Standard Castings Pvt. Ltd. vs Test Equipment
1997 Latest Caselaw 155 Del

JUDGMENT

K. Ramamoorthy, J.

(1) The plaintiffs have filed the suit against the defendant for the recovery of Rs. l,25,000.00 with interest @ 18% per annum. The alternative prayer is made that if for , any reason a decree is not passed in favour of the second plaintiff, the same may be passed in favour of the first plaintiff or jointly in favour of both the plaintiffs for the same amount.

(2) Before I refer to the pleadings I should note a few facts. On 06.11.1979, the first plaintiff M/s Standard Castings (P) Ltd. had placed an order for the purchase of 300 Kv 5MA Panoramic 360" X-ray Unit, that is marked as Exhibit P-1 in the case. Towards the 10% advance a sum of Rs. 17.991.00 was paid by the first plaintiff on 22.02.1980. Towards 20% advance a cheque was issued by the first plaintiff that was dishonoured but subsequently on 18.07.1980 a sum of Rs. 53.883.00 was paid towards 20% advance.

(3) It would appear that on 15.09.1980 the machine was ready according to the defendant. On 06.10.1980 the defendant wrote to the plaintiffs about the payment of the machine. On 20.10.1980, the defendant wrote to the first plaintiff demanding the balance payment of the money due and the defendant called upon the first plaintiff to pay the amount on or before 31.10.1980. On 23.10.1980, the first plaintiff wrote to the defendant acknowledging the receipt of the letter dated 20.10.1980 noting that the machine is ready and wanted to witness the satisfactory performance of the machine. On 19.12.1980, the first plaintiff wrote a letter to the defendant for transfer of the order in the name of his sister concern, the second plaintiff and the first plaintiff requested the defendant to issue a fresh proforma invoice. The first plaintiff had also mentioned the dates where money was to be paid. On 26.12.1980, the defendant would appear to have accepted the proposal of the first plaintiff. On 30.12.1980, the defendant sent invoice to the second plaintiff in the following terms: One Industrial X-ray 1,79,910.00 Unit Panoramic 300 Kv 5 M.A as per above order. Add S.T @ 4% : 7,206.40 Total 1,87,116.40 Less payment received 53,883.00 Net due: 1,33,233.40 (Rupees One lac thirty three thousand two hundred and thirty three only).

(4) On 01.01.1981, the defendant wrote to the plaintiffs pursuant to the letter dated 19.12.1980 from the second plaintiff calling upon the second defendant to pay the amount. On 20.03.1981, (marked as Exhibit D-l), the second plaintiff wrote to the defendant that the payment would be made on or before 31.03.1981. It would appear that there was some talk of settlement. On 25.07.1981, the defendant wrote a letter to the plaintiffs (letter not produced). On 17.10.1981, the plaintiffs wrote to the defendant marked as Exhibit P-3, staling that there was some settlement and after verification of the total interest payable by the defendant to the bank, the defendant would send a letter to the plaintiffs about the amount due from the defendant to the plaintiffs. On 20.04.1981, the defendant sent invoice to the third party in Ahmedabad for selling the machinery.

(5) On 27.07.1982, a resolution was passed by the first plaintiff Company to institute the suit against the defendant. On 04.08.1982 the plaint was presented.

(6) The plaintiffs claim the return of the advance and also damages from the defendant. Now a look at the plaint would show that how the plaintiffs have put their case.

(7) A contract was entered into between the first plaintiff and the defendant on 08.11.1979 for the supply of 300 Kv 5, M.A., Panoramic 360" X-Ray Unit consisting of the various parts mentioned in the said contract at a price of Rs. l,99,900.00 with a discount of 10%. The price thus comes to Rs. l,79,910.00 . The sale tax was to be paid extra at 7% at the time of supply. As I have noticed above, the payment of Rs. 53,883.00 was paid by the First plaintiff towards the advance. There was a transfer of the order in the name of the second plaintiff which was agreed to by the defendant. On 26.12.1980, the defendant accepted the proposal and the defendant sent the invoice in the name of the second plaintiff on 30.12.1980.

(8) The time for payment was not essence of the contract and the correspondence held between the parties support the case of the plaintiffs. The defendant insisted on the payment of the balance amount by 28.03.1981 but the plaintiffs requested the defendant to wait till 31.03.1981. The plaintiffs in para 7 asserted as follows: That the defendant without informing or intimating the plaintiffs or giving any other notice or remainder sold the contracted machines and the plaintiffs came to know of it only when the defendant was contacted on the telephone in connection with taking of the balance payment from plaintiffs and delivery of contracted X-Ray Unit to the plaintiffs. The property in the contracted Unit had passed on to the plaintiff No. 2.

(9) The plaintiffs refer to the talk of settlement and the letter written by the defendant on 17.11.1981 and according to the plaintiff the defendant legally cannot sell the machinery without prior notice to the buyer. Para 8 of the plaint is as follows: That prior to the plaintiffs coming to know of unauthorised sale by the defendant/ Seller the discussion had taken place on 25.07.1981 with Shri S.V. Subramanian of the plaintiff No. 2 with Shri A.B. Desgupta of the defendant at which discussion according to which an amicable settlement was arrived at was for the refund of the advance amount made to defendant after suitable adjustment of interest amount incurred by defendant as mentioned in his letter dated 28.07.1981. This letter was acknowledged by the defendant under the signature of Mr. A.B. Dasgupta on the 18th August, 1981 but by this Defendant backed out from the settlement mentioned in the letter dated 28.07.1981, and he stated that adjustment of the advance amount can be allowed if a new order for a purchase of a machine is placed. The defendant vide letter dated 17.11.1981 was informed that it was settled" that you will contact your bankers to check the total interest on investment incurred" by the defendant and commission paid to the bank on bank guarantees and that the defendant would refund the balance amount of advance after adjustment of the several items of interest. However, as submitted above instead of sticking to this, they sold the machine. If the settlement as agreed between the parties for the refund of the amount of advance to the plaintiff was not acceptable and they insisted on the plaintiff taking delivery of the machine, it was the duty of the defendant to say so to the plaintiff but instead of it they sold the machinery at an increased price and thus made considerable profit/benefit and deprived the plaintiffs of the taking of the delivery of the machine at the old price. Legally the defendant seller could not sell it to any one else without prior notice to the buyer the plaintiff and is liable to pay the amount of increased price to plaintiffs. Thus the plaintiffs claimed the advance of Rs.53,883.00 plus damages. The claim of damages is made in the following manner: The defendant sold the machinery to the third party at Rs. 2,39,012.00 so the difference between the price offered to the plaintiffs and what was sold to a third party would come to Rs. 59,102.00 . The plaintiffs claimed interest @ 18% per annum on the amount paid. The interest on Rs. 53,883.00 comes to Rs. 75,450.00 . Adding to this, the difference in the amount in the purchase price of Rs. 59,102.00 . The total amount would come to Rs. 1,34,554.73 payable by the defendant to the second plaintiff. But the plaintiffs would restrict their claim to Rs. l,25,000.00 .

(10) Therefore, according to the plaintiffs, there was no breach on the part of the plaintiffs. The property in the machine had passed on to the plaintiffs and it would pass on to the plaintiffs was not mentioned by the plaintiffs and the defendant sold away the machine, therefore, the plaintiffs are entitled to the relief.

(11) The defendant filed the written statement on 24.11.1982 stating that there was an order placed by the plaintiffs on 18.07.1980. The machine was ready by 06.10.1980. The defendant called upon the plaintiffs to take the delivery of the machine. There was no response.

(12) The defendant wrote on 20.10.1980 that if the balance amount is not paid by 31.10.1980, the defendant would take unilateral action. On 23.10.1980, a letter was received from the plaintiffs (Exhibit D-2). On 03.11.1980, demonstration was given to the plaintiffs and the plaintiffs were satisfied and promised to take delivery of the machine and promised to make the balance payment by 07.12.1980.

(13) On 19.12.1980, the plaintiffs wrote a letter to the defendant agreeing to pay the amount by 31.01.1931 to which the defendant agreed. The defendant wrote a letter on 01.01.1981 which was served on the plaintiffs personally by the representative of the defendant Company. On 15.03.1981, the defendant wrote to the plaintiffs requesting to make the payment by 28.03.1981 and the plaintiffs wrote a letter on 20.03.1981 (Exhibit D-1) agreeing to pay the amount on or before 31.03.1981. Since the plaintiffs did not make Ac payment, on 23.04.1981 the defendant sold the machinery to another party and forfeited the advance paid by the plaintiffs. According to the defendant, because of the breach committed by the plaintiffs he incurred assess and the defendant was a Small Scale Industry Unit and he started the business only recently and he was solely depending upon the orders from the customers and was borrowing from his banker.

(14) The plaintiffs filed the replication staling the plaintiffs all the time bad been acting in accordance with the reasonable and legal demand raised by the defendant. The contract dated 08.11.1979 no way stipulates that the time of payment is of essence. If the machinery had been sold on 23.04.1981, the defendant should have intimated the same to the plaintiffs. There was no order placed on 18.07.1980. On 23.10.1980 the plaintiffs wrote a letter to the defendant rightly requiring the defendant to give a demonstration as was obligatory to do tinder the contract. Legally too the buyer has a right to examine the goods before accepting them in order to know if they are in confirmity with the contract. The defendant has no right to forfeit the advance money as there is no clause in the original contract dated 08.11.1979. The defendant was not ready and willing to abide by the terms of the contract that payment was to be made by the plaintiffs on delivery of the machinery at plaintiff No.2's factory and insisted for payment before hand.

(15) On 25.07.1981, the defendant agreed to refund the amount unconditionally subject to deduction of expenses incurred by them and interest paid to the bank which was affirmed by the defendant in letter dated 18.08.1981. The defendant had admitted that the machinery had been sold at Rs. 2^9,000.00 covered up by a false plea, giving discount of such an imageable amount of Rs. 50,000.00 and thus the defendant had made a profit of over Rs. 59,000.00 . The allegation of the defendant that it sold the machine only for Rs. l,89,000.00 is false to the knowledge of the defendant. The allegation that the machine was sold for Rs. l,89,000.00 clearly shows that the defendant had made a profit as against the purchased price of Rs. l,79,910.00 .

(16) On 06.02.1985, the following issues were framed; 1.Was time of payment the essence of the contract? If not, what is its effect in this case? Opd (Onus objected to). 2. If issue No. 1 is decided against the defendant, did the defendant commit any breach? Opp 3. Was the delivery of the machine in question to be made at Gurgaon, as alleged by the plaintiffs? Opp 4. Did the property in machine pass to the plaintiff and if so, what is its effect? Opp 5. .If issue No. 4 is decided in favour of the plaintiffs, could the defendant sell off the machine, as has been done in the present case ? Opd 6. Is plaintiff No. 2 not entitled to the refund of the amount already paid to the defendant? Opd 7. If issue No. 6 is decided in favour of the plaintiffs, are the plaintiffs entitled to interest and if so at what rate? Opp 8. Are the plaintiffs or any of them entitled to recover damages from the defendants? If so, how much? Opp 9. Relief.

(17) The plaintiffs did not .adduce any oral evidence. The plaintiffs were content with exhibit P-1, letter dated 06,11.1979, Exhibit P-2, invoice dated 30.12.1980, Exhibit P-3 letter dated 17.11.1981.

(18) The plaintiffs have completely ignored the letter dated 19.12.1980 written by the second plaintiff to the defendant which was filed on 21.11.1984 by Mr. A.B. Dass Gupta along with the affidavit. The letter reads as under: "DEAR Sir, This has reference to the discussion undersigned had with you on 18th December 1980. As per the discussion we confirm that the payment shall be made in the-following manner towards purchase of X-Ray equip: Advance already paid: Rs.53,883.00 Advance to be made: Rs.25,000.00 by 31.12.1980 Advance to be made: Rs.40,000.00 by 15.01.1981. Balance to be made by 31st January 1981."

We would request you to transfer the above order in the name of our sister Concern M/s Standard Machines & Equipment Pvt. Ltd., No. 16HSIDC Industries Area, Palam Gurgaon road, Gurgaon and treat the above advance received from M/s Standard Machines & Equipment Pvt. Ltd., for which necessary adjustment entry will be made in our books of accounts. Afresh proforma invoice in the above company's name may be sent to us. This is not marked in the case. This ought to have been marked. Accordingly, this is marked as Exhibit X-1.

(19) The plaintiffs were well aware on that date, that the machine was ready. They themselves offered to pay the balance on the dates fixed by them. On 01.01.1981, the defendant wrote to the first plaintiff. This letter was served on the first plaintiff by the representative of the defendant Company. Ms. R. Geetha, Secretary of the Company had signed this letter which is shown as marked A red in the letter. At the time of admission/ denial, the plaintiffs with ulterior motive admitted only the signature but denied the contents. The letter reads as under: "DEAR Sirs, We are sending our representative Mr. P.K. Dutta to collect the draft for Rs. 25,000.00 as per your letter No.SC/39/ll/D/SO/630 dated 19.12.1980. We have been trying to contact Mr. Manchanda on telephone for last three days but failed. We could not contact Miss. r. Geetha also. Somehow we have a feeling that it is being avoided. In case you fail to honour your commitment this time you loose the opportunity for every. Please do not request us for further extension of date. This letter is marked as Exhibit X-2."

(20) The defendant wrote on 20.10.1980 to the first plaintiff pursuant to its letter dated 06.10.1980 and informing the first plaintiff that if the positive action is not taken by 31.10.1980 the defendant would infer that the first plaintiff is not interested in taking the delivery of the machine. This letter is acknowledged by the first plaintiff by its letter dated 23.10.1980, which is marked as Exhibit D-2. This is written by Ms. R. Geetha, the Secretary of the first plaintiff company. In this letter the letter dated 20.10.1980 is acknowledged by the first plaintiff but at the time of admission/denial the letter dated 20.10.1980 is not admitted, the letter being a copy. The plaintiffs must have produced the original when the plaintiffs had acknowledged the receipt of the letter. That shows the mala fide intention of the plaintiffs in making the claim against the defendant. This letter dated 20.10.1980 is marked as Exhibit X-3. There can be no dispute by the plaintiffs about the receipt of this letter. Therefore, the fact remains that the plaintiffs were fully aware of it at. any rate the first plaintiff was fully aware that the machine was ready in September 1980, and the first plaintiff itself had offered to pay the amounts by fixing the time and the defendant had categorically stated that the delivery should be taken by making the payment by 31.10.1980. To oblige the plaintiffs the defendant wrote on 01.01.1981 and further time was granted upto 28.03.1981. The plaintiffs themselves offered to pay by 31.03.1981. The plaintiffs did not do anything in discharge of their obligations under this contract for the reasons . best known to them. They failed and neglected to take the delivery of the machine. The first plaintiff having transferred the order to the second plaintiff passed a resolution on 27.07.1982 giving the right to Mr. A.K. Manchanda, Managing Director, to institute the suit against the defendant. This resolution is marked as Exhibit P-4.

(21) The burden is on the plaintiffs to show that the time was not the essence of the contract. The plaintiffs having paid the advance and having been aware of the facts that the machine was ready by September 1980 and having written letter on 23.10.1980 in response to the letter dated 20.10.1980, must have paid the balance amount or must have expressed their intention that .they are not willing to buy the machine. The plaintiffs asserted in the plaint that the property had passed on to the plaintiffs. The plaintiffs asserted that there was talk of compromise in July 1981. All these things must be proved by the plaintiffs. It is well settled that the onus to prove is on the person who asserts a claim and if that is not discharged that assertion would fail.

(22) In the case of Harmes and another Vs. Hinkson Air (33) 1946 Pc 156 the strict meaning of the term onus probandi is this that if no evidence is given by the party on whom the burden is cast, the issue must be found against him.

(23) The Supreme Court in Gopal Krishnaji Ketkar Vs. Mohamed Haji Latif and ors had in unmistakable terms had laid down that parties should produce the best evidence in their possession and certainly in order to succeed before a court of law.

(24) The learned counsel for the plaintiffs without examining any witness submitted written arguments running into 13 pages dealing with the defendant's case. Reference is made in the written submissions to an application under Order Ii Rule 12 and Section 151 Civil Procedure Code in IANo. 484/83 for discovery and orders were passed on 15.10.1984 and 28.01.1985. Ia No. 5158/83 was filed by the plaintiff under Order Ii Rule 21 and Section 151, CPC. for striking off the defense of the defendant. Reference is made to the sale made by the defendant and the profit alleged to have been made by the defendant.

(25) In the written arguments a reference is made to the judgment of the Division Bench of the Punjab High Court in New India Timber Trading Company Vs. Murari Lal and on, 1956 Plr 2 were the Punjab High Court held "it is the duty of the parties to produce their best evidence in court. Where a party does not do so, the court will be justified in concluding that if brought, it would not support the case of the party".

(26) The plaintiffs in this case had not led any evidence to support their case. In Murugesam Pillai Vs. Manichavasaka Desika Gnana Sambandha Pandora Sannadhi Ilr 40 Madras 402, the Privy Council held: "the best assistance to a Court of Justice would have been a scrutiny of these documents, and their Lordships feel free to conclude that if they had been by their entries confirmatory of the defendants' view the defendants would have brought them into Court. This part of the case, which is their Lordships' view is of considerable importance, is not referred to in the High Court". It is further held: "it is the duty of the parties to bring their best evidence. Where a party does not do so, the Court will be justified in concluding that it would, if brought, not support the case of the party and in such circumstances such party cannot be allowed to take advantage of the abstract doctrine of onus of proof". The Privy Council reiterated the principles in Sardar Gurbakhsh Singh Vs. Gurdial Singh and ors. Air 1927 Pc 230.

(27) The plaintiffs cannot say that the time is not the essence of the contract. In the ordinary commercial contract the time is of essence. It is only the case of Sale and Purchase of immoveables where time in general is not the essence of contract. In this case parties have made time the essence of the contract. It is open to the plaintiffs unilaterally to say that the time is not the essence of the contract because there was exchange of correspondence. As I had pointed ou( above, the plaintiffs themselves offered to pay the amount by a particular date, but they failed to do so. The plaintiffs claimed that the defendant ought to have informed the plaintiffs before the sale. There is absolutely no evidence from the plaintiffs that they were not aware of the sale of the machinery in April 1981 by the defendant to the third party when there were alleged talk of compromise in July 1981. This fact stated in the plaint could be decided only if the plaintiffs had offered themselves for cross-examination. The plaintiffs have come forward with a false case in material particulars. Therefore, they had no courage to come into witness box. The plaintiffs cannot now seek to recover the balance amount and damages on account of the breach committed by the plaintiffs. DW-1 has stated that he had incurred loss and a perusal of the defendant's evidence would show that he had placed all the facts on the title unlike the plaintiffs who have played hide and seek. It is vehemently contended by the learned counsel for the second plaintiff that the property had passed on to the plaintiffs by virtue of Section 21 of the Sale of Goods Act, 1930. Section 21 of the Sale of Goods Act, 1930 reads as under: Section 21 Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

(28) It is assumed by the second plaintiff that the property in the machine had passed on to the second plaintiff. The ingredient of Section 21 must be established by the plaintiffs by leading necessary evidence. Exhibit P-1, Exhibit P-2, Exhibit P.-3 do net in any way prove the case of the plaintiffs. The plaintiffs have not proved that the property in machine had passed on to the plaintiffs, the plaintiffs do not even say at what stage the property in the machine passed on to the plaintiffs that requires evidence, that requires the cross-examination of the plaintiffs. Then only we can come to the conclusion in way or the other. The plaintiffs are not prepared to come and give evidence. Exhibit P-3 dated 07.11.1981 does not by itself prove anything for the plaintiffs and unless the plaintiffs had examined themselves the contents of Exhibit P-3 cannot be taken nor can a decision be given in favour of the plaintiffs on the allegations in the plaint.

(29) The learned counsel for the second plaintiff relied upon Section 26 of the Sale of Goods Act 1930. Section 26 reads as under: Section 26 '. Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods arc at the buyer's risk whether delivery has been made or not. Provided that, where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might .not have occurred but for such fault: Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party.

(30) The plaintiffs have taken for granted and every assertion made by the plaintiffs cannot be taken proof of their case and I am quite unable to appreciate the stand taken by the plaintiffs.

(31) In the light of this discussion, now I deal with the issues. I)On "Issue No. 1, i find that time of payment was the essence of the Contract. Therefore, this issue is answered in favour of the defendant and against the plaintiffs. ii) On issue No. 2, the plaintiffs committed breach of the contract and therefore, this issue is answered in favour of the defendant and against the plaintiffs. iii) On issue No. 3, I find that there was no contract to deliver the machine at Gurgaon because the very allegation in the plaint is that the transport charges from Delhi to Gurgaon shall be charged extra by the defendant. There is no evidence from the plaintiffs that the plaintiffs offered to pay the charges. When there is no evidence, the plaintiffs cannot say that there was a contract to deliver the machine at Gurgaon. Therefore, this issue is found against the plaintiffs. iv) On the question of property in machine passing on to the plaintiffs, it is absolutely wrong for the plaintiffs to say, without leading any evidence, that the property in the machine passed on to the plaintiffs. Therefore, this issue is answered in favour of the defendant and against the plaintiffs. v) On issue No. 5, I have absolutely no difficulty in holding that since the plaintiffs had committed breach of the contract and had come forward with a false case they cannot say that the defendant cannot sell the machinery. Therefore, this issue is answered in favour of the defendant and against the plaintiffs. vi) On issue No. 6, about the refund of the advance to the plaintiffs. The plaintiffs are not entitled to any refund, not even the amount paid as advance because of their putting forth a false case and withholding the evidence from the court. vii) On issue No. 7, this issue relates to the payment of interest. This issue does not arise for consideration. viii) -I find that the plaintiffs cannot claim damages because a party who commits breach cannot claim damages. This issue is answered in favour of the defendant and against the plaintiff.

(32) Accordingly, there shall be a decree:    1)directing the dismissal of the suit; 2) directing the defendant to pay the costs of the suit to the Defendant.