Hartlay Knits vs Dvh Industries Inc. And Anr.
2007 Latest Caselaw 2381 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The plaintiff, a partnership firm is engaged in the business of exporting readymade garments to foreign countries. Defendant No. 2 is claimed to be an agent of defendant No. 3 and in that capacity placed a purchase order with the plaintiff in March-April 1999 for supply of specified quantities of cotton readymade garments vide Exhibit P-2. The detailed description of the garments was given in the purchase order.

2. In order to secure the payment of the plaintiff, the buyer bank at USA opened irrevocable letters of credit to the plaintiff's bank, Oriental Bank of Commerce. The goods were to be transported free of board through nominated carrier.

3. It is the claim of the plaintiff that the goods were duly dispatched along with invoices totalling to US $ 1,27,085.50. The payment was not made to the plaintiff but the possession of the goods was taken over and it is alleged that the same occurred on account of collusion between the nominated carrier, buyer and its agent. Since the payment was not made, the present suit for recovery of US $ 1,27,085.50 with interest @ 20 per cent was filed, against the nominated carrier as defendant No. 1, the agent as defendant No. 2 and the buyer as defendant No. 3. However, on an application being filed under Order 7 Rule 11 of the Code of Civil Procedure, 1908 by the nominated carrier, the said nominated carrier, in terms of the order dated 31.7.2006, was deleted as a defendant from the array of parties and the suit, thus, continued only against the present two defendants, being the agent and the buyer respectively.

4. It may be noticed that original defendant No. 3 (now defendant No. 2), never entered appearance but the suit was contested by original defendant No. 2 (now defendant No. 1), who even filed the written statement. It has also emerged from the pleadings that defendant No. 1 herein had received an amount of US $ 1,03,029.73 from defendant No. 3 vide fax message/letter dated 30.12.1999 but even that amount was never made available for the benefit of the plaintiff. Defendant No. 1 deducted an amount of US $ 26,101.25 as commission leaving a balance of US $ 76,962.48 even though it was entitled to only 5% commission.

5. On the filing of the suit an interim order was passed on 4.9.2000 restraining defendant No. 1 from making payment of US 76,928.48 to any other person except the plaintiff. The object was to preserve this amount for the satisfaction of the claim of the plaintiff (there appears to be some discrepancy in the amount as mentioned in the order and as claimed by the plaintiff now). The interim application of the plaintiff was disposed of on 4.9.2002 in terms whereof a direction was passed to deposit US $ 76,928.48 in the name of the Registrar of this Court. The amount was, however, not deposited and defendant No. 1 preferred an appeal. The appeal was dismissed being FAO (OS) No. 311/2002 on 6.2.2003. Defendant No. 1 even preferred a Special Leave Petition being SLP No. 8816/2003 but withdrew the same to file a review application. Thereafter no such review application is stated to have been filed and defendant No. 1 disappeared from the scene.

6. The present two defendants were not contesting the matter and were proceeded ex parte vide order dated 12.10.2007 and the plaintiff filed the affidavit of evidence of Ms. Uma Goyal, partner of the plaintiff as PW-1/A. The deposition of the said witness shows that the plaintiff claimes to have entered into an agency agreement with defendant No. 1 through whom the purchase orders were received. The agency agreement has been proved as Exhibit P-1. Defendant No. 1 also acted as agent of defendant No. 1, the buyer. The purchase orders received from the buyer have been collectively proved as Exhibit P-2. The witness, in order to substantiate the dispatch of goods has proved the letters of credit collectively as Exhibit P-3.

7. The witness has affirmed to the fact that defendant No. 1 kept on promising to send the money after goods were received but the amount was not paid. The goods were received after an inspection and that is apparent from the inspection certificate dated 15.8.1999 and 4.9.1999, which are collectively exhibited as Exhibit P-4. The original cargo receipt and shipment of goods through nominated carrier have been proved as Exhibit P-5.

8. The witness claims that having received the goods and utilised the same without payment for the same on account of collusion between all the original defendants whereby the goods were released without payment, the present defendant No. 2 started negotiating for discount on the goods by sending an E-mail dated 29.11.1999, which was objected to by the plaintiff through their agent defendant No. 1. The letter dated 29.11.1999 has been proved as Exhibit P-6.

9. The witness has categorically stated that defendant No. 1 intimated that discounted amount has been received by them as payment for the goods by defendant No. 2 as per letter dated 30.1.2000 proved as Exhibit P-7. The legal notice was also sent to all the parties in December 1999 (Exhibit P-8) and the letter of credit opened by defendant No. 2 in favor of the plaintiff to cover the contract in settlement of supply of goods has been proved as Exhibit P-9. The bills have been proved as Exhibit P-10.

10. The grievance of the plaintiff is that defendant No. 1 having contested the matter even in respect of the amount received from defendant No. 2, contrary to the directions of the Court, never deposited the amount.

11. The aforesaid evidence led has remained unrebutted. It may, however, be noticed that a letter has been received from one Mr. David Desiere placed on record addressed to the Delhi High Court claiming to be the Chief Executive Officer of erstwhile defendant No. 2. In the letter it has been stated that goods sent by the plaintiff were not up to the standard and that is why the discussion took place for settlement of amounts at a lesser value and defendant No. 1 was directed to negotiate a settlement with the plaintiff and transfer the money. Since the settlement could not be arrived at, the said letter claims that defendant No. 2 adjusted the sums paid to defendant No. 1 against other dealings with defendant No. 1. The jurisdiction of this Court is also disputed.

12. The aforesaid fact shows that an order was placed on the plaintiff by defendant No. 2 through defendant No. 1. Defendant No. 1 was actually a common agent. Defendant No. 1 acted as an agent of defendant No. 2 and took the delivery of the goods. The grievance of the plaintiff is that the delivery was taken without negotiating the documents contrary to the terms of the letter of credit on account of collusion. The plaintiff has also relied upon the inspection certificate (Exhibit P-4 collectively) to show that no defect in the goods were found and it is only after having appropriated and utilised the goods wrongfully that defendant No. 2 started making out excuses for non-payment and sought to settle the accounts at a lesser amount. The reduced amount was also remitted by defendant No. 2 to defendant No. 1 and despite the directions passed by this Court to deposit the amount in this Court, which was upheld right till the Supreme Court, the amount was never deposited by defendant No. 1 in this Court. It does appear from the letter received from defendant No. 2 that defendant No. 2 adjusted the amount which had been advanced to defendant No. 1.

13. In view of the unrebutted testimony of the plaintiff, I find that the plaintiff has proved its case for recovery of money for the goods supplied, which have been appropriated by the buyer. The plaintiff is, thus, entitled to the recovery of US $ 1,27,085.50 equivalent to Indian rupees. Since the decree has been claimed in US Dollars, the next question would be the the interest to which the plaintiff would be entitled to. The libor rates are stated to be around 7 per cent and thus I hold that the plaintiff is entitled to 7 per cent per annum simple interest on the said amount.

14. A decree is passed in favor of the plaintiff and against the defendants jointly and severally in the sum of US $ 1,27,085.50 equivalent to Indian rupees along with simple interest @ 7 per cent per annum from the date of institution of the suit, (29.2.2000 as no past interest has been claimed) till date of realisation. The plaintiff shall also be entitled to costs.

15. Decree sheet be drawn up accordingly.