M/S VEE VEDIONICS PVT. LTD. AND ANR. v. M/S D.R. PLASTICS

1. Whether Reporters of Local papers may be allowed to see the Judgment? NO. 2. To be referred to the Reporter or not? NO. 3. Whether the judgment should be reported in the Digest? No. HIMA KOHLI, J. (ORAL)

1. The present appeal is directed against the judgment and decree dated 27.02.1997 passed in a suit for recovery of a sum of Rs.1,56,519/- filed by the respondent, proprietorship firm (plaintiff in the court below) against the appellants (defendants in the court below), for the goods supplied to the appellants.

2. Briefly stated, the facts of the case, as culled out from the 2009:DHC:4675 plaint are that the respondent was dealing in all kinds of plastic raw materials and the appellants had dealings with the respondent as they were purchasing plastic raw materials from the respondent against payment as also on credit basis. The respondent averred that it was maintaining a regular account in respect of the purchases made from it and the account of the appellants showed a debit balance of Rs.1,26,225/- as outstanding since 27.01.1995. The respondent claimed that despite repeated requests and assurances from the appellants, the latter did not clear the outstanding payment. It was further stated that appellant No. 1 issued a letter dated 12.06.1995 to the respondent stating inter alia that the outstanding payments which could not be cleared on time due to liquidity crisis would be cleared soon. Thereafter, even a fax message is stated to have been forwarded by the appellants to the respondent assuring it that the balance amount would be released on 20.08.1995 but despite the said assurance, payments were not released by the appellants. As a result, the respondent served a legal notice dated 11.09.1995 upon the appellants by Registered AD Post as also under Postal Certificate, followed by institution of a suit for recovery of Rs.1,56,519/- from the appellants alongwith pendente lite and future interest @ 24% per annum from 27.01.1995 till realization.

3. The aforesaid suit was contested by the appellants, who filed a written statement. In the written statement, it was admitted that the appellants had dealings with the respondent and were purchasing material from it against payment as well as on credit. However, the correctness of the accounts maintained by the respondent was disputed. It was denied that a sum of Rs.1,26,225/was due or outstanding against them. The receipt of the legal notice dated 11.09.1995 was also denied by the appellants.

4. On merits, it was pleaded by the appellants in their written statement that the respondent had supplied sub-standard and defective material to the appellants and though they had requested the respondent to replace the said material, needful had not been done, and the defective material continued to lie with the appellants. An objection with regard to territorial jurisdiction of the Delhi court to entertain the suit filed by the respondent was also raised on behalf of the appellants. An additional plea was taken in the written statement that an excess payment of Rs.1,15,955/- had been made to another proprietorship concern of the respondent, namely, M/s Rohit Polymers against inferior and rejected material and that a separate suit for recovery was instituted by the said firm against the appellants. The appellants urged that the said amount was liable to be adjusted in the other account.

5. After the pleadings were completed, the following three issues were framed by the trial court:- “1. Whether the material supplied by the plaintiff to the defendants was below specification, below standard and defective. If so, to what effect? OPD.

2. Whether the defendants had made a request to the plaintiff to replace the said material and get payments for the specific material. If so, its effects? OPD.

3. Relief.”

6. Evidence was led by both the parties. The respondent/plaintiff produced Shri Bhanwar Lal Doshi, proprietor of the firm as PW[1] and the appellants produced Shri J.S. Madan, Addl. Director of the appellant No.1, as DW[1]. After perusing the pleadings, documents placed on the record and examining the evidence of the parties, the trial court answered both issues against the appellants and held that they had failed to discharge the onus placed on them by proving that the material supplied by the respondent was below specification, sub-standard and defective or that they had made any request to the respondent to replace the said material and get payment for the specified material. As a result, the suit of the respondent was decreed against the appellants for a sum of Rs.1,56,519/- with costs and interest payable @ 24% per annum from the date of filing of the suit till realization of the decretal amount. Aggrieved by the said judgment and decree, the appellants preferred the present appeal.

7. Counsel for the appellants states at the outset that though a ground has been taken in the appeal that the trial court ought to have framed an issue with regard to territorial jurisdiction of the court to try and entertain the suit instituted by the respondent, however the said objection does not survive for the reason that at the time of admission of the appeal, on 07.08.1997, an application filed by the appellants seeking permission to lead additional evidence in the appeal on the question of jurisdiction, was rejected with the observation that no such issue was claimed or got framed and as such, the point of jurisdiction could not be raised in appeal in view of Section 21 of the CPC. It is pertinent to note that as the present appeal was filed against a money decree, while admitting the appeal vide order dated 7.8.1997, on the stay application accompanying the appeal, the Division Bench stayed the execution of the decree in view of the statement made on behalf of the appellants that the decretal amount would be deposited in the trial court within four weeks. Permission was also granted to the decree holder to recover the money deposited on furnishing security for restitution during the pendency of the appeal. However, the decretal amount was not deposited by the appellants in the trial court. As a result, vide order dated 12.9.1997, the ex-parte interim order dated 7.8.1997 was vacated. Counsel for the respondent states that despite initiating execution proceedings in respect of money decree in the Court at Bhopal, the appellants have not paid any amount to the respondent till date.

8. Counsel for the appellants submits that apart from the issue of jurisdiction which had been turned down earlier as noted above, the impugned judgment is erroneous inasmuch as the learned ADJ erred in arriving at the conclusion that the appellants were unable to establish that the material supplied by the respondent was defective and failed to consider the submissions made on behalf of the appellants that such defects were conveyed to the respondent telephonically. He further states that the factum of the raw material being below specification and lying in the godown of the appellants, was pointed out to the trial court but was not taken into consideration while deciding the case.

9. I have heard the counsels for the parties and perused the trial court record including the pleadings, the documents placed on the record and the deposition of the witnesses. The submission of the counsel for the appellants to the effect that the trial court failed to consider the relevant documents placed on the record, which established that the material supplied by the respondent to the appellants was sub-standard has to be examined in the light of the documents themselves. Ex.DW1/1 is a letter dated 27.12.1994 issued by the appellants to the respondent. In the said letter, there was a reference made to some “shortage in the material being received”. Further, a request was made to the respondent to maintain consistency in the quality and specification of the material. However, the appellants did not inform the respondent that the material supplied by it had been rejected on the ground of the same being sub-standard or not up to the mark.

10. Ex.DW1/2 is a letter dated 03.01.1995 addressed by the appellants to the respondent wherein, the respondent was assured that as in the past, payments would be made to it. However, a rider was added that the rejections would be adjusted. No mention was made of the extent of rejection or the grounds of rejection of the consignment. Further, if the information about defective material had come to the knowledge of the appellants on 31.12.1994, they would have mentioned the details of the defective material in their letter dated 03.01.1995 (Ex.DW1/2) but no such details were mentioned in the said letter. Rather, the appellants released certain payments to the respondent on 23.01.1995 (wrongly typed in the impugned judgment as 27.01.1995). It is pertinent to note that apart from the aforesaid letters, there is no other correspondence placed on the record by the appellants to establish that it intimated the respondent at any stage, about the sub-standard and poor quality of the material supplied or of rejection of any consignment. Even if it was accepted that it being a commercial transaction, the correspondence exchanged on the issue between the parties was limited and most of the interaction was done by telephonic communication, there is no getting away from the fact that when the appellants received a legal notice dated 11.09.1995 from the respondent, even then they did not choose to rebut the contents of the said notice. The trial court rightly made an observation that if the case of the appellants was that the material supplied by the respondent was sub-standard, then they ought to have replied to the legal notice of the respondent separately.

11. Looking at the stand of the appellants, they ought to have at the first opportunity pointed out the defects in the material received from the respondent and called upon it to take back the material or replace it with the material as per specifications. No such steps were taken by the appellants in this case. The complete silence maintained by the appellants right from the dates of supply of the consignment, i.e., 22.11.1994 and 03.11.1994, (Ex.DW1/3 and Ex.DW1/4 respectively) till September, 1995 when the legal notice was issued on behalf of the respondent to the appellants only fortifies the deductions drawn by the trial court to the effect that the defence of the appellants that the material supplied by the respondent was below specification and defective was only an afterthought. The trial court also took notice of the contradictions in the stand of the appellants. While in para 7 of the written statement, the appellants denied service of any legal notice upon them, DW[1] in his testimony admitted having received the legal notice from the respondent. The relevant extract of the statement of DW[1] in this regard is reproduced hereinbelow: “…… Notice dated Sept. 11, 1995 was received by the defendants in Sept. or October, 1995 and the said notice is Ex.D.W.1/PX. No reply to this notice was given by us, though we addressed a separate letter to the plaintiff. ……”

12. All the aforesaid facts and circumstances when examined collectively, lead to the inevitable conclusion that the appellants were liable to release the balance sum of Rs.1,26,225/- to the respondent and that the said amount had been withheld by the appellants without any justification. The defence taken by the appellants that the respondent had supplied sub-standard or defective material to the appellants remained unsubstantiated was therefore rightly rejected by the trial court.