Calcutta High Court
Anand Carbo Private Limited vs Amrit Cement Limited on 20 September, 2023
ORDER SHEET
OCD-5
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
[COMMERCIAL DIVISION]
IA No. GA/1/2023
In
CS/196/2023
ANAND CARBO PRIVATE LIMITED
VERSUS
AMRIT CEMENT LIMITED
BEFORE:
The Hon'ble JUSTICE ARINDAM MUKHERJEE
Date: 20th September, 2023.
Appearance:
Mr. Jishnu Saha, Sr. Adv.
Mr. Kumarjit Banerjee, Adv.
Ms. Sanchari Chakraborty, Adv.
Ms. Akansha Chowdhury, Adv.
Mr. Sourojit Dasgupta, Adv.
For the plaintiff/petitioner.
Mr. Jishnu Chowdhury, Adv.
Mr. Sankarsan Sarkar, Adv.
Ms. Patrali Ganguli, Adv.
Mr. Bhawna Parasranka, Adv.
For the defendant/respondent.
The Court:- In a suit for recovery of price of goods said to have been
sold and delivered, the plaintiff has made this application, inter alia, for
security and injunction.
The plaintiff says that the defendant placed a purchase order on 3rd
November, 2022 for supply of Indian Coal through Rake for Umlaper
Meghalaya plant by Rail mode up to Railway siding (TTLA) loaded into Rake
basis for an aggregate quantity of 4000 MT+/-10% i.e. 01 Rake. The purchase
order which is annexed at page 26 of the application provides for the price per
MT (PMT) on loaded into rake basis at Rs.10,300/- excluding the Goods and
Service Tax (GST) and the cess. The coal should have the Gross Calorific Value
(GCV) of 5000 kilocal/per kg +/-100 kilocal/per kg. The ash contents, the
volumetric measure (VM), the sulphur and IM content are also provided in the
purchase order.
The plaintiff further says that the purchase order on being accepted
becomes a contract between the parties there, on the terms and conditions
provided therein. The purchase order having been accepted brought in
operation a contract of guarantee. The said guarantee is on pro-rata basis on
GCV and Total Mass (TM) i.e. on prorata basis if the coal did not fulfill the
specification the buyer (defendant) was only entitled to impose penalty and not
reject the goods. The plaintiff further says that the terms and conditions of the
contract in unequivocal language provide for a guarantee as stipulated therein.
The plaintiff also says that in view of the provisions of Sections 11,
12 and 13 of the Sale of Goods Act, 1930 (hereinafter referred to as 'the said
Act'), the provision of rejection of goods as provided under Section 41 of the
said Act is not applicable in this case for such guarantee. The defendant in
case of inferior quality of the goods would at the highest pay less by imposing
penalty and deducting the same on pro-rata basis from the price of the goods.
The plaintiff also says that there is no dispute as to the receipt of the
total quantity of the material on 16th November, 2022. The railway receipt
annexed at page 40, according to the plaintiff, will show that the goods were
loaded on 13th November, 2022 and the invoice was raised on 14th November,
2022 (at page-45 of the application). The defendant has paid a sum of
Rs.2,81,19,000/- in advance and was, therefore, liable to pay the balance
amount immediately upon the receipt of the goods.
The plaintiff further says that on 26th November, 2022, the defendant
for the first time alleged that the goods were of inferior quality. Although, the
agreement provided for drawing of samples by an independent agency in the
presence of the representatives of the plaintiff and the defendant at the railway
siding no such sample was done by the defendant in the presence of the
plaintiff. The report, which is annexed to electronic mail dated 26th November,
2022, according to the plaintiff, is dated 22nd November, 2022, but the
samples were drawn on 6th November, 2022 when the materials were not even
placed for being loaded in the rake and as such samples could not have been
drawn on that date. The plaintiff, therefore, says that the report relied upon by
the defendant is a unilateral report, when samples may have been collected not
in the presence of the representative of the plaintiff, but only with the
defendant's representative around.
The plaintiff also says that attempt to reject the goods is
impermissible under the contract between the parties and the defendant could
not have done so. The plaintiff further says that by a subsequent letter caused
to be written by the defendant through its advocate, which is at page 52 of the
application, the defendant has given incorrect facts and figures to defy making
payment of the price of the goods, sold and delivered by the plaintiff. In the
said letter, the plaintiff says that the defendant has after initially rejecting the
goods which it could not have otherwise done, however, admitted to have
consumed 1014.69 MT. The defendant having partly consumed the goods have
given a go by to the rejection and cannot now turn around and say that the
balance quantity is rejected. The plaintiff also says that assuming without
admitting that there is a dispute as to the quality of goods, then also, by acting
contrary to the ownership of the goods, the defendant has waived its initial
decision for rejection and have accepted the goods. The defendant cannot,
therefore, reject the balance part and claim damages from the plaintiff. The
plaintiff also says that from the letters issued by the defendant, it is crystal-
clear that the defendant is not keeping good financial health and had to close
down the unit intermittently, though the defendant alleged that the same has
occurred due to off-grain materials supplied by the plaintiff which is, however,
incorrect. The plaintiff further says that the conduct of the defendant attracts
the provisions of Order XXXIX Rule 1(b) read with the provisions of Order
XXXVIII Rule 5 of the Code of Civil Procedure, 1908. It is, therefore, an
appropriate case to direct security by exercising the powers under Section 151
of CPC as laid down by the Hon'ble Supreme Court in the judgment reported in
(2021) 6 SCC 418 (Rahul S. Shah-Versus- Jinendra Kumar Gandhi & Others).
Responding to the submission made by the plaintiff, the defendant
says that there was an initial delay on the part of the plaintiff in supplying the
goods. Initially, the goods were asked to be supplied from Bermo Siding, but
later on, it was loaded from Nimpura Siding near Kharagpur, West Bengal as
the plaintiff could not supply from the initially decided point which caused
delay resulting in breaking the chain of continuous supply at the defendants'
factory. The defendant was forced to go ahead with the contract as it was not
possible to arrange the goods from alternative sources. The defendant says
assuming without admitting that there was no delay and 16th November 2022
being the date on which the goods were supplied according to the original
scheme even then the defendant, within a reasonable period of time, in writing,
had rejected the goods as required under Section 41 of the said Act. The ten
days time period, according to the defendant, from the date of receipt of the
material should be reckoned to be a reasonable period of time, particularly
when the report from SGS, an independent inspecting agency, was received
only on or after 22nd November, 2022.
The defendant also says that from the report of SGS, it will be clear
that the materials supplied by plaintiff were not in accordance with the
specification as laid down in the purchase order. The GCV was much less than
4900 kcal/PMT. The ash content and other compounds contained in the coal
so supplied by the plaintiff as per the report of the SGS was also not as per the
specification. The defendant further says that after having rejected the goods,
it was the obligation of the plaintiff to take back the same, but the plaintiff did
not lift it. Under compelling circumstances as there was no coal available to
keep the factory operative which solely occurred due to delayed supply by the
plaintiff, the defendant consumed the off-grade material by mixing it with high-
grade materials to achieve a standard. In this process, the defendant has
rejected the balance quantity between 3966 MT being supplied by the plaintiff
and 1014.69 MT consumed by the defendant, equivalent to 2951.31 MT and is
also entitled to refund of price already paid and damages. The defendant has
paid a sum of Rs.2,81,19,000/- and says that even if the aggregate value of the
coal measuring 1014.69 MT is calculated at the rate of 10,300 PMT without
even price deduction for inferior quality, then also, the defendant has money
lying with the plaintiff in excess of Rs.1.76 crores. The plaintiff, therefore, is
adequately secured as the issues regarding the specification, which have led to
rejection of the goods, are required to be gone into after affidavits, no order of
security can be made.
The defendant further says that no case has been made out either as
required under Order XXXIX Rule 1(b) of CPC or under Order XXXVIII Rule 5
of CPC. The allegations are bald and do not warrant consideration. The
defendant also says that the case in hand cannot be an appropriate case as
indicated in the judgment of Rahul S. Shah (supra) as there are more than one
triable issues. There are contemporaneous documents complaining about the
quality backed with a report of an independent inspecting agency. Taking all
these facts into consideration, no security can be directed to be paid nor can
the defendant be injuncted in a manner as prayed for to provide the security.
Last but not the least, the defendant has also taken a point that the
application has not been properly verified. The statements made in paragraph
16 onwards are at the highest statement of facts making allegation against the
defendant. The same cannot be submission on behalf of the plaintiff as
indicated in the jurat. The affidavit is not conforming to the provisions of Order
XIX of CPC and as such should not be taken into consideration.
After hearing the parties and considering the materials on record, I
find that the defendant has been able to make out a prima facie defence to
come out of an appropriate case as indicated in Rahul S. Shah, particularly, in
view of the letter of rejection being issued within ten days from the date of
receipt of the materials backed by a report. The rejection was also made within
four days from the date of receipt of the report from SGS. The defendant also
has admittedly paid a sum of Rs. 2,81,19,000/- which is much in excess of the
price of the goods as per the contract admitted to have been consumed by the
defendant. The defendant has raised quality dispute which is, prima facie,
substantiated by a report. The said report cannot, at this stage, be shorn
away. The pleadings and supporting materials also do not reflect at this stage
that the defendant is trying to sequester its assets or trying to remove the
assets and itself from the jurisdiction of this Court.
The defects alleged as to the affirmation of the petition by the
defendant are curable defects. These are not illegalities, but at the highest
irregularities as held in (2006) 2 SCC 777 (Vidyawati Gupta-Versus-Bhakti
Hari Nayak & Others). Neither the plaint nor an application can be rejected
in view of such irregularities. Although, the judgment in Vidyawati Gupta
(supra) was rendered in respect of a suit filed in the ordinary original civil
jurisdiction of this Court, yet I am willing to extend the same ratio to a suit like
the instant one filed in the Commercial Division of this Court.
Going by the facts of the case the principles as laid down in Raman
Tech & Process Engg. CO. & Anr. -Versus- Solanki Traders reported in
(2008) 2 SCC 302 are applicable. No case as required under Order XXXIX
Rule 1(b) of CPC has also been prima facie made out.
In the aforesaid facts and circumstances, the ad interim order of
injunction and/or security prayed by the plaintiff is refused. The matter
requires further scrutiny, which is possible only after affording the defendant
to file affidavits.
Affidavit-in-opposition be filed by 6th October, 2023. Affidavit in
Reply thereto, if any, be filed by 17th October, 2023.
Let this matter appear under the heading "Adjourned Motion" on 20th
November, 2023.
(ARINDAM MUKHERJEE, J.)
snn.
