IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF JANUARY, 2021
PRESENT
THE HON'BLE MRS.JUSTICE S.SUJATHA
AND
THE HON'BLE MR. JUSTICE M.I.ARUN
R.F.A.No.437/2012
BETWEEN :
M/s BABA ENTERPRISES
NO.5 & 6, D.DEVARAJA URS ROAD,
MYSORE-570001
REP BY ITS PROPRIETOR
Mr. MOHAMMAD KHASIM
S/O LATE MOHAMMED JAFFER
AGED ABOUT 60 YEARS ...APPELLANT
(BY SRI K.G.SADASHIVAIAH, ADV.)
AND :
M/s KARNATAKA SOAPS & DETERGENTS LTD.,
(GOVERNMENT OF KARNATAKA UNDERTAKING)
BANGALORE, BRANCH NO.307,
18TH CROSS, 6TH MAIN ROAD,
BANGALORE-560055 ...RESPONDENT
(BY SRI K.GURUDHATTA, ADV.)
THIS R.F.A. IS FILED UNDER SECTION 96 R/W ORDER 41
RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE
DATED 02.12.2011 PASSED IN O.S.No.4269/2013 ON THE FILE
OF THE IX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AT
BANGALORE (CCH-5), DECREEING THE SUIT FOR RECOVERY
OF MONEY.
-2-
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the defendant challenging the judgment and decree dated 02.12.2011 passed in O.S.No.4269/2003 by the IX Addl. City Civil and Sessions Judge, Bengaluru (CCH-5) ('Trial Court' for short).
2. For the sake of convenience, the parties are referred to as per their status before the Trial Court.
3. The plaintiff instituted the suit for recovery of Rs.10,98,397.89 with interest at 18% per annum with costs inter-alia seeking for such other reliefs.
4. The plaint averments are that the plaintiff is the manufacturer and supplier of products like soaps, detergents, shampoos, talcum powder, facial creams, agarbathies etc., to the stockiest, dealers, wholesalers and retailers having their factory at Bengaluru - Pune -3- Highway, Bengaluru - 55 and place of business is at the address mentioned in the cause-title. The plaintiff, a Government of Karnataka undertaking is carrying on their business under the name and style of "M/s. Karnataka Soaps and Detergents Limited". It was averred that the defendant is carrying on business as a stockiest, dealer, wholesaler and retailer in the name and style of M/s. Baba Enterprises and also in the name of another concern namely M/s. Baba Agencies, both carrying on business at the address mentioned in the cause-title and Mr. Mohammed Khasim was the proprietor of both the concerns.
5. It was contended that as per the orders placed by the defendant, invoices used to be raised and the goods used to supplied to M/s Baba Enterprises, but the defendant as per his own convenience used to give payments from M/s. Baba Agencies by sending Demand Drafts and Cheques and the same were -4- accepted by the plaintiff and the amount realized was adjusted towards the outstanding amount due.
6. It was contended that the plaintiff has dispatched the goods as per the orders and requirements of the defendant through "Road Line Courier Services" which was duly acknowledged by the defendant. The value of the goods supplied in between 31.01.2002 to 31.03.2002 is in a sum of Rs.9,67,164.70. The defendant has paid the amount towards the supply of sandalwood soaps by way of Demand Drafts and Cheques. But as far as the other goods supplied during the said relevant period was on credit basis. The defendant had promised and assured the plaintiff that he would make payment towards supply of goods, but failed to do so despite several requests and demands made. Deducting the value of supply of sandal wood soaps which was paid, on the outstanding amount of Rs.8,94,664.48 along with interest at the rate of 18% per annum upto 31.05.2003, -5- Rs.10,98,397.89 was the liability which the defendant failed to pay.
7. It was further contended that the cheques issued by the defendant for repayment of the outstanding dues has been dishonoured and despite the notice issued, neither he has cleared the amount nor replied the said notice. Hence, a private complaint was registered against the defendant under Section 138 of the Negotiable Instruments Act, 1881. On these set of facts and grounds, the plaintiff prayed for passing of the judgment and decree against the defendant in favour of the plaintiff.
8. On issuance of summons, the defendant appeared and contested the case. Written statement was filed contending that the suit was barred by limitation; the Court at Bengaluru, where the suit was filed has no jurisdiction to entertain the suit. The -6- primary defence set up was that the defendant was carrying on the business only in the name and style of Baba Agencies. There is no business concern known as Baba Enterprises. Admitting the cheques and demand drafts taken in the name of Baba Agencies, it was contended that the goods were supplied not on credit basis but as against payments. The officials of the plaintiff used to take responsibility of effecting sales of the products which was not saleable. The plaintiff has not given credit to the goods returned to the extent of Rs.98,071.13. Thus, it was contended that the defendant is not liable to pay any amount muchless what was claimed by the plaintiff. Accordingly, sought for the dismissal of the suit with exemplary costs.
9. Based on the pleadings, the following issues were framed:-
"1. Whether the Defendant proves that this Court has no territorial jurisdiction to try this suit?-7-
2. Whether the Plaintiff proves the existence of M/s Baba Enterprises and that Mohammad Khasim is its Proprietor?
3. Whether the plaintiff proves that supplies were made to the defendant against the order placed for supply?
4. Whether the Plaintiff further proves that goods worth of Rs.8,94,664-48 were supplied to the Defendant on credit basis?
5. If so, whether the plaintiff is entitled to claim interest at 18%?
6. Whether Defendant proves that supply of Soap under Sl.No.1 to 9, 11 and 12 of Para 6 of plaint was against payment?
7. Whether the Plaintiff is entitled for decree for Rs.10,98,397-70?8. What decree or order?"
10. PW.1 was examined on behalf of the plaintiff and Exs.P1 to P28 were marked. DW1 was examined on behalf of the defendant and Exs.D1 to D8 were marked. -8-
11. After considering the oral and documentary evidence on record, the Trial Court answered the issue Nos.1 and 6 in the negative and issue Nos.2 to 5 and 7 in the affirmative, decreeing the suit for Rs.10,98,397.89 with costs. Further, the defendant has been directed to pay the said amount with interest at 18% per annum on outstanding balance of Rs.8,94,664.48 from 31.05.2003 till payment.
12. Being aggrieved, the defendant has preferred the present appeal.
13. Learned counsel appearing for the appellant/defendant submitted that the judgment and decree passed by the Trial Court is erroneous for four reasons. Firstly, the Court had no territorial jurisdiction to entertain the suit and to adjudicate upon the relief claimed by the plaintiff. Secondly, the damaged goods amounting to Rs.98,071.13/- returned to the plaintiff was not given deduction. Thirdly, there was no privity of -9- contract for payment of interest in the event of delayed payment and as such, the Trial Court decreeing the suit directing the defendant to pay the interest at the rate of 18% per annum on the outstanding amount is unjustifiable. Fourthly, claim made without deduction is arbitrary. Elaborating the arguments on these points, learned counsel submitted that the Trial Court has failed to appreciate the evidence in a right perspective.
14. Learned counsel for the respondent/plaintiff submitted that the Trial Court on appreciation of documentary and ocular evidence has rightly decreed the suit with interest at the rate of 18% per annum and the same does not call for any interference by this Court. It was argued that as per the terms and conditions of the invoices, it was made clear that dispute arising out of the said transaction, if any, shall be subject to Bengaluru jurisdiction. Merely for the reason that the defendant is resident of Mysuru, the
- 10 -
jurisdiction of the Court at Bengaluru could not be ousted, more particularly in view of the expressed covenant in the invoices raised by the plaintiff and agreed by the defendant, pursuant to which the transactions were taken. Learned counsel submitted that the defendant has miserably failed to establish the goods returned to the tune of Rs.98,071.13. The transaction being commercial, the Trial Court has rightly fixed the rate of interest at 18% per annum on the outstanding amount due from the defendant. Having regard to these aspects, the Trial Court has decreed the suit and the same deserves to be confirmed by this Court.
15. We have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the original records.
16. As regards the objections raised by the appellant/defendant inasmuch as the territorial
- 11 -
jurisdiction of the Trial Court to try the suit is concerned, it is beneficial to refer to issue No.1 and the reasoning of the Trial Court on the said issue. Exs.P2 to P13 and P28 are the invoices raised by the plaintiff under which the goods were supplied to Baba Enterprises. One of the terms and conditions stipulated in the said invoices reads thus:
"Disputes arising out of this transaction are subject to Bengaluru jurisdiction".
17. The defendant though has not denied the transaction but contended that it is the Baba Agencies which has placed the purchase order. In the cross- examination, defendant has admitted that his business carried in the name and style of M/s Baba Enterprises has been changed to M/s Baba Agencies. It is demonstrated that the goods supplied by the plaintiff were received by the defendant under the lorry receipts marked as Exs.P14 to P22.
- 12 -
18. Indisputedly, DW1 is the proprietor of M/s Baba Enterprises. The goods supplied through the invoices as per Exs.P2 to P13 and P28 to the defendant being established by the plaintiff, the objection raised to the territorial jurisdiction of the court to entertain the suit is wholly untenable and is negated. The terms and conditions stipulated in these invoices indicate that the disputes arising out of the transaction are subjected to Bangalore jurisdiction. The situs of sale and the supply of goods originally from Bangalore pursuant to the invoices raised based on the purchase order issued by the defendant is binding on the defendant and the jurisdiction to the dispute being clearly agreed as per the invoices, the defendant cannot raise any dispute regarding the same. We do not find any infirmity or illegality in entertaining and adjudicating the matter by the Trial Court.
- 13 -
19. As regards the return of goods, it was contended that the damaged goods handed over to Sri. Narasimhamurthy and Sri. Raghu who were working as sales representatives of the plaintiff - Company, to an extent of Rs.98,071.13 has not been given deduction in the outstanding amount claimed by the plaintiff, the Trial Court has held that there is no supporting evidence to establish the same. On the other hand, Ex.D1, the accounts maintained by the plaintiff which was produced in a criminal case would disclose the transaction of 31.03.2002 where the balance is shown as Rs.9,44,665.48. The said document further discloses that the balance as on 27.08.2002 was Rs.8,94,665.48. It is an admitted fact that the defendant was convicted in C.C.No.1422/2003 filed by the plaintiff under Section 138 of the Negotiable Instruments Act, 1881 against which Criminal Appeal No.99/2007 was filed by the defendant and the same came to be dismissed, further confirmed by this Court in Crl.R.P.No.254/2009. Thus,
- 14 -
the Trial Court has rightly negated the contentions of the defendants in this regard.
20. Though it was vehemently argued by the learned counsel for the appellant that there was no privity of contract inasmuch as paying interest, the same is wholly misconceived. Exs.P2 to P13 and P28, the invoices clearly shows that the payments received after due dates will attract interest charges at the prevailing bank rates. Interest is the compensation fixed by agreement or allowed by law for deprivation; the money due, due to the plaintiff was not paid or withheld by the defendants. This transaction being commercial in nature the Trial Court has rightly awarded the interest at the rate of 18% per annum on the outstanding amount at 18% per annum. Pre-lite interest awarded by the Trial Court cannot be faulted with. Awarding interest at 18% p.a., on the outstanding amount of Rs.8,94,664.48 upto 31.05.2003, suit has been decreed
- 15 -
for Rs.10,98,397.89 [8,94,664.48 + 2,03,733.41] which in our opinion cannot be faulted with. But in our considered view, the rate of interest awarded by the Trial Court pendent-lite and future rate of interest at 18% per annum from 31.05.2003 however requires re- consideration having regard to the facts and circumstances of the case read with Section 34 of CPC, keeping in mind the interest of justice and equity.
21. Accordingly, we modify the rate of interest from 31.05.2003 till the date of payment at 7% per annum confirming the rate of interest at 18% per annum upto 31.05.2003 on the outstanding amount of Rs.8,94,664.48.
22. Hence, the following
ORDER
i) The appeal is allowed in part.
- 16 -
ii) The impugned judgment and order passed in
O.S.No.4269/2003 by the IX Addl. City Civil and Sessions Judge, Bengaluru (CCH-5) is modified insofar as the direction to pay interest at the rate of 18% per annum on the outstanding balance of Rs.8,94,664.48 from 31.05.2003 till its realization, to 7% per annum.
iii) The amount of Rs.8,25,000/- (Rupees Eight Lakhs Twenty Five thousand only) deposited by the appellant/defendant before this Court and directed to be released in favour of the respondent/plaintiff in terms of the order of this Court dated 22.11.2013 shall be deducted from the decretal amount of Rs.10,98,397.89.
iv) In all other respects, the judgment and order passed by the Trial Court remains intact.
- 17 -
v) All pending I.As. stand disposed of accordingly.
SD/-
JUDGE SD/-
JUDGE PMR