M/S Bharat Electronics Limited. vs M/S Shyam Telecom Limited
2011 Latest Caselaw 322 Del

         THE HIGH COURT OF DELHI AT NEW DELHI



%                      Judgment Pronounced on: 20.01.2011


+           CS(OS) No. 474/1997

M/s Bharat Electronics Limited.                      .....Plaintiff


                                 - versus -

M/s Shyam Telecom Limited                            .....Defendant


Advocates who appeared in this case:
For the Plaintiff: Mr.H.L. Raina
For the Defendant: None.

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

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

2. To be referred to the Reporter or not?                        YES

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

V.K. JAIN, J. (ORAL)

1. This is a suit for recovery of Rs.1,78,22,826/-.

The plaintiff is a Government company

incorporated under the Companies Act, 1956. The suit has

been instituted and plaint signed and verified by its Deputy

Manager (Personnel and Administration) Mr. M.S. Khan.

The plaintiff company is engaged in catering to the needs of

defence forces and para-military forces, by manufacturing

and supplying various professional grade electronic

equipments and is also engaged in manufacturing and sale

of various equipments such as PCM MUX (VLSI) etc. to the

private parties. It is alleged in the plaint that the defendant

approached and informed the plaintiff that it had obtained

order from the Department of Telecommunications (DOT) for

supply of 2 GHZ 30 channel digital micro wave radio

equipment and wanted to purchase 200 units of PCM MUX

(VLSI) equipment from the plaintiff for supply to the DOT.

The quotations for supply of the aforesaid equipment was

submitted by the plaintiff at the rate of Rs.74,500/- per

unit, FOR kotdwara basis, exclusive of taxes and duties,

which were to be charged at the rate prevailing at the time

of dispatch of goods. The rate of excise duty, according to

the plaintiff, at the relevant time was 20% and CST payable

against C/D Forms was 4% whereas the freight was to be

charged on actual basis. One of the terms of the quotations

submitted by the plaintiff to the defendant provided that

interest charged beyond 30 days up to 90 days shall be

equally shared by the parties. The equipments were to be

inspected by the Inspectors of the plaintiff, which already

had an inspection status issued by CGM (QA) of Department

of Telecommunications for PCM I, II, III Order MAX RAX 256

P., SBM RAX & MAX L. products. The equipments could

also be inspected by the defendant at the works of the

plaintiff before their dispatch. On receipt of quotations, the

defendant placed purchase order dated 1st February, 1995

for supply of 200 units of PCM MUX (VLSI). However, while

placing the purchase order, the defendant changed the

condition stipulated by the plaintiff in the quotation for

furnishing of bank guarantee to opening of a Letter of Credit

(LOC) for 90 days and it was also stipulated that last 60

days interest was to be shared by the parties. Regarding

inspection of the equipment, the defendant while placing the

order stipulated that DOT ( QA) inspection will be done at

the premises of the plaintiff and it will be the responsibility

of the plaintiff to get the equipment passed by DOT (QA) and

get a certificate for the same. It was further stipulated that

if it was not possible to conduct DOT (QA) testing at the

premises of the plaintiff then the same will be done at his

place and the plaintiff will help in getting it cleared by DOT

(QA).

2. It is further alleged that in response to the

purchase order, the plaintiff vide fax dated 10 th February,

1995 gave delivery schedule, which envisaged completion of

delivery of the entire equipments by 31st March, 1995 and

also set out the procedure for inspection of the equipments

before its dispatch. It was stated by the plaintiff that the

equipments would be inspected by the BEL (QA) Inspectors,

who had "Approved Inspection Status" conferred by CGM

(QA) (DOT) and based on the inspection certificate issued by

BEL(QA) Inspector, the defendant could get those

equipments cleared by DOT(QA) resident Inspector at

defendant's factory. The plaintiff also confirmed that the

Multiplexers to be supplied by it will conform to the Telecom

Engineering Centre (TEC) DOT specifications. The

defendant was requested to issue LOC for full value of the

order, including taxes, up to 90 days, with interest free

credit for 30 days and interest for balance 60 days at the

rate of 16% per annum to be shared equally between the

parties. The defendant was requested to make necessary

amendments accordingly in the purchase order issued by it.

3. In pursuance of the fax dated 10th February, 1995

sent by the plaintiff, the defendant vide its fax dated 15 th

February, 1995 raised no objection to the amendments

suggested by the plaintiff but requested the plaintiff to

complete delivery by 25th March, 1995. The defendant also

informed the plaintiff that it was in the process of opening

LOC.

4. Acting on the assurance of the defendant, the

plaintiff started production of the equipments ordered by

the defendant. In the meantime, it also arranged DOT (QA)

inspection to be carried out by the DOT (QA) resident

inspector at the premises of the plaintiff. In order to take

up inspection, the DOT (QA) inspector asked for DOT

purchase order placed on the defendant. Since the order

placed by the order placed by the DOT to the defendant was

not in possession of the plaintiff, the defendant was

requested to send a copy of the purchase order so that

inspection of the equipments by DOT (QA) Resident

Inspector Kotdwara could be carried out. Thereafter,

defendant vide fax message dated 13th March, 1995 sent a

copy of the purchase order dated 20th December, 1993. A

perusal of the order dated 20th December, 1993 revealed

that the delivery date mentioned therein was 31 st December,

1994 which had already expired. As a result, Resident

Inspector of the DOT (QA) refused to inspect the equipments

till the delivery date in the purchase order was extended.

The plaintiff, therefore, vide fax dated 16 th March, 1995

informed the defendant that delivery date mentioned in the

purchase order dated 20th December, 1993 needed to be

extended and requested the defendant to forward extension

of the delivery date to it. The defendant, however, failed to

respond to the request made by the plaintiff, which then

sent a reminder dated 22nd March, 1995 to the defendant in

this regard and again requested it to forward the LC and

letter of extension, treating the matter as most urgent. The

defendant ultimately vide fax dated 24th March, 1995, sent

copy of letter extending the delivery date up to 30 th June,

1995. The defendant also informed the plaintiff that due to

insufficiency of funds in their L/C limit, they were unable to

open the LOC and, therefore, their management had

decided to issue post dated cheques for 90 days including

interest of the last 30 days in lieu of LOC. The plaintiff was

also requested to send proforma invoices in order to enable

the defendant to prepare the cheques. The plaintiff sent

proforma invoices to the defendant for delivery of 50 units of

the equipments on 27th March, 1995, for a sum of

Rs.47,10,784/- inclusive of interest. The defendant vide its

fax dated 27th March, 1995 informed the plaintiff that the

cheque was ready and sought confirmation of dispatch of

the equipments. It was further stated by the defendant that

the cheques would be given after receiving the material. A

photocopy of the postdated cheque No.753333 dated 27th

June, 1995 drawn on State Bank of India, Industrial

Finance Branch, New Delhi for Rs.47,10,784/- was also

sent to the plaintiff. Acting on the fax dated 27th March,

1995, the plaintiff dispatched 50 units of equipments to the

defendant on 27th March, 1995. Those units had been

inspected by the DOT(QA) on 11th March, 1995, 15th March,

1995 and 18th March, 1995 and certificates to this effect

were issued by DOT (QA) on 27th March, 1995.

5. The defendant vide fax dated 28 th March, 1995

informed the plaintiff that there were certain defects in the

equipments sent to it and requested that the engineers of

the plaintiff be sent to set the equipments in order. A

meeting was accordingly held on 29th March, 1995 wherein

it was decided that the plaintiff will make the further

supplies. The plaintiff further supplied 116 equipments

between 28th March, 1995 and 31st March, 1995. All these

equipments had been finally inspected and cleared by the

DOT (QA) Resident Inspector on 28th March, 1995, 30th

March, 1995 and 31st March, 1995. Thus, in all the plaintiff

supplied 166 units of PCM (MUX) (VSLI) equipments to the

defendants by 31st March, 1995. The amount payable by

the defendant in respect of these 166 units comes to

Rs.1,55,28, 252/-, out of which the defendant has paid only

Rs.20,00,000/- vide cheque dated 15th July, 1995 leaving a

balance of Rs.1,35,28,252/-. Since the defendant has failed

to pay the aforesaid amount, the plaintiff has filed this suit

claiming a sum of Rs.1,35,28,252/- being the principal

amount and a sum of Rs.42,94,574/- towards interest upto

31st December, 1996 thereby making a total of

Rs.1,78,22,826/-.

6. The defendant filed the written statement

contesting the suit. The defendant denied authority of Mr.

M.S. Khan to institute the suit and sign and verify the

plaint. On merits, it was alleged that the equipments

supplied by the plaintiff were defective and, therefore, the

plaintiff was required to stop further shipment. The

plaintiff, however, ignored the instructions sent to it in this

regard on 28th March, 1995 and shipped the defective goods

to the defendant. It is also alleged that the plaintiff did not

adhere to the delivery schedule, which it had offered. It is

further alleged that the Government of India had placed an

order on the defendant for supply of 420 Terminals of 2 GHz

Microwaves system-30 Chl. (1+0) configuration for wireless

transmission of telephone signals between two telephone

exchanges. The tendered equipment i.e. 2 GHz MW System

- 30 Chl. (1+0) configuration comprises two important units,

one of them being Digital Microwave Radio System and the

other being 30-Channel PCM Multiplexer. Since 30-

Channel PCM multiplexer was not being manufactured by

the defendant company at that time, it proposed to buy that

equipment from the plaintiff. The payment was to be made

in full in respect of accepted quantity, including taxes and

duties and was to be made against proforma invoices within

30 days. The interest beyond 30 days and up to 90 days

was to be equally shared. A bank guarantee for full

payment was to be made before dispatch of the goods. The

defendant while placing the purchase order stipulated that

the entire delivery was to be made by 23rd March, 1995 and

50 pieces per week were to be supplied starting 1st

February, 1995. The purchase order also contained various

conditions such as training of engineers of the defendant

and free of cost repairs/replacement of the equipments. It

is also alleged that the plaintiff being a government

company, blank test certificate had been made available to

it by the Department of Telecommunications (QA). Since

the equipment in question was required to be inspected and

tested by DOT(QA), the plaintiff company made the format

of a letter offering equipment for inspection, available to the

defendant and asked it to provide sufficient number of

blank letters duly signed on behalf of the defendant and

addressed to the DOT, Camp, Bharat Electronics Limited,

Kotdwara, U.P. offering equipment for testing and clearance.

The defendant company signed 13 blank offer letters and

delivered the same to the plaintiff on 13th March, 1995. The

defendant denied that the 50 equipments dispatched on

27th March, 1995 were duly inspected by the concerned

department and alleged that the blank DOT (QA) certificates

were obtained by the plaintiff company and appeared to

have been filled up to suit the convenience of the plaintiff

without getting the equipment inspected and tested as per

DOT (QA) procedure. It is alleged that during the joint

inspection carried out on 29th March, 1995 by Mr.

Diwakaran, DGM (Mktd.) and Mr. Yudhbir Singh of

defendant, it was found that there were large number of

defects in the 50 equipments which the plaintiff had

supplied to the defendant. Those equipments were,

thereafter, attempted to be rectified and inspection was

carried out jointly on 7th April, 1995 by Mr. Manas Aich,

Deputy Manager (Design and Engg.) with Mr. Pankaj

Sharma, Engineer of the defendant. A large number of

operational defects were still found in the equipments.

Thereafter, the engineers from the plaintiff and defendant

company jointly sought to improve the equipment and 46

equipments were supplied to DOT as part of the purchase

order dated 20th December, 1993. 4 equipments could not

be rectified and the plaintiff was asked to take them back.

According to the defendant, the time of supply was the

essence of the purchase order. Hence, the belated supply of

116 equipments was never accepted by it. It is also alleged

that when the equipment when installed in the field did not

work and DOT instructed the defendant not to supply any

PCMs produced by the plaintiff to them. The equipments

supplied after 28th March, 1995, according to the defendant,

were left at site at the risk and costs of the plaintiff.

7. The following issues were framed on the pleadings

of the parties:-

(i) Whether the plaint has been signed, verified and instituted by a duly authorized person? OPP.

(ii) Whether the equipments supplied by the plaintiff to the Defendant under the Contract dated 1st February, 1995 were defective? OPD.

(iii) Whether the Plaintiff is entitled to recover any amount from the Defendant under the Contract dated 1st February, 1995 and if so what amount? OPP.

(iv) Whether the Plaintiff is entitled to pendente lite interest, and if so at what rate and for what period?

     (v)      Relief.

Issue No.(i)

8. Exh. PW-6/10 is the copy of the resolution passed

by the Board of Directors of the plaintiff company in its

meeting held on 26 th November, 1983 whereby it was

resolved that the Heads of Units and Officers of the rank of

General Managers, Additional General Managers, Senior

Deputy General Managers, Deputy General Managers at the

Units and Head Office and Administrative Managers and

Chief Administrative Managers were designated as the

Principal Officers of the Company and were authorized to

sign and execute applications/petitions/documents on

behalf of the plaintiff and/or to depose before Government

and Judicial Authorities in relation to activities of their

respective Unit/Division/Department. In his affidavit by

way of evidence, Mr. M.S. Khan has stated that he was

working as Chief Administrative Officer and was designated

as Deputy Manager (Personnel and Administration) on 4 th

March, 1997. I see no reason to disbelieve the deposition of

Mr. M.S. Khan with regard to his designation. In view of the

Board resolution dated 26th November, 1983, Mr. Khan

being the Administrative Officer of the plaintiff company was

authorized to sign and very the plaint on behalf of the

plaintiff and was also designated as the Principal Officer of

the company. Order 29 Rule 1 of the Code of Civil

Procedure provides that in suits by or against a corporation,

any pleading may be signed and verified on behalf of the

corporation by the secretary or by any director or other

Principal Oficer of the corporation who is able to depose to

the facts of the case. Mr. M.S. Khan being the Principal

Officer of the company in terms of the Board resolution

dated 26th November, 1983 and also in view of the specific

delegation of power in this regard was competent to institute

this suit and sign and verify the pleadings on behalf of the

plaintiff. The issue is decided against the defendant and in

favour of the plaintiff.

Issue No.(ii) & (iii)

9. This is not in dispute that the plaintiff company

supplied 166 equipments to the defendant company and

those equipments were dispatched between 27 th March,

1995 and 31st March, 1995. The onus of proving that all

the equipments supplied by the plaintiff were defective was

on the defendant company. No witness has been examined

by the defendant, which was proceeded ex parte on 7 th

September, 2009. The case set out in the written statement

is that during the joint inspection carried on 29 th March,

1995 by Diwakaran, DGM (Mktd.) of the plaintiff and Mr.

Yudhbir Singh of defendant company, a large number of

defects were found in the 50 equipments supplied by the

plaintiff to the defendant. A perusal of the minutes of the

inspection held on 29th March, 1995, which is Exhibit PW-

6/6, does show that there were large number of defects in

the 50 equipments supplied by the plaintiff to the defendant

company. The minutes also show that the representative of

the plaintiff company assured the representative of the

defendant company that the defects found during inspection

will not be repeated and that they would take remedial

action, which will be informed to the plaintiff before

dispatching the next supply.

10. In his affidavit filed on 10th January, 2011, Mr.

B.K. Pant, Manager of the plaintiff company has stated that

on 28th March, 1995 after dispatch of 57 units of

equipments, a fax was received from the defendant company

intimating that 50 units, which they received on 27 th March,

1995, were defective and they requested that an Engineer be

sent for fixation and testing of those units. They also

requested them not to dispatch any further units. The fax

sent by the defendant is Exhibit PW-6/5. The affidavit of

Mr. Pant shows that the defects found during the joint

inspection carried on 29th March, 1995 were removed on

21st April, 1995, 22nd April, 1995 and 29th April, 1995 by the

engineers of the plaintiff company, in the presence of the

engineers of the defendant, at the place of the defendant. It

further shows that the equipments, which were supplied by

the plaintiff company on 28th March, 1995, 30th March,

1995 and 31st March, 1995, were also inspected and found

according to the requirement of DOT. Since no evidence has

been produced by the defendant, I see no reason to

disbelieve his deposition of Mr. Pant to the effect that the

defects noticed in the 50 units dispatched on 27th March,

1995 were rectified on various dates between 21 st April,

1995 to 29th April, 1995 at the premises of defendant

company. In the absence of any rebuttal from the

defendant, I see no reason to disbelieve his deposition to the

effect that equipments that were supplied by the plaintiff

company on 28th March, 1995, 30th March, and 31st March,

1995 were found as per the requirement of Department of

Telecommunications.

11. Exhibit PW-6/7 is the fax sent by the defendant

company to the plaintiff on 18 th May, 1995. A perusal of

this document would show that the defendant accepted only

44 pieces and declined to accept the remaining pieces on

the ground that they were supplied beyond the stipulated

date of delivery of the equipments. This was not the case of

the defendant in this communication that the remaining

equipments supplied by the plaintiff company also were

defective or were not in accordance with the specifications

prescribed by the Department of Telecommunications and

failure of the plaintiff to adhere to the agreed delivery

schedule was the sole ground for declining to accept the

remaining equipments.

12. Though the defendant accepted only 44

equipments out of 50 equipments shipped to it on 27th

March, 1995, there is no evidence of its having returned the

remaining six equipments to the plaintiff company. Though

it has come in the written statement that four units

supplied by the plaintiff could not be rectified and only 46

units were delivered by the defendant to the Department of

Telecommunications, the fax sent by the defendant to the

plaintiff on 18th May, 1995 conveyed acceptance of 44

equipments, whereas it should have been for 46 equipments

assuming that remaining four equipments out of 50

supplied to it continued to be defected. In fact, acceptance

of 44 equipments by the defendants indicates that the

plaintiff is right in saying that the equipments, which had

dispatched on 27th March, 1995 had been rectified by its

Engineers. Had those equipments not been rectified, the

defendant would not have accepted even 44 such

equipments.

13. This is plaintiff's own case that the equipments

were to be supplied by it by 31st March, 1995. The first

batch of the equipments was dispatched on 27 th March,

1995 and comprised 50 units. These 50 units were found to

be defective during the joint inspection held on 29th March,

1995. The plaintiff company removed the defects found in

these 50 units somewhere in the month of April, 1995. The

plaintiff company was under obligation to supply

equipments free from any defect on or before 31 st March,

1995. If the plaintiff company supplied 50 defective units

on 27th March, 1995, the defendant was not bound to

accept them, could have rejected those equipments and was

not bound to pay their price. However, since the defendant

accepted 46 equipments out of 50 units supplied on 27 th

March, 1995 by supplying them to DOT, it is obliged in law

to pay to the plaintiff company for those 46 units. However,

the defendant is not liable to pay for the remaining four

units out of 50 units dispatched on 27th March, 1995 since

they were defective when received by the defendant the

defects in those units were rectified by the plaintiff company

after the last date stipulated for supply of the equipment,

and the defendant did not accept them at a later date.

14. Section 43 of the Sale of Goods Act, 1930 provides

that unless otherwise agreed, where goods are delivered to

the buyer and he refuses to accept them, having the right so

to do, he is not bound to return them to the seller, but it is

sufficient if he intimates to the seller that he refuses to

accept the equipments. Since the defendant was not bound

to accept the equipments on removal of defects in the month

of April, 1995 and the plaintiff was informed of the defects

found in the goods and was also informed that only 44 units

were being accepted by it, the defendant complied with the

statutory requirement laid down in Section 43 of the Sale of

Goods Act, 1930 as far as four units of equipments are

concerned.

15. As regards remaining 116 units, the affidavit of

Mr. Pant shows that they were also inspected and were

found according to the requirement of Department of

Telecommunications. There is no evidence on record to

prove that any of the units out of 116 units dispatched to

the defendant company between 28th March, 1995 and 31st

March, 1995 were defective. The defendant could not have

refused to accept delivery of those equipments and could

not have asked the plaintiff to take them back.

16. The only ground on which supply of the remaining

units was rejected by the defendant, as conveyed vide fax

dated 18th May, 1995 was that there was delay in supply

and the balance quantity sent by the plaintiff was beyond

the delivery dates and, therefore, could not be accepted.

Exhibit PW-5/5 is the copy of the order placed by the

Government of India on the defendant company for supply

of equipment. This document shows that the delivery of 30

terminals of 2GHz., 30 channel (1+0) M/W equipment and

associated items was to be completed by 31 st March, 1994

whereas the delivery of the balance equipments was to be

supplied by 31st December, 1994. The case of the plaintiff is

that since the copy of the purchase order placed by the

Government of India on the defendant company, supplied to

it by the defendant, envisaged delivery by 31 st March, 1994

and that date already expired much before the purchase

order was placed by the defendant on the plaintiff company,

the officials of DOT, who were required to inspect the

equipments declined to carry out/certify the inspection and,

therefore, it had to write to the defendant company

requesting it to get the time for delivery of the equipments

by it, to Government of India, extended suitably so that

inspection could be carried out by the officials of DOT

posted at its premises.

17. Exhibit PW1/1 is the fax dated 16th March, 1995

sent by the plaintiff company to the defendant informing it

that as per the purchase order, delivery date was 31 st

December, 1994 and DOT(QA) needs the extension of

delivery date to take up the inspection. The defendant was

requested to forward the delivery date extension letter

immediately. Exhibit PW-6/3 is the fax sent by the

defendant to the plaintiff on 24th March, 2005 thereby

forwarding the delivery date extension letter of DOT against

purchase order dated 20 th December, 1993. Exhibit PW-

5/6 is the letter of the Department of Telecommunications

to the defendant whereby the delivery schedule for the

second lot of the equipments was extended upto 30th June,

1995 without levy of liquidated damages. This letter issued

by the Government of India is dated 2nd February, 1995. It

is, thus, quite obvious that the inspection of the equipments

which the defendant had manufactured could not be carried

out by DOT (QA) officials due to the lapse on the part of the

defendant company in not sending the letter whereby the

last date for delivery of the equipment by it to the

Government of India had been extended till 30 th June, 1995

though, being dated 2nd February, 1995, this letter issued

by the Government of India must be in possession of the

defendant company much prior to the date the inspection

was to be taken up the officials of DOT (QA). Since the

letter extending date of delivery of equipment by the

defendant to DOT was forwarded to the plaintiff company

only on 24th March 1995, it was not possible for the plaintiff

to dispatch the equipments to the defendant by 25 th March

1995, in terms of defendant's letter dated 15th February

1995. Inspection by officials of DOT posted at the premises

of the plaintiff was a condition required to be fulfilled before

dispatch of goods to the defendant company in terms of

agreement between the parties. Since inspection by DOT

officials was delayed solely on account of lapse of the

defendant in not sending the letter extending date of

delivery of equipment by it to the Government, the

consequent delay in dispatch of goods to the defendant is

also attributably solely to the defendant. The letter

extending date of delivery of equipment by the defendant to

the Government was sent to the plaintiff Company on 24 th

March 1995. The inspection at the premises of the plaintiff

was completed between 27th March 1995 and 31st March

1995 and the equipments, as soon as they were inspected in

parts, were dispatched to the defendant company. Had the

defendant company sent the letter extending date of delivery

to the plaintiff company in time along with the order on 15 th

February 1995, or even soon thereafter, there would have

been no delay in inspection by DOT officials posted at the

premises of the plaintiff and consequently no delay would

have occurred in dispatch of goods to the defendant

company.

18. As per the terms and conditions of purchase order,

the plaintiff could not have dispatched the equipments to

the defendant company without its inspection by DOT(QA).

Since the inspection was delayed on account of lapse of the

defendant company, it was not entitled in law to take

advantage of its own fault and reject the supply on the

ground that it had been made after the last day fixed for

supply of the equipments. Though vide its fax dated

15.2.1995 which is exhibit PW-6/2, the defendant had fixed

the delivery schedule as 30 equipments by 5.3.1995, 30

equipments by 10.3.1995, 40 equipments by 15.3.1995, 50

equipments by 20.3.1995 and 50 equipments by 25.3.1995,

vide subsequent fax dated 27.3.1995 Ex.PW-6/4, it had

informed the plaintiff that they would not accept any

material after 30.3.1995, meaning thereby that the plaintiff

could have supplied 200 equipments on or before

30.3.1995. Irrespective of whether the last date for supply

of equipments remained as 25.3.1995 in terms of the fax

dated 15.3.1995 or it was changed to 30.3.1995 in terms of

fax dated 27.3.1995, the fact remains that the dispatch of

the equipments was delayed on account of the lapse of the

defendant company in not supplying the letter whereby the

last date for supply of equipments by it to Government of

India had been extended upto 30.6.1995. The official of

DOT(QA) were not expected to inspect the equipment after

the last date stipulated for its supply to Government of India

had already expired by that time. In any case, the plaintiff-

company could not have compelled the officials of DOT(QA)

to carry out inspection despite the fact that the delivery

order supplied to it envisaged 31.12.1994 as the last date

for supply of the equipments to Government of India.

Therefore, in my view, the defendant company was not

entitled to reject the equipments supplied by the plaintiff

company on the ground that the supply was beyond the

delivery schedule agreed between the parties. I, therefore,

hold that the defendant company is required to pay the

price of 162 equipments to the plaintiff company. The price

of 162 equipments comes to Rs.1,52,02,270/- per unit.

After deducting Rs.20 lacs which the defendant had

admittedly paid to the plaintiff, the principal amount

payable by the defendant to the plaintiff for 162 units comes

to Rs.1,32,02,270/-. The plaintiff is entitled to recover this

amount from the defendant. The onuses are decided

accordingly.

Issue No.(iv)

19. The plaintiff has claimed a sum of Rs.4294574/-

towards interest on cash credit rate without specifying what

the cash credit rate was. There is no agreement between

the parties for payment of interest. No custom or usage for

term for payment of interest has either been pleaded or

proved by the plaintiff. Interest cannot be awarded as

damages. However, since this is a suit for price for goods

sold and delivered, the Court in view of provisions contained

in Section 61 of Sale of Goods Act can award interest to the

plaintiff at such rate as it finds fit on the price of the goods,

from the date of tender of the goods or from the date on

which the price was payable. The quotation given by the

plaintiff to the defendant envisaged opening of LOC with the

provision for payment upto 90 days with interest free credit

for 30 days and sharing of interest for balance 60 days,

calculated at the rate of 16% per annum. Since no LOC was

opened by the defendant in favour of the plaintiff company,

the provisions regarding interest free period or sharing of

interest in equal proportion for 60 days beyond the initial

period of 30 days does not come into play. In my view,

taking into consideration the nature of transaction between

the parties, the plaintiff should be awarded interest at the

rate of 12% per annum w.e.f. 1.4.1995. The amount of

interest on principal amount of Rs1,32,02,270/- calculated

at the rate of 12% per annum for the period upto 4.3.1997

comes to Rs.30,53,557/-.

The issue is decided accordingly.

Issue No.(v)

20. In view of my finding on above issues, the plaintiff

is entitled to recovery of Rs.1,62,55,827/- from the

defendant.

ORDER

A decree for Rs.1,62,55,827/- with proportionate

cost and pendente lite and future interest at the rate of 12%

per annum is passed in favour of the plaintiff and against

the defendant. Decree sheet be drawn accordingly.

(V.K. JAIN) JUDGE January 20, 2011 vk