S.M.S. Udyog Ltd. vs Flistex Magnetics Limited
2005 Latest Caselaw 1265 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The plaintiff has filed this suit for recovery of Rs. 55 lakh and for a decree of permanent injunction. The plaintiff is a company incorporated and registered under the Companies Act, 1956 and the suit has been filed through it Managing Director Mr. S.K. Jain. The plaintiff is engaged in the business of manufacturing and supply of industrial gases including liquid nitrogen having its factory in Greater NOIDA. The plaintiff also possesses specialized equipments for storage and supply of gases including quid nitrogen. The defendant-company is also stated to be located in NOIDA and engaged in the business of manufacturing and selling and exporting of magnetic tapes.

2. The defendant-company required supply of liquid nitrogen and an agreement dated 16.03.92 was arrived at between the parties whereby the plaintiff was to install two vacuum-insulated storage tanks of approximately of 11,000 ltrs capacity each with safety devices for storage of liquid nitrogen in the premises of the defendant-company. It is stated that the plaintiff-company installed this expensive equipment costing approximately Rs. 50 lakh which was done only in cases where the customer was desirousf of reasonably large quantity of supplies and the whole costing is stated to have been done on the basis of minimum requirement of the defendant for liquid nitrogen. The bills for supply of gas were to be paid on the same being raised and the defendant ad to also to pay a sum of Rs. 25,000/- besides sales tax on a monthly basis as higher charges for the tanks. Since the costing was done on the basis of a large quantum of supply to be made, in case supplies were not sought of the requisite amount, payment had to be made for such shortfall at the rates stipulated in the agreement. The plaint states that the defendant was yet to commence production at the stage when the agreement was entered into. The tanks were installed but the defendant did not commencproduction for a few months. The first supply was sought only on 20.01.93. It may be noticed that in terms of para 7 of the agreement, the supplies had to be made as per the production plan of the defendants stipulated therein, which was to grow from yer to year. The plaintiff was entitled even to raise a debit note in case of delay in off take of the project of the defendant.

3. The plaint states that separate bills were raised for the supplies made, the higher charges as well for purchase of two vaporising coils. These coils are stated to have been purchased for a sum of Rs. 1.8 lakh in October, 92. A running account is stated to be maintained by the plaintiff. In para 10 to 13 of the plaint, the position in the statement of account as reflected in the financial years 1992-93, 1993-94, 1994-95, 1995-96 has been set out. These debit balances are Financial Year Amount Due 1992-93 Rs. 9,79,026.60/-

  1993-94        Rs. 17,32,124.80/-
  1994-95        Rs. 17,67,124.80/-
  1995-96        Rs. 18,45,874.80/-
 

Thus the net balance outstanding on account of the supplies made and the rentals amount to Rs. 18,45,874.80/-
 

4. It is stated that apart from the aforesaid, in case of shortfall of minimum guaranteed amount of liquid nitrogen, the defendant was to pay an amount calculated at the rate of Re.1 per cubic metre for the differential. The details of these have been given in Annexure I to the plaint and it is stated that a sum of Rs. 30,67,671.20/- is due to the plaintiff for the period ending 31.05.95. Apart from these, the plaintiff has claimed interest at the rate of 24 per cent which at the date of filing of te suit amounted to Rs. 6,00,385.64/-. Thus the total claim is stated to be Rs. 55,13,931.64/-, but the suit was filed for Rs. 55 lakh along with interest at the rate of Rs. 24 per cent per annum from the date of filing of suit till the date of release.

5. A decree of permanent injunction has also been prayed to restrain the defendant or its agents from causing any hindrance in removal of the entire equipment installed by the plaintiff at the premises of the defendant at NOIDA under the agreement dated 16.03.92.

6. Learned counsel for the plaintiff submits that in so far as the machinery is concerned, the same stands now removed under the directions of the Court.

7. The plaintiff filed an application IA 12424/91 under Order 11 Rule 14 CPC seeking discovery of books of accounts kept by the defendant. In terms of the order dated 19.09.2000 defendants were directed to produce the accounts books. The accounts bookswere not produced despite repeated directions and the plaintiff filed IA 468/01 for striking out the defense of the defendant. In terms of the order dated 03.02.2003 the defense of the defendant was struck off, but the order was directed to be kept in aeyance in case the defendant was to deposit in court within four weeks from the date of the order the suit amount. This amount is stated not to have been deposited, thus, the order came into force.

8. The defendant subsequently stopped appearing and were proceeded ex-parte. Affidavits of evidence have been filed by the plaintiff. The affidavits of evidence have been filed by Sh. B. Vishwanath, Manager and Mukesh Patni. The authorization to file suithas been proved as ExP1, which has been granted in favor of Mr. S K Jain, Director. The agreement dated 16.03.92 has been exhibited as ExP2. It may, however, be noticed that original documents have not been placed on record and the copies have been exibited on the basis of the averments in the affidavits that the originals have been perused and seen and that there is no dispute over the documents. The accounts have also been affirmed by the witnesses including Sh. Mukesh Patni since it is a running acount. The aforesaid position shows that no defense has been set out by the defendants as their defense has been struck off.

9. The position which emerges from the perusal of the affidavits and documents is that on the basis of the running account, the plaintiff is liable to recover a sum of Rs. 18,45,874.80/- on account of gas supplied and the hiring charges. The plaintiff is also entitled to recover from the defendant a sum of Rs. 30,67,671.20/- on account of difference between the actual liquid nitrogen drawn and the minimum guaranteed quantity in terms of the clause in the contract to that effect, as discussed above. I amhowever not inclined to grant interest as claimed prior to the filing of the suit and post the filing of the suit at the stated rate of 24 per cent. I am of the considered view that the plaintiff should be allowed grant of interest at the rate of 9 perent per annum on the said two amounts. The debits were made up to June 30,1995 and the differential amount is stated to be due as on 13.05.1995. I am thus of the considered view that the interest should be payable starting from 01.07.1995. A decree forecovery of Rs. 49,13,546/- along with simple interest at the rate of 9 per cent per annum from 01.07.1995 till date of payment is passed in favor of the plaintiff and against the defendant. The plaintiff shall also be entitled to costs. Decree sheet bedrawn up accordingly.