Calcutta High Court
Orissa Metaliks Private Limited vs Shenyang Casting And Forging ... on 18 August, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
CS 279 of 2019
Orissa Metaliks Private Limited
Versus
Shenyang Casting and Forging Industries
Company Limited.
Mr. Jishnu Chowdhury
Mr. Debdut Mukherjee
Ms. Priyanka Sharma
... for the plaintiff.
Hearing Concluded On : 24.07.2023
Judgment on : 18.08.2023
Krishna Rao, J.:
1.
Plaintiff has filed the present suit against the defendant for recovery of
an amount of Rs. 2,20,46,576.27/- with interest.
2. The plaintiff is engaged in the business of manufacturing of iron and
steel and has a manufacturing unit at Kharagpur, Midnapore, West
Bengal. The defendant is engaged in the business of design,
manufacturing and supply of major equipment for pellet plant.
3. After discussion and negotiation between the parties two agreements
were entered on 19th February 2017 and 17th March, 2017 for design,
manufacturing and supply of major equipments for a 6,00,000 TPA
Grade Kiln Pellet Plant Line - 4 and 6,00,000 TPA Grade Kiln Pellet
Plant Line -5. The total value of the contract is USD 3.00 Million of
each contract. As per Clause 3.10 of the contract, the plaintiff is
required to pay USD 50,000 as advance by way of Letter of Credit and
10% of the total value is to be paid by way of bank guarantee. As per
clause 5.00 of the contract, the defendant is required to supply the
parts and accessories within a maximum period of 180 days from the
date of token advance.
4. The defendant raised two invoices of each agreement dated 12th March
2017 and 17th March 2017. The plaintiff has paid the token advance of
USD 50,000 each to the defendant on 20th March, 2017 and 22nd
March, 2017. The payment made by the plaintiff on 20th March, 2017
which was equivalent to Rs. 32,72,240.58/- and payment made on 22nd
March, 2017 was equivalent to Rs. 32,74,740.95/- due to the foreign
exchange fluctuation.
5. The plaintiff and the defendant have agreed that the zero date from
which the 180 days within which delivery had to be effected would be
counted from 30th March, 2017. By e-mails dated 31st March, 2017, 3rd
April, 2017 and 7th April 2017, the terms of payments were modified. In
the meeting held on 10th April, 2017, it was mutually agreed between
the parties that the second contract would be cancelled and the
payment made thereunder shall be adjusted in the first contract. In the
meeting held on 21st September, 2017 and 22nd September, 2017, the
zero date was again modified to 10th July 2017.
6. The first Letter of Credit was opened on 10th July, 2017 with HDFC
Bank for a value of USD 12,07,000 by incurring cost of Rs.
1,01,824.74/- in favour of the defendant. Due to the difficulties
expressed by the defendant, the plaintiff has closed the Letter of Credit
by a letter dated 23rd November, 2017 and a fresh Letter of Credit was
issued by the plaintiff through the State Bank of India on 29th
November, 2017. Various meetings between the parties were held and it
transpired that defendant was not in a position to perform the contract.
7. On 22nd February, 2018, the plaintiff had sent a notice though the
learned Advocate calling upon the defendant for immediate
performance and also indicated that the plaintiff will also claim
damages for non-performance of contract. The notice issued by the
plaintiff was duly delivered to the defendant but inspite of receipt of the
notice, the defendant failed to perform the contract.
8. It transpired from the records that after filing of the suit, writ of
summons were served upon the defendant but inspite of receipt of writ
of summons of this case, the defendant has not entered in the suit and
accordingly on receipt of report from the department, by an order dated
25th November 2022 the present suit was placed in the list of
"undefended suit".
9. The plaintiff has examined one witness in support of his case by filing
examination-in-chief on affidavit along with all documents and the
same was marked as Exhibit A collectively.
10. Clause 3.10 d of the agreement provides payments terms which reads
as follows:
"3.10 PAYMENT TERMS
Payment will be released as per the terms specified
herein, Billing schedule document No: OMPL-II/16-
17/P7162-00019 (BS), attached to this contract is part of
this contract.
1. Token advance USD 50,000.00
along with order by
TT.
2. 90% (USD 2650000) LC to be opened for
of order value less 100% of order value
token advance, less token advance
Prorate basis (USD 2950000)
against the
dispatch, as per the
billing schedule, LC
to be enchased
against the
submission of
documents,
Dually signed LC shall be opened
commercial invoice, within 30 days from
Test Certificate (In date of receipt of
triplicate) first payment
Bill of Lading,
Inspection report
dually signed and
stamped by Buyer
Packing List (In
Triplicate)
3. USD 300000 10% of order value
Against submission
the Performance
bank Guarantee of
10% of order value
which shall remain
valid for the period
of Guarantee at
least for 18 months.
Refer clause 10.00,
must be submitted
along with last
supply of good
equivalent to 10 of
order value."
11. Clause 5.00 of the agreement provides delivery period which reads as
follows:
"5.00 DELIVERY PERIOD
All the equipment shall be delivered at CIF-Haldia/Kolkata within 105-
180 days from date of token advance of order without any failure, (latest
by 20th October, 2017). Part shipment is allowed however all the goods
must be delivered in three consignment as specified herein,
A. First consignment Material will be
of steel parts of delivered within 105
the equipment, days at Indian port
stationary parts of
the equipment
B. Second Material will be
consignment delivered within 150
inclusive of days at Indian Port
Rotating parts of
the equipment
C. Third consignment Material will be
inclusive of drive delivered within 180
Gear box, motor, days at Indian Port
electrical panel,
control panel, etc.
However, Purchase requested seller to deliver the goods in 150
days from date of signing of contract.
You shall provide all the engineering drawings scoped in, within
30 days from date of contract, Equipment drawings must be
submitted immediate on signing the contract so as OMPL can
extend their approval immediate to commence the manufacturing
of the equipments by seller.
Delivery is linked only to first payment, not to drawings approval,
this please be noted, however any delay in opening the LC will
have impact on delivery period correspondingly.
Kindly note that the maintenance of delivery schedule is of paramount
importance and is a vital consideration for the placement of order with
you. We shall tolerate no delay in the delivery of the items on any
grounds whatsoever."
12. Clause 18.00 of the agreements provides for termination which reads as
follows :
"18.00 TERMINATION
We reserve the right to terminate the contract in the event of :
1. Non fulfilment of supply after a maximum
delay of one month.
2. Non fulfilment of quality and
workmanship standards as mentioned in
this contract, inclusive of this contract."
13. As per invoices raised by the defendant, the plaintiff in terms of the
agreement has paid USD 50,000 each on 20th March, 2017 and 22nd
March, 2017. As on 20th March, 2017, the value of USD 50,000 was
equivalent to Indian Rupees 32,72,240.58/- and on 22nd March, 2017
the value of USD 50,000 was equivalent to Indian Rupees
32,74,740.95/-. The delivery period was 180 days from 30th March,
2017 and subsequent the date of delivery period was modified to 10th
July, 2017.
14. Initially, the plaintiff has opened the Letter of Credit on 10th July, 2017
in the HDFC Bank for a value of USD 12,07,000 by incurring cost of
Rs. 1,01,824.74/- but subsequently on the request of the defendant,
the plaintiff has closed the said Letter of Credit and opened a new
Letter of Credit through the State Bank of India on 29th November,
2017 for value of USD 12,07,000 by incurring cost of Rs. 50,936.00/-
15. Even after completion of all formalities and payment of token advance
as per the contract, the defendant failed to perform its obligations by
supplying the materials to the plaintiff as agreed by the defendant. The
defendant even after receipt of the legal notice has not come forward to
comply with the terms of the contract.
16. The Agreements dated 19th February, 2017, 17th March, 2017, two
invoices date 12th March, 2017 and 17th March, 2017, the bank
transaction of USD 50,000 each dated 20th March, 2017 and 22nd
March, 2017, the emails dated 31st March, 2017, 3rd April, 2017 and 7th
April, 2017, the letter dated 20th April, 2017 wherein the second
contract was cancelled, Letter of Credit dated 10th July, 2017 with the
HDFC Bank, Letter of Credit with the State Bank of India dated 29th
November, 2017, Minutes of the Meetings dated 24th July, 2017 to 27th
July, 2017, 21st September, 2017 to 22nd September, 2017, 12th
November, 2017 and 10th May, 2018, Advocate notice dated 22nd
February, 2018 and the track reports are exhibited as Exhibit A
collectively.
17. Considered the submissions made by the learned Counsel for the
plaintiff, perused the plaint, examination in chief on affidavit of the
plaintiff's witness and the documents exhibited during the evidence of
the plaintiff's witness. This court finds that the plaintiff in compliance
of the contracts entered between the parties and in terms of invoices
raised by the defendant, the plaintiff has paid token advance of USD
50,000 each on 20th March, 2017 and 22nd March, 2017 and
subsequently on the request of the defendant, first Letter of Credit was
closed and a fresh Letter of Credit was opened with the State Bank of
India by incurring expenditure of Rs. 1,01,824.74/-.
The defendant has received the total amount of Rs.
65,46,981.23/- from the plaintiff and the plaintiff has also incurred
an amount of Rs. 1,01,824.74/- for opening of fresh Letter of Credit
by closing earlier Letter of Credit. The defendant has neither supplied
materials in terms of contract nor has refunded the amount, thus the
plaintiff is entitled to get the amount incurred by the plaintiff along
with interest as well as damages.
18. In view of the above, the plaintiff do get a decree for Rs.
2,20,46,576.27/- against the defendant with interest at the rate of 18%
per annum from the date of filing of the suit till the realisation of the
decretal amount.
19. C.S No. 279 of 2019 is thus disposed of. Decree be drawn
accordingly.
(Krishna Rao, J.)
