D.V.H.Industries vs Hartley Knits & Anr.
2011 Latest Caselaw 6262 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%               Judgment Reserved On: December 13, 2011
               Judgment Delivered On: December 20, 2011

+                        RFA(OS) 61/2009

       D.V.H.INDUSTRIES                     ..... Appellant
            Through: Mr.Ravi Gupta, Sr.Advocate with
                      Mr.V.K.Malik, Advocate

                              versus

       HARTLEY KNITS & ANR.             ....Respondents
           Through: Mr.Sunil Magon, Advocate for R-1

        CORAM:
        HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
        HON'BLE MR. JUSTICE S.P. GARG

PRADEEP NANDRAJOG, J.

1. M/s.Hartley Knits, a partnership firm, through its partner Uma Goel filed a suit, styling the same as one for permanent injunction, but actually prayed for a decree in sum of US$1,27,085.50 together with interest @20% per annum against the defendants: (i) M/s.A.C.S.Logistics (defendnant No.1), (ii) M/s.D.V.H.Industries (defendant No.2) and (iii) M/s.Cornett Group Inc (defendant No.3).

2. The most inartistically drafted plaint; the crudeness whereof is evidenced by the fact that the suit was captioned as one for mandatory injunction but actually a money decree was prayed for, pleaded that the second defendant was an agent through whom the third defendant placed purchase orders with the plaintiff for manufacture and supply of garments. It was pleaded that the buyer's bank opened two irrevocable letters of credit with the plaintiff's bank for a value of

US$76,923.00 and US$50,400.00. That the goods were to be transported through the nominated carrier A.C.S.Logistics i.e. defendant No.1. Alleging that goods worth US$1,27,085.50 were exported and were delivered to defendant No.3 as per agency agreement entered into between the plaintiff and defendant No.2, it was alleged that after deducting 5% commission said defendant was responsible to ensure receipt of the balance payment. Pleading that when the documents were presented for payment to the bank, no money was received and in the meanwhile defendant No.1 colluded with defendants No.2 and 3 in handing over goods to defendant No.3 which never remitted any amount and hence the claim for a decree in sum of US$1,27,085.50.

3. The inartistic pleading and the crudeness therein is evidenced from the fact that in paragraph 2 of the plaint, the pleadings would evidence that according to the plaintiff defendant No.2 was acting as the agent of defendant No.3. But, evidenced by the pleadings in paragraph 5 it would be apparent that the plaintiff states that defendant No.2 was its agent. It is unfortunate that the lawyer could not draft a proper plaint and as would be evidenced from the facts which we would be noticing, with reference to the evidence led, it is a case where defendant No.2 was the common agent of the plaintiff as also of defendant No.3. Evidence led has revealed that by the time the goods were sent from India, the letters of credits had expired and the question therefore of raising any bill upon the issuing bank to honour the letters of credit does not arise and it is a case where the documents were directly dispatched and delivered to defendant No.3. It is unfortunate

that in spite thereof, it has been pleaded in the plaint as if the documents were to be got retired through the bank.

4. The pleadings against defendant No.1 were a complete hash, inasmuch as said defendant was not the carrier. The documents filed would reveal that some goods were sent by ship and some by air. The plaint just does not disclose as to which goods were sent by air and which goods were sent by sea. The documents filed by the plaintiff would reveal that defendant No.1 was a mere forwarding and clearing agent i.e. dealing with the custom clearance of the goods and had a role no more. Thus, vide order dated July 31, 2006, defendant No.1 was deleted from the array of defendants requiring the plaintiff to file an amended memo of parties, which was filed, and thus M/s.D.V.H.Industries became defendant No.1 and M/s.Cornett Group Inc became defendant No.2.

5. After filing written statement, defendant No.2 which became defendant No.1 in view of the order dated July 31, 2006, stopped appearing. Original defendant No.3 which became defendant No.2 in view of the order dated July 31, 2006, never filed a written statement. Both were thus proceeded against ex-parte.

6. The plaintiff led evidence by way of affidavit Ex.PW- 1/A, wherein the witness stated that the plaintiff had entered into an agency agreement dated 20.05.1998 Ex.P-1, with M/s. DVH Industry, through whom the plaintiff received purchase orders No.2182 to 2202 Ex.P-2 (colly) whereunder it was indicated that the goods were to be delivered to M/s.Cornet Group Inc. and for the payment of said goods, M/s.Cornet

Group Inc.'s bank opened two irrevocable letters of credit Ex.P- 3 (colly) with the plaintiff's bank for a value of US$76,923.00 and US$50,400.00. That by the time the goods were manufactured, the two letters of credit had expired and in spite thereof the buyer showed willingness to accept the goods and from August till October 1999 received the same but did not make any payment. That no objections were raised at the time of receipt of the goods, but by the end of November 1999, through an e-mail dated 29.11.1999 D.V.H.Industries disputed the bills raised by it i.e. the plaintiff and claimed unfair reduction and discount in the price charged. D.V.H.Industries, vide letter dated 29.11.1999 Ex.P-6 requested M/s.Cornet Group Inc. to settle the outstanding bills raised by the plaintiff at the earliest. Vide letter Ex.P-7 dated 30.1.2000, D.V.H.Industries intimated the plaintiff that it had received an amount from M/s.Cornet Group Inc. towards payment for the goods delivered which amount was not paid by D.V.H.Industries to it.

7. Vide impugned judgment and decree dated 10.12.2007 the learned Single Judge has held, in paragraph 12, that it is a case where D.V.H.Industries has acted as the common agent of the plaintiff and M/s.Cornet Group Inc. Holding that delivery of goods being proved and the defendants having led no evidence that the goods were not up to the specification, has decreed the suit as prayed for i.e. US$1,27,085.50 and since the decree was in US$ interest has been awarded at libor rate i.e. 7%. The decree is against D.V.H.Industries and M/s.Cornet Group Inc.

8. Suffice would it be to state that if the appellant was the agent, a finding returned by the learned Single Judge, it would not be personally liable to pay a penny to the plaintiff. But, having received US$76,923.00, as the common agent of the parties, it became the trustee of the amount and thus has to pay the same to the plaintiff, but after deducting 5% commission payable to it as per the agreement Ex.P-1 between the plaintiff and the appellant. We note that the agency agreement Ex.P-1 records that D.V.H.Industries would be entitled to 8% or such mutually agreed commission and in the plaint Hartley Knits has not disclosed whether there was any agreed commission other than 8% and neither has D.V.H.Industries disclosed on said subject, but during arguments in appeal learned counsel for the parties stated that the agreed commission was 5%, but that would be irrelevant from the fact which we note in the next paragraph.

9. Thus, on the pleadings as laid and the evidence led, since Ex.P-7 contains an admission by D.V.H.Industries that it had received certain amount from M/s.Cornet Group Inc. and after deducting DVH commission was transferring US$76,928.48 in an ESCROW account and admittedly said money has been retained by D.V.H.Industries, taking note that as per Ex.P-7, D.V.H.Industries had appropriated its commission from the amount received from M/s.Cornet Group Inc. and had thereafter transferred US$76,928.48 in an escrow account, we dispose of the appeal modifying the impugned decree passed against the appellant and as a consequence dispose of the suit filed by the respondent decreeing the same in sum of US$76,928.48 together with interest @ 7% per

annum till realization with proportionate costs in favour of the respondent in the suit. As regards the appeal, parties shall bear their own cost.

(PRADEEP NANDRAJOG) JUDGE

(S.P.GARG) JUDGE DECEMBER 20, 2011 dk