M/S Steelco (India) Pvt. Ltd. vs M/S Quality Steels & Forgings Ltd.
2009 Latest Caselaw 1955 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                    Date of Decision : 11.05.2009

%                        CS(OS) No. 1734/1993


       M/S STEELCO (INDIA) PVT. LTD.          ..... Plaintiff
                       Through:    Mr. Ravi Gupta, Advocate

                     versus


       M/S QUALITY STEELS & FORGINGS LTD.             ..... Defendant
                       Through:  Ex parte.


       CORAM:
       HON'BLE MR. JUSTICE VIPIN SANGHI

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

       2. To be referred to Reporter or not?                      No

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



VIPIN SANGHI, J. (Oral)

1. Initially the plaintiffs, namely, M/s Steelco India, a partnership

firm acting through its partner Sh. S.N. Aggarwal, M/s Aggarwal Metal

Corporation, a partnership firm acting through its partner Sh. Puran

Chand Aggarwal and M/s Shree Shyam Steel-N-Alloys, also a

partnership firm acting through its partner Sh. Brij Mohan Aggarwal,

filed the present suit for recovery of Rs.50,07,995/- and rendition of

accounts and permanent injunction. Subsequently, during the

pendency of the suit the plaint was amended on the ground that the

business, assets and liabilities of the said three plaintiffs had been

taken over by M/s Steelco (India) Pvt. Ltd., a private limited company

incorporated under the Companies Act, 1956. Consequently, the three

plaintiffs were substituted by M/s Steelco (India) Pvt. Ltd. The

amended plaint has been signed and verified on behalf of the

substituted plaintiff company by Sh. S.N. Agarwal who is the Director of

the plaintiff company duly authorized to sign and verify the suit on

behalf of the company by the resolution dated 9.12.2000.

2. The case of the plaintiff as stated in the plaint is as follows:-

One of the erstwhile constituent of the plaintiff company,

namely, M/s Steelco India & Associates had entered into an agreement

dated 30.07.1990 with the defendant, whereunder M/s Steelco India &

Associates was appointed as the sole distributor of the steel and alloy

steel products of the defendant company, having its works at

Madhavas, Halol Kalol Road, Tal Kallol-388220, Gujarat. According to

the plaintiff, under this agreement the defendant had agreed to make

supplies of various steel products to the plaintiff and the plaintiff was

to act as the sole distributor of the defendant in the States of Uttar

Pradesh, Punjab, Haryana, Rajasthan, Himachal Pradesh, Madhya

Pradesh and Jammu & Kashmir. As per the terms of the agreement the

erstwhile three constituent partnership firms M/s Steelco India, M/s

Aggarwal Metal Corporation and M/s Shree Shyam Steel-N-Alloys used

to purchase goods from the defendant company for further sale and

distribution in Northern India and then used to reconcile their

statements with the defendant pertaining to the goods ordered by

them and goods received by them and the amount paid by them.

Claims on account of defective and inferior goods and the orders which

remained unexecuted were also periodically reconciled. As per the

agreement, the defendant was not entitled to sell, deliver and supply

goods directly to any person, firm or company in Northern India. But in

case the defendant did effect direct sales, the defendant was obliged

to intimate the three erstwhile constituent firms and transact business

at terms which would be acceptable to them. The terms of the

distributorship was agreed to be for the period of at least five years

commencing from 01.08.1990. And in case of termination prior to the

period agreed, the defendant was liable to pay to the plaintiff a sum of

Rs. 10,00,000/-. The allegation of the plaintiff is that the defendant

failed to make supplies to the plaintiff as per its purchase orders and

eventually illegally terminated the distributorship agreement on

21.07.1993 vide Exh.PW-1/415.

3. The suit was filed on 23.7.1993. Summons in the suit were

issued to the defendant on 3.8.1993 for 30.8.1993. Upon being

served, the defendant filed its written statement. On 8.12.2000,

plaintiff sought time to file amended plaint as a consequence of

change in constitution of the plaintiffs from partnership firms to that of

a private limited company. The Court granted time to the defendant

directed to file the amended written statement after two weeks of filing

of amended plaint.

4. On 04.12.2002 the Court recorded the position that written

statement to the amended plaint has not been filed despite being

given several opportunities for the same. The right to file the same

was closed. The Court framed the following issues:

1. Whether the plaintiff is entitled for damages for un-executed orders by the defendant, if so for what amount? OPP.

2. Whether the plaintiff is entitled for damages for determination of distributorship agreement its expiry, of so for what amount? OPP.

3. Whether the plaintiff was appointed as the sole selling agent of the defendant in the Northern India? OPP.

4. Whether the defendant is not liable to pay any amount incurred by the plaintiff for running the branch office of the defendant in Delhi? OPD.

5. Whether the plaintiff is entitled to recover a sum of Rs.50,07,779/- from the defendant? OPD.

6. Whether the plaintiff is entitled for interest from the defendant, if so, at what rate and for what period and on what amount? OPP.

7. Whether the defendant is liable to render accounts in respect of direct sales made by the defendant in the Northern India, if so, for what period?

8. Relief.

5. The defendant was proceeded ex parte on 17.05.2005. The

plaintiff was directed to lead ex parte evidence on affidavits. The

affidavits by way of evidence towards examination-in-chief of a total of

four witnesses have been tendered on behalf of the plaintiff. These are

the affidavits of:

(1) PW-1, Mr. S.N. Aggarwal, the Director of the

plaintiff company, who has filed the affidavit in

support of the claim in suit,

(2) PW-2, Mr. Jawahar Lal Beriwal, one of the

witnesses to the agreement Exh.PW-1/17,

(3) PW-3, Mr. Ved Prakash Jain, also a witness to

Exh.PW-1/17, and

(4) PW-4, Mr. Jagdish Narsingh Baad, the former

Director (Technical) of the defendant company.

6. The plaintiff has made its claim in the suit under four heads.

The first claim is for Rs.27,84,635/- for loss of profit on account of non-

supply of the goods against orders placed by the plaintiff between

January 1992 to February, 1993. The second claim is for an amount of

Rs.10 Lacs on account of, what is claimed to be, the illegal termination

of the distributorship agreement. Reliance has been placed on Clause

17 of the said agreement to raise this claim. The third claim is for an

amount of Rs.3,55,600/- by placing reliance on Clause 3 of the

agreement. It is stated that under the said clause, on account of

failure of the defendant to supply the goods, the monthly estimated

expenses of Rs.30,000/-, which were to be borne by the plaintiff ought

to be shared by the defendant. The fourth claim is towards discounts

on the defective supplies made by the defendant company to the

plaintiff.

7. The plaintiff has also claimed the rendition of accounts by the

defendant in respect of various supplies allegedly made by the

defendant directly in the market in contravention of the sole

distributorship agreement with the plaintiff. The plaintiff claims its

commission/profits on all such sales @ 8% of such sales.

8. The first issue to be considered is the issue relating to the

appointing of the plaintiff as the Sole Selling Agent of the defendant in

the northern region, since the defendant has denied the execution of

the agreement dated 30.07.1990 Exh.PW-1/17, whereby the plaintiff

claims to have been appointed as the sole distributor of the defendant

company. All the claims of the plaintiff originate from the said

agreement. The plaintiff in its evidence has proved the agreement

dated 30.07.1990 Exh.PW-1/17. In his affidavit towards examination-

in-chief, Ex.PW-1/A, Mr. S.N. Aggarwal, PW-1, has stated that the

agreement dated 30.7.1990, Ex. PW-1/17 was executed on 30.07.1990.

He has further stated that the carbon copy of the agreement, signed

by Mr. R.A. Bhuraria as Managing Director of the defendant firm and by

the deponent Mr. S.N. Aggarwal, as the partner of M/s. Steelco India,

was retained by the plaintiff and the original typed copy was retained

by the defendant. He states that the original agreement and the

carbon copy of the agreement were typed and prepared

simultaneously and were also signed at the same time. The

agreement, Ex.PW-1/17 was witnessed by Mr. Ved Prakash Jain and Mr.

Jawahar Lal Beriwal, whose signatures he has identified as he has seen

them signing and writing. The carbon copy of the agreement dated

30.07.1990 has been exhibited as Exh.PW-1/17. The original letter

dated 07.06.1990 bearing the signatures of Mr. R.A. Bhuraria,

Managing Director of the defendant, stating that Mr. S.N. Aggarwal,

proprietor Steelco India, is the sole authorized agent/stockist for the

defendant's products in Northern India is Exh.PW-1/18. Exh.PW-1/13 is

the letter dated 12.12.1991 issued by the defendant company through

its Director (Technical), J.N. Baad, stating that he had sent the

agreement dated 30.07.1990 executed between the defendant

company and Steelco India, including its associate firms Shree Shyam

Rolling Mills and Aggarwal Metal Corporation, and assuring that the

said agreement would be fully honoured in true spirit.

9. PW-2, Jawahar Lal Beriwal, has affirmed in his affidavit that an

agreement was signed between the plaintiff and late Mr. R.A. Bhuraria.

The same was signed at the office of Quality Steels and Forgings

Limited at CD-157, Pitampura, New Delhi in his presence. The

agreement dated 30.07.1990 was signed by the plaintiff and late Mr.

R.A. Bhuraria and that he had witnessed the same. He had signed the

original agreement and the carbon copy. He identified the signatures

of Mr. S.N. Aggarwal, PW-1, and Mr. R.A. Bhuraria in the carbon copy of

the agreement. The carbon copy of the agreement dated 30.07.1990

witnessed by PW-2 is exhibited as Ex.PW-1/17. He states that the

original agreement and the carbon copy was also signed by Mr. Ved

Prakash Jain, in his presence, whose signatures he has also identified.

To the same effect is the evidence of Mr. Ved Prakash Jain, PW-3, in his

affidavit Exh.PW-3/A. There has been no challenge to the evidence led

by the plaintiff. I have, therefore, no difficulty in accepting the

plaintiff's case that the parties had entered into an agreement dated

30.07.1990, Exh.PW-1/17. The rights of the parties are, therefore,

governed by the said agreement. By the said agreement the plaintiff

was appointed as the sole distributor of the defendant's product in the

various States in Northern India. Issue No.3 is, therefore, answered in

favour of the plaintiff and against the defendant.

10. In support of claim of Rs. 27,84,635/- for loss of profit on

account of unexecuted orders, plaintiff states that as per the

agreement dated 30.07.1990 it was agreed that the defendant will

compensate the plaintiff for the orders which would reamin

unexecuted. It is stated that at the time of termination of agreement,

many orders of the plaintiff remained unexecuted. From 01.01.1992 to

31.05.1993 the plaintiff placed orders with the defendant company for

Rs. 3,76,50,500/-. But against this the defendant had only supplied the

goods worth Rs. 58,26,119/-. Accordingly, it is claimed that defendant

company had failed to supply goods worth Rs.3,18,24,381/-. Plaintiff

claims that the margin of profit as per their balance sheet is @ 8.75%.

The plaintiff claims that at this rate the liability of the defendant on

account of loss of profit comes to Rs.27,84,635/-. It is also claimed

that defendant company had admitted through its letters that the

goods as ordered by the plaintiff could not be supplied on account of

various constraints and problems which the company was facing in the

manufacturing of steel and steel products in their plants.

11. PW-1 has proved the various orders for procurement of steel

and steel products from the defendant as Exh.PW-1/25, Exh.PW-1/26,

Exh.PW-1/27, Exh.PW-1/28, Exh.PW-1/29, Exh.PW-1/30, Exh.PW-1/31,

Exh.PW-1/32, Exh.PW-1/33, Exh.PW-1/34, Exh.PW-1/35, Exh.PW-1/36,

Exh.PW-1/37, Exh.PW-1/38, Exh.PW-1/39, Exh.PW-1/40, Exh.PW-1/41,

Exh.PW-1/42 & Exh.PW-1/43. These purchase orders span the period

01.01.1992 to 28.02.1993.

12. PW-1 has proved on record the various purchase orders

placed by the plaintiff from time to time on the defendant beginning

01.01.92 as Exhibits P-1/25 to P-1/43.

13. In para 22 of the plaint as originally filed, the plaintiff had

claimed that purchase orders worth Rs.3,18,24,381/- were not

executed by the defendant. The details of the orders not executed by

the defendant were contained in Annexure P-4 of the plaint. The

defendant filed its written statement to the originally filed plaint. A

perusal of para 22 of the written statement shows that the defendant

had not denied the non-execution of the purchase orders to the

aforesaid extent. However, the defendant has sought to put the blame

on the plaintiff by stating that the hundis issued by the plaintiff were

not honoured. The defendant claims that about Rs.88 Lakhs for

recoverable from the plaintiff for supplies made. Para 23 of the

amended plaint contains the same averments as are contained in para

22 of the originally filed plaint. As noticed the defendant did not file

the amended written statement. The plaintiff has also relied on the

testimony of Sh. J.N. Baad, PW-4 as contained in his affidavit PW-1/4A

dated 03.05.2004 wherein he states that he had signed the letter

dated 20.05.1992 Ex.PW1/14 and letter dated 31.03.1993 Ex.PW-1/179

as Director (Technical) of the defendant company. In these two

communications, the defendant company acknowledged that the value

of the supply orders that remained unexecuted between 1.1.1992 and

06.05.1992 (in Ex.PW1/14) stood at Rs.1,69,10,552.25, and between

23.05.1992 to 28.02.1993 (in Ex.PW1/179) stood at Rs.1,49,73,828.75.

14. The figures given in PW-1/14 and PW-1/179 indeed add up to Rs.

3,18,24,381/- as contained in Annexure P-4 to the plaint. From the

aforesaid evidence it is clear that there was shortage in supply made

by the defendant in response to the various purchase orders issued by

the plaintiff. The defendant has failed to substantiate its defence that

the Hundis issued by the plaintiff were not being honoured and that it

was of this reason that the defendant could not make supplies. It

must, therefore, be accepted that there was shortage of supply on

behalf of the defendant for which the plaintiff was not responsible.

15. Counsel for the plaintiff has relied on clause 17 of the agreement

which, inter alia, provides that in case the defendant company is

unable to supply the goods as ordered by the Sole Distributor and the

agreement cannot be performed out on account of the companies

going into liquidation or for any other reason, the defendant shall inter

alia pay damages, losses and all other charges payable in respect of

the orders which shall remain unexecuted. Mr. Gupta submits that

even otherwise under Sections 73 and 74 of the Contract Act, the

plaintiff is entitled to recover damages for the loss of profit suffered on

account of non-supply of goods by the defendant against various

purchase orders placed by it.

16. I see merit in the submission of Mr. Gupta. Since the plaintiff had

been appointed as its Sole Distributor, and the defendant company

was obliged to supply the goods required by the Sole Distributor by

virtue of clause 2 of the agreement, the failure of the defendant to

supply the same did constitute breach of the agreement by the

defendant which would entitle the plaintiff to claim the damages

suffered on that account. Clause 2 of the agreement Ex.PW-1/17 reads

as follows:-

"The SOLE DISTRIBUTOR shall submit his requirements of the company's products at the Branch Office of the Company at Delhi or head office 501-3, World Trade Centre, Sayaji Gunj, Baroda-

390005, which would be forwarded to the Company's works at Madhavas, Halol Kalol Road, Tal Kalol-

389330 and the goods required by the SOLE DISTRIBUTOR shall be supplied and sold and delivered to the party of the Second Part from the Company's office at Delhi."

17. The question that now arises is as to what is the quantum of

damages to which the plaintiff would be entitled.

18. PW-1 in his affidavit has stated that the margin of profit was

8.75% as per the balance sheet and is also the most appropriate rate

for compensation of suitable compensation. From 01.01.1992 to

31.03.1993 the plaintiff placed orders with the defendant for

Rs.3,76,50,500/-. Out of this defendant company supplied goods worth

Rs.58,26,119/-. The unexecuted order for the supply of goods comes

out to Rs.3,18,24,381/-. The plaintiff claims 8.75% as the net profit

that it could have earned on the unexecuted order of worth

Rs.3,18,24,381/- which comes out at Rs.27,84,635/-. The balance

sheet of the plaintiff as on 31.3.1992 has not been proved on record.

However, the same has been filed along with the compilation tendered

by the plaintiff. The said balance sheet cannot be looked into and

acted upon. Even otherwise, this balance sheet shows that the gross

profit for the year ending 31.3.1992 translates to about 8% as claimed

by the plaintiff. It is not the figure of gross profit which would be

relevant. It is the figure of "net profit", which would be relevant. On

the other hand there is no other evidence led by the defendant and

there is no challenge to the evidence led by the plaintiff. In my view

profit of 8.75% claimed by the plaintiff is on the higher side.

Considering the nature of wholesale trade in which the plaintiff was

engaged, a reasonable rate of return would be 4%. The unexecuted

orders were to the tune of Rs.3,18,24,381/-. The net profit that the

plaintiff could earn on the said amount, computed at the rate of 4%

would come to Rs.12,72,975.25. Accordingly, the plaintiff is held

entitled to damages of Rs.12,72,975.25 on the various unexecuted

orders between 1.1.1992 and 31.5.1993 worth Rs.3,18,24,381. Issue

no.1 is answered accordingly.

19. Issue no.2 framed by the Court pertains to the claim for damages

on account of determination of the distributorship agreement by the

defendant prior to its expiry. Mr. Gupta submits that the

distributorship agreement, Exhibit PW-1/17 provided that the same

shall remain in force for a period of five years. Clause 17 of the said

agreement prohibited the defendant company from terminating the

agreement on the ground of any alleged breach of the terms of the

agreement before the expiry of the period of five years. It further

provided that in the eventuality of the agreement being terminated the

defendant company shall be liable to pay the damages for the

remaining unexpired period of the agreement, subject to a minimum

amount of Rs.10 lakhs. The plaintiff claims the said minimum amount

of Rs.10 lakhs by placing reliance on clause 17 of the distributorship

agreement. Exhibit P-1/415 the registered communication received

from the defendant dated 21.7.1993 states that the defendant had

decided to wind up its business with the three erstwhile constituents of

the plaintiff. Since the period of distributorship agreement was five

years and the same was to take effect from 1.8.1990, it is evident that

the distributorship agreement was terminated before the expiry of five

years and the said termination was in contravention of clause 17 of the

said agreement. At the time when the said agreement was

terminated, there was still a period of two years to go. From the

finding on issue no.1, it is clear that the net profit/income that the

plaintiff would have earned over the unexpired portion of the

agreement would have been in excess of Rs.10 lakhs, which has been

claimed by the plaintiff by reference to clause 17 of the Distributorship

agreement. Since the agreement had been breached by the defendant

by its termination, the plaintiff is entitled to claim damages on account

of its termination. For the aforesaid reasons I hold that the plaintiff is

entitled to damages of Rs.10 lakhs on account of early termination of

the agreement. Issue no.2 is decided accordingly.

20. The next claim made by the plaintiff is referable to issue no.4

which reads as follows:-

"Whether the defendant is not liable to pay any amount incurred by the plaintiff for running the branch office of the defendant in Delhi? OPD."

21. This claim is founded upon clause 3 of the agreement which

reads as follows:-

"Total Co- establishment expenses at Delhi will be borne by the SOLE DISTRIBUTOR, such as Godown Rent, Godown Keepers Salary, Godown Watchman, Office Rent, Office Assistants Salary, Conveyance Expenses, Steno/typing. Telephone Expenses, which are estimated @ Rs.30,000/- (Thirty thousand only) per month.

In case, the Co. fails to send goods to the SOLE DISTRIBUTOR and its associate firms Shri Shyam Rolling Mills & Agarwal Metal Corporation to the extent of at least Rs.20,00,000/- (Rs. Twenty lacs only) per month then the liability of the SOLE DISTRIBUTOR to pay the Company shall be responsible for the same. The Co. Delhi branch

office premises is owned by the SOLE DISTRIBUTOR."

22. The case of the plaintiff in support of this claim is that

though the plaintiff had agreed to bear the establishment expenses

quantified at about Rs.30,000/- per month, but in case the defendant

company failed to send the goods to the plaintiff and its other

constituents to the extent of at least Rs.20 lakhs per month, then the

liability of the plaintiff distributor to pay the company branch expenses

would stand reduced proportionately and that the defendant would be

liable for the same. The plaintiff states that after 1.4.1992, the

defendant did not supply and sell the goods worth about Rs. 20 lakhs

per month as had been agreed. Consequently, the defendant became

liable to pay the expenses incurred by the plaintiff in running the

branch office of the defendant company at Delhi. In support of this

claim, the plaintiff relies on Exhibit PW-1/14 dated 20.5.1992 which

tabulates the various supply orders executed, and not executed, by the

defendant between the period 01.1.1992 to 06.05.1992 and also relies

on Exhibit PW-1/179 dated 31.3.1993 which also tabulates the various

orders placed, executed and not executed by the defendant during the

period 23.05.1992 to 28.02.1993. Mr. Gupta submits that the said

claim is being made for the period 1.4.1992 onwards and upto May,

1993. The orders executed after 1.4.1992 and upto February 1993, in

my view are only relevant since the last order placed by the plaintiff

with the defendant was dated 28.2.1993. As is evident from Exhibit

PW-1/179, plaintiff did not place any orders for the months of March,

April and May, 1993 and, therefore, would not be entitled to claim any

expenses incurred for the months of March, April and May, 1993. The

period for which the plaintiff would be entitled to claim partial

expenses from the defendant by placing reliance on clause 3 of the

Distributorship agreement would be from 1.4.92 to 28.2.1993 which

translates to eleven months. The minimum purchase orders that the

defendant should have executed in the eleven month period so as to

ward off any liability under Clause 3 of the agreement would have

been Rs.20,00,000 x 11 = Rs.2,20,00,000/-. The orders executed as

aforesaid are only to the tune of Rs.43.86 lakhs i.e approximately Rs.

44 lakhs. The orders executed therefore translate to only about 1/5th

of the order which ought to have been executed. Consequently, the

defendant would be liable to bear the expenses to the extent of 80%

i.e. 4/5th of the total expenses of Rs.30,000/- per month. This

translates to Rs. 24,000/- per month for a period of eleven months

which adds upto Rs.2,64,000/-. Accordingly I hold that the plaintiff is

entitled to recover Rs.2,64,000/- towards establishment expenses for

the Delhi office of the defendant under clause 3 of the Distributorship

agreement. Issue no.4 is decided accordingly.

23. The plaintiff makes a further claim of Rs.8,67,759/- on

account of loss suffered due to supply of sub-standard goods. Plaintiff

states that as per the agreement the duty was cast upon the

defendant to supply the goods in strict conformity with the technical

specifications communicated by the plaintiff. The plaintiff also claims

that there was a usual practice between the parties to either give

credit on account of defective goods or to adjust the amount paid for

defective goods towards other bills whenever defendant company

delivered goods which were strictly not in conformity with the order

placed. It is alleged that the defendant company has not settled the

claims of plaintiff towards the quality complaints since 01.01.1992.

PW-1, Sh. S. N. Aggarwal, in his testimony has stated that some of the

goods supplied by the defendant through its Delhi branch were

rejected. The intimation regarding rejection of the goods along with

copies of the respective test reports were sent to the defendant. He

has proved on record various communications and invoices in respect

of which the goods were rejected. He has also proved on record the

various test reports in relation to the defective goods. I may note that

though the affidavit towards examination-in-chief of Mr. Sunil Kapoor of

Ess kay Metallurgical Laboratory was filed by the plaintiff, the same

has not been tendered in evidence as the said witness has not

appeared before the Court. Since PW-1 is not the author of the said

test report, these report cannot be taken to be proved. The plaintiff

relies upon Exhibit PW-1/21, being a debit note for quality compliance

stated to have been issued on 31.5.1993 for Rs.8,61,759/-. He also

relies on PW-1/15 issued by Shri J.N. Baad, Director Technical dated

20.5.1992 wherein he states that he has personally seen and accepted

most of the forged rounds lying in the plaintiff's godown. He further

states that he is sorry to state that practically all the supplies have

ultrasonically failed. He also relies on Exhibit PW-1/184 issued by Sh.

J.N.Baad, General Manager, Finance and Administration of the

defendant dated 30.5.1983 wherein the defendant acknowledges the

serious quality problems and untimely supplies against the pending

orders.

24. Since the test reports have not been duly proved on record, and

it was absolutely essential for the plaintiff to have done so to be able

to sustain this claim, I am of the view that the plaintiff's claim for

damages on account of supply of defected goods cannot be sustained.

I may also note that the claim is founded upon a circular dated

7.1.1993 allegedly issued by the Delhi Alloys Steel Traders Association

(regd.) which gives the rates for sub-standard materials as being

discounted by 18 to 28%. Even this circular has not been proved on

record. I accordingly hold that the plaintiff is not entitled to any

amount on account of the alleged supply of sub-standard goods by the

defendant. Issue no.5 is decided accordingly.

25. Coming to issue no.6, since the transaction between the parties

was commercial, in my view the plaintiff is entitled to claim interest.

The plaintiff has made a claim for interest at the rate of 12%. In my

view, considering the fact that the defendant is a sick company,

interest at the rate of 8% per annum would meet the ends of justice.

Accordingly I hold that the plaintiff would be entitled to claim interest

from the date of filing of the suit till realization at the rate of 8 % per

annum.

26. So far as issue no.7 is concerned, I am not inclined to decide the

same in favour of the plaintiff and to require the defendant to render

accounts in respect of the alleged sales made by the defendant in

Northern India. PW-1 in his testimony has named a few firms to whom

the defendant allegedly made direct supplies in contravention of the

distributorship agreement. However no details of such alleged

supplies was even furnished. No witness from any of these firms was

summoned by the plaintiff. There is no basis for the plaintiff to assume

that goods were directly supplied by the defendant to any of these

firms or to any other firm. No material has been placed on record.

Accordingly I hold that the defendant is not liable to render accounts to

the plaintiff for any period.

27. Mr. Gupta, on instructions of Mr. S. N. Aggarwal, who is present

in Court that the plaintiff does not press the relief for permanent

injunction against the defendant as claimed in the plaint.

28. In view of the aforesaid, the suit is decreed in favour of the

plaintiff and against the defendant for a sum of Rs.25,36,975/- along

with interest at the rate of 8% per annum from the date of filing of the

suit till realisation. However, the decree shall not be executed without

obtaining permission of the BIFR. Plaintiff shall be entitled to costs.

VIPIN SANGHI, J.

MAY 05, 2009 as/ rsk