HON'BLE SRI JUSTICE P.NAVEEN RAO
AND
HON'BLE SRI JUSTICE J.SREENIVAS RAO
CITY CIVIL COURT APPEAL NOS.42, 55 AND 71 OF 2002
Date: 02.03.2023
CCCA No.42 of 2002:
Between:
Maruti Udyog Limited,
11th Floor, Jewan Prakash,
25, Kasturba Gandhi Marg,
New Delhi, rep.by its Managing
Director and others.
.... petitioners
And
M/s.DCL Finance Limited,
situated at 6-3-569/1, DCL Chambers,
Somajiguda, Hyderabad, rep.by its
Dy.Manager (Legal), K.V.Prasad,
s/o. K.V.Subbaiah, 42 years,
r/o.6-3-569/1, DCL Chambers,
Somajiguda, Hyderabad and others.
.... Respondents
This Court made the following :
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 2 HON'BLE SRI JUSTICE P.NAVEEN RAO AND HON'BLE SRI JUSTICE J.SREENIVAS RAO CITY CIVIL COURT APPEAL NOS.42, 55 AND 71 OF 2002 COMMON JUDGMENT: (Per Hon'ble Sri Justice P.Naveen Rao) O.S.No.96 of 1998, O.S.No.95 of 1998 and O.S.No.558 of 1998 are filed by M/s.DCL Finance Limited in the Court of III Additional Chief Judge, City Civil Court at Hyderabad against Maruti Udyog Limited, Mahalaxmi Motors Limited and RKS Motors Private Limited.
All the three suits are filed for recovery of money. In O.S.No.96 of 198 money claimed was respondent 8,04,142.46 Ps.; in O.S.No.95 of 1998 money claimed was 59,00,633.20 Ps., and O.S.No.558 of 1998 money claimed was 4,59,269/-. In addition plaintiff also claimed subsequent interest at the rate of 24% per annum. All the suits were decreed in favour of plaintiff.
2. In O.S.No.96 of 1998, the trial Court granted decree directing the 1st defendant to pay the plaintiff sum of 5,84,400/- with interest at the rate of 18% per annum from the date of encashment of demand drafts i.e., 05.03.1997. In O.S.No.95 of 1998, the trial Court granted decree directing the 1st defendant to pay the plaintiff a sum of 47,02,036/- with interest at the rate of 18% per annum from the date of encashment of respective demand drafts. In O.S.No.558 of 1998, the trial Court passed decree directing the 1st defendant to pay PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 3 plaintiff a sum of 3,15,704/- with interest at the rate of 18% per annum from 25.01.1997. In all the suits, Maruti Udyog Limited represented by its Managing Director is the 1st defendant.
3. These three appeals are filed by the Maruti Udyog Limited challenging the respective judgments and decrees in the three suits. As the parties to these appeals and issues involved are same, they are heard together and by this common judgment they are disposed of. The parties are referred to as arrayed in O.S.No.95 of 1998.
4. The 1st defendant is engaged in manufacture of passenger vehicles. Its factory is located at Palam-Gurgoan Road, Gurgoan, State of Haryana. The 1st defendant appoints dealers at various places in the country and sells its Cars through the dealers. The 1st defendant enters into dealership agreements with its dealers. Those agreements determine the relationship of manufacturer with the dealers. In the said manner, 4th and 5th defendants were appointed as dealers in Hyderabad and Vijayawada.
5. M/s. DCL Finance Limited is in the business of hire purchase and renders financial assistance to its customers. Some of the customers approached the defendant no. 1 company for financial assistance to purchase motor vehicles being manufactured by the 1st defendant company, Maruti Udyog Limited, through its authorized dealers Defendant nos.4 and 5, Mahalaxmi Motors, Hyderabad and Vijayawada, respectively.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 4 CCCA No.42 of 2002:
6. On 03.03.1997, the plaintiff company in the course of their business issued Demand Drafts amounting to 5,84,400/- in favor of the 1st defendant company to book two Maruti Zen Cars for its customers. The Demand Drafts along with the requisite forms and documents were handed over to the authorized dealer/Defendant No.4. According to the terms and conditions of the forms, the authorized dealer was duty bound to deliver the motor vehicles in stipulated period of 2-3 months. It is the case of plaintiff that even upon repeated requests by the plaintiff company, the Defendant No.4, authorized dealer, failed to deliver the motor vehicles as per the terms.
7. On 27.11.1997, plaintiff company issued legal notice to the 1st defendant/manufacturer and Defendant No.4/dealer demanding refund of 5,84,400/- with interest @ 30% P.A. due to non-delivery of the booked vehicles.
8. As the amount was not refunded, defendant No.1 company filed O.S.No.96 of 1998 before the III Additional Chief Judge, City Civil Court, Hyderabad for recovery of the amounts with the interest.
9. According to the plaintiff, in accordance with the terms and conditions mentioned in the booking form, the first defendant is supposed to deliver the vehicles within stipulated time of 2 to 3 months. Though the first defendant got encashed the Demand Drafts PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 5 drawn by the plaintiff and sent to Defendant no.1 through Defendant no.4, the first defendant did not deliver the vehicles in spite of repeated requests. The first defendant, however, wrote a letter on 12.07.1997 to plaintiff to submit copies of relevant documents to 5th defendant, which the plaintiff accordingly submitted along with its letter dated 29.07.1997, which was also acknowledged by the 5th defendant on 30.07.1997. Even thereafter the vehicles were not delivered. In view of non-delivery of the vehicles, the plaintiff's customers had cancelled their agreement with the plaintiff. Finally on 27.11.1997, the plaintiff got issued registered notice to all the defendants demanding repayment of 5,84,400/-, which was sent by the plaintiff to the first defendant in the form of demand drafts through defendant No.4, together with interest at 30% per annum. In spite of receipt of the registered notice, the defendants kept quiet without paying the same. Since the first defendant-company neither delivered the vehicles nor returned the money back to the plaintiff, the plaintiff is entitled to claim interest at 24% p.a. Since the demand drafts along with requisite booking forms were sent to the first defendant through defendant No.4 who is the then dealer of the first defendant and the 5th defendant is the present dealer, all the defendants are jointly and severally liable for the suit amount. Hence, the Suit.
10. All the material averments in the plaint are denied by the defendants 1 to 3. The first defendant denied the booking of vehicles with the first defendant by the customers mentioned by the plaintiff PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 6 and the plaintiff extending financial assistance to them. The first defendant also denies specifically the purchase of demand drafts by the plaintiff and sending the same to the first defendant along with booking forms through defendant No.4. The first defendant also denied non-delivery of vehicles to defendant no.4. It is further averred that the suit is not maintainable and Civil Court has no jurisdiction to try the same. There is no privity of contract between the plaintiff and the first defendant, and, therefore, the plaintiff is not entitled for the relief sought for. It is the authorized dealer, who enters into contract with its customers but not the first defendant. It is the authorized dealer, who invoices the vehicles to its customers after paying the Andhra Pradesh General Sales Tax and upon receiving the ex-showroom price at the time of the delivery. It is the authorized dealer who issues the sale certificate in favour of the customers. Thus, there is never any privity of contract between the plaintiff and the first defendant.
11. The third defendant addressed letter dated 12.7.1997 to the plaintiff to ascertain the customers bookings and to confirm the same upon receiving the relevant records through defendant No.4. The 6th defendant upon ascertainment had delivered back the documents to the plaintiff and it was ascertained by the first defendant that the plaintiff had not made any bookings with defendant No.4. The first defendant denies addressing of letter dated 12.7.1997 to the plaintiff. The first defendant is not liable either for delivery of the vehicles or for refund of any amount whatsoever. The plaintiff failed to produce any PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 7 document authorizing it to file the suit or to initiate any legal proceedings on behalf of its alleged customers. This suit is also bad for non-joinder of necessary parties. The first defendant initiated separate criminal proceedings by terminating the dealership of 4th defendant for its omission and commission and irregularities in drawing excess vehicles. The suit is, therefore, liable to be dismissed.
12. According to the 4th defendant, when the demand drafts are purported to be in favour of the first defendant, 4th defendant could not have encashed the same and as such, the question of defendant No.4 not delivering the vehicles to the plaintiff does not arise. That he has not received notice dated 27.11.1997. This Court had no jurisdiction and there is no cause of action. The suit is liable to be dismissed and the 4th defendant is entitled for exemplary costs.
13. All the allegations made in the plaint are denied by the 6th defendant and the plaintiff is put to strict proof of the same. The 6th defendant had no privity of contract with the plaintiff. The 6th defendant had no knowledge of the terms and conditions that were agreed upon between the plaintiff on one hand and the defendant No.4 on the other after termination of the authorized dealership of defendant No.4 by the first defendant. The first defendant had instructed the 6th defendant to receive certain documents in respect of bookings pending with defendant No.4 and accordingly, the first defendant appeared to have intimated the same to the alleged customers of the plaintiff to PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 8 approach 6th defendant for receiving documents on behalf of the first defendant. The 6th defendant having received certain documents acknowledged the same and after their verification by the third defendant returned back the same under acknowledgement due. No amounts were paid either by the plaintiff or its customers to this defendant. The first defendant neither sent any vehicles nor gave any instructions for delivery of vehicles to the 6th defendant. The 6th defendant being an authorized dealer of the first defendant, it is acting wholly on the instructions of the first defendant. There is no cause of action against the 6th defendant for filing the suit. The 6th defendant is not a necessary party to the suit. The suit is also bad for mis-joinder of parties. This suit may, therefore, be dismissed with exemplary costs against the 6th defendant.
14. On analyzing the pleadings, evidence and submissions, trial Court held issues 2, 5 and 6 in favour of plaintiff and against first defendant. Additional issues were held in favour of 6th defendant. Issues 1, 3 and 4 are held against defendants and in favour of plaintiff and decreed the suit 5,84,400/- together with interest at 18% per annum from the date of the encashment of the respective drafts till the date of payment with proportionate costs against the first defendant. The suit against defendants 2 to 4 and 6 is dismissed, but in the circumstances without costs.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 9 CCCA No.55 of 2002:
15. According to plaintiff, financial assistance was extended to two persons to acquire Maruti Van 800 CC on hire purchase basis. As per their instructions, plaintiff purchased two Demand Drafts for 1,57,852/- each in favour of authorized dealer of defendant no.1 i.e., the defendant no.4 and handed over to 4th defendant along with booking order form through its two customers. On 22.01.1997, defendant no.4 issued receipt Nos.368 and 330. As per order form, the vehicles were to be delivered within three months. In the meantime, 6th defendant was substituted in place of 4th defendant. On 07.08.1997, 6th defendant intimated plaintiff's customers to deposit balance amount. Accordingly, balance amount of 25,496/- each was paid by way of pay orders dated 19.08.19097. It is asserted that even after payment of balance price the vehicles were not delivered inspite of repeated requests. As vehicles were not delivered, customers cancelled the agreement and the plaintiff's amount is lying with the defendants from 22.01.1997. On 27.11.1997, plaintiff issued registered demand notice to the defendants demanding an amount of 3,66,696/- along with 30% interest per annum. In spite of the demand notice defendants did not turn up to pay the amount. Hence, the suit.
16. First defendant raised preliminary objection on maintainability of the suit contending that as the business of first defendant is carried out in New Delhi Courts in Hyderabad have no jurisdiction. Further, there was no privity of contract between the plaintiff and the first PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 10 defendant. Further, objection is on non-joinder of necessary parties, the alleged customers of defendants. It is denied that defendant assured to hand over vehicles in three months. It is also denied that defendant no.6 is substituted dealer in place of defendant no.4. It is asserted that plaintiff has not made any bookings either with 4th defendant or 6th defendant.
17. This defendant submits that generally bookings are made by the prospective customers with the authorized dealers of this defendant by depositing a demand draft equal to the dealer destination price payable to ANZ Grindlays Bank, Hyderabad. The customers execute the order booking form containing the terms and conditions of sale, approximate delivery period of vehicles besides the details of vehicles booked. Authorized dealer upon receiving the demand drafts hands over a copy of the order booking form and issues a receipt for the demand draft received by the authorized dealer. Thus, the authorized dealer enters into a contract with the customers. The authorized dealer further maintains the Payment and Delivery Register and the seniority of its customer for the delivery of his vehicle. Thus, a contract for sale of vehicle is created between the dealer and the customer concerned. The authorized dealer who receives the demand draft deposits the same in the ANZ Grindlays Bank for crediting the process into the dealer control vehicle purchase account.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 11
18. According to the availability of the funds in the said dealer control account, the vehicles are sold by this defendant in favour of its authorized dealers. Thus, this defendant cannot correlate the individual bookings made by the customer through its authorized dealers. The authorized dealers are also not required to send the details of the customers, who have made the bookings of the vehicles. This defendant maintains the dealer control account indicating the payments received in ANZ Gridlays Bank and the vehicles sold to its authorized dealers against the availability of the funds in the said account. This defendant invoices the vehicle after making payment of the Central Sales Tax and invoices the vehicle in favour of various dealers. This defendant does not earmark the vehicle in favour of any individual customers. The authorized dealer invoices the vehicles to its customers after paying the A.P. General Sales Tax and upon receiving the ex-showroom prevailing price at the time of the delivery. The authorized dealer also issues the sale certificate in favour of their customers. Thus, there is no privity of contract between the plaintiff and this defendant.
19. It is further averred that for the acts of commissions and omissions and also irregularities committed in drawing excess vehicles, the first defendant initiated criminal proceedings against 4th defendant by terminating his dealership.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 12
20. In the written statement filed by the 4th defendant, it is contended that when demand drafts were issued in favour of defendant no.1, the 4th defendant could not have encashed the said demand drafts and therefore the question of this defendant delivering the vehicles did not arise. Further, there was no demand or request made by the plaintiff to this defendant. Deponent also denies of receiving notices from the plaintiff.
21. In the written statement filed by the 6th defendant, he denies existence of privity of contract with the plaintiff and that suit filed does not show any cause of action with this defendant.
22. In reply to the allegations made by the plaintiff in paragraph-5 of the plaint, this defendant submits that he has no knowledge of the terms and conditions that were agreed upon by the plaintiff, and defendant no.4. After the termination of the authorized dealership of defendant no.4 by defendant no.1, the 1st defendant had instructed this defendant to accept the documents of certain bookings pending with defendant no.4. It also appears that the first defendant had intimated the customers viz., K.Prabhakar and B.V.Subba Rao to approach this defendant, for receiving the documents on behalf of the first defendant. This defendant was instructed to receive the documents for verification by the Area Manager of the first defendant and also to receive the balance amount. In anticipation of clearance to be obtained from defendant no.1, he received two pay orders of PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 13 25,496/- each from the said Prabhakar and Subba Rao, who made bookings on their own behalf, this defendant released the vehicle arrival intimation.
23. The defendant avers that except the aforementioned two pay orders of 25,496/- each, no other amount was received by this defendant. As the documents were presented on the instructions of the first defendant, this defendant had to acknowledge the receipt of the original receipts and the other documents made by the parties and these are the documents referred to at pages 7 and 8 of the documents filed by the plaintiff. The first defendant neither sent any vehicle nor any instructions for delivery of vehicle and directed the defendant to return the documents to the persons who had deposited them with this defendant.
24. As this defendant was acting only on the instructions of defendant no.1, this defendant returned all the documents received from the parties mentioned above by registered post with acknowledgement due. The documents sent to K.V.Subba Rao were received and the postal acknowledgment is filed herewith. Whereas the documents sent to Prabhakar were returned. This fact has also been intimated to the plaintiff vide letter of this defendant dated 21.11.1998. As the above two bookings were made by the plaintiff, the amounts which were received by us viz., 25,496/-, in each case were returned to the plaintiff by two cheques bearing nos.500959 and 500960. This PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 14 defendant avers that both these cheques were encahsed by the plaintiff. As such this defendant has absolutely no privity of contract with the plaintiff and the suit as filed is not maintainable against this defendant. There is also no cause of auction alleged against this defendant for filing the suit. This defendant is also not liable to pay back the suit amounts.
25. On analyzing the pleadings, evidence and submissions, trial Court held issues 2, 5 and 6 in favour of plaintiff and against first defendant. Additional issues were held in favour of 6th defendant. Issues 1, 3 and 4 are held against defendants and in favour of plaintiff and decreed the suit for 3,15,074/- together with interest at 18% per annum from 23.01.1997 till the date of realization with proportionate costs against first defendant. The suit against defendants 2 to 4 and 6 is dismissed without costs. CCCA No.71 of 2002:
26. The plaint averments disclose that on the request of its customers, the plaintiff provided financial assistance on hire purchase basis to acquire Maruti Vans 800 CC, standard and A/C. The plaintiff purchased demand drafts on their behalf in favour of defendant no.1 and handed over to the customers. The customers have filed order booking forms enclosing Demand Drafts and handed over to first respondent's authorized dealers in Hyderabad and Vijayawada, defendants 4 & 5, and obtained receipts from them. The defendants PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 15 were required to deliver the vehicles within two to three months but not delivered in spite of repeated requests even though the defendants have encashed the Demand Drafts. On 12.07.1997, first defendant wrote letter requesting plaintiff to submit further documents for delivery of vehicles and accordingly required documents were submitted vide letter dated 29.7.1997, copy of which was sent to 6th defendant. On 30.7.1997, 6th defendant has given acknowledgment. However, vehicles were not delivered. It is further case of plaintiff that when the plaintiff demanded the installment amount from the customers, the customers have cancelled the agreements on the protest that defendants have not delivered the vehicles. On 27.11.1997 plaintiff issued notice sent through registered post to the defendants demanding refund of 47,02,036/- along with interest @ 30 % per annum. As there was no response to the said notice instant suit is filed. It is its further case that as the amount is lying with the defendants, it is entitled to recover the money with interest @ 24 % per annum and that defendants jointly and severally liable to pay 59,00,633.28 till 10.3.1998.
27. In the written statement of defendant no.1, on the maintainability of the suit, the procedure of booking and delivery of vehicles, the same averments are made as averred in the written statement filed in CCCA No. 55 of 2002.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 16
28. It is further averred that third defendant addressed letter dated 12.7.1997 to the plaintiff t ascertain the status of customer booking and to reconfirm the same upon receiving the records from the defendants 4 and 5. Upon ascertaining, the 6th defendant delivered back the document to the plaintiff. It is asserted that the plaintiff had not made booking of vehicles with defendants 4 to 6. The first defendant denied receiving letter dated 12.7.1997 or sending the letter to the 6th defendant from the plaintiff for submission of further documents. The first defendant denies its liability either to deliver vehicles or refund of amount. It is further averred that it has initiated separate criminal proceedings by terminating the dealership of the 4th and 5th defendants for the acts of omissions and commission and irregularities in drawing excess vehicles.
29. This defendant submits that the suit is bad for non-joinder of necessary parties. This defendant further submits that the suit is not maintainable in law against this defendant. This defendant further submits that there is no privity of contract between the plaintiff and this defendant. This defendant further submits that the Civil Courts in Hyderabad have no jurisdiction to entertain the suit filed by the plaintiff against this defendant. There is no agreement much less a contract between the plaintiff and this defendant. This defendant further submits that the agreement having entered into by the plaintiff with the defendant Nos.4 and 5 cannot be enforced against this defendant. This defendant further submits that the suit is not PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 17 maintainable and is liable to be summarily rejected inasmuch as the plaintiff has not entered into any contract with the defendant Nos.4 and 5. This defendant further submits that the alleged customers of the plaintiff having failed to initiate or take any steps against defendant Nos.4 and 5, ipso facto disentitles the plaintiff from claiming any relief whatsoever.
30. In the written statement filed by 6th defendant, the defendant denies privity of contract with the plaintiff. According to this defendant after termination of dealership of 4th and 5th defendant, the first defendant instructed this defendant to receive the documents of certain bookings pending with 4th and 5th defendants, for verification by the Area Manager of the first defendant and to return the documents to the customers. He denied of any amount paid to the 6th defendant. Defendant asserted that the Court below has no jurisdiction to decide the suit.
31. On consideration of pleadings, submissions and evidence, the trial Court answered issues 2, 5 and 6 in favour of the plaintiff and against first defendant and additional issues in favour of the 6th defendant. Issues, 1, 3 and 4 answered in favour of plaintiff and against defendants. The trial Court decreed the suit for 47,02,036/- together with interest @ 18 % per annum from the date of encashment of respective demand drafts till the date of payment with proportionate PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 18 costs against the first defendant. The suit against defendants 2 to 6 is dismissed without costs.
32. Based on the pleadings, the trial Court formulated seven issues and two additional issues in each suit and on assessment of evidence, recorded findings in the three suits. The issues, additional issues, evidence relied on and findings are shown in a table format as under: Sl. Suit No. Issues/Additional issues Evidence Findings No.
(1) (2) (3) (4) (5)
1 O.S.No.96 On analyzing the
1. Whether the suit as framed is On behalf of plaintiff, P.W.1
pleadings, evidence and
of 1998 maintainable? was examined and marked
Exs.A1 to A22. On behalf of submissions, trial Court
defendants, DWs.1 to 3 were held issues 2, 5 and 6 in
examined and Exs.B1 to B8 favour of plaintiff and
2.Whether there is any privity of contract
were marked. against first defendant.
between the plaintiff and defendants 1 to 3?
Additional issues were held
in favour of 5 defendant.
th
3. Whether the suit is bad for mis-joinder of Issues 1, 3 and 4 are held
parties? against defendants and in
favour of plaintiff and
decreed the suit
4. Whether this Hon'ble court has got 5,84,400/- together with
territorial jurisdiction? interest at 18% per annum
from the date of the
encashment of the
5. Whether the plaintiff is claimed exorbitant respective drafts till the interest?
date of payment with
proportionate costs against
6. Whether the plaintiff is entitled for the first defendant. The
recovery of amount in the suit with interest suit against defendants 2 to
thereon? 5 is dismissed, but in the
circumstances without
costs.
7.To what relief?
On 01.04.1999, the following additional
issues were framed:
1. Whether there is any privity of contract
between the plaintiff and the 5th defendant?
2.Whether the plaintiff is entitled for a decree for the suit amount against defendant No.5? "
2 O.S.No.558 On behalf of plaintiff, one On analyzing the
of 1998 1. Whether the suit as framed is witness was examined and pleadings, evidence and
maintainable? 24 documents were marked.
submissions, trial Court
On behalf of defendants,
three witnesses were held issues 2, 5 and 6 in
examined and 13 documents favour of plaintiff and
2.Whether there is any privity of contract
were marked. against first defendant.
between the plaintiff and defendants 1 to 3?
Additional issues were held
in favour of 5 defendant.
th
3. Whether the suit is bad for mis-joinder of Issues 1, 3 and 4 are held
parties? against defendants and in
favour of plaintiff and
decreed the suit for
4. Whether this Hon'ble court has got 3,15,074/- together with
territorial jurisdiction? interest at 18% per annum
from 23.01.1997 till the
date of realization with
5. Whether the plaintiff is claiming
proportionate costs against
exorbitant interest?
first defendant. The suit
against defendants 2 to 5 is
PNR,J & JSR,J
CCCA Nos.42, 55 & 71 of 2002
19
6. Whether the plaintiff is entitled for dismissed without costs.
recovery of amount in the suit with interest
thereon?
7.To what relief?
On 01.04.1999, the following additional
issues were framed:
1. Whether there is any privity of contract
between the plaintiff and the 5th defendant?
2.Whether the plaintiff is entitled for a decree for the suit amount against defendant No.5? "
3. O.S.No.95 of On behalf of plaintiff, two On consideration of
1998 1. Whether the suit as framed is witnesses were examined pleadings, submissions and
maintainable? and marked 67 documents.
evidence, the trial Court
On behalf of defendants
three witnesses were answered issues 2, 5 and 6
examined and marked 20 in favour of the plaintiff and
2.Whether there is any privity of contract
documents. against first defendant and
between the plaintiff and defendants 1 to 3?
additional issues in favour
of the 6th defendant.
3. Whether the suit is bad for mis-joinder of Issues, 1, 3 and 4 answered
parties? in favour of plaintiff and
against defendants. The
trial Court decreed the suit
4. Whether this Hon'ble court has got for 47,02,036/- together
territorial jurisdiction? with interest @ 18 % per
annum from the date of
encashment of respective
5. Whether the plaintiff is claiming
demand drafts till the date
exorbitant interest?
of payment with
proportionate costs against
6. Whether the plaintiff is entitled for the first defendant. The
recovery of amount in the suit with interest suit against defendants 2 to
thereon? 6 is dismissed without
costs.
7.To what relief?
On 01.04.1999, the following additional
issues were framed:
1. Whether there is any privity of contract
between the plaintiff and the 6th defendant?
2.Whether the plaintiff is entitled for a decree for the suit amount against defendant No.6? "
33. As can be seen from the table above issues in all three suits are same, the parties are same, all evidence relied on is same, the stand of respective parties is same and findings recorded by the trial Court are same. Inspite of service of notices, plaintiff has not chosen to enter apperance. As we were informed that the company is in liquidation, we have issued notice to official Liquidator, but he has also not chosen to make submissions. Further, implead respondent No.4 not filed counter PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 20 nor denied the claim of the defendants 1 to 3. Only learned counsel for appellants/defendants 1 to 3 made submissions.
34. Having heard learned counsel for appellants, the issues that arise for consideration are:
"1. Whether there is privity of contract between the plaintiff and the defendants 1 to 3 ?
2. Whether the impugned judgments and decrees passed by the trial Court are sustainable under law ?
3. To what relief ?
ISSUE NO.1:
35. The crux of the issue in these three appeals is whether there was privity of contract between the plaintiff and the defendants 1 to 3?
36. The primary defence of defendants 1 to 3 is that there is no privity of contract between the plaintiff and defendants 1 to 3 and, therefore, suit is liable to be dismissed on that ground. According to these defendants, by separate contract, Dealerships were awarded to the defendants 4 and 5 and the terms of the contract clearly disclose that the vehicles are delivered to the dealer by the manufacturer after receiving the sale consideration excluding local taxes and commission and the dealer in-turn sells the vehicle after collecting local taxes and commission. There is no contract between the customer and the manufacturer. Defendants 1 to 3 also challenged the maintainability of the suit to recover the money by the plaintiff as plaintiff is not the customer of defendants 4 and 5, but he was only financier to the customers.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 21
37. On both aspects, the trial Court overruled the objections and held the issues in favour of the plaintiff. On the issue of privity of contract, trial Court observed that only the manufacturer delivers the vehicles to its customers, whereas authorized dealer acts as mere agent for the manufacturer and receives a commission for its service rendered to the manufacturer. Certain portions of the depositions of DWs.1 to 3 were noted to hold that defendants 1 to 3 are alone responsible for delivery of vehicles and if vehicles are not delivered, liable to refund the money to the customers. The trial Court observed that the evidence of DWs.2 and 3 contradicts the evidence of DW.1. According to DWs.2 and 3, payments were made favouring Maruti Udyog Limited, payments were sent to Delhi and that no part of the amount was paid directly to the 4th and 5th defendants. According to DW.3, who is the Manager of 6th defendant, he acted on instructions of manufacturer, that the dealer would incorporate the terms and conditions in the order booking form supplied to the customers, that Demand Drafts should be drawn in favour of 1st defendant and the 1st defendant alone would encash the same. Relying on these depositions, trial Court discarded the deposition of DW.1.
38. Trial Court observed that dealer is only an Agent. If he becomes purchaser of the vehicle sold by the manufacturer then he should have freedom of selling the vehicles as per the price determined by him and to his choice of customers, whereas the price payable to the vehicle PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 22 including dealer commission is determined by the manufacturer and the dealer is only required to collect the money as fixed by the manufacturer and dealer has no discretion to prescribe price of the vehicle. Therefore, the dealer cannot be called as separate vendor. Further, if dealer is an independent vendor, there was no requirement for the dealer to forward the names of the customers in a given document along with Demand Drafts to the first defendant. Trial Court observed that dealer acts on behalf of the manufacturer and receives fixed commission, which component is already included in the price of the vehicle.
39. On the issue of locus standi, trial Court observed that admittedly plaintiff paid the amount to purchase the vehicles by his customers and that plaintiff is not insisting for delivery of the vehicles for seeking repayment of money paid by him and, therefore, he has locus standi to file the suit. Admittedly, amount was paid by the plaintiff and received by the defendants and non-refund of money would amount to undue enrichment and, therefore, first defendant cannot escape from liability to return back the money received from the plaintiff.
40. Extensive submissions are made by the learned counsel for appellants and has taken through exhibits filed on behalf of the defendants before the trial Court. According to learned counsel, there is no privity of contract between the plaintiff and the defendants 1 to 3 PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 23 and that plaintiff cannot maintain suit against the defendants as he is not the customer of the defendants 4, 5 and 6 as the case may be. Ex.B2 is the list of documents including plaint in O.S.No.2466 of 1998 in Delhi High Court. At running page Nos.146 to 177 of material papers compilation in CCCA No.42 of 2002 is the Dealer Agreement along with Schedules. Clause-5 of Article-I deals with limits of authority. Clause17 of Article-IV deals with commission. According to this clause, dealer should receive from his customer a commission specified by the Company based on the type of the product booked and sold. Clause-18 deals with delivery of products. It specifically refers to sale by the Company. It holds that company would not be liable for any failure, delay, or error in delivery or consequential loss arising therefrom. It also says that if it is not possible to supply fully the demand of the dealer, the company reserves the right to apportion products which are available among its dealers and other customers. Clause-19 envisages that after dispatch of the products from the company's factory, the company's liability in respect of any defect in the products would be limited to the company's obligations under the warrantee clause and would have no other liability. Clause 35 in Article-VIII talks about selling of parts to the dealer.
41. From the reading of the various clauses of the Dealer Agreement and the deposition of DW.1, it is manifest that manufacturer delivers the vehicles as per the indent placed by the dealer. When vehicles are delivered by the manufacturer, he does not verify as to which vehicle PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 24 would go to which customer. The delivery of vehicle to the customer is prerogative of the dealer. The manufacturer does not maintain list of customers to whom the vehicles are delivered. The authorized dealer only maintains payment and delivery register and seniority of the customers for the delivery of the vehicles.
42. It is the assertion of DW.1 that contract for sale of vehicle is created between the dealer and the customer concerned. In his deposition, the deponent explained the procedure as under:
"The authorized dealer who receives the demand drat deposits the same to the ANZ Gridlays Bank for crediting the proceeds into the dealer control vehicle purchase account at Delhi. According to the availability of the funds in the said dealer control account, the vehicles are sold by this defendant in favour of its authorized dealers. Defendant nos.1 to 3 cannot correlate the individual bookings made by the customer through its authorized dealers. The authorized dealers are also not required to send the details o the customers, who have made the bookings of the vehicles to D1 to D3. Defendant nos.1 to 3 maintains the dealer control account indicating the payments received in ANZ Grindlays Bank and the vehicles sold to its authorized dealers against the availability of the funds in the said account. Defendant nos. 1 to 3 invoices the vehicle after making payment of the central sales tax and invoices the vehicles in favour of various dealers. Defendant nos.1 to 3 further does not earmark the vehicle in favour of any individual customers. The authorized dealer invoices the vehicles to its customers after paying the A.P.General Sales Tax and upon receiving the ex-showroom prevailing price at the time of the delivery. The authorized dealers also issue the sale certificate in favour of their customers. Thus, there is first sale by D1 to D3 in favour of authorized dealers or enabling the dealer to re-sell the vehicles in favour of customers and as such there is no privity of contract between the plaintiff and this defendant. The plaintiff never made bookings either with D1 to D3 or D3 and D5."
43. What is deposed by DW.2 was that plaintiff did not make payment by cash or cheque or Demand Drat favouring Mahalakshmi Motors Private Limited and made payments favouring Maruti Udyog Limited and all the payments were sent to Maruti Udyog Limited, Delhi and that 4th defendant is not liable to pay suit amount in all the three suits. In the deposition of DW.3, deponent clearly stated that "Maruti PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 25 Udyog Limited sells vehicles to us and we sell them to customers". This assertion of DW.3 is ignored and trial Court considered the other averments. In the cross-examination by the plaintiff, DW.3 stated that demand drafts were drawn in favour of Maruti Udyog Limited and it alone encashes the demand drafts and when demand drafts are received from the customers, they would pass receipts on behalf of Maruti Udyog Limited and that there is a condition in the order booking form that the dealer is not responsible and the deponent also stated that he gets commission for running services to Maruti Udyog Limited for booking and delivery of the vehicles.
44. On a careful consideration of the respective depositions of defendant witnesses, it cannot be said that there is material contradiction among the witnesses. The trial Court erred in not properly analyzing the depositions and exhibits marked on behalf of defendants 1 to 3.
45. It is not in dispute that initial payment was made by demand drafts drawn in favour of Maruti Udyog Limited. From the extracted averments of DW.1, it is noticed that these amounts get credited to the specific account maintained in ANZ Grindlays Bank, which is called 'dealer control vehicle purchase account'. Such accounts are maintained dealer-wise all over the country. For convenience sake, the demand drafts were drawn in favour of Maruti Udyog Limited, but those demand drafts are credited in the 'dealer control vehicle purchase PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 26 account'. It is the practice in vogue in automobile sector. As explained by the deponent and as can be seen from the various clauses in the Dealer Agreement, the manufacturer verifies the amount lying in the 'dealer control vehicle purchase account' of a dealer and dispatches the vehicles based on the amount accumulated in the account. At the stage of dispatch of the vehicles, the company does not verify the customers to whom the vehicles are to be delivered. It is not the responsibility of the company to deliver a particular vehicle to a particular customer. That is left to the dealer and it is the dealer's responsibility to deliver the vehicle to his customer.
46. The trial Court failed to appreciate the specific mechanism created for the purpose of assessing the availability of funds in the 'dealer control vehicle purchase account' for delivery of vehicles as per the indent placed by the dealer. For example, if dealer places indent for 20 vehicles of different models and price range, the company verifies the vehicles prices and verifies the balance amount available in the 'dealer control vehicle purchase account' and to the extent of amount available in the account, it delivers the vehicles. In a given situation, the company may not deliver all the 20 vehicles indented if the amount is not sufficient to meet the vehicles price. There is a separate contract between the customer and the dealer and it is dealer's responsibility to deliver the vehicle booked by the customer or to refund the amount secured from him. This finer distinction is not appreciated by the trial PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 27 Court in holding that the defendants 1 to 3 are responsible for repayment of the amount due.
47. Manufacturer is responsible for the quality of the vehicle manufactured and spare parts provided by the manufacturer. It is not the responsibility of the manufacturer for the deficiency in service by the dealer on delivery of vehicle or spare parts. If there is deficiency in service in delivery of the vehicle, it is the dealer who is responsible and answerable to the customer. The terms of the contract clearly envisage this and make clear distinction between the role of manufacturer and the dealer.
48. The quality of service provided by the dealer has an impact on sales of the vehicles manufactured by the company. Therefore, the manufacturer keeps tab on service provided by the dealer and wherever there is deficiency in service takes remedial steps. Therefore, in its own interest, defendant-company requires to keep tab on functioning of a dealer. That does not mean it is responsible for deficiency of service by the dealer. Having found that defendants 4 and 5 committed several irregularities and were not providing quality service to the customers, it has terminated the dealerships and has initiated criminal and civil action.
49. It is the responsibility of the authorized dealer to issue invoice and sale certificate to its customer and charge local sales tax and commission and credit the local sales tax to the State Government PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 28 Treasury. The transaction between the dealer and its customer concludes on the delivery of the vehicle to the customer. Whereas, the sale of a vehicle between the company and the authorized dealer concludes as soon as the vehicle is handed over to the transporter for dealer's destination.
50. Thus, there was no privity of contract between plaintiff and defendants 1 to 3. The relationship between defendants 4 and 5 and defendants 1 to 3 is on the basis of principal to principal as held by the Hon'ble Supreme Court in identical fact situation in Indian Oil Corporation vs. Consumer Protection Council, Kerala1.
51. On the issue of locus standi also, the trial Court erred in holding in favor of the plaintiff. Plaintiff is a finance company, which enters into hire purchase agreements with its customers to provide finances to the customers to purchase vehicles. They are called 'hire purchase agreements'. On entering into agreement, plaintiff releases the money to the customer. However, instead of paying the money directly to the customer, the plaintiff seems to have adopted the mechanism of paying initial amount to book a vehicle with the dealer directly and arrange the full amount at the time of delivery of the vehicle. It is only a convenience and understanding between the plaintiff and its customers. But its customers are the actual customers to the vehicle dealer and the agreement to deliver the vehicle is between the customer 1 (1994) 1 SCC 397 PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 29 and the dealer. Merely because plaintiff arranged the initial vehicle booking money, it does not step into the shoes of the customer, take the role of the customer to prosecute litigation against the dealer and the manufacturer of the vehicle, as in these cases. At any rate, there is absolutely no contractual relationship between the plaintiff and the defendants 1 to 3. Merely because Demand Drafts were drawn for initial vehicles booking amount favouring Maruti Udyog Limited, it does not create relationship with plaintiff and issue of enforcement of contract with the defendants 1 to 3 does not arise. Therefore, the trial Court grossly erred in holding that plaintiff has locus standi in instituting the suits and claim to refund the amounts paid by the plaintiff.
52. Thus, the issue is held in favour of defendants 1 to 3 and against the plaintiff.
ISSUE No.2:
53. The findings recorded by the trial Court on privity of contract and locus standi are not sustainable. That being so, the trial Court grossly erred in holding the issues in favour of the plaintiff and against the appellants. Once issue no.1 is decided in favour of defendants 1 to 3, all other issues fall to the ground. The judgments and decrees of trial Court under Appeal are not sustainable.
PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 30 ISSUE NO.3:
54. With the result, Appeals are allowed and the judgments and decrees made by the trial Court in O.S.No.96 of 1998, O.S.No.95 of 1998 and O.S.No.558 of 1998 are set aside. Pending miscellaneous applications, if any, shall stand closed.
_______________________ P.NAVEEN RAO, J _______________________ J.SREENIVAS RAO, J Date: 02.03.2023 KKM PNR,J & JSR,J CCCA Nos.42, 55 & 71 of 2002 31 HON'BLE SRI JUSTICE P.NAVEEN RAO AND HON'BLE SRI JUSTICE J.SREENIVAS RAO CITY CIVIL COURT APPEAL NOS.42, 55 AND 71 OF 2002 Date: 02.03.2023 KKM