Jitendra Nath Banerjee And Ors. vs Union Of India (Uoi) And Ors.
2005 Latest Caselaw 1776 Del

JUDGMENT

Vikramajit Sen, J.

1. The prayer in this writ petition is for the passing of a writ of certiorari quashing the Orders of the Central Government dated 10.6.2005 directing adherence to Rule 59 (ii) of The Mineral Concession Rules, 1960. For facility of reference Rule 59 of Mineral Concession Rules, 1960 is reproduced below:

59. Availability of areas for regrant to be notified:-

(1) No area--

(a) which was previously held or which is being held under a reconnaissance permit or a prospecting license or a mining lease; or of the Respondent/applicant that the goods were defective and there were friable issues raised by the Defendant in the application under consideration, as such they be granted unconditional leave to defend the Suit.

Reply to this application was filed by the Plaintiff. While denying the contents of the application for leave to defend the Plaintiff termed the application of the Defendant as totally sham. It is averred by the Plaintiff that when the total cost of equipments was Rs. 63,97,128.32, the cost of carrying out any repairs or rectifying any quality defects of some unidentified equipments, which even if assumed was incurred, could not amount to Rs. 50 lacs. According to the Plaintiff this shows the falsehood of the stand taken by the Defendant before this Court.

2. It is denied that any quality defects in the equipments were ever pointed out and in fact there were none. If any minor defects like paints or accidental breakage of a multi function gun of a spot welder which were caused in transportation were noticed and were corrected. The Plaintiff had written a letter on 24th June, 2003 to provide the details of location of such spot welders so that spare parts could be shipped and these parts were actually sent to the Plaintiff free of cost.

3. While reiterating the averments made in the Plaint it is further stated by the Plaintiff that the Defendant in fact has acquiesced in the termination of the agreement and thus cannot be permitted to turn back at this stage to defeat the cause of the Plaintiff in relation to recovery of its amounts and for entering into agreement on the basis of non-exclusive distributorship.

4. The price of the goods on the written commission was fixed in terms of the agreement thus the parties are bound by it. The Defendant had raised at later stages certain objections in regard to defect in the equipments which were corrected and the Plaintiff had granted additional discount of 10% on such items. As such, the Defendant has no cause for not paying the money demanded by the Plaintiff.

5. The narration of the above facts, which appear from the pleadings of the parties, it is clear that there is no dispute between the parties in relation to the receipt of goods. The goods were admittedly received during the currency of the contract. The main dispute is whether there were defects in the machinery or not and if they were, whether they were corrected and commission was granted by the Plaintiff to the Defendant to cover up the said deficiencies. To the averments made in reply to the application for leave to defend to Defendant by the Plaintiff the Defendants have not submitted any rejoinder. The learned Counsel appearing for the applicant had referred to certain letters annexed with the application for leave to defend. In none of these letters it has been pointed out that there were defects in the machinery and the Defendants were not accepting the same. On the contrary from the minutes recorded between the parties on 5th September, 2004, while trying to settle the disputed the letter dated 8th September, 2003 produced by the applicant/Defendant reads as under:-

Dear Deepak,

Thank you for your update.

I am in no position and in no mode to discuss.

Regarding the Net amount you are talking about; you told me very clearly that I will immediately receive your calculation on this after my reply on the minutes of meeting, nothing received from you even you stated that your people completed this 10 days ago.

I will not under no circumstances wait anymore only look forward to receive the first payment before the end of this week. You have absolutely no reason to be disappointed, you simply do as I requested in my earlier mail.

Looking forward to seek you urgently do some action in solving this serious problem.

Per

6. The correspondence placed on record shows that vide letter dated 13th September, 2003, the parties had agreed that payment of SEK 4,00,000 was to be sent to COL Sweden before 16th September, 2003. By letter dated 7th September, 2003 reference was made to the meeting dated 5th September, 2003 held between Mr. Deepak Sharma with Mr. Per Matson on phone and otherwise and parties were requested to finalise the minutes. In letter dated 17th October, 2003 the Defendants raised all grievances to the Plaintiff but at no point of time showed that the material supplied by the Plaintiff was in substance defective to the extent as claimed by the Defendants to frustrate the entire claim of the Plaintiff based on a written contract and the goods already received. This aspect of the case gets more significant in view of the fact that additional discount was given to the Defendant and defects of breakage which occurred during transportation were corrected. The copy of the letters placed on record after September, 2004 does refer to supply of some defective material replacement thereof and measure that should be taken. Obviously the stand taken by the Defendants is not bonafide in its entirety. In face of the admitted position that all the goods in question under different invoices were received by the Defendant, the Defendant would be obliged to pay the cost of such received material, obviously subject to finalisation of its goods.

7. Learned Counsel appearing for the Applicant/Defendant while relying upon the judgment of Mechelec Engineers and Manufacturers v. Basic Equipment Corporation, contended that once the Defendant denies liability to pay anything to the Plaintiff for an alleged supply of goods the Defendant would be entitled to unconditional leave to defend. As the Defendant has disclosed the defense which is not illusory or sham or practically moonshine, the Defendant shall be granted the leave.

8. In the present case the defense of the Defendant in the application for leave to defend may not be a moonshine but certainly is not a defense which in its entirety is bonafide and would give rise to friable issues on all aspects of the issues taken up by the Defendant/applicant in the application for leave to defend.

9. In the case relied upon by the Defendants the Trial Court had granted leave to defend which was interfered by the High Court in granting unconditional leave to defend. In that case the Plaintiff had denied the liability in its entirety and in fact had even denied the receipt of the goods. The Trial Court had in that case formulated 7 issues which require consideration. The facts of the case has no application to the present case. The friable issues that would arise in the present case would be limited to the question of interest and the defective material. Rest claims of the Plaintiff in regard to receipt of the goods and its price and commission being regulated by a written contract between the parties even in view of the stand taken by the Defendant would not be open to much doubt. In accordance with the principle enunciated in the case cited by the Defendant itself, it will be a fit case where the Defendant should not be granted unconditional leave to defend. The case of the Defendant squarely falls in the category where the affidavit does not make out positively and immediately a case for grant of unconditional leave. Court shows such a state of fact has led to the inference that a trial of action may be able to establish a defense partly to the claim of the Plaintiff. In that case the Plaintiff may not be entitled to the judgment and Defendant would be entitled to leave to defend subject to conditions. Such principles are well enunciated, reference can be made to the Judgment of this Court in the case of Harprasad v. Allahabad Bank and in the case of Kiranmoyee Dassi v. J. Chatterjee AIR 1949 Calcutta 479. For grant of unconditional leave to defend, it is necessary for the applicant to show that the defense taken by him is not sham but is bonafide. Reference can also be made to the judgment of the Supreme Court in the case of Gujarat Lease Financing Ltd. v. Abdulla Akbarali and CO. and Ors., where the Court held that even if the injunction was operating against the Defendant from transferring shares of the Company, it would be no ground for grant of unconditional leave. The applicant should show friable issues which would fairly demand a trial and must not appear to be a mere pretence of a friable issue.

10. The learned Counsel for the Plaintiff has not been able to show as to on what written contract or term of the invoices the Plaintiff claims the interest.

11. This amount claimed by the Plaintiff in absence of such specific stipulation may not even fall under the category of the claim which could be raised strictly within the ambit of Order 37 of the CPC prior to the institution of the Suit.

12. To this extent the Defendant could be entitled to leave to defend unconditionally.

13. In view of my above discussion the application for leave to defend of the Defendant is allowed, subject to the Defendant furnishing security to the extent of principal amount claimed by the Plaintiff in the Suit.

14. The application is accordingly disposed of in the above terms. All the three IAs No. 4644/2004, 5720/2005 and IA .../2004 stands disposed of.

CS (OS) No. 630/2004

15. The Defendant may file written statement within 4 weeks from today with advance copy to the Counsel for the Plaintiff who may file replication thereto within two weeks thereafter. Parties to file additional/original documents, if any, Along with their pleadings.

16. The case be listed before the Joint Registrar for admission/denial of documents on....