Vasudeva Publicity Service & ... vs Mrf Ltd.
2010 Latest Caselaw 3032 Del

*                 IN THE HIGH COURT OF DELHI AT NEW DELHI

+                            CS(OS) No.2635 of 2000

%                         Date of Decision:   02. 07.2010

Vasudeva Publicity Service & Another                      .... Plaintiffs
                     Through Mr.Ravi Kant Chaddha, Sr. Advocate
                               with Ms.Nidhi Lal, Advocate.

                                    Versus

MRF Ltd.                                                    .... Defendant
                          Through Mr.C.M. Oberoi        with Ms.Surekha
                                  Raman, Advocates
CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR

1.     Whether reporters of Local papers may be                  YES
       allowed to see the judgment?
2.     To be referred to the reporter or not?                     NO
3.     Whether the judgment should be reported in                 NO
       the Digest?


ANIL KUMAR, J.

*

1. The plaintiff has filed this suit for recovery of Rs.58,43,756/- as

the principal amount and Rs.20,84,176/- as interest, a total amount of

Rs.79,27,932/- from the defendant on account of advertisement of

defendant displayed through the plaintiff.

2. The plaintiff contended that he is engaged in the business of

display of outdoor publicity/advertisements in Delhi and surrounding

areas. According to the plaintiff, defendant had been availing the

services of the plaintiff for display of his advertisements. The defendant

had allegedly approached the plaintiff in January 1998 for display of

advertisements on traffic islands on Bharion Marg Junction and Nehru

Place Crossing and after negotiations, the plaintiff agreed to display

defendants‟ advertisements at two traffic islands, Mathura Road,

Bhairon Marg Junction near Pragati Maidan for one year from 15th

January, 1998 to 14th January, 1999 and on four traffic islands at

Nehru Place for one year from 1st February, 1998 to 31st January, 1999

at a monthly rate of Rs.50,000/- per island plus 5% service tax.

3. After settlement of all the terms for display of advertisement of

the defendant and starting displaying the advertisements, plaintiff sent

agreement/contract dated 2nd April, 1998 to the defendant to sign and

return the same for records, as a concluded contract between the

parties had already come into existence pursuant to which the plaintiff

had already started displaying defendant‟s advertisements at sites.

4. The plaintiff categorically asserted that as per the practice, on

oral instructions of the defendant, plaintiff used to perform work and

written contract or instructions were sent later on, which was only a

formality on the part of the defendant. It is contended that later on the

period of contract was extended from 12 months to 19 months, i.e.,

from 15th January, 1998 to 14th August, 1998 as the first term and 15th

August, 1998 to 14th August, 1999 as the second term. The terms and

conditions which were agreed were specifically incorporated in the

contract dated 2nd April, 1998. Since the period of contract was

extended, therefore, the plaintiff send another contract form dated 21st

September, 1998 for signatures and for keeping the contract in his

record.

5. The plaintiff contended that his work was appreciated meetings

which were held pursuant to plaintiff's letter dated 16th January, 1999.

The contract was extended by the defendant till 14th January, 2000 and

the monthly rent was re-negotiated at Rs.45,000/- per month per island

plus service tax thereon. Consequent to modification of the rate at

Rs.45,000/- per island, fresh contract forms dated 2nd February, 1999

were also sent for the signatures and for record by the plaintiff.

6. The plaintiff categorically asserted that during the period of

display, the defendant was kept abreast of the same by addressing

letters from time to time and also sending photographs of the display.

The plaintiff also raised bills in respect of the advertisements displayed

pursuant to contracts dated 2nd April, 1998; 21st September, 1998 and

2nd February, 1999.

7. The plaintiff pleaded that in consonance with the terms and

conditions already agreed and entered, the contracts dated 2nd April,

1998, 21st September, 1998 and 2nd February, 1999 were sent to the

defendant for signatures and keeping the contract for the purposes of

record. The defendant, however, sent a letter dated 15th March, 1999

sending the contract only for one traffic island at Nehru Place. The

other contracts sent by the plaintiff incorporating the terms and

conditions agreed between the parties for other islands were not sent

back by the defendant, though the plaintiff had already displayed the

advertisement on the sites and the defendant's office at New Delhi had

also been aware of it and had not objected to the display of

advertisements.

8. Since the plaintiff had already displayed the advertisements in

consonance with the terms and conditions agreed and the written

contracts were sent subsequently for signatures incorporating the terms

and conditions were not returned duly signed, therefore, the plaintiff

protested and made oral and written representations and meetings were

held between the parties in which the plaintiff was assured that the

matter shall be looked into. However, later on at the request of the

defendant, the plaintiff discontinued and removed the display of

defendant‟s advertisements from two traffic islands at Mathura Road

and three traffic islands at Nehru Place on 20th April, 1999. The

plaintiff also raised bills in respect of six sites from time to time which

were received by the defendant and were also acknowledged. Since the

amounts of the bills raised by the plaintiff were not paid, a notice dated

21st February, 2000 demanding an amount of Rs.58,43,756.85 paisa

with interest thereon was sent. The notice was received by the

defendant and was replied by reply dated 15th March, 2000 denying

defendant‟s liability to pay the amount for the advertisements displayed

by the plaintiff. On failure of the defendant to make the payments, the

plaintiff has filed the present suit for recovery of Rs.79,27,932/-.

9. The claim of the plaintiff is contested by the defendant contending

inter alia that there was no concluded contract between the parties as

the defendant did not give his consent/approval for contract dated 2nd

February, 1999 and the defendant did not approve the contract for six

traffic islands, namely, four at Nehru Place and two at Mathura Road.

It was contended that the policy and practice of the defendant in

respect of display of advertisement with agencies was that the

advertisements agency was to display advertisements only after prior

approval of the defendant. In these circumstances, it is asserted that

the defendant did not send back the fresh contract form after signing

and when the plaintiff wrote a letter dated 6th January, 1999 seeking

whether defendant was interested to retain display after 5th January,

1999, further meetings took place between the parties and duration of

display was agreed to be extended for a total period of two years

from15th January, 1998 to 16th January, 2000 at Rs.45,000/- per

month plus 5% service charges for one site only. The defendant

asserted that contract form dated 2nd February, 1999 in respect of

display at Nehru Place which was signed and sent back under the cover

of letter dated 15th March, 1999.

10. The defendant has contested the claim on the ground that

plaintiff has no right or cause of action to maintain the suit as there

was no concluded contract between the parties and the allegations

regarding alleged discussions, understanding and agreement/approval

of the display was denied. The contract form dated 2nd April, 1998 and

21st September, 1998 were also denied. It was pleaded that

agreements/contract dated 2nd April, 1998, 21st September, 1998 were

not discussed/negotiated or approved and, therefore, there was no

question of extending the period of contract by a fresh contract. It was

asserted that only one contract dated 2nd February, 1999 was signed in

respect of one traffic island at Nehru Place crossing for two years and

the agreement was not for four islands which was forwarded to the

plaintiff on 15th March, 1999.

11. On the basis of the pleadings of the defendants accepting the

agreement dated 2nd February, 1999 for display of advertisement of one

traffic island at Nehru Place crossing for Rs.45,000/- per month, on an

application of the plaintiff, an amount of Rs.11,10,186/- was paid to

him pursuant to order dated 24th May, 2002 after deducting an amount

of Rs.23,814/- towards TDS.

12. On the basis of the pleadings and the documents of the parties,

the following issues were framed on 14th February, 2003:-

"1. Whether the plaintiff is entitled to any amount claimed in suit and if so to what amount? OPP

2. Whether the plaintiff is entitled to interest? If so on what amount, at what rate and for what period? OPP

3. Whether there exists any concluded contract pertaining to the advertisement/displays for which amounts are being claimed by the plaintiff? Onus on parties."

13. The plaintiffs examined Shri Satish Vasudeva, plaintiff No.2 and

proprietor of plaintiff No.1 and filed his deposition on affidavit dated

19th September, 2004. Additional deposition by an additional affidavit of

Shri Satish Vasudeva dated 24th February, 2005 was also filed. On

behalf of defendant, the deposition of Mr.A. Rodricks, General Manager,

was filed on affidavit dated 17th July, 2006. However, the written

statement on behalf of defendant was signed and verified by Shri K.

Jagdishwar Rao who was not examined by the defendant. The affidavit

of Mr.Anthony Rodricks was exhibited as DW1/A.

14. Issues No.1 and 3 are `Whether the plaintiff is entitled to any

amount claimed in suit and if so to what amount?‟ and `Whether there

exists any concluded contract pertaining to the advertisement/displays

for which amounts are being claimed by the plaintiff?‟ Both the issues

are considered together.

15. Learned senior counsel, Mr.Chadha for the plaintiff, has very

emphatically contended that plaintiffs have proved various facts and the

documents which clearly show that as per the practice, the terms and

conditions used to be settled between the parties and the

advertisements were displayed and thereafter, written contract

incorporating the terms and conditions for display of advertisements

used to be sent to the defendant for their formal signatures and for the

record of the parties. According to the plaintiffs, the defendant had been

returning the signed contract later on after commencement of display of

advertisement by the plaintiffs. It is asserted that no instance has been

shown by the defendant that the advertisements were displayed only

after signing of the agreements in writing. The learned counsel

contended that even as per the testimony of DW1, Shri Rodricks, the

DM of the defendant company (Mr. Bhattacharya), had given oral

recommendations to the Head Office of his company recommending the

sites. In the circumstances, it is asserted that the plea of policy and

practice of prior approval for display of advertisement as has been

raised by the defendant, is an afterthought only to counter the claim of

the plaintiffs. The emphasis has also been laid by learned senior

counsel on Exhibit P5 and PW1/64A which is a contract dated 21st

April, 1992 for the period from 1st April, 1992. Similarly reliance has

also been placed on Exhibit DW1/P1 and Exhibit DW1/P2 which are

contracts dated 17th January, 1994 for the period 1st January, 1994

onwards which was returned after signing on 28th April, 1994 though

the agreement commenced on 1st January, 1994. Reliance has also

been placed on Exhibit DW1/P3 and Exhibit DW1/P6 which is the

contract dated 12th August, 1992 for the period 1st September, 1992

onwards which was signed and returned on 28th April, 1993 to the

plaintiff for the purposes of record. Similarly, Exhibit DW1/P4 and

DW1/P7 is a contract dated 17th January, 1994 for the period 1st

January, 1994 onwards which was signed and returned to the plaintiffs

on 28th April, 1994. Exhibit DW1/P5 and Exhibit DW1/P8 is a contract

dated 14th April, 1994 for the period 1st April, 1995 onwards which was

signed and returned on 3rd January, 1995.

16. From these contracts of the earlier periods, it is apparent that the

display of advertisements started earlier then the date on which the

written contracts were signed by the defendant and returned to the

plaintiffs. The defendant had made payments for these agreements.

These documents belie the statement of Shri Rodricks, DW1, in his

affidavit dated 20th July, 2006 that the policy and practice of the

defendant was that the advertisements could be displayed after written

approval/execution of agreement by the defendant from the Head

Office. The said witness though has emphasized about the policy of the

defendant company, however, no such policy has been produced and

proved by the defendant rather DW1 in his cross-examination on 11th

October, 2006 admitted that there is no written policy but it is a matter

of practice. Though the said witness deposed that plaintiffs were aware

of such a policy but how the plaintiff had been aware of such a policy

has not been answered by the said witness of the defendant or anyone

else on behalf of the defendant. The said witness did not state that he

had disclosed about the said policy of the defendant to the plaintiff or to

any of their representatives or even named any other person of the

employee of the defendant who had disclosed the said policy of the

defendant to the plaintiffs or to any of plaintiffs‟ representatives. He did

not depose as to who had disclosed the said policy of the defendant to

the plaintiffs. No documents has been produced by the defendant to

show and establish that the defendant had a policy that the

advertisements were not to be displayed on account of oral instructions

of its employees and representative or on account of oral agreement

arrived at between the plaintiffs‟ and defendant's representatives at

Delhi. The defendant has not proved that the officials at the branch

office were not competent to negotiate the terms and conditions for

display of advertisement or that the defendants‟ officials at its branch

office at Delhi exceeded their authorization or the scope of their work.

The DW1 rather admitted in the cross-examination that it was the

normal practice of the defendant company to make oral representations

or offers to the plaintiffs through company representatives at Delhi.

17. When confronted with the letter dated 28th April, 1994 which is

exhibit DW1/P1 by which the agreement for display of advertisement

dated 17th January, 1994 was signed on 28th April, 1994 and other

documents dated 28th April, 1993; 28th April, 1994 and 3rd July, 1994

which were exhibited DW1/P3 to DW1/P5 and documents exhibited as

PW1/64A, 65A and 65B, the said witness rather admitted that it was

the normal practice of the defendant company to make representations

and offers orally. If that be so, the defendant cannot succeed in his

plea that as per the policy and practice of the company prior written

approval for display of advertisements was adhered to and it was the

practice of the company and the plaintiffs were aware of it. Rather it has

been established that plaintiffs used to commence display of

advertisement much before the signing of the written contract

incorporating the terms of display of advertisements on oral instruction

and the terms agreed between the parties.

18. Learned counsel for the plaintiffs has relied on AIR 1968 SC

1028, Kollipara Sriramulu v. T. Aswathanarayana & Others; 79 (1999)

Delhi Law Times 1, J.K. Industries Limited v. International Cooperative

Alliance Domus Trust and others; 1991 (1) Arbitration Law Reporter

154, Ram Krishan Singhal v. Executive Engineer; 1986(1) Arbitration

Law Reporter 428, M/s.Prahlad Singh Mulakh Raj v. Union of India &

Others; AIR 1982 Calcutta 167, Nanalal madhavji Varma v. State of

Andhra Pradesh; AIR 1999 SC 2544, K.S. Satyanarayana v. V.R.

Narayana Rao; 2002 (3) Arbitration Law Reporter 235, Hindustan

Construction Corporation v. Delhi Development Authority and another;

132 (2006) Delhi Law Times 196, Neha Bhasin v. Anand Raaj Anand &

another and 73 (1997) Delhi Law Times 374, Old World Hospitality Pvt.

Ltd. V. India Habitat Centre in support of pleas and contentions raised

on behalf of plaintiff.

19. In Kollipara Sriramulu (supra), The Supreme Court while

considering whether there was an oral agreement or not, had held that

a mere reference to a future formal contract does not prevent the

existence of a binding agreement between the parties unless reference

to a future contract is made in such terms as to show that the parties

did not intend to be bound until a formal contract is signed. Thus

whether there had been an oral contract or not would depend upon the

intention of the parties and special circumstances of each particular

case. In case of plaintiffs, despite formal agreements not signed

between the parties, the advertisements had been displayed which were

accepted and the payments were made in previous dealings between the

parties which has been established by the plaintiffs. In these

circumstances continuation of same practice i.e display of

advertisements pursuant to conclusion of oral agreement cannot be

ruled out completely. The defendant has not established that he was

not bound unless the formal contract was signed between the parties.

From the evidence led by the parties, it is rather established that

pursuant to oral instruction by the branch office of the defendant the

advertisement were displayed.

20. In Ram Krishan Singhal (supra), a single Judge had held that it is

not necessary that a formal contract should have been signed by both

the parties before a contract could be concluded, as a contract can

come into existence by exchange of letters. In this matter, a tender for

construction of road was accepted and general conditions of contract

contained an arbitration clause and for the arbitration agreement it was

held that even if it was not signed by both the parties, there was a

written agreement. In M/s Prahlad Singh Mulak Raj (supra), relied on

by the plaintiffs the tender had contained an arbitration clause and

though no formal contract was signed, it was held that there was a

concluded contract between the parties and the arbitration agreement

could be filed in the Court and the disputes could be referred to the

Arbitrator. In Nanalal Madhavji Varma (supra), it was held by a single

Judge of Calcutta High Court that though the contract was in

contravention of Article 299 (1) of the Constitution of India yet the

compensation could be granted under section 70 of the Contract Act. In

Neha Bhasin (supra), claimant had sung for the defendant company

which songs were recorded and it was held that the claimant had not

sung for the company gratuitously. The company had enjoyed the

benefits of the recordings of the claimant and used the same in

cassettes and CDs commercially. Despite no formal contract between

the parties, the company had the option not to use her recordings at all.

But since the company used the recordings of the claimant, quasi

contract came into existence and therefore, all the ingredients of section

70 of the Contract Act were satisfied and the company became liable to

compensate the claimant.

21. This has been established by the plaintiffs that they had been

displaying the advertisements for the defendant company for about 10

to 12 years prior to the transaction in the dispute and the

advertisements were displayed on the oral instructions of the officials of

the branch office of the defendant company at Delhi and written

agreements were signed later on for the purposes of record. The Plaintiff

no.2 in his deposition has categorically contended that in respect of

disputed advertisements the defendant had insisted for immediate

display of his advertisement on the traffic islands at Mathura Road and

Nehru Place in view of the Auto Expo (Exhibition) which was held at

Pragati Maidan at New Delhi. The contract forms were sent to the

defendant which were later on not signed by the defendant. The

contract forms also stipulates specifically "To sign and return for the

records". For one site where the advertisement of defendant was

displayed from 1.2.1998 along with other sites, the written approval Ex

P/26 had been given on 15th March, 1999. In the circumstances, as has

also been held earlier that the plea of the defendant of prior approval

and any such practice and procedure has not been established by the

defendant.

22. On the preponderance of probabilities from the evidence on the

record it also cannot be inferred that the plaintiffs did not display

advertisements of the defendant at all the sites and only at one site

which had been admitted by the defendant later on and the amounts in

respect of the same had been paid to the plaintiffs during the pendency

of the present suit. From the record it is apparent that the plaintiffs had

been sending letters and bills in respect of all the sites. It is not

acceptable that the defendant would have received the letters and bills

only in respect of one site and not in respect of other sites, as all the

letters and bills had been sent by the plaintiff for all sites

simultaneously. The defendant in its deposition on affidavit dated 17th

July, 2009 in paragraphs 9 and 10 has admitted that certain bills were

received by him in respect of advertisements displayed by the plaintiffs

at the traffic crossing at Nehru Place, which were, however, not in

accordance with the contract and had not been approved by the

defendant. In the cross examination be defendant attempted to explain

that these bills were for earlier period. This explanation of the defendant

cannot be accepted because if these bills were for earlier period they

could not be contrary to the contract as the earlier bills had been paid

by the defendant. Therefore, these bills were for the period and for the

advertisements which are disputed by the defendant. The plaintiffs have

also produced the copies of relevant pages of the dispatch register

whereas the defendant has not produced anything to rebut the

documents produced by the plaintiff. If the defendant had been

receiving the letters and bills for all the sites, then why no objection was

raised earlier by the defendant has not been explained. The case of the

defendant is not that the inspection was carried out by its officials and

only one advertisement which is later on admitted by the defendant was

found to be displayed, and other advertisements were not displayed.

Considering the entirety of the evidence led on the record it cannot be

inferred that the defendant had not received the correspondence and

bills from the plaintiffs. In the circumstances, why the defendant did

not object to display of other advertisements by the plaintiffs has not

been explained satisfactorily.

23. The plaintiffs in the circumstances have been able to prove that

that they had displayed the advertisements of the defendant on six

sites. If the plaintiff had displayed the advertisements of the defendant

on all the six sites, then whether the plaintiffs would be entitled to

claim amounts for display of advertisement on other sites or not as for

one site it is admitted by the defendant and the amount has been paid

during the pendency of the suit. The learned counsel for the Plaintiffs

has also contended that even if it is inferred that there was no

concluded agreement between the parties, as it has been established

that the advertisements were displayed without any objection from the

defendant and they have benefited from them and advertisements were

not displayed gratuitously, they are entitled to claim the amounts for

other advertisements at the same rates at which the amount has been

paid to the plaintiffs for one of the advertisement. The learned counsel

for the plaintiffs has relied on section 70 of the Contract Act and has

contended that his case falls squarely within the purview of section 70

of the Indian Contract Act. Reliance has also been placed on

Mulamchand v. State of Madhya Pradesh, AIR 1968 SC 1218 where the

Apex Court had held as under:

"In other words if the conditions imposed by Section 70 of the Indian Contract are satisfied then the provisions of that section can be invoked by the aggrieved party to the void contract. The first condition is that a person should lawfully do something for another person or deliver something to him; the second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied, Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. The important point to notice is that in a case falling under Section 70 the person doing something for another or delivering something to another cannot sue for the specific

performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. So where a claim for compensation is made by one person against another under Section 70 it is not on the basis of any subsisting contract between the parties but on a different kind of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi- contract or restitution. "

The plaintiffs have also placed reliance on "State of West Bengal

v. B.K. Mondal and Sons, 1962 Supp(1) SCR 876 where the Apex Court

held:-

"It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. In appreciating the scope and Page 1753 effect of the provisions of this section it would be useful to illustrate how this section would operate. If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case Section 70 would not come into operation. Similarly, if a person does something for another it would be open to the latter person not to accept what has been done by the former; in that case again Section 70 would not apply. In other words, the person said to be made liable under

Section 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under Section 70 arises."

The Supreme Court has explained section 70 of the Contract Act

in the case of State of W.B. v. B.K. Mondal and Sons, 1962 Suppl. (1)

SCR 876 in the following words:

"14. It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. In appreciating the scope and effect of the provisions of this section it would be useful to illustrate how this section would operate. If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case Section 70 would not come into operation. Similarly, if a person does something for another it would be open to the latter person not to accept what has been done by the former; in that case again Section 70 would not apply. In other words, the person said to be made liable under Section 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under Section 70 arises."

24. The defendant has contended that it is not open to the plaintiff to

take and rely on the plea based on section 70 of the Contract Act, 1872

as the same is beyond the pleadings. It is also alleged by the defendant

that in view of plea of agreement between the parties, the reliance

cannot be placed by the plaintiffs on Section 70 of the Contract Act,

1872 as the said section can be relied on only if there had been no

agreement between the parties. This contention of the defendant cannot

be accepted because two issues have been framed separately. Issue

no.3 is whether there was a concluded contract between the parties and

issue no.1 is whether the plaintiff is entitled for the amount claimed.

Thus even if it is to be held, that there was no concluded contract

between the parties, the issue whether the plaintiff is entitled for the

amount claimed is required to be adjudicated separately. In absence of

any concluded contract, if the advertisement displayed were not for

gratuitous reasons, the plaintiff would be entitled to rely on section 70

of the Contract Act, 1872 and the plea of the defendant that it is an

afterthought cannot be accepted.

25. The defendant has also contended that it is not open to plaintiff

to rely upon agreements and letters/bills as the same have not been

proved as per the requirements of the provisions of Indian Evidence Act.

According to Mr. Oberoi, Senior Counsel for the defendant, mere

marking and reference as Exhibit in respect of documents is not the

proof of the documents. The counsel for the defendant has relied on AIR

1971 SC 1865, Sait Tarajee Khimchand & Others v. Yelanaarti Satyam

& Others; (2003) 8 SCC 745, Narbada Devi Gupta v. Virendra Kumar

Jeswal & Others and (1995) Rajdhani Law Report 286, Sudhir

Engineering Co. v. Nitco Roadways Ltd. in support of his pleas and

contentions.

26. In Narbada Devi Gupta (supra), the Supreme Court had held that

mere production and marking of a document as exhibit is not enough

as execution of a document has to be proved by admissible evidence,

however, whether documents produced are admitted by the signatories

thereto and thereafter they are marked as exhibits, no further burden to

lead additional evidence to prove the writing and its execution survives.

In this case, the plaintiff-landlord had averred that signed blank stamp

papers were given to the tenant to conduct pending litigation in his

absence, however, no evidence was led in proof thereof. The tenant,

however, had taken a specific plea of tenancy based on rent receipts

signed by the landlord. The landlord had not disputed his signatures

nor made any consequential amendment to the plaint nor had taken the

plea of fraud and forgery and in such circumstances it was held by the

Apex court that no further burden of proof was on defendant to lead

evidence to prove writing about the rent and their execution. The said

precedent relied on by the defendant is distinguishable. In Sait Tarajee

Khimchand & Others (supra), referring to Order XIII Rule 4 of the Code

of Civil Procedure, it was held that mere marking of a document as an

exhibit does not dispense with its proof. A single Judge of this Court in

Sudhir Engineering Co. (supra), had held in reference to the Original

Side Practice Direction 3/74 that when a document is produced in

evidence and is marked as an exhibit, then it is only for identifying the

documents and is not its proof as proof of the contents of the

documents must be proved and established by independent evidence.

27. No doubt, a number of documents produced by the plaintiff

appear to have merely been exhibited, however, considering the entire

evidence of the parties, it cannot be held that there is no evidence about

these documents. Some of the documents especially earlier bills have

been categorically pleaded and some of them have not been specifically

denied. Some of the documents have been produced by the defendant

which can be relied on by the plaintiffs. Defendant has admitted some

of the documents for the previous periods which reflect that the

agreements for display of advertisements were signed much later than

before the display was commenced. The plaintiffs have also produced

their dispatch register and some evidence has been led in respect of the

same which has not been refuted by the defendant nor any suggestion

had been given to the witness of the plaintiffs that the plaintiffs had not

been maintaining any dispatch register or the entries made therein are

forged. The postal receipts produced by the plaintiffs and exhibited, in

the facts and circumstances, cannot be ignored and have to be accepted

having been proved. When the documents which have not been

admitted by the defendant were exhibited, no objection had been taken

by the defendant about exhibition of documents. No doubt that the

deposition was filed by the plaintiff on the affidavit, however, this

objection should have been taken at the time of commencement of cross

examination of such a deponent of the plaintiffs. The deposition of the

defendant in its affidavit dated 17th July, 2009 is also that there were

no agreements and the bills raised by the plaintiffs were not in

accordance with contracts and had not been approved by the

defendant. The defendant has also not stated that the bills and letters

sent to him were forged. On the basis of entire evidence led by the

parties, it has been inferred that the advertisements were displayed by

the plaintiffs and the case of the defendant is that the agreements sent

and the bills sent on the basis of alleged agreements were not in

accordance with the terms agreed between the parties. The defendant

has also failed to establish the alleged practice under which the

plaintiffs could display the advertisements only after written

approval/execution of the agreements by the defendant‟s Head office.

The defendant has also not established that its officials at branch office

were not competent to give instructions to the plaintiffs for display of

advertisements or they exceeded their authorization or that they could

not negotiate the terms and conditions for display of advertisements. In

the circumstances, it cannot be inferred that there is no evidence in

respect of the documents of the plaintiffs and they have been merely

exhibited. Considering the entirety of the evidence and that the

defendant did not object to exhibition of documents and there being

some evidence in respect of documents produced by the plaintiffs, the

contention of the defendant that these documents could not be

considered, cannot be accepted.

28. In the circumstances, it is inevitable to conclude that the

plaintiffs had displayed advertisements of the defendant pursuant to

the instructions by and on behalf of the defendant and on the ground

that the written agreements sent by the plaintiffs to the defendant

incorporating the terms and conditions for display were not signed

would not show that the terms and conditions were not settled between

the parties. The rate for the one of the site has been accepted by the

defendant and even the amount had been paid during the pendency of

the present suit. The amount claimed by the plaintiffs is not alleged to

be excessive or exorbitant. The other terms and conditions for the

display of other advertisements were also the same as in respect of one

of such advertisement which is accepted by the defendant. The only

plea, therefore, could be whether the display of other advertisements by

the plaintiff was without instructions and settlement of terms and

conditions for display of advertisement. The defendant has failed to

prove that the advertisements could be displayed only after written

approval and signing of written contract by the defendant. The

agreements rather categorically stipulates that they were to be signed

for the purposed of record as the stipulate ` To sign and return for the

records.‟. Therefore the issue no.3 is decided in favor of the plaintiffs

holding that there had been concluded agreements between the parties

for the display of advertisement of the defendant.

29. With the finding that there had been concluded agreements

between the parties pursuant to which the advertisements were

displayed by the plaintiffs, they would be entitled to claim the amounts.

Even if for the sake of arguments, it is inferred that there had not been

concluded agreement between the plaintiffs and the defendant for the

display of the advertisements, yet relying on section 70 of the Contract

Act, 1872, the plaintiffs shall be entitled for the amount claimed by

them. Considering the entirety of evidence led by the parties, the

probable inference is that all the three pre-requisites of section 70 of

the Contract Act, 1872 are satisfied in the present case.

i. The defendant had approached the plaintiffs for the display of its advertisements at six sites. The parties had reached an oral agreement regarding the terms and conditions of the display of advertisements. The plaintiff had sent copies of the agreements to the defendant for his signature. The plaintiffs had also from time to time sent several letters, bills and reminders. The defendant had also paid for the display at one of the sites. Further the said display of advertisements is not against any law.

ii. The agreements that the plaintiffs had sent to the defendant had clearly stipulated the mode and amount payable to the plaintiffs for the service provided by them. Furthermore, the defendant has already paid the plaintiffs for the display of advertisements at one of the sites. This clearly shows that the services rendered were for consideration and was not gratuitous. The amount claimed by the plaintiffs is not exorbitant or such which cannot be claimed in the facts and circumstances as for one of the site at the same rate as has been claimed by the plaintiffs, the amount has already been paid.

iii. The defendant was aware of the fact that the plaintiffs were displaying the advertisement of the defendant at all the six sites. But he never raised any objection to this until 15th March, 1998, which was more than 14 months since the advertisements were first displayed. The defendant quietly went on enjoying the services of the plaintiffs. Outdoor advertising increases the visibility of the defendant‟s products and is therefore beneficial to the business of the defendant. The plea of the plaintiffs that on account of Auto Expo (Exhibition) the defendant had insisted for immediate display of his advertisement has not been countered specifically in the evidence by the defendant. Further, the defendant had paid for the display at one of the sites, which in itself shows that the displays were beneficial to the defendant.

30. Thus all the three pre-requisites of section 70 are also satisfied

and the plaintiffs on this ground are also entitled to be compensated for

the services rendered by them. The rate at which the plaintiffs should

be compensated is also not in dispute as the defendant has already paid

for the display at one of the six sites. Therefore issue no.1 is also

decided in favor of the plaintiffs and against the defendant holding that

the plaintiffs are entitled for the amount claimed which is

Rs.58,43,756/- (Rs. Fifty Eight lakhs forty three thousand Seven

hundred and fifty six) and the suit is decreed for the said amount. Since

an amount of Rs.11,10,186/- has already been paid to the plaintiffs

after deducting the amount of Rs.23,814/- towards TDS pursuant to

order dated 24th May, 2002, the plaintiffs shall be entitled for balance

amount.

31. The next issue is issue no.2 about the entitlement of the plaintiffs

for interest. The learned counsel for the plaintiffs for this issue had

relied on the deposition of the plaintiff no.2 filed on affidavit dated 10th

September, 2004 where in paragraph 35 it is deposed by the plaintiff

no.2 that the defendant is liable to pay interest at the agreed rate of

24% per annum on the principal amount of Rs.58,43,756/- which was

to the plaintiffs till filing of the present suit. Reliance has also been

placed on the deposition of the plaintiff no.2 in paragraph 35 where it is

contended that interest at the rate of 24% per annum was agreed and

the said rate of interest is also usual and customary market rate of

interest which is being charged in commercial transaction of like

nature. The plaintiffs have also claimed interest on the basis of notice

dated 21st February, 2000 exhibit PW 1/54 where in para 6, the interest

is claimed at the agreed rate of 24% per annum from the date of default

in payment of respective bills till the amount of the bills is paid. The

learned counsel for the plaintiffs has asserted that on the basis of the

deposition on behalf of the plaintiffs they are entitled for interest at the

rate of 24% per annum as it was categorically deposed that the market

rate of interest was also 24% which testimony of the plaintiff no.2 has

remained un-rebutted as no suggestion to the contrary was given to the

witness in his cross examination.

32. The learned counsel for the defendant has refuted the claim of

interest contending inter-alia that the deposition of the defendant in

respect of payment of interest in accordance with the bill is categorical

as it was deposed by DW1, Mr.A.Rodricks that the bills which had been

submitted by the plaintiffs which he had admitted in the cross

examination were not according to the contract and consequently the

plaintiffs was asked to rectify the bills and submit the same and he was

categorical that there is no question of any interest to be paid to the

plaintiff. Regarding the interest demanded by notice exhibit PW.1/54,

the learned counsel relied on the reply dated 15th March, 2000 exhibit

PW.1/59 where the defendant has categorically denied that the interest

is payable at the rate of 24% as claimed in the notice. According to the

learned counsel for the defendant one line deposition that the plaintiff is

entitled to interest at the customary rate in case any amount is found

due to him will not entitle plaintiffs for the interest at the said rate as

the same has not been established despite the fact that the statement of

the plaintiffs was not refuted in the cross examination on behalf of

defendant.

33. Therefore what is to be determined is whether the plaintiffs

are entitled for interest, and if so, on what amount at what rate and for

what period. This Court has decreed the suit of the plaintiffs. The

plaintiffs have claimed an amount of Rs.20,84,176/- as interest at the

rate of 24% per annum on the principal amount of Rs.50,43,756/-. The

suit was filed by the plaintiffs on 7th November, 2000, and therefore, it

is assumed that amount of Rs.20,84,176/- is the interest claimed by

the plaintiffs at the rate of 24% per annum till the said date. The

amount of Rs.11,10,186/- after deducting an amount of Rs.23,814/-

towards TDS was paid after the institution of the suit pursuant to order

dated 24th May, 2002.

34. The defendant has admitted the transaction in respect of one of

the site on which advertisement on behalf of the defendant were

displayed by the plaintiffs. The bill in respect of the said site raised by

the plaintiffs, is therefore, also admitted which carries a stipulation that

in case the amount is not paid, the defendant shall be liable to pay

interest at the rate of 24% per annum. DW-1 Mr.Rodricks, the witness

of the defendant was categorical that the bills were submitted by the

plaintiffs. However, the plaintiffs were asked to rectify the bills. The

witness has thus, meant that though a demand for interest was raised

at the rate of 24% per annum, however, it was to be rectified as the rate

of interest was not agreed at the said rate. This Court has already held

that in respect of the other bills also the liability of the defendant is

towards the plaintiffs for the payment of the amount due to the

plaintiffs on account of displaying the advertisement of the defendant.

35. This is also not being disputed that a notice of demand Ext. PW-

1/54 was given by the plaintiffs to the defendant which was received by

the defendant and was even replied. The notice raises a demand of

interest at the rate of 24% per annum, though the payment of interest

at the said rate was denied by the defendant in reply dated 15th March,

2000, which had been exhibited as Ext.PW-1/59.

36. In the circumstances, he cannot be held that the plaintiffs are not

entitled for interest from the defendants. The defendant has also not

refuted the deposition on behalf of the plaintiffs that the plaintiffs are

entitled for interest at the rate of 24% per annum, which is the

customary rate of interest. Though the learned counsel for the

defendants has contended that merely not refuting the deposition of the

witness of the plaintiffs shall not make the defendants liable, however,

the liability to pay the interest cannot be absolved, in the facts and

circumstances. It also cannot be held that the defendants are not liable

to pay interest, if not at 24% per annum than at some other rate.

37. The Supreme Court a number of judgments reported as Rajendra

Construction Co. v. Maharashtra Housing & Area Development Authority

and others, 2005 (6) SCC 678, McDermott International Inc. v. Burn

Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road

Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna

Bhagya Jala Nigam Ltd. v. G.Harischandra, 2007 (2) SCC 720 and State

of Rajasthan Vs. Ferro Concrete Pvt. Ltd. (2009) 3 Arb.LR 140 (SC) has

held that in view of changed economic scenario and the consistent fall

in the rates of interest, the Court can take notice of the same and must

necessarily reduced the interest in the facts and circumstances.

38. In the Rajendra Construction Company (Supra), the claimants

had claimed interest in the suit, however, the matter was referred for

arbitration, and arbitrator had awarded interest at the rate of 18% per

annum on the principal amount from the date of the suit to the date of

the award. The Apex Court keeping in view the facts and circumstances

that a contract was entered into in 1987 and the work was completed in

1990 after extension granted by MHADA and that arbitrator had passed

the award in 1995 with interest at 18% per annum had reduced the

rate of interest from 18% to 10% per annum and had held that

reduction of interest is proper and equitable and is in the interest of

justice. In McDermott International Inc. (Supra), resorting to exercise its

power under Article 142 of the Constitution of India in order to do

complete justice between the parties, had directed that the claimants

shall be entitled for interest at the rate of 6% per annum in place of

18% per annum. Relying on Mukund Ltd. v. Hindustan Petroleum

Corporation Ltd. where the Supreme Court had confirmed the decision

of the Division Bench upholding the modified award against the order of

the learned single judge and had reduced the interest awarded by the

learned single judge subsequent to the decree from 11% to 7½ % per

annum holding that 7½ % per annum would be reasonable rate of

interest that could be directed to be paid to the claimants. For reducing

the rate of interest long lapse of time was taken into consideration.

39. Similarly, in Rajasthan SRTC (Supra), since a long spell of time

had passed since the amounts were claimed by the claimants and the

interest at the rate of 12% per annum was considered to be

burdensome to the company, therefore, the Apex Court in the facts and

circumstances, had reduced the rate of interest from 12% to 6% per

annum. In Krishna Bhagya Jal Nigam Ltd. (Supra), the Supreme Court

considering the economic reforms in the country and that the interest

regime has changed and the fact that interest rate had substantially

reduced, reduced the interest from 18% to 9% per annum. Similarly, in

UP Cooperative Federation Ltd. (Supra), the rate of interest was reduced

in the entirety of the facts and circumstances.

40. In the present facts and circumstances also the claims are for the

period 1998-99 and considerable time has already elapsed. The

plaintiffs have also not specifically proved as to what is customary rate

of interest and relies only on the fact that the deposition of the plaintiffs

regarding customary rate of interest has not been refuted in the cross-

examination by the defendant. Therefore, taking the totality of the facts

and circumstances, and the law laid down by the Supreme Court, it will

be just and appropriate to award interest till the date of filing of the suit

at the rate of 9% per annum. The plaintiffs have claimed an amount of

Rs.20,84,176/- as interest till the filing of the suit at the rate of 24%

per annum. Since the plaintiffs have been awarded interest till the filing

of the suit at the rate of 9% per annum, therefore, the proportional

interest at the rate of 9% per annum shall be Rs.7,81,566/- (Rupees

seven lakhs eighty one thousand five hundred and sixty six only), and

therefore, the issue is decided in favor of plaintiffs and against the

defendant awarding an amount of Rs. 7,81,566/- (Rupees seven lakhs

eighty one thousand five hundred and sixty six only) as interest till the

date of filing of the suit.

41. The plaintiffs are also awarded pendente lite and the future

interest from the date of institution of the suit till the recovery of the

amount at the rate of 6% in the facts and circumstances. The plaintiffs

shall be entitled for pendente lite interest at the rate of 6% on the

amount of Rs.50,43,756/- till the amount of Rs.11,10,186/- and TDS

amount of Rs.23,814/- was paid pursuant to order dated 24th May,

2002. From the date of payment of the said amount, the plaintiffs shall

entitled for pendent lite interest at the rate of 6% per annum on the

balance amount after deducting the amount which was paid and

deducted pursuant to order dated 24th May, 2002. The plaintiffs shall

be entitled for the future interest also at the rate of 6% till the amount

decreed in favour of the plaintiffs is paid. The issue is decided

accordingly.

42. Therefore, in the entirety of the facts and circumstances, the suit

is decreed in terms of finding on the issues decided herein above. The

plaintiffs shall also be entitled for a cost of Rs.10,000/- payable by the

defendant. Suit is decreed accordingly and the decree sheet be drawn.

July 02, 2010                                            ANIL KUMAR J.
„Dev‟