1/1.
ii. Email dated 05.12.2017 is Ex. PW1/2.
iii. Revised Quotation of 08.07.2017 submitted by defendant is Ex. PW1/3.
iv. Revised Quotation of 10.07.2017 submitted by defendant is Ex. PW1/4.
v. The price quotation dated 04.12.2017 and the email dated 04.12.2017 are Ex. PW1/5 & Ex. PW1/6.
vi. Email dated 05.12.2017 is Ex. PW1/7.
vii. Email dated 07.12.2017 is Ex. PW1/8.
viii. Revised performa invoice dated 15.12.2017 and email dated 15.12.2017 are Ex. PW1/9 & Ex. PW1/10.
ix. Email dated 20.12.2017 & 13.12.2017 is Ex. PW1/11 & Ex. PW1/12.
x. Email dated 27.12.2017 is Ex. PW1/13.
xi. Copy of loan agreement is Ex. PW1/14.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 29 of 47xii. Installation report dated 08.01.2018 is Ex. PW1/15. xiii. Email dated 05.01.2018 is Ex. PW1/16.
xiv. Whatsapp message dated 08.01.2018 is Ex. PW1/17. xv. Email dated 08.01.2018 of defendant no. 2 is Ex. xvi. Email dated 11.01.2018 is Ex. PW1/19.
xvii. Email dated 24.01.2018 is Ex. PW1/20.
xviii. Email dated 25.01.2018 is Ex. PW1/21.
xix. Email dated 27.01.2018 is Ex. PW1/22.
xx. Email dated 27.01.2018 of defendant no. 1 is Ex.PW1/23.
xxi. Email dated 02.02.2018, 05.02.2018, 06.02.2018 are Ex.PW1/24 to Ex. PW1/27 (colly) xxii. Emails exchanged between the parties are Ex. PW1/28 to Ex. PW1/40.
xxiii. Legal notice dated 19.12.2018 is Mark PW1/41.
14. The plaintiff has contended that first offer i.e. March, 2017, a quotation for a sum of Rs. 38,25,000/- was submitted by defendant no.1 and same was revised leading to final quotation of 04.12.2022 for a sum of Rs. 29,00,000/-, accordingly defendant no.1 raised proforma invoice. On 01.01.2018, the said Machine was installed by the Service Engineer of defendant no. 1 in the presence of Sh. Rajesh Khurana, Managing Director of defendant no.1 and during installation, a defect in Machine came to the knowledge of the plaintiff and accordingly, an installation report Ex. PW-1/15 highlighting the defect - water leakage from Hand Piece was prepared and signed by all the parties. Machine, which was purchased by the plaintiff from the defendants was with a view to put the same for immediate use of treatment upon patients but on CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 30 of 47 account of inherent defects, it remained idle and could not be used for treatment purposes. It is urged that the purpose for which Machine was purchased got frustrated. It is emphasized that despite repeated reminders and requests, defendant no.1 neither rectified the defects nor replaced with new one and the plaintiff is entitled for the recovery of the money of Rs. 29,00,000/- spent by the plaintiff to purchase the said Machine.
15. Per contra, according to the defendants, the plaintiff after doing complete diligence of Machine and after going through all the Certificates, then decided to purchase the Machine from defendant no. 1, manufactured by defendant no. 2. Proper demonstration of the Machine was given to the plaintiff as desired and the complaints as and when raised by the plaintiff were promptly attended. Rather, defendant no. 1 also provided extra tip after fixing new tip in the hand piece. It is alleged that defect in the Machine was caused by the plaintiff by mishandling. It is alleged that it is defendant no. 1, who is entitled to recover balance amount of Rs. 68,000/- towards purchase of Machine; arrears of rent of Rs. 9,90,000/- for stand-by hand piece supplied to the plaintiff and also Rs. 2,45,000/- towards cost of repairing the Machine. To substantiate its defence, the defendants have examined Sh. Rajesh Khurana, Director as DW-1. He tendered his affidavit by way of evidence as Ex.DW-1/A and relied upon the documents as follows:-
i) Authority letter of the authorized representative of CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 31 of 47 defendant no.1 in my favour is Ex. DW1/1.
ii) Copy of US FDA Certificate issued by the Department of Health and Services, Food and Drug Administration is Ex.DW1/2
iii) Copy of revised quotation dated 15.12.2017 is Mark DW1/3
iv) Copy of delivery certificate alongwith warranty certificate and pre-delivery inspection report is Mark DW1/4
v) Copy of report dated 08.02.2018 and receiving of Asclepion TIP
vi) XLS from plaintiff dated 20.02.2018 mark Ex. DW1/5
vii) Copy of cheque dated 25.02.2018 bearing no. 000605 drawn on viii) HDFC Bank is Ex. DW1/6
ix) Copy of return memo is Ex. DW1/7
x) Copy of receiving on 16.11.2018 by Vipin is Mark DW1/8
xi) Copy of ticket raised by defendant no. 1 to defendant no.2 is Ex.DW1/9
xii) ) Copy of letter dated 30.07.2021 regarding handpiece is Ex.
DW1/10.
xiii) Copy of Rental charges of handpiece from other customers Ex. DW1/11(colly)
xiv) Copy of reply to plaintiff's police complaint in Gurugram as Ex. DW1/12
xv) Copy of letter dated 28.08.2022 issued by Asclepion Laser Technologies GmbH i.A. through Area Manager, Sh. Hans Gunter Prufer is Mark DW1/C. xvi) Certificate under Section 65B of the Indian Evidence Act, 1872 is Ex. DW1/B xvii) Certificate under Section 65B of Indian Evidence Act, 1872 is Ex. DW-1/D.
16. Ld. Counsel for defendants contended that of the claim of CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 32 of 47 plaintiff is not sustainable because the defects were rectified as and when reported. It has been contended that defendant no.1 was mere supplier and was not competent to handle technical part, which was domain of defendant no. 2 being the manufacturer of Machine. The defendants relied upon two documents dated 08.02.2018 and 20.02.2018 Ex. DW1/5 to argue that defective parts of the Machine were immediately replaced. It is also argued that vide receiving dated 16.11.2018 Ex. DW1/8 stand-by hand piece was supplied on 16.11.2018, so as to facilitate the working of the plaintiff for which rent has not been paid. While drawing attention of the Court to the cross examination of PW1, it is asserted that this witness admitted that spare hand piece was given before taking the hand piece from them. Ld. Counsel for defendants further argued that a ticket was placed on the manufacturer on 15.11.2019 Ex. DW1/9, thus, all efforts were finally put. Finally based on a report dated 30.07.2021 Ex. DW1/10, it has been argued that defect in the Machine was caused by the plaintiff by mishandling.
17. Resisting the above argument of the defendants, Ld. Counsel for plaintiff argued that there is no document on record to suggest that Machine was tested before delivery. Drawing attention to the cross examination of DW1, it is urged that this witness could not state when the Machine was tested before delivery and how many hand pieces were ordered by the plaintiff. The relevant extract is reproduced as under:
"I do not remember how many hand pieces were ordered by CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 33 of 47 the plaintiff. Again said, plaintiff has ordered only one hand piece. Two tips come along with hand piece. They are small & large and come with the hand piece. I do not remember whether on 08.02.2018, small tip was replaced or large tip was replaced. It is correct that tip as per document Ex. PW1/5 were replaced. I cannot say if at any time, large hand piece was replaced by us. I do not remember the date when Machine was imported in India. The Machine was tested before delivery, however, I were not present at the time of testing. Testing were done by my Engineer. I am not sure, if I had gone to the premises of plaintiff to see at the time of delivery of Machine. My Engineer had delivered the Machine. It is correct that the Machine was installed, there was water leakage problem..........."
18. Ld. Counsel for the plaintiff would argue that defendant no.1 replaced the small tip in February, 2018 and when in September, 2018, he was informed about the problem in Machine vide email dated 03.11.2018 Ex. PW-1/38, the defendant no.1 informed that Tip No. 40720036 was not working properly. The defendant no.1 to wriggle out its contractual obligation has relied upon a report dated 30.07.2021 Ex.DW-1/10 of defendant no.2 stating that since the Hand Piece was mishandled or dropped, therefore, is not covered under warranty. It is submitted that the present suit has been instituted in the year 2020 and the defendant no.1 is placing reliance upon report which was generated on 30.07.2021. Moreover, the tip number mentioned on this report is completely different than that of the plaintiff. The tip number of the plaintiff is 407200636 while the report placed on record is with respect to tip no. 402002637. There is no report which states that tip no. 407200636 (of the plaintiff) was mishandled or dropped. It is emphasized that it is a case where the defendant no.1 clearly CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 34 of 47 admits that there is a problem with the Hand Piece and the tip vide email dated 03.11.2018 Ex. PW1/38, there is also admission that Hand Piece and tip is till date in possession of defendant no.1, therefore the Machine supplied by the defendants was defective. It is also urged that even if it is assumed that Machine was working for a period of six months, this would not mean that plaintiff is not entitled for the cost of Machine, in as much as, the plaintiff invested a huge amount of Rs. 29,00,000/- on an assumption that a Machine which is being purchased would be fully functional. Since the Machine was defective and the defect has never been rectified, therefore, plaintiff is entitled for cost of the Machine.
19. On judicial scanning of evidence adduced by respective parties, the dispute, as claimed by the plaintiff pertains to defective sale of MeDio star Next Pro 2400 watt Diode Laser with Large Hand Piece (Machine) by the defendant no. 1 (the seller) to the plaintiff (the buyer). The background emerging from the pleadings is that vide email dated 28.03.2017 Ex. PW-1/1 the defendant no. 1 proposed to the plaintiff supply of MeDio star Next Pro 2400 watt Diode Laser allegedly manufactured by Asclepion Laser Technologies, GMBH, Germany the defendant no. 2. This e-mail contained two pdf attachments; one was TH-6226 Quotation and another was ASCLEPION MEDIO STAR NEXT PRO. These attachments show that the defendant no. 1 not only informed the price but also exact model and description of Machine to be supplied to the plaintiff.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 35 of 4720. Subsequently, there were exchange of e-mails between the parties dated 08.10.2017 Ex.PW-1/3, 10.07.2017 Ex.PW-1/4, 04.12.2017 Ex.PW-1/6 ,email dated 07.12.2017 Ex.PW-1/8, Email dated 15.12.2017 Ex.PW-1/10 and exchange of price quotation Ex.PW-1/6 and revised proforma invoice Ex.PW-1/9, thereby fine tuning various aspects of transaction of sale of goods ( Machine).
21. Finally, a purchase order was placed by the plaintiff vide e- mail dated 20.12.2017 Ex. PW-1/11 and the defendant no. 1 issued Tax invoice dated 20.12.2017 for due amount of Rs. 29,00,000/-. As per email dated 27.12.2017, Ex.PW-1/3, the payment of Rs. 26,00,000/- and Rs.3,00,000/- and the aforesaid Machine was supplied to the plaintiff on 01.01.2018. The Machine was installed by the representative of the defendant no. 1 and Installation Report was generated Ex. PW-1/15 which contained remark "Water Leakage from Hand piece".
22. In the present case, the Installation Report dated 01.01.2018 Ex.PW-1/15, itself contains the defect which primarily indicates that the Machine has defects. However, between 05.01.2018 and 19.12.2018, there were e-mail communications ending with legal notice 19.12.2018 revealing that plaintiff pointed out defects in the Machine and repeatedly informed the defendants that Machine is not working properly and having defects. With this background, some of relevant documentary evidence produced by both the parties by arranging them in chronological order, with reference to CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 36 of 47 the oral evidence adduced by the parties are discussed as under:-
i. Ex. PW-1/16:- It is an email dated 05.01.2018 sent by the plaintiff to the defendant no.1 wherein precise defect has been mentioned and pictures are attached. It is specifically mentioned that further use of Machine may cause damage. This is an exercise of right of examination and pointing of defects in goods.
ii. Ex.PW-1/17:- It is a Whatsapp message dated 08.01.2018 mentioning that defendant no.1 is in touch with Asclepion for resolution.
iii. Ex. PW-1/18:- It is an email dated 08.01.2018 sent by the defendant no.2 to the plaintiff acknowledging the notes and seeking further details such as Serial no. of device and Hand Piece etc. iv. Ex. PW-1/19:- It is an email dated 11.01.2018 sent by the plaintiff to the defendant no.1 asking rectification of defect or replacement of Machine. By seeking replacement, the plaintiff has communicated that the delivered piece of Machine has been rejected. "In case the Machine is faulty, then kindly replace the same with new one."
v. Ex. PW-1/20:- It is an email dated 24.01. 2018 sent by the plaintiff to the defendant no. 1 informing that problem has increased. The plaintiff has enquired if the reported defect was a manufacturing defect.
vi. Ex. PW-1/21:- It is an email dated 25.01.2018 sent by the defendant no.1 to the plaintiff acknowledging the defect and assuring solution. The conduct of the defendant shows that defects in goods is not only admitted but accepted.
"Engineer visited and saw the problem. Root cause identified is the Tip 10X30 MM. We are getting a new one for you to replace."
vii. Ex.PW-1/22:- It is an email dated 27.01.2018 sent by the plaintiff to the defendant which is reminder seeking solution.
viii. Ex. PW-1/23:- It is an email dated 27.01.2018, whereby, the defendant no. 1 admits the defect. "Ok we will give you feedback. We arrange for both the tips."
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 37 of 47ix. Ex. PW-1/24:- It is an email dated 02.02.2018 sent by the plaintiff to the defendant informing another problem in Machine (photographs were also sent). It is also informed that Machine is lying unused.
x. Ex. PW-1/25 (Colly):- Vide email dated 02.02.2018, the plaintiff files a comprehensive details such as conversation, pictures and other issues about the Machine from the date of installation. The entire gamut of problem and efforts done till date were given in detail addressed to defendant no.2.
xi. Ex. PW-1/26:- It is an email dated 05.02.2018, which clearly mentions that Machine is lying unused for 1 month and 5 days. The loss of revenue is caused because patients were waiting. A request was made to correct the problem.
xii. Ex. PW-1/27 (colly):- It is email (s) dated 05.02.2018 being a distress communication to the manufacturer intimating the difficulties faced by the buyer.
xiii. Ex. DW1/5:- It is Report dated 08.02.2018 of providing large hand piece tip to the plaintiff and receiving of ASCLEPION Tip from plaintiff dated 20.02.2018.
xiv. Ex. PW-1/28 (colly):-It is email (s) dated 07.02.2018 sent by the plaintiff to the defendant no.1 asking stand-by Machine till time supplied Machine is rectified. Further, on the same day, there is another mail whereby request was made to the defendant no.1 to return the amount of Rs. 29,00,000/- to the plaintiff's account since the Machine was not working and no single penny was earned through that Machine.
xv. Ex.PW-1/29 (colly):- Reminder emails to return the amount of Rs. 29,00,000/- to the plaintiff.
xvi. Ex.PW-1/30:- It is an email dated 19.02.2018 sent by the defendant no.1 clearly stating that company is not only sending O Ring responsible for leakage which is rarely small but also a brand new tip just in case, it is required. It also mentions that out of two tips XLL and XLS, in XLS, rubber ring is to prevent water leakage and that needs to be changed. However, it has taken us sometime to come to root cause but would sincerely request you to let us handle it and we will do it to entire satisfaction.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 38 of 47xvii. Ex.PW-1/31:- It is an email dated 26.03.2018 sent by the plaintiff to the defendant no.1 stating that the tip has been changed only and there is a doubt that water is very less in Machine due to leakage and it was requested to arrange to provide technician to check and fill the water in Machine and trainers to give the training to the technicians of the plaintiff.
xviii. Ex.PW-1/32:- It is an email dated 31.03.2018 sent by the plaintiff requesting for providing the service and further informing that one quarter from January, 2018 to March, 2018 is being ended and there is no reply to any mail from their end.
xix. Ex.PW-1/33:- It is an email dated 11.05.2018 requesting for providing energy and short charts for the Machine.
xx. Ex.PW-1/34 (colly):- It is one of the email dated 07.09.2018 addressed to the defendant no.1 informing that Mr. Prahlad has delivered the water BC-4 for Machine on 03.09.2018 but Hand Piece of Machine was not working properly on that day. The tip nos. were also provided as 407100609 and 407200636.
xxi. Ex. PW-1/38 (colly):- Set of emails on 2nd and 3rd November 2018 indicating that the seller has proposed to send the Hand Piece to Germany for repairs/ replacement which was likely to take 30-45 days. In this email at 6:43 PM, sent by defendant no. 1, the serial number, the relevant extract is reproduced as under:-
"We tested the Machine today 159103735. It is working perfectly alright. We did not have to open it. However, we found fault with Hand Piece (serial no. 470/40701 with tip 407200636 giving error 164/167 Testing of tip 407100609 small was perfect giving no errors we are talking to manufacturer, so we can send to Germany for repair/replacement Please be prepared for 30-45 days it might take for above two comeback)."
xxii. Ex. PW1/39: It is an email dated 09.11.2018 addressed to defendant no. 1 informing that Machine is being out of order from past three months and even after repeated complaints, the issues have not been CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 39 of 47 resolved by Timpac (plaintiff). It is also mentioned therein that (plaintiff) we have received Machine but without hand piece, which does not work. In the said email, the plaintiff made a request to arrange for replacement of hand piece and also to revert about the large piece that when will the defendant be arranging the replacement for that.
xxiii. Ex. DW1/8: It is copy of receiving on 16.11.2018 of spare hand piece of stand-by hand piece by Vipin on behalf of plaintiff.
xxiv. Ex. PW-1/40:- Vide e-mail dated 19.11.2018, the plaintiff again informed the defect and difficulties, the relevant extract is reproduced as under:-
"Please confirm the status of Hand Piece. We are facing a lot of problems and our client are asking for refund. Last three months the Machine has been out of order. This is really very unprofessional, and we are sure this is either a refurbished piece or a defective Machine sold by you. Kindly revert."
xxv. Ex. DW1/10:- It is a letter dated 30.07.2021 stated about findings on the hand piece s/m 402002637 that the defect is caused by improper handling.
23. The above discussed email communications exchanged between the plaintiff and defendants leave no doubt about the fact that defect in the Machine was pointed out by the plaintiff on the date of installation itself and the supplied Machine was rejected by the plaintiff within reasonable time and there was no conduct, which could show that Machine was accepted as such by the plaintiff. Though, as evident from Ex. DW1/5 that the plaintiff was provided with hand piece replaced and tip 407100606 but from record, it can be gathered that it was temporary solution because the problem resurfaced after few months. There is nothing on record on behalf of defendants to show that delivery of Machine was accepted by the plaintiff. Pertinently, there are ample CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 40 of 47 communications between February 2018 and November 2018 that the plaintiff was seeking further support to understand whether the Machine would work or not and also informing the defendants that defective Machine has been sold by the defendant no. 1. From the documents in the form of emails on record would show that plaintiff continued highlighting problem with the Machine till February 2018 and the defect resurfaced in November 2018, which was flagged to the defendants. Further, emails above indicates that plaintiff was continuously stating that said Machine was lying as show piece. It was also persistently asked from the defendant no. 1 let it may be rectified, so that the plaintiff did not lose business and reputation.
24. Section 15 of the Sales of Goods Act, 1930 (the Act) covers sales by description as in the case here where description of the Machine is basis of the contract and it is the case of sale of Machine by description. Section 16 of the Act postulates that where goods are brought by description as in this case, as mentioned in Ex. PW1/6, there is an implied condition that the Machine shall be of that specification.
25. Section 16 of the Act defines as under:
16. Implied conditions as to quality or fitness. - Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:-
(1) Where the buyer, expressly or by implication, make known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 41 of 47 which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:
Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality:
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
26. Section 12 of the Act defines a condition and warranty. Section 12 (2) & (3) state:
"(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives right to plead the contract as repudiated.
(3) A warranty is a stipulation collateral to main purpose of the contract, the breach of which gives right to a claim for damages but not a right to reject the goods and plead the contract as repudiated."
27. Section 17 of the Act provides sale by sample, where sale is a term in the contract, express / implied to that effect that the bulk shall correspond with the sample and quantity; the buyer shall have the reasonable opportunity of comparing the bulk with the sample; that the good should be free from any defect rendering that unmerchantable, which would not be apparent on a reasonable examination of sample.
28. The legal right of buyer to examine goods and acceptance as CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 42 of 47 provided under the Sales of Good Act as under:
41. Buyer's right to examining the goods. - (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.
42. Acceptance. - The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected the them.
29. The merchantable quality as per Section 16 of the Act means that goods comply with the description in the contract show that a purchaser buying goods of that description would be of a good tender. Goods cease to be merchantable because of defects rendering them unfit for the purpose for which they are usually sold and it is the duty of seller that the goods should be free from any defect. The Proviso to Section 16 of the Act, however divides all such defects into two kinds, often called patent and latent defects. A patent defect means there is something wrong with the product, which can be seen upon ordinary inspection. A latent defect can be a defect that existed at the time of purchase or construction but it is not a detectable by reasonable inspection methods. There is an implied condition on the seller's part that the CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 43 of 47 goods should be free from all defects. Further, seen in light of the provisions under Section 12 of the Act, breach of condition confers a non-defaulting party, right to repudiate such contract.
30. In the present case, as already discussed, there is unambiguous refusal of Machine (Medical Equipment) within reasonable time by the plaintiff due to it being defective as the defect has already been discovered on the day of installation itself i.e. 01.01.2018 meaning thereby at the first instance. The keeping of Machine with the plaintiff was on account of defendants making efforts to cure the defects. It can be culled out from the emails exchanged between the plaintiff and defendants as discussed in preceding paragraphs that the plaintiff many a times clarified that because of inherent defects in Machine, it is lying unused and it is requested to replace the same. Further more, with regard to the contention raised by the defendants that hand piece of Machine was damaged due to mishandling by the plaintiff, significantly, this contention is based on letter dated 30.07.2021 Ex. PW1/10 issued by defendant no. 2 after examining the hand piece sent to it. The plaintiff has refuted this contention by raising that hand piece number mentioned in this report Ex. PW1/10 is 402002637, whereas, referring to various emails exchanged between the parties show the hand piece as 407002636, this would show that argument raised by the defendants is fallacious.
31. In the said circumstances, in view of above-mentioned legal provision coupled with the contentions, oral evidence and CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 44 of 47 documents as discussed above, because the medical equipment (Machine) provided by defendant no. 1 is defective, which was never accepted by the plaintiff, there is a breach of terms by the defendant no. 1 as agreed & evident from emails exchanged between plaintiff & defendant no. 1. It is well settled position of law that erring party i.e. defendant no. 1, who has raised the invoice and received the payments from plaintiff, is legally bound to compensate the other party (plaintiff) for the said breach. Accordingly, defendant no. 1 is liable to refund the entire amount paid by the plaintiff for the purchase of Machine. It is claimed that out of total amount of Rs. 29,00,000/- the plaintiff has not paid Rs. 68,000/-, which is accordingly deducted from this amount. It is pertinent to mention here that no liability can be fastened upon the defendant no. 2 being not privity of contract and further being only the manufacturer of Machine. The plaintiff is accordingly, entitled for recovery of Rs. 28,32,000/- (Rs. 29,00,000/- - Rs. 68,000/-) from the defendant no. 1. To meet the end of justice, the defendant no. 1 is entitled to recover the subject Machine from the plaintiff. The issue no. 1 is partly decided in favour of plaintiff and against the defendant no. 1.
32. Now coming to interest, the plaintiff has claimed interest @ 18% per annum from the date of filing the suit till its realization. The Court is of opinion that the interest claimed by the plaintiff appears to be on higher side. Considering the transaction between the parties being commercial transaction, the plaintiff is entitled for pendete lite & future interest @ 10% per annum on the said amount CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 45 of 47 from the date of institution of suit till realization, the issue no. 2 is proved in favour of plaintiff and against defendant no. 1.
Issue nos. 3, 4 & 5:-
33. All these issues are being taken up together being interconnected. The onus to prove these issues were upon counter- claimant / defendant no. 1. It is claimed that the counter-claimant is entitled for Rs. 13,03,000/- under the various heads i.e. arrears of Machine (Rs. 68,000/-), arrear of rent for the handle supplied (Rs. 9,90,000/-) and the cost incurred on repairs of defective parts (Rs. 2,45,000/-).
34. The legal preposition highlighted in Cofex Exports Ltd Vs. Canara Bank 1997 AIR (Del) 355, was that where a plea in the nature of payment,adjustment and the like can be raised in defense as of right. The plea if upheld, has the effect of mitigating or wiping out the plaintiff's claim on the date of the suit itself. The plea is not a claim made by the defendant. A counter-claim or a plea of set-off is a claim made by defendant. It does not extinguish the plaintiff's claim; it exonerates the defendant from honouring plaintiff's claim through upheld. Such plea if raised shall be gone into by the court, if permitted by law applicable to the court and would have the effect of a decree in favour of the defendant taking away plaintiff's right to realise such amount as has been upheld in favour of the defendant.
35. In the present case, the defendant no. 1 has filed a separate and distinct counter-claim to the above claiming an amount of Rs.
CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 46 of 4713,03,300/-, therefore, it was a separate action brought by the defendant no. 1, on which Court fee was payable. Since, the defendant no. 1 / the counter-claimant has not paid Court fee on the counter-claim, therefore, the counter-claim is not maintainable. Pertinently, during the trial, at no point of time, defendant no.1 expressed its willingness to deposit court fees. This issue is decide against the defendant no. 1/ the counter-claimant.
36. The issue nos. 3 & 4 do not require adjudication because issue no. 5 has been decided against the defendant no.1/counter- claimant.
Relief:
37. In view of above discussions on all the issues as well as issue wise findings, the suit of the plaintiff is partly decreed and counter-claim of defendant no.1/counter-claimant stands dismissed. The plaintiff is hereby entitled for recovery of Rs. 28,32,000/- along with pendtent lite & future interest @ 10% per annum along with cost from defendant no. 1 from the date of institution of suit till its realization.
38. Keeping in view provisions as contained in Section 35 and Section 35A of CPC, more particularly in the given facts of the case, the plaintiff shall be entitled to costs equivalent to the Court Fee deposited in this case apart from Pleader Fee @ Rs. 1,00,000/- (Rupee One Lac Only). Decree sheet be prepared accordingly.
39. File be consigned to record room.
Pronounced in the open Court (VINEETA GOYAL) on 07.08.2023. District Judge (Commercial-03) Patiala House, New Delhi CS (Comm) 286/20 LA Skin Clinic vs. Tipac Healthcare Pvt Ltd and Anr Page 47 of 47