Anil Maheshwari v. Lambda Eastern Telecommunication Limited

1. The plaintiff has filed the present suit for recovery of Rs.53,79,037/- along with pendente lite interest and cost.

2. The case of the plaintiff is that he is carrying on his business operations in the name and style of Supreme Industrial Corporation and engages in business of electrical wires, cables, switchgears, switch boxes and electrical accessories of the similar type.

3. The defendant is engaged in manufacturing of PIU and other items mainly for telecom towers who has been contracting with large power distribution units and industry to lay and install electrical lines. From the year 2008, the defendant has been in active trade relations with the plaintiff for supply of electrical and allied items. As per agreed terms between the parties, the material was supplied against the purchase orders to be sent by the defendant to the plaintiff and supply 2015:DHC:8965 was to be made to the Kundli Project as well as to the Gurgaon Project of the defendant. The payment against the bills was to be made upon delivery of material and receipt of the bills from the plaintiff. The plaintiff used to receive purchase orders from the defendant and the material used to be delivered soon upon those purchase orders. Bills were raised and initially payments were received in satisfaction of the oust.

4. During the period from June 2010 to August 2011, the plaintiff received purchase orders, from the Kundli Project and the Gurgaon Project of the defendant. The material was duly delivered and received by the defendant. Necessary taxation documents were also duly exchanged. But starting from June 2010, the defendant stopped following the payment as per terms against the material supplied. Between 29th June, 2010 and until 17th February, 2011, when the last of the supplies was made, the plaintiff supplied material to the defendant of the sum of Rs.55,02,199/- the defendant released payment for the sum of only Rs.12,75,510/-. A payment of Rs.2,34,068/- was due in respect of delivery made to Gurgaon Project as on 3rd August, 2011, after which no payment was received by the plaintiff.

5. A copy of the running account as on 31st March, 2011 for Kundli Project and 30th September, 2011 for Gurgaon Project, as maintained by the plaintiff in the ordinary course of its business, of transactions between plaintiff and the defendant has been placed on record. The supplies were made to the defendant's Kundli Project, a sum of Rs.42,26,689/- is outstanding, while for the Gurgaon Project another sum of Rs.2,34,068/- is outstanding.

6. The plaintiff had several times represented to the officials of the defendant to expedite payments, but received no positive response. Looking at the attitude of the defendant, the plaintiff had to address a legal notice to the defendant through its counsel. By the said notice dated 21st October 2011, the plaintiff called upon the defendant to release the entire payment along with interest within four weeks but no reply was received by the plaintiff. Thus, in total the defendant owes a sum of Rs. 44,61,777/- to the plaintiff.

7. The last bill raised by the plaintiff for the goods supplied to the defendant in the ordinary course of their dealings was on 16th March, 2011 for Kundli Project and on 3rd August, 2011 for Gurgaon Project. The plaintiff claimed that the defendant is also liable to pay as per the terms of trade the interest for non-payment @ 24% p.a. commencing 15 days after the date of last transaction as under: Project Principal amount outstanding Interest payable from Amount of interest Kundli 42,27,709/- 1.04.2011 889,556/- Gurgaon 2,34,068/- 19.08.2011 27,703/-

8. The present suit is being filed under Order XXXVII CPC. The material was supplied by the plaintiff to the defendant under invoices which were duly acknowledged and which invoices give clearly the terms of trade between the plaintiff and the defendant, in addition, the plaintiff also relies on the statements of running accounts kept in the books of the plaintiff maintained in the ordinary course of business. The amount payable by the defendant to the plaintiff by way of principal comes to Rs.44,61,777/- and by way of pre-suit interest to Rs.917,260/-. The suit is being valued accordingly for the sum of the above principal and pre-suit interest, which comes to Rs.53,79,037/-. An ad valorem court fee of Rs.64,853/- has been paid. Application for Leave to Defend

9. Upon service, ultimately the defendant filed the application under Order XXXVII Rule 3(5) CPC for grant of leave to defend alongwith detailed affidavit on behalf of the defendant on the following grounds: a) The defendant company is working and operating from its office in Haryana i.e. at 478-EPIP, Industrial Area, Kundli (Haryana) and is carrying its ordinary course of business from that place only. Thus, this Court lacks territorial jurisdiction. b) The plaintiff had violated the terms of the purchase order and supplied defective and sub-standard material to the defendant company due to which the defendant company had to suffer huge financial loss. The defendant company vide its letter dated 31st October, 2011 addressed to the plaintiff had informed its grievances to the plaintiff about the sub-standard materials supplied. c) The plaintiff as per the purchase orders supplied certain Electrical Accessories to M/s Indus Towers Ltd. which is the client of the defendant company which rejected the material as supplied by the defendant and withheld the payment of the defendant company to the tune of approximately three crores consequent thereof the defendant company sent legal demand notice dated 11th October 2012 to its client i.e. Indus Tower Ltd. d) The plaintiff company has raised frivolous invoices against the defendant company and relied on mails without admitting the fact that payment has been made to it.

10. The plaintiff has filed the reply to the affidavit filed by the defendant in support of its application seeking leave to defend stating that the defendant has raised wrong, false, frivolous and vague grounds in its application for grant of leave to defend who tried to mislead the Court. The plaintiff has denied each and every ground made in the application. It is stated that despite of admission about its liabilities, false grounds are raised. There is even sufficient ground to contest the suit therefore, the decree is to be passed in summary suit of the plaintiff.

11. Order 37 Rule 3 of the Civil Procedure Code lays down: “(1) The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application. (2) Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit.”

12. In M/s. Mechalec Engineers & Manufacturers v. M/s. Basic Equipment Corporation, reported in 1977 SC 577 the Supreme Court has evolved the following principles which are to be followed while considering the question of granting leave to defend:- “(a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defence. (b) If the defendant raises a triable issue indicating that he has a fair or bonafide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.

(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. (e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence.”

13. With regard to grounds of territorial jurisdiction of this Court is concerned, it is not denied that the defendant has its registered office at Delhi and the invoice issued by the plaintiff against the defendant clearly stated that "All disputes are subject to Delhi Jurisdiction only". Reliance is placed on the following judgments:-