Bombay Ammonia Pvt. Ltd. vs Blue Diamond Ice Factory
1998 Latest Caselaw 15 Del

JUDGMENT

C.M. Nayar, J.

1. The present suit has been filed by the plaintiff for recovery of Rs. 1,60,856.60 with costs and future interest against the defendants. The plaintiff is a company incorporated under the Companies Act, 1956 having its registered Head Office at 445, 4th Floor, Kewal Industrial Estate, Senapati Bapat Marg, Lower Parel, Bombay-400013, and its branch office at 9/47, Kirti Nagar Industrial Area, Kirti Nagar, New Delhi. Shri C.P. Dua is the Principal Officer of the plaintiff company at its branch office at 9/47, Kirti Nagar Industrial Area, Kirti Nagar, New Delhi and is stated to be duly authorised by the Power of Attorney of the plaintiff in his favour to institute the suit, to verify, to sign plaint, and to take recourse to all incidental proceedings in this regard. The details of the transactions between the parties are referred to in paragraphs 2, 3 and 4 of the plaint which may be reproduced as follows:-

"2. That the defendant No. 2 had acquired a plot of land in the industrial area Para deep Garh, with the financial assistance of defendant No. 3 and was interested in installing an Ice Plant in the above said premises. The defendant No. 3 had assured defendant No. 2 of its financial assistance in this respect in the purchase and installation of ice plant project. He therefore, floated a proprietary concern known as Blue Diamond Ice Factory defendant No. 1. Defendant No. 2 approached the plaintiff who undertakes contracts for the supply and installation of Ice Plant on the recommendations of defendant No. 3 with whom the plaintiff was registered as an approved supplier of Ice Plants.

The plaintiff had offered a 6 tonne capacity Ice Plant to the defendant, through its proprietor defendant No. 2 who accepted the same and requested the plaintiff to submit Proforma Invoice to defendant No. 3 who was to finance the purchase.

3. That in pursuance to the said agreement, the plaintiff had sent a Proforma Bill No. PF/607/1 dated 8,6.81 drawn in favour of defendant No. 3 in Account of M/s Blue Diamond Ice Factory for six tonne capacity clear Ice making Plant valued at Rs. 2,50,000/- a letter dated 6.6.81 and had endorsed a copy of this letter as well as the proforma Invoice to defendants No. 1 & 2 and requested defendant No. 3 to communicate its acceptance of the offer.

4. That the defendant No. 3 had confirmed the acceptance of the offer dt. 6.6.81 and had further confirmed that the captained Proforma Invoice had been approved and the defendant No. 3 was agreeable to make payment to the extent of 75% towards the cost of the machinery against documents through Central Bank of India, Mehtab Road, Cuttack. The defendant No. 3 had called upon the plaintiff to despatch all the machinery in one lot. The true copy of this letter of confirmation dated 7.7.1981 was also sent to the defendants No. 1 & 2.

The contract between the plaintiff and the defendants was concluded by the receipt of the letter of acceptance from the Orissa State Financial Corporation defendant No. 3 at New Delhi."

2. Further reference is made in paragraph 8 of the plaint when the equipments were despatched to defendants 1 and 2 which reads as under:-

"8. That the plaintiff did not receive L-6 Licence and CT-2 form from defendants No. 1 & 2 for the clearance and purchase of the compressor at concessional excise duty even by 30.6.1983 and it was under this circumstance that the plaintiff had despatched the ordered equipments except the compressor under consignment Note No. 91111 dated 30.6.1983 through Transport Corporation of India covering the despatch of 222 packages of Ice Plant Machinery and had sent the documents vide letter dt. 1.7.1983.

(a) Sight Draft, 642 dated 1.7.1983 for Rs. 1,72,350/-.

(b) Consignment Note No. N-91111 dated 30.6.1983 of Transport Corporation of India Ltd. covering despatch of 222 packages of Ice Plant Machinery and equipments, freight to pay Rs. 6,250/-.

(c) The Insurance Policy No. 21190/301/00333/20/83/00047 dated 1.7.1.983 of The Oriental Fire and General Insurance Co. Ltd. for the value of Rs. 2,00,000/-.

(d) Bill No. J/606/1 dated 1.7.1983 for Rs. 1,72,350/- to The Manager, Union Bank of India, Chandni Chowk, Delhi and had requested this bank to negotiate the documents drawn on defendant No. 3 through their Bankers, Central Bank of India, Cuttack and credit the proceeds on realisation to its account. The copy of the letter dated 1.7.1983 was also sent to the defendants. The goods were despatched by the plaintiff through the Transport Corporation of India Ltd. to Para deep Garh, duly insured."

3. The plaintiff alleged that payment against the due amounts of Rs. 1,72,350/- had not been made by defendant No. 3 in the account of defendants 1 and 2 despite repeated demands. Reference has been made to communications dated 23rd December, 1983, 26th December, 1983, 2nd January, 1984 and 12th January, 1984 addressed to defendant No. 3 calling upon him to release payment against the site draft for Rs. 1,72,350/- but to no effect. The amount of Rs. 67,850.65 had been received by the plaintiff from defendant No. 3 but this was not the complete amount which had been claimed for the equipments supplied by the plaintiff. Paragraph 35 of the plaint gives details of the amount as payable and that the plaintiff wrote vide its letter dated 15.4.1985 and even earlier to it also that defendant No. 3 had made the unauthorised illegal, without any authority at all, a deduction of Rs. 1,04,699.35 from its bill dated 1.7.1983/17.12.84 for Rs. 1,72,350/- and had made a payment of Rs. 67,850.65 on 18.6.1985 to the plaintiff by a draft payable at New Delhi thus leaving a balance amount of Rs. 1,04,699.35.

4. The amount which has been claimed in this suit is detailed in paragraph 38 which reads as follows:-

"38. That despite the clear position vide plaintiffs letters dated 15.4.1985, 4.5.1985 & 13.6.1985, the defendant No. 3 had acted illegally, unauthorisedly and had made an unauthorised deduction of Rs. 1,04,699.35 from its bill dated 1.7.84/12.12.84 of Rs. 1,72,350.00 on 18.6.1985 and had made a payment of Rs. 67,650.65 on 18.6.1985 by a draft payable to it at New Delhi. The defendants have become jointly, severally & co-extensively liable to pay the following amount to the plaintiff: -

(a) Principal Amount 1,04,699.35

(b) Interest @ 12% per 40,452.25 annum 1.7.83 to 18.6.85 on Rs. 1,72,350/-.

(c) Interest @ 12% percent 15,705.00 from 18.6.85 to 18.9.86 on Rs. 1,04,699.35

-------------------

1,60,856.60

------------------"

The cause of action accrued to the plaintiff against the defendants when despite the arrival of the consignment covered by the consignment note dated 30th June 1983 the defendants failed to take delivery of the consignment, and failed to pay. The cause of action further accrued when defendants 1 and 2 failed to furnish L-6 licence and CT-2 form despite demand made upon them from time to time and had totally failed to furnish the said documents and prevented the plaintiff to install and commission the plant. It is further stated in paragraph 40 that; "The cause of action had also accrued to the plaintiff and against the defendants on 16,9.1983, 4.10.83, 6.10.1983, 12.10.1983, 14.10.1983, 30.9.1983, 2/3.11.1983, 5.12.1983, 23.12.1983, 26.12.1983, 2.1.1984, 12.1.1984, 17.2.1984, 22.2.1983, 24.2.1983, 27.7.1983, 17.12.1983, 27.12.1983, 20.5.1983, 6.1.1985, 15.1.1985, 12.2.1985, 4/5.2.1985, 13.2.1985, 26.2.1985, 25/26.3.1985, 4.5.1985 and 10.9.1985, when despite the calls and demands of the plaintiff to pay the amount due to the plaintiff, the defendants had failed to pay. The cause of action had also been accruing to the plaintiff and against the defendants when despite the fact that the ordered equipments had been supplied to the defendants, were inspected by them and even then, the defendants had failed to pay the amount due to the plaintiff. The cause of action had also accrued to the plaintiff and against the defendants when defendant No. 3 had illegally deducted Rs. 1,04,699.35 from the bill dated 1.7.1983/17.12.1984 of the plaintiff on 18.6.1985. The cause of action had also accrued to the plaintiff and against the defendants when despite letters dated 4.5.1985, 13.6.1985, the defendant No. 3 had made unauthorised and an illegal deduction of Rs. 1,04,699.35 paise from its bill. The cause of action had also accrued to the plaintiff and against defendants when despite its letter dated 10.9.1985, the defendants did not release the payment of Rs. 1,04,699.35 to it. The cause of action against them is joint, several, co-extensive as all of them are jointly and severally liable to the plaintiff. The cause of action had also accrued to the plaintiff and against the defendants on all the dates when the equipments had been acknowledged and found in order on inspection and despite this, they did not pay the amount to the plaintiff. The cause of action had also been accruing to the plaintiff and against the defendants when the defendants did not even allow it to remove the equipments from site and at the same time, had refused to pay the cost of the equipments received by them."

5. Summons in the suit was issued to the defendants but despite opportunities defendants 1 and 2 failed to put in any appearance and were directed to be proceeded against ex-parte by Order dated 18th July, 1988. The following Order was passed by the Court on that date:-

"18.7.88 Present: None for the plaintiff Ms. Devinder Bagga for defendant No. 3.

None is present for defendants 1 and. 2 in spite of service by proclamation. None was present for them before the Deputy Registrar on 12th July, 1988. In these circumstances ex parte proceedings are ordered against defendants 1 and 2.

Defendant No. 3 has not filed its written statement even though it was on 31.3.1987 that defendant No. 3 had first appeared before this court. Learned counsel for defendant No. 3 has requested for last opportunity to enable her to file written statement. Let it be filed within two weeks with advance copy to the counsel for the plaintiff to enable him to file replication within further four weeks. To be listed before the Deputy Registrar on 12th August, 1988."

6. Defendant No. 3 did appear in Court and filed written statement. However, he also chose to remain absent on subsequent dates and was ordered to be proceeded against ex-parte on 28th August, 1992. The plaintiff has filed the relevant documents to reiterate the averments made in the plaint for the recovery of the suit amount. Exhibit-P1 is true copy of certificate of incorporation of the plaintiff company. Ex-hibit-P2 is the true copy of General Power of Attorney dated 12th August, 1965 in favour of Shri C.P. Dua. Exhibit P-3 is the carbon copy of proforma invoice No. PF/606/1 dated 8th June 1981 for Rs. 2,50,000/-. Exhibit P-4 is the original letter dated 22nd April, 1982 from defendant No. 1 to the plaintiff. Exhibit P-5 is the original letter dated 28th December, 1982 from the defendant to the plaintiff. Exhibit P-6 is the carbon copy of letter dated 2nd February, 1983 from the plaintiff to defendant No. 3. Exhibit P-7 is the original letter dated 1st April, 1983 from defendant No. 1 to the plaintiff. Exhibit P-8 is the original letter dated 12th May, 1983 from defendant No. 1 to the plaintiff. Exhibit P-9 is the carbon copy of letter dated 31st May, 1983 from the plaintiff to defendants 1 and 2. Exhibit P-10 is the carbon copy of letter dated 1st July, 1983 from the plaintiff. Exhibit-P11 is the carbon copy of Invoice No. J/606/1 dated 1st July, 1983 for Rs. 1,72,350/-. Exhibit P-12 is the carbon copy of letter dated 20th August, 1983 sent by plaintiff to defendant No. 3. Exhibit P-13 is the carbon copy of letter dated 16th September, 1983 from the plaintiff to defendant No. 3. Exhibit P-14 is the carbon copy of letter dated 22nd September, 1983 from M/s T.C.I. Ltd. Exhibit P-15 is the carbon copy of letter dated 30th September, 1983 from defendant No. 3 to the plaintiff. Exhibit P-16 is the original letter dated 6th October, 1983. Exhibit P-17 is the original telegram dated 12th October, 1983. Exhibit P-18 is the carbon copy of letter dated 18th October, 1983 from the plaintiff to defendant Nos. 1 and 2. Exhibit P-19 is the original letter dated 30th March, 1984 from defendant No. 3. Exhibit P-20 is the original letter dated 19th May, 1984 from defendant, No. 3. Exhibit P 21 is the original letter dated 12th December 1984 from defendant No. 3. Exhibit P-22 is the original letter dated 12th December, 1984 from defendant No. 3 to the plaintiff. Exhibit P-23 is the carbon copy of letter dated 17th December, 1984 from the plaintiff. Exhibit P-24 is the carbon copy of letter dated 20th December, 1984 from plaintiff to defendant No. 3. Exhibit P-25 is the carbon copy of Invoice No. J/606/1 dated 17th December, 1984 for Rs. 1,72,350/-. Exhibit P-26 is the carbon copy of letter dated 20th December, 1984 from plaintiff and defendant Nos. 1 and 2. Exhibit P-27 is the original letter dated 6th January, 1985 from defendants 1 and 2 to the plaintiff. Exhibit P-28 is the carbon copy of letter dated 15th January 1985 from the plaintiff to defendants 1 and 2. Exhibit P-29 is the original letter dated 25th January, 1985 from defendants 1 and 2 to the plaintiff. Exhibit P-30 is the original letter dated 4/5th February, 1985 from defendant No. 3 to the plaintiff. Exhibit P-31 is the original letter dated 25/26th March, 1985 from defendant No. 3 to the plaintiff. Exhibit P-32 is the carbon copy of letter dated 15th April, 1985 from plaintiff to defendant No. 3. Exhibit P-33 is the carbon copy of letter dated 12th February, 1985. Exhibit P-34 is a communication dated 1.8th June, 1985 which is addressed by defendant No. 3 to the plaintiff to explain the amount which was sent to the plaintiff. The same maybe reproduced as follows:-

"Disbursement 1679/85-86 Dt. 18.6.85

BY REGD POST WITH AD.

To

M/s Bombay Amonia Private Ltd.,

24, Asaf Ali Road, New Delhi-110002.

Sub: Payment against bill No. J/606/1 Dt. 12.12.84

Dear Sir,

Please refer to your above bill for Rs. 1,72,350/-. The bill has been settled at Rs. 67,650 = 65 after physical inspection and taking into account the short supply, installation and earlier account of M/s Litu Ice Plant, Astranga. The details are as under:

Total cost of net Bill Rs. 1,72,350=00

Less value of short supply and damaged items as reported to you earlier.

Rs. 35,000=00

Rs. 1,37,350=00

Less amount retained for installation and trial run Rs. 29,699=35

Rs. 1,07,650=65

Less amount retained for settlement of Litu Ice Plant Case Rs. 40,000=00

Rs. 67,650=65

A cheque bearing No. 011745 Dt. 10.6.85 for Rs. 67,650 = 65(Rupees Sixty Seven thousand six hundred fifty and paise sixty five) only drawn on Central Bank of India in your favour is enclosed."

7. The averments made above were repudiated by the plaintiff by communication dated August 5, 1985 which is filed as Exhibit P-35 which reads as under:-

"REF:CPD:HS:85: August 5,1985.

REGISTERED A/D

The Deputy General Manager

(Disbursement),

Orissa State Financial Corporation, O.M.P. Square, Cuttack-753003.

Dear Sir,

We duly received your letter dated 18th June, 1985, alongwith a cheque for Rs. 67,650/65 against part payment of equipment supplied to Blue Diamond Ice Factory, Para deep. The various amounts as deducted by you out of the payment of Rs. 1,72,350/- as due to us on account of the equipment supplied to M/s Blue Diamond Ice Factory are deducted illegally and without any justification for the following reasons:-

1. Rs. 35,000/- on account of alleged short supply and damaged items as reported to us earlier vide your letter No. DISP/7413/84-85 dated 25/26th March, 1985:

In reply to your letter dated 25th/26th March, 1985, we have already, VIDE OUR Letter No. CPD:PO:85:12228 dated 15th April, 1985, explained in detail that there is absolutely no justification for you to withhold the detail that there is absolutely no justification for you to withhold the payment of Rs. 35,000/- as the materials as per the actual requirement have already been supplied by us. It appears that you have withheld the payment of Rs. 35,000/- completely under the influence of Blue Diamond Ice Factory, which is absolutely illegal.

2. Rs. 29,699/31 withheld on account of installation and trial run of the plant.

In this connection please refer to the correspondence resting with our letter No. CPD:HS:85:14008 dated 13th June, 1985, in which it was brought to your notice that Messers. Blue Diamond Ice Factory has not responded to our various letters sent under registered A/D cover and furnished the L-6 licence and CT-2 forms which are required for the clearance of the compressor at concessional rate of Excise Duty to enable us to proceed with the procurement and supply of the Compressor without which the installation of the Ice Plant cannot be completed. The complete silence on the part of Blue Diamond Ice Factory after taking delivery of the Ice Plant clearly shows that the party is not interested in getting the plant installed from us and, therefore, there is absolutely no justification for you to with-hold our payment to the extent of Rs. 26,699/31 towards the installation and trial run of the plant. It may also be noted that we take no responsibility for the installation and trial run of the plant in case the installation of the same is got done by Messers. Blue Diamond Ice Factory through some other sources according to our contract with the party, Blue Diamond Ice Factory was supposed to have purchased the complete plant from us and got it installed through our people. It is for this reason that your withholding the amount of Rs. 29,699/31 towards installation and trial run is not at all justified and we request you to please release this payment to us without any further delay.

3. Rs. 40,000/- retained for settlement of Litoo Ice Factory case.

Your withholding Rs. 40,000/- on account of Litoo Ice Factory is completely illegal and unjustified. You will recall that before we handed over the Ice Plant Equipment supplied for Blue Diamond Factory to you, you had given us an undertaking vide your letter No. 5710/84-85 dated 12th December, 1984 that payment for the cost of entire equipment except those items which are found defective, will be made to us immediately after the equipment has been received at the site and inspected by your representative. Therefore, you have no right to withhold the payment of Rs. 40,000/- on account of Litoo Ice Factory. It may also be noted that the Ice Plant supplied by us to M/s Litoo Ice Factory is under a separate con tract and you have no legal or moral right to withhold the payment due to us against Ice Plant supplied to Blue Diamond Ice Factory in the ac count of Litoo Ice Factory.

As you are aware, we had despatched the Ice Plant to Blue Diamond Ice Factory against the order confirmed by your Corporation on 30th June, 1983, and against the value of the plant amounting to Rs. 1,72,350/- you have so far paid a sum of Rs. 67,650/65, which payment has been received by us on 24th of June, 1985. We are entitled to claim from you interest at the rate of 18% per annum for the period our payment has been delayed without any justification and on the balance amount of Rs. 1,04,699/35, which has been wrongly withheld by you, interest at the rate of 18% till the date of the actual payment. Besides the loss of interest, we have spent over Rs. 10.000/- on visits to Cuttack, telephone calls etc. Our business during the last one and a half year has also suffered immensely because of the huge payment which was blocked in the equipment supplied for Blue Diamond Factory, besides the mental tension and as result thereof the deterioration of the health of the undersigned. All our losses as suffered at your hands in connection with the above transaction are being calculated and the same will be claimed from you as well as from Blue Diamond Ice Factory.

In the meaning we once again request you to please realise your responsibility in the matter and release the payment of Rs. 1,04,699/35 which is wrongly and illegally withheld by you out of the payment due from Ice Plant supplied for Blue Diamond Factory, without any further delay and positively by 31st August, 1985.

If the above payment is not received within the above mentioned period, we shall be at liberty to take legal steps as advised by our Legal Adviser for the recovery of the balance payment and other losses suffered by us, at your risk and cost.

This may be treated as the final notice on this subject.

Thanking you, Yours faithfully,

FOR BOMBAY AMONIA PRIVATE LIMITED

Sd/-

DIRECTOR."

8. The plaintiff has filed its evidence by way of affidavits. The claims made in the plaint are reiterated therein as well as in the documents filed in this Court which have been duly exhibited. During the pendency of the suit defendant No. 3 remitted a sum of Rs. 6240/- to the plaintiff vide communication dated 18th June, 1987 which is marked as Exhibit P-36 and is not disputed by learned counsel for the plaintiff.

9. In view of the above, the plaintiff is entitled to the decree for the amount as claimed in the suit minus the sum of Rs. 6240/- which has been paid during the pendency of the present proceedings. The suit is, accordingly, decreed for a sum of Rs. 1,54,616/- in favour of the plaintiff and against the defendants with costs. The plaintiff shall also be entitled to pendente lite and future interest at the rate of 12% per annum from the date of institution of the suit till realisation.