Delhi High Court

Assam State Cooperative Mktg. & ... vs M/S. K.S. Food Products & Ors. on 1 July, 2009

Author: Manmohan Singh

*          HIGH COURT OF DELHI : NEW DELHI

+                      CS (OS) No.2151/1993

%                      Judgment reserved on : 1st May, 2009

                       Judgment pronounced on :      1st July, 2009

Assam State Cooperative Mktg. & Consumers Fed.     ....Plaintiff
                    Through : Mr. Ajay Verma, Adv.

                       Versus

M/s K.S. Food Products & Ors.                            .....Defendants
                    Through : None

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                    No

2. To be referred to Reporter or not?                                 No

3. Whether the judgment should be reported                            No
   in the Digest?

MANMOHAN SINGH, J.

1. The Plaintiff (counter claim defendant) in the main suit for

recovery of amount of Rs.25,36,654/- alongwith interest claimed the

amount from all defendant Nos.1 to 7 [Counter Claimant(s)], jointly and

severally and alleged that defendant nos. 2 to 7 are the sister concerns of

defendant no.1. While defendant Nos.2 to 7 including defendant No.1

are sister concerns only the following firms, the counter claimants

herein ("Counter Claimant(s)") preferred counter claims against counter

claim defendant ("CC Defendant") :

1. M/s. K.S. Foods Products, Morena (Counter Claimant No.1)

2. M/s. K.S. Oil Private Ltd., Morena (Counter Claimant No.2)

3. M/s. K.S. Trading Co., Gwalior (Counter Claimant No.3)

2. Originally the suit was filed in the court of Assistant District

Judge no.1 at Guwahati, which was transferred to this court in view of

the order passed by the Apex Court dated 20.04.1992 and upon transfer

the present suit number is assigned. At the stage of filing of affidavit in

evidence, the plaintiff company had gone into liquidation. Vide order

dated 16.10.2006, the court ordered the parties to take steps as required

by law to ensure that the plaintiff is represented both for prosecuting

and also defending the suit by the liquidator. As per order dated

11.12.2007, the liquidator was served on 18.08.2007 but no one

appeared before the court, therefore, the suit was dismissed for non-

prosecution.

3. As far as the counter claim of the defendant being CC

no.504/2007 is concerned, the plaintiff was proceeded against ex parte

and the defendants were given time to file their affidavits of

examination-in-chief within four weeks from the date of the order i.e.

11.12.2007.

4. It is submitted by the CC defendant that it placed order on

counter claimant No.2 vide letter No.N-60/1988 dated 10.12.88

exhibited as Ex. CCW1/3 for the supply of the following goods :

     Goods             Qty. (MT)             Rate/Qtl     Despatch

     Gram Whole        500[5000]qtl]         825.00      Within Jan, 1989
     (Best Quality)

     Masoor Chanti 600[6000 qtl]             825.00      Within Jan, 1989
     (Best Quality)

     Moong Whole       600[6000 qtl]         765.00      Within Dec, 1988


        (Best Quality)

       Moong Chanti      600[6000 qtl]         825.00      Within Feb, 1989
       (Best Quality)

5. The CC defendant also placed the following order on counter

claimant No.1 vide S.O. No.N-60/88 dated 15.2.1989 a copy of which is

exhibited as Ex. CCW1/4 :

       Goods            Qty. (MT)        Rate/Qtl          For months of

       Masoor Whole 24,000 qtl           825.00            Feb, 1989
       (Best Quality)

                                        740.00             Mar, 1989
                                    Rates thereafter were to be fixed later

6. CC defendant also placed the following order on counter

claimant No.3 vide S.No.N-60/88 dated 4.3.89, which is exhibited as

Ex. CCW1/5 :

Goods            Qty. (MT)          Rate/Qtl      Despatch Schedule

Gram Whole 500[5000]qtl]            730.00        Within Mar, 1989
(Best Quality)

-do-             500[5000 qtl]      To be fixed Within April, 1989
                                     740.00      Mar, 1989

7. It is submitted that on 21.1.1989, CC Defendant asked

counter claimants to furnish security deposit in the form of Bank

guarantee to the tune of 5% of total value of the supplies to be made for

1000 MT Gram Whole. In compliance of the said demand, counter

claimants furnished security deposit of Rs.10 lac in the form of Bank

guarantee being bank guarantee No.54/8 issued by the Central Bank of

India, Morena, M.P. The said bank guarantee was issued by the Central

Bank of India, Morena, for the benefit of M/s. K.S. Oil Pvt. Ltd., Tilak

Road, Morena, which is counter claimant No.2.

8. The Counter Claimants completed the said contract in all

respects by supplying all the contracted stores to CC defendant. In this

respect, the CC Defendant accepted all supplies made by Counter

Claimants, as per the bills raised by Counter Claimants, without any

objection particularly with regard to the time of supply or the rate. CC

Defendant not only accepted the goods but also facilitated retirement of

some of the hundis and their encashment, and made part payments as per

the bills raised.

9. The Counter Claimants were required to effect delivery of

the goods to the Central Warehousing Corporation, Morena (CWC) on

behalf of CC Defendant which were then to be despatched as and when

the wagons were made available by the Railways for carrying the goods

to Gauhati. Counter Claimants duly tendered the goods to the CWC,

Morena, which on many occasions refused to accept the goods on the

plea of non-availability of space, because of which the delivery at times

to Gauhati was delayed. CWC acted as agent of CC Defendant, and

Counter Claimants were in no manner responsible for its acts which may

have delayed delivery. Counter Claimants tendered the goods to CWC

within the period stipulated.

10. Counter Claimants completed the said contract in all

respects by supplying all the contracted stores to CC Defendant, but CC

Defendant with mala fide intention invoked and encahsed Bank

Guarantee issued by Central Bank of India, Morena some time in

October, 1989 by raising an illegal and untenable demand of

Rs.24,30,327/-. The said bank guarantee was given by the

banker/Central Bank of India who has recovered the amount from

Counter Claimant No.2.

11. It is averred that the encashment of bank guarantee was

illegal, arbitrary and unjustified as CC Defendant had no claim against

Counter Claimants and moreover the alleged claim of Rs.24,30,327/- is

bad in law. Therefore, it is prayed that Counter Claimant No.2 is

entitled to refund of the said amount of Rs.10,00,000/- along with

interest at the rate of 18% per annum.

12. The CC Defendant had failed to release full payments in

respect of the bills raised by the three Counter Claimant business

concerns and wrongly withheld various amounts without any sufficient

cause, justification or any cogent reasons. Moreover, against the

various Supply Orders, goods/material supplied by the counter claimants

were never accepted by the CC Defendant in full. In respect of

despatches made, bills preferred, documents of Hundies etc. having

been executed for retirement, the CC Defendants accepted part of the

goods varying between 70% to 75% of the entire goods. The bills raised

were accompanied by the documents for retirement but CC Defendant

did not retire the hundies for the reasons that it did not have funds to

take delivery. As a result of this action of CC Defendant, Counter

Claimants were left with no other option but to dispose of the

goods/stocks in the market, through M/s. Naveen Trading Co., on

account and at sole risk and responsibility of the CC Defendant for

which the CC Defendant is liable to pay to Counter Claimants.

13. The counter claimants has supported his case on copies of

the Bills, Bank Memos and Hundies, Statements of Accounts, Bills of

resale, etc. and letters written by Counter Claimants furnishing all

information asked for by CC Defendant and asking for release of

goods/making payments/incurring demurrage, etc.

14. It is alleged that the Counter Claimant No.1-3 supplied goods

to the CC Defendant from time to time, incurred expenses, raised bills,

draw Hundies and received payments. CC Defendant failed to retire the

documents from the Bank and as such the Hundies were returned by the

bank. The amount of Hundies, Bank interest and commission etc. were

debited to the account of the CC Defendant and the Counter Claimant

Nos.1-3 sold the said goods on account and at sole risk and

responsibility of the CC Defendant, through M/s. Naveen Trading Co.,

by duly serving notice as required under the Sale of Goods Act.

Counter Claimant Nos.1-3 could realize an amount less than the amount

due and as such suffered losses which CC Defendant is liable to pay to

Counter Claimant Nos.1-3. The amount of goods supplied expenses

incurred and the Hundies returned including Bank interest, commission

and charges were debited to the account of the CC Defendant and

payments received and sale proceeds on resale were credited to the

account of CC Defendant. The total amount of debits to the account of

the CC Defendant in the A/c CC No.1 for the year ended 31.3.90 comes

to Rs.48,35,685.88 and the total of credits comes to Rs.47,53,685.70 and

as such the CC Defendant No.1 is entitled to and CC Defendant is liable

to pay an amount of Rs.82,000.18.

15. The total amount of debits to the account of CC Defendant

in the A/c of CC No.2 for the year ended 31.3.91 for the value of goods

sold, expenses incurred and Hundies returned comes to Rs.72,37,877.20

and the total of credits for payments received and amount realized on

resale comes to Rs.63,83,981/-. The Counter Claimant No.2 is entitled

to and claims a sum of Rs.8,53,896.20 which CC Defendant is liable to

pay.

16. The total amount of debits to the account of CC Defendant

in the A/c of CC No.3 for the year ended 31.3.89 comes to

Rs.58,14,351/- and total of credits comes to Rs.57,21,166/-.

Accordingly, Counter Claimant No.3 is entitled to and claims a sum of

Rs.93,185/- which CC Defendant is liable to pay.

17. Apart from the above, Counter Claimant No.2 had furnished

a Bank Guarantee being Bank Guarantee No.54/8 issued by Central

Bank of India, Morena (MP) for a sum of Rs.10,00,000/- in favour of

CC Defendant. The said Bank Guarantee was illegally and wrongfully

invoked and encashed by CC Defendant and CC Defendant received the

said sum of Rs.10,00,000/- from the Bank which Counter Claimant No.2

had to pay the Bank. Accordingly, Counter Claimant No.2 is entitled to

receive a total sum of Rs.18,53,896.20 from Counter Claim Defendant,

i.e. Rs.10,00,000/- and Rs.8,53,896.20.

18. It is alleged that CC Defendant is liable to pay a total sum of

Rs.20,29,081.38 to Counter Claimants as claimed by Counter Claimants.

i          M/s. K.S. Food Products,
           Counter Claimant No.1                        Rs. 82,000.18



 ii        M/s. K.S. Oils Pvt. Ltd.,
          Counter Claimant No.2
          (Rs.10,00,000 + Rs.8,53,896.20)             Rs.18,53,896.00

iii       M/s. K.S. Trading Co.,
          Counter Claimant No.3                       Rs. 93,185.00
                                                      Rs.20,29,081.38
                                                      ----------------------

19. The Counter claimants also claimed interest @ 18% per

annum which comes to Rs.7,07,918.62 as follows:-

i)        Interest on 82,000.18 from 1.4.89 to date
          of filing of Counter Claim                  Rs. 32,980.00

ii)       Interest on Rs.8,53,896.20 from 1.4.89
          to the date of filing of Counter claim      Rs. 3,37,496.47

iii)      Interest on Rs.10,00,000.0 from 1.10.89
          to the date of filing of Counter Claim      Rs. 3,00,000.00

iv)       Interest on Rs.93,185/- from 1.4.89
          to the date of filing of Counter Claim      Rs. 37,442.15
                                                      Rs. 7,07,918.62
                                                      ---------------------

20. Thus, the total amount claimed by the C Claimants is a sum

of Rs.27,37,000/-, i.e. Rs.20,29,081.38 + Rs.7,07,918.62 from CC

Defendant inclusive of interest till the date of filing of the Counter

Claims, in the amounts as mentioned above.

21. In compliance with the court order, the affidavit of Shri

Ashish Bhat on behalf of the counter-claimants/originally defendant

nos.1 to 3 was filed on 11.04.2008 along with Ex.CCW-1/1 and CCW-

1/2. Another affidavit of Shri Deep Chand along with Ex.CCW-2/1 and

CCW-2/2 was also filed on 05.12.2008.

22. In view of the evidence adduced by the counter-claimants,

which has gone unrebutted by the plaintiff, it appears that the counter-

claimants have made out a strong case against the counter-claimant