M/S Kunstocom(India) Ltd. vs M/S Ikea Trading(India) Ltd & Ors
2010 Latest Caselaw 1601 Del

$~12
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                     Date of decision: 22.03.2010

+      CS(OS) 162/2008

       M/S KUNSTOCOM(INDIA) LTD.                                      ..... Plaintiff
                      Through : Mr. Rajesh Yadav, Mr. Vinay Garg, Mr. A.P. Singh and
                      Mr. Rajan Chawla, Advocates.

                      Versus

       M/S IKEA TRADING(INDIA) LTD & ORS                         ..... Defendants
                       Through : Mr. Jayant Bhushan, Sr. Advocate with Mr. Shankar
                       Madhur, Mr. Gautam Talukdar and Ms. Rikha Gupta, Advocates,
                       for Defendant No.1.
                       Mr. Jayant. K. Sud and Ms. Nandita Abrol, Advocates, for
                       Defendant No.2.

       CORAM:
       MR. JUSTICE S. RAVINDRA BHAT

1.

     Whether the Reporters of local papers         Yes.
       may be allowed to see the judgment?

2.     To be referred to Reporter or not?            Yes.

3.     Whether the judgment should be                Yes.
       reported in the Digest?

S.RAVINDRA BHAT, J. (OPEN COURT)


I.A. No. 6087/2008 (Under Order 7 Rule 11)

1. Defendant No.1 requests the Court to reject the suit, contending that the plaint does not

disclose any triable cause of action and is vague in material particulars since there was no

concluded contract between the parties.

2. Briefly the facts of the case are that the plaintiff sues the defendants for a decree in the

sum of Rs.5,25,12,515.23/-, with pendente lite and future interest @ 14% per annum. The

I.A. No. 6087/2008 in CS (OS) 162/2008 Page 1 undeniable facts are that the plaintiff and the first defendant used to transact with each other; the

latter used to place orders for supply of Barnslig Floor Lamps and other types of lamps. It is not

disputed by the first defendant that such supplies were made during the period 2001-2003. The

plaintiff also does not dispute that the price of the goods were paid for. The plaintiff's grievance

is that sometime in 2003-04, the first defendant represented to it, stating that since its products

were acceptable and of the requisite quality, the first defendant would pick-up certain quantities

of the goods, of an aggregate value of Rs. 5 crores.

3. The plaintiff relies upon certain letters/e-mail communication dated 27.01.2004 of the

first defendant as well as the minutes of meetings dated 09.03.2004, 28.04.2005 and 02.05.2005,

to say that on the basis of defendants' assurance, firm commitments were entered into for

purchase of machinery. According to the plaintiff, these were premised upon the prevailing

EPCG scheme of the Central Government, which enable the trader/exporter to import machinery

without payment of Customs Duty or payment of minimal Customs Duty, as the case may be,

due to export commitment. The plaintiff has placed on record invoices to prove the purchase of

such machinery and their importation. It is contended in this background that the defendants'

subsequent volte face and the decision to place orders for such products to a third party caused

the plaintiff wrongful loss. The plaintiff has in paras 48 to 59 spelt-out the said heads of loss. The

plaintiff essentially relies upon the minutes of meeting dated 09.03.2004, subsequent minutes of

meeting dated 04.08.2004 as well as an e-mail dated 15.06.2004, said to have originated from the

defendants, to say that the quantity was known as also the price and even the nature and quality

of the goods so defined.

4. The defendants contend that the suit is completely vague and lacking in particulars as to

the dates on which the so-called concluded or unenforceable contract was entered into by the

I.A. No. 6087/2008 in CS (OS) 162/2008 Page 2 parties. It is highlighted that the suit does not mention any material particulars in this regard and

that even the documents placed on the record show at best an intention on the part of the first

defendant to procure the goods. Learned Senior Counsel for the first defendant submits that the

documents and the pleadings taken together nowhere disclose any definiteness as to the

consideration payable for the quantity of goods, the other essential terms of the contract as well

as the specifications of the goods. At best, argues the first defendant, these only points to the

parties' intention to convey future binding relationships but do not amount to an enforceable and

concluded contract which can be the only basis for damages.

5. Learned senior counsel on behalf of the first defendant relies upon the decision of the

Supreme Court reported as T. Arivandandam v. T. V. Satyapal and Anr. 1977 (4) SCC 467,

where it has been declared that the Court should nip vexatious litigation in the bud and see

through clever drafting of the pleadings, which might disguise otherwise untenable claims, at the

appropriate stage. It is submitted that the claim for damages, if any, is tenable only if the

pleadings disclose a clear and enforceable contract. In the present case, at best, the minutes of

meeting and the e-mail point to future interest to enter into a binding relationship but under no

circumstances establish a concluded contract.

6. The Court has considered the submissions as well as the materials placed on the record.

The minutes of meeting dated 09.03.2004 read as follows:

            "XXXXXX                          XXXXXX                         XXXXXX
       March 9, 2004
                                      MINUTES OF MEETING

       Supplier/Producer: KUNSTOCOM -                 Mr. Anand Chauhan/
                                                      Mr. Amit Arora
                               IKEA           -       Mr. Anderson
                                                      Ms. Vaishali

1. It was suggested by IKEA that KIL will modify moulds as per new

I.A. No. 6087/2008 in CS (OS) 162/2008 Page 3 suggestion from IKEA for Barnslig and do the moulding of the component out of these moulds. KIL will inform the cost and time if any to IKEA for modification and start working after IKEA's approval.

2. As IKEA agrees to their previous commitment, i.e. billing of moulds against CT-3 Forms and IKEA will take moulded components from KIL for export. This resolves all previous disputes between IKEA and KIL. Regarding supply of these components, IKEA will inform to KIL to whom KIL will supply the component but it is agreed that the components will be billed as export.

3. IKEA will inform KIL regarding billing of moulds and KIL will get CT-3 Forms (as export) as per Purchase Order Terms.

4. Ms. Vaishali will provide the details of new modifications that are needed.

5. Since these products are new and unproven in the market the indicated forecast is very preliminary CNDE of IKEA told KIL to aim for 60-70% of forecast 75000 sets of each lamp but full quantity will be taken from KIL.

6. Performance of KIL over 12 months from moulding starts will be monitored and as always exposed to competition.

7. If any of the above parameters are not fulfilled a shift of mould could happen after 12 months.

XXXXXX XXXXXX XXXXXX"

7. The subsequent minutes dated 04.08.2004 read as follows:

             "XXXXXX                      XXXXXX                        XXXXXX

      BARNSLIG PROJECT:-

      Minutes of Meeting on 4th Aug 04 in IKEA office

1. Modern thermo plastics: Mr. Arpan Mehta, Mahesh, Mr. Palet

2. KIL : Mr. Chauhan, Mr. Jain, Mr. Amit

3. IKEA : Vaishali Mishra, Rajan Palan.

1. Payment Terms: After components delivery from KIL within 30 days.

2. One person from KIL & Modern Plastics also will jointly visit the textured company mould tex together.

KIL has to get back on the date as to when they will visit Mumbai.

3. Colour Pcc: Modern will cooperate with KIL.

I.A. No. 6087/2008 in CS (OS) 162/2008 Page 4

4. Fix one brand/company for each Material used in component of lamp.

5. Table lamp texturing on hold: IKEA has to get back to KIL.

6. Truck Loads delivery from KIL to Modern: KIL has to get back on the freight from Noida to Alibagh.

Only sets for dispatches no mismatch on components.

7. Colour - limit - samples to be set by KIL - Modern - IKEA.

8. Quality Inspection jointly by Modern & KIL, first buy Qtys. For one/two lots.

9. KIL will manufacture first 500 pc XXXX & dispatch to evaluate Quality/dispatch etc......

10. From each lot of delivery by KIL to Modern: Feed back from Modern to KIL on quality & rejection, if any.

11. On Export benefit on tools & Components KIL & Modern will get back as "As Invoice details has to be priced".

12. Plastic overall Raw Material Price: IKEA will get back on pricing the conditions jointly with KIL & Modern.

13. First buy approximately 30,000 pc each set which KIL will dispatch at the rate of 15,000 set each/month - capacity. KIL will need 15 days startup time.

XXXXXX XXXXXX XXXXXX"

8. The first defendant submits that an overall reading of the above documents do not reveal

any intention or firm commitment to purchase defined quantities or the price and that the original

documents, i.e. of the minutes of meeting dated 04.08.2004 with regard to the rate of 15,000

"set" is not the cost to in fact prove the sets to be dispatched each month.

9. It appears to this Court that even though the suit is not exact about the contract

particulars, at the same time, it is not an instance of clever drafting. The plaintiff's claim is not

founded on sale of goods or for realization of the price; rather it is on the basis of a commitment

entered by the first defendant over a period of one year, said to have been recorded in the

minutes of meeting dated 09.03.2004, to take-up 60-70% of the 75,000 odd pieces to be

produced by it (the plaintiff). As regards the contention that the consideration is not spelt-out and

that in the absence of such an essential condition, the Court should not infer any fact which

would either of the parties, this Court cannot, at this stage, entertain rival merits of the case.

Whether the minutes of the meeting dated 04.08.2004 in fact spells-out the price ought to be

I.A. No. 6087/2008 in CS (OS) 162/2008 Page 5 gone into at the stage of trial. On the substantial aspect of the claim, the plaintiff has placed on

the record certain invoices to establish the importation of the machinery or goods which it

claims, were to be used for the manufacture of the agreed goods to be lifted by the first

defendant.

10. Having regard to the overall circumstances and the fact, the Court is not persuaded by the

submissions of the first defendant that the suit is bereft of any cause of action so as to warrant

rejection under Order 7 Rule 11. I.A. No. 6087/2008 (Under Order 7 Rule 11) is accordingly

rejected. In the circumstances, the first defendant shall bear the costs quantified at Rs.50,000/- as

costs of the application, to be paid to the plaintiff, within two weeks.

CS(OS) 162/2008

After hearing counsel for the parties and with their consent, following issues are framed:

1. Did the parties enter into a binding or concluded contract so as to entitle the plaintiff to

the reliefs claimed?

2. Is the plaintiff entitled to the amount claimed, or any part thereof?

3. Is the suit time-barred? OPP;

4. Is the suit filed within the period of limitation?

5. Is the plaintiff entitled to interest on the amount; if so, at what rate and for what period?

List before the Joint Registrar on 05.07.2010, to enable the parties to take steps to lead

evidence. List before the Court on 10.01.2011, after depositions of parties are recorded.

                                                                                 S. RAVINDRA BHAT
                                                                                           (JUDGE)
         MARCH       22, 2010
         'ajk'




I.A. No. 6087/2008 in CS (OS) 162/2008                                                           Page 6