M/S Subros Limited vs M/S Glasnost Hydraulic ...
2011 Latest Caselaw 5981 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                       Judgment Pronounced on: 08.12.2011

+ CS(OS) No. 2215/2007


M/S SUBROS LIMITED                       ..... Plaintiff
              Through: Mr. R.C. Beri with Mr. S.K. Beri,
              Advs.

                        versus


M/S GLASNOST HYDRAULIC EQUIPMENTS(INDIA) PVT.
LTD.                            ..... Defendant
             Through: None

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

V.K. JAIN, J. (ORAL)

1. This is a suit for recovery of Rs.23,43,000/-.

2. The case of the plaintiff is that the plaintiff

company placed a purchase order on the defendant

company for purchase of 7 machines, detailed in Purchase

Order dated 12.12.2002, at a total basic cost of

Rs.65,90,625/- and subject to the terms and conditions

mentioned in the Purchase Order.

The Purchase Order was amended vide letter dated

16.12.2002, thereby changing the delivery date from

25.3.2003 to 30.3.2003. The order in respect of two

equipments, Manual Core Assy. Machine and Wire Winding

Machine was cancelled. The basic value of the order was

thus reduced to Rs.46,55,000/-. The plaintiff made

payment of Rs.18,62,000/- to the defendant being 40% of

the basic value of the order as was agreed between the

parties. The defendant agreed to deliver the machines latest

by 07.7.2003. Later, the dispatch date in respect of

Caulking Machines was changed by the defendant to

30.7.2003. This, however, was not acceptable to the

plaintiff, which insisted on dispatch of the machines by

07.7.2003. Since, there was delay in dispatch of machines,

in a meeting held on 31.7.2003, it was agreed that all the 5

machines will be dispatch on or before 30.9.2003 and they

were likely to be ready for inspection by 20.9.2003. On

confirmation of final date of inspection by the defendant, the

plaintiff was to depute its representative for inspection and

trial of the machines and thereafter, they were to be packed

in the presence of representative of M/s Subros

Ltd./plaintiff and payment was to be delivered to the

defendant after loading of machines in the truck and

creation of excise documents. In case of delay in dispatch

beyond 30.9.2003, a penalty @ 1% per week was to be

imposed on the defendant.

3. The defendant, however, failed to adhere even to

the revised delivery schedule and thereby became liable for

payment of penalty at a stipulated rate @ 1% of the basic

value of the order per week. Since, the defendant failed to

adhere even to the revised delivery schedule, the plaintiff

after awaiting for one month, served a legal notice dated

01.11.2003 on the defendant informing that it had been

forced to make alternative arrangements for procuring the

machines from another source and their Purchase Order

dated 12.12.2002 as modified on 25.4.2003 stood cancelled.

The defendant was required to refund the advance of

Rs.18,62,000/- along with the penalty @ 1% of the basic

value of the order per week as well as the interest @ 18%

per annum. Since, the defendant failed to pay the aforesaid

amount, the plaintiff is now claiming the advance of

Rs.18,62,000/- along with the interest on that amount @

10% per annum, amounting to Rs.4,81,000/-.

4. The defendant was proceeded ex-parte vide order

dated 08.8.2011. The plaintiff has filed affidavit of Mr.

Virender Kumar by way of ex-parte evidence. In his

affidavit, Mr. Virender Kumar has supported on oath the

case set-out in the plaint.

5. 'Ex.PW1/2' is the quotation, which the defendant

had submitted to the plaintiff company for supply of

machines, whereas, 'Ex.PW1/3' is the Purchase Order dated

12.12.2002. 'Ex.PW1/5' is the revised Purchase Order

dated 25.4.2003 issued by the plaintiff to the defendant.

6. A perusal of the initial Purchase Order dated

12.12.2002 would show that timely delivery of the machines

was made essence of the order, failing which, the plaintiff

reserved the right to withdraw the order and, in that case,

the defendant was to refund the entire advance paid to it

against the order. The term making the timely delivery

essence of the contract was not modified at the time revised

purchase order was issued on 25.4.2003.

7. A perusal of the E-mail dated 08.5.2003 sent by

the defendant to the plaintiff would show that the delivery

period was two months from the date of receipt of advance,

i.e. 07.5.2003. The defendant, thus, was required to deliver

the machined to the plaintiff latest by 07.7.2003.

'Ex.PW1/8' is an E-mail sent by the plaintiff to the

defendant, whereby it declined to change of dispatch date

from 07.7.2003to 30.7.2003 and maintained that the

delivery period will be two months from 07.5.2003.

'Ex.PW1/10', are the Minutes of Meeting held on 31.7.2003

in the office of the defendant company. A perusal of the

Minutes would show that it was agreed between the parties

that all the 5 machines would be dispatched by the

defendant on or before 30.9.2003. They also agreed that the

machines were likely to be ready for inspection by

20.9.2003. The final date of inspection was to be confirmed

by the defendant, whereupon the plaintiff was to depute its

official representative for inspection and trial of the

machines. After trials and final clearance, the machines

were to be packed in the presence of the representative of

the plaintiff company and the payment, as per the purchase

order was to be handed over to the defendant on the

machines being loaded on the truck and creation of the

excise documents.

8. It has come in the affidavit of Mr. Virender Kumar

that the defendant had failed to adhere even to the revised

delivery schedule and did not supply the machinery within

time, agreed in the Meeting held on 31.7.2003.

9. 'Ex.PW1/11' is the notice sent by the plaintiff to

the defendant informing it that since it had failed to adhere

even to the revised delivery schedule, the purchase order be

cancelled. The defendant was also called upon to refund

the advance of Rs.18,62,000/- along with penalty @ 1% of

the basic value of the order per week and interest @ 18%

per annum.

10. The testimony of Mr. Virender Kumar coupled with

the documents filed by the plaintiff company would show

that though time was made essence of the contract between

the parties and the defendant was required to deliver all the

machines latest by 30.9.2003, in terms of the decision

taken in the meeting held on 31.7.2003, the defendant

failed to adhere to this revised schedule as well. Hence, in

terms of the Purchase Order dated 12.12.2002 as well as

the revised Purchase Order dated 25.4.2003, the plaintiff

was entitled to cancel the purchase order and thereupon the

defendant was required to refund the entire advance

payment received by it from the plaintiff.

Since the purchase order has been cancelled on

failure of the defendant to adhere to the schedule agreed

between the parties for delivery of machines, the defendant

is required to refund the advance of Rs.18,62,000/-, which

it had received from the plaintiff.

11. As regards interest, admittedly, there is no

agreement between the parties for payment of interest by

the defendant on the advance which it received from the

plaintiff. No custom or usage of trade for payment of

interest has been proved by the plaintiff. Section-3 of the

Interest Act, 1978 to the extent it is relevant provides that in

any proceedings for the recovery of any debt or damages or

in any proceedings in which a claim for interest in respect of

any debt or damages already paid is made, the Court may, if

it thinks fit, allow interest to the person entitled to the debt

or damages or to the person making such claim, as the case

may be, at a rate not exceeding the current rate of interest.

It further provides that if the proceedings relate to a debt

payable otherwise than by virtue of a written instrument at

a certain time, then, interest can be granted from the date

mentioned in this regard in a written notice given by the

person entitled or the person making the claim to the

person liable that interest will be claimed, to the date of

institution of the proceedings. Since the plaintiff gave

notice envisaged in Section 3 of the Interest Act, 1978

claiming interest from the defendant, it is entitled to interest

in terms of the aforesaid provision.

In the facts and circumstances of the case and

considering the nature of the transaction between the

parties, I am of the view that the plaintiff is entitled to

interest @ 10% per annum w.e.f. 30.4.2003 to 30.11.2005,

which comes to Rs.4,81,000/-. The plaintiff, thus, is

entitled to recover a total sum of Rs.23,43,000/-.

12. In view of the above discussions, a decree for

recovery of Rs.23,43,000/- with pendentilite and future

interest @ 10% per annum is hereby passed in favour if the

plaintiff and against the defendant.

Decree sheet be drawn accordingly.

(V.K. JAIN) JUDGE DECEMBER 08, 2011 KA