Skanska Cementation India Ltd. vs M/S D.D.Amarnath & Anr.
2008 Latest Caselaw 1538 Del

i.19

*      IN THE HIGH COURT OF DELHI AT NEW DELHI


+      RFA 386/2005


       SKANSKA CEMENTATION INDIA LTD.            ..... Appellant
       (Now known as ITD Cementation India Ltd.)
                Through: Mr. Sandeep Sethi, Sr. Adv. with
                           Mr. Mohit Bakshi and Mr. Lakshay
                           Sawhney, Advocates


                               versus


       M/S D.D.AMAR NATH & ANR.              ..... Respondents
                 Through: Mr. S.M.Mittal, Adv. for R-1

                        DATE OF DECISION
%                         04.09.2008

       CORAM:
       HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
       HON'BLE MR. JUSTICE SUNIL GAUR

1.     Whether reporters of local papers may be allowed
       to see the judgment?

2.     To be referred to the Reporter or not?

3.     Whether judgment should be reported in Digest?

:      PRADEEP NANDRAJOG, J. (Oral)

CM No.10565/2005

1. The appellant which was known as 'Kvaerner

Cementation India Ltd.' before the suit was filed got name

changed to 'Skanska Cementation India Ltd.' before appeal was

filed. During pendency of the appeal the name has been further

changed to 'ITD Cementation India Ltd.' The certificate issued by

the Registrar of Companies, Mumbai dated 26.5.2005 has been

annexed with the application.

2. We allow the application.

3. Amended memo of parties filed along with the

application (at page 112) is taken on record.

RFA No. 386/2005

1. Heard learned counsel for the parties.

2. Perused the Trial Court record.

3. The appellant is aggrieved by the impugned order

dated 7.4.2005 declining leave to defend and as a consequence

decreeing the suit filed by the respondent No.1.

4. Respondent No.1 invoked the summary jurisdiction of

the Court when a suit was filed praying that a decree in sum of

Rs.6,08,369/- be passed in its favour and against the appellant

and respondent No.2.

5. It was stated in the plaint that the first respondent

had supplied flooring material vide invoice No.002110 dated

15.2.1997 and had raise the invoice in sum of Rs.3,89,236/-.

6. It was stated that under the invoice interest @ 24%

per annum was payable for overdue payment after 15 days of the

raising of the invoice. It was pleaded that the appellant and

respondent No.2 kept on acknowledging liability but did not make

payment raising an inter-se dispute between the appellant and

respondent No.2.

7. In para 3 of the plaint it was pleaded:-

"3. That in February, 1997 the defendant No.1 viz. Kvaerner (for short), formerly - "Trafalgar", needed wonder floor Antistatic P.V.C. Flooring for one of its projects being executed at Surajpur, Noida and placed an order through M/s.Premier Vinyl, the manufacturers, being their distributors, on the asking of the defendant 2, their sub-contractors for 'Interiors' for the said job."

8. The appellant formally known as "Kvaerner

Cementation India Ltd.' filed an application seeking leave to

defend and projected a defence which flows out of averments

made by respondent No.1 in para 3 of the plaint.

9. It was pleaded that it had engaged services of

respondent No.2, Eastern Interiors Pvt. Ltd., impleaded as

defendant No.2 in the suit, for executing certain interior finishing

work of the company at Surajpur U.P. It was pleaded that the

works awarded to Eastern Interiors Pvt. Ltd were for supply of

material and execution of the tendered works at site. It was

pleaded that the execution of the work required procurement and

thereafter laying antistatic PVC flooring. It was stated that

Eastern Interiors Pvt. Ltd. placed an order on the first respondent

for supply of the material in question and hence liability to pay to

the first respondent was that of the second respondent.

10. To further bring home the point that the inter-se

dealings were between the first respondent and the second

respondent, in para 9 of the application seeking leave to defend it

was pleaded as under:-

"9. That the invoice in question referred and relied upon by the plaintiff has been wrongly prepared in the name of defendant No.1 whereas said invoice was to be prepared in the name of defendant No.2 and simply because the name of defendant No.1 is entered in the invoice, will not make liable the defendant No.1 to pay the invoice amount as also other charges as included in the invoice. Form 'C' was/is to be delivered by defendant No.2 who placed order with plaintiff for supplying material in question. It is an important fact to be submitted that had the defendant No.1 been placed an order in respect to material in question, defendant No.1 who has been carrying business in Delhi, would not have to deliver Form 'C' which is deliverable only on Interstate transactions between the parties. Had the defendant No.1 been placed an order with plaintiff, the defendant No.1 would have been made liable for delivery of form ST-1 or form ST-35 and not form 'C', as claimed in the invoice in question and in default thereof, the defendant No.1 could have been made liable for payment of sales tax @ 6% and not 4% as stated in Invoice in question."

11. With reference to the invoice it was pleaded in the

application seeking leave to defend that since the delivery was

effected at the site of the work, the first respondent wrongly

raised the bill in the name of the appellant. It was pleaded that

merely because an employee accepted the invoice would not

mean that the appellant was liable, for the reason the invoice

could not be treated as a contract between the parties; the

appellant being a company, only a person duly authorized could

bind the appellant company.

12. The first respondent oppose the application seeking

leave to defend and referred to the fact that the invoice was

accepted by the employee of the appellant and that admittedly

the goods were consumed at Surajpur Project of the appellant.

13. Declining leave to defend the learned Trial Judge has

held that documents filed showed that both parties impleaded as

defendants i.e. the appellant and respondent No.2 kept on

admitting their liability but avoided payment. The second reason

is that the invoice shows receipt of the goods at the premises of

the appellant. Therefrom learned Trial Court has concluded that

since the goods were appropriated by the appellant,

notwithstanding there being no contract between the parties

Section 70 of the Contract Act would be attracted.

14. Since the invoice stipulated that if payment was not

made within 15 days interest would be charged @ 24% per

annum the suit was decreed as prayed for. It be noted that the

sum of Rs.6,08,369/- prayed for to be decreed had two elements,

being Rs.3,89,236/- representing the value of the goods and the

remaining amount being the pre-suit interest.

15. We note that while considering the application

seeking leave to defend the concern of the Court at the moment

is not to probablize the defence by evaluating the same with

reference to the documents relied upon. What has to be seen is,

whether a plausible defence is raised which if succeeds would

non-suit the plaintiff.

16. As is to be noted from para 3 of the plaint, the first

respondent himself admitted that the interior works of the

appellant was subcontracted by it to Eastern Interiors Pvt. Ltd.

The first respondent sought a decree jointly and severally against

the appellant and Eastern Interiors Pvt. Ltd.

17. It is thus obvious that the first respondent was not too

sure whether under the contract it was to receive the money

from the appellant or the Eastern Interiors Pvt. Ltd.

18. That apart, the defence of the appellant that it had

awarded a lump sum contract to Eastern Interiors Pvt. Ltd. who

was to procure the material and consume the same at site and

thereupon receive money from the appellant; viz-a-viz the first

respondent, in our opinion, shows a good defence that the

appellant has not to pay any money to the first respondent.

19. Needless to state an issue would arise for

consideration being whether the owner of a work is liable for the

dues of his sub-contractor to 3rd parties?

20. If this triable issue arises we see no escape from the

conclusion that case would be made out for grant of a leave to

defend.

21. In this connection we may briefly note that the

learned Trial Judge has not considered the plea in para 9 of the

application seeking leave to defend which, we note, has gone un-

rebutted in the reply filed by the first respondent thereto.

22. Indeed, the works of the appellant were at Surajpur in

State of U.P. If the first respondent had to supply goods from

Delhi to the appellant at U.P. the same would have attracted levy

of Central Sales Tax being inter state sale. Indeed, the issue of

form 'C' and the issue of form 'ST-1' or form 'ST-35' also shows

that a triable issue arises in relation to the said defence

projected.

23. We fail to understand as to how Section 70 of the

Indian Contract Act 1872 would be attracted. Section 70 is

attracted where a person lawfully delivers anything to another

person not intending the delivery to be gratuitous and the other

person enjoys the benefit thereof. Said other person is bound to

recompense the former or restore the goods delivered.

24. Prima facie Section 70 would have no application

where the owner of a land appoints a contractor to execute

certain works on the land and agrees to pay the contractor the

agreed amount under the Contract Act. If the contractor has

individually contracted with 3rd parties for supply of goods to the

contractor which he would use at the site, the owner of the land

would prima facie be not liable to the sub-contractors or the

vendors.

25. We note that since respondent No.2 did not enter

appearance and hence failed to contest the suit instituted by the

first respondent, a decree already stands passed against

respondent No.2.

26. We allow the appeal.

27. The impugned order dated 7.4.2005 and the

consequential decree of even date passed is set aside.

28. Appellant's application seeking leave to defend is

allowed unconditionally.

29. Parties are directed to appear before the learned Trial

Judge on 20.10.2008.

30. The appellant is directed to file the written statement

before the learned Trial Judge on said date.

31. At this stage we note that on 24.5.2005 appellant was

directed to deposit 50% of the decretal amount. Said amount has

been released to the first respondent.

32. Since the appellant has been entitled to an

unconditional leave to defend we order restitution.

33. Since the first respondent has secured restitution by

means of a bank guarantee we directed the Registrar General of

this Court to encash the bank guarantee and pay over the

realized amount to the appellant through it's counsel.

34. Needless to state we have looked at the issue with

reference to the parameters of leave to defend. Thus, nothing

stated in this order would be treated as an expression on the

merits of the rival claims. Learned Trial Judge would decide the

issue after evidence is recorded in light of the evidence which has

been led.

35. No costs.

36. TCR be returned.

PRADEEP NANDRAJOG, J.

SUNIL GAUR, J.

SEPTEMBER 04, 2008 mm