M/S. Camco Multi Metal Ltd. vs M/S. Sharif Metals International ...
2011 Latest Caselaw 1797 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                       Judgment Pronounced on: 28.03.2011

+           CS(OS) No.2223/2010

M/S. CAMCO MULTI METAL LTD.                              .....Plaintiff

                                  - versus -

M/S. SHARIF METALS
INTERNATIONAL LLC & ORS.                       .....Defendants

Advocates who appeared in this case:
For the Plaintiff:      Mr. Kunwar Pal Singh, Adv.

For the Defendants:                  None.

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

1. Whether Reporters of local papers may                             No.
   be allowed to see the judgment?

2. To be referred to the Reporter or not?                             No.

3. Whether the judgment should be reported                            No.
   in Digest?

V.K. JAIN, J. (ORAL)

1. This is a suit for specific performance of the

agreement dated 27.01.2009 or in the alternative for

recovery of Rs.21,80,500/-. The plaintiff has also sought an

injunction restraining defendant No.3 from transferring any

amount to defendants No.1 & 2 to the extent of

Rs.21,80,500/-. The plaintiff is an Indian Company,

whereas defendant No.1 is a company incorporated in UAE.

Defendant No.1 Company is engaged in the business of sale

of aluminium scraps and defendant No.2 is stated to be its

Director. It is alleged in the plaint that defendant No.1

offered to sell 100 MT of aluminium scraps as per ISRI

Tense to the plaintiff vide offer dated 27.01.2009. The offer

was accepted by the plaintiff and purchase order dated

28.01.2009 was issued accordingly for supply of 100 MT of

aluminium scraps as per ISRI Tense at the rate of US $

1,025.00 per metric ton. The shipment was to be done by

26.02.2009. A sum of US $ 20,500 was paid as an advance

to defendant No.1 on 04.02.2009. After several reminders

from the plaintiff, defendants No.1 & 2 informed the plaintiff

company that a shipment of two containers containing

20 MT each of material had been released by them and

would be received by the plaintiff. However, the defendants

later diverted shipment to defendant No.3 - M/s. Ashirwad

Steels. Defendants No.1 & 2 thereafter demanded increased

price for the material. The plaintiff agreed to increase the

price from US$ 1025 per metric ton to US $ 1045 per metric

ton and a revised purchase order dated 18.03.2009 was

accordingly issued. Initially, the goods were to be supplied

or shipped by defendants No.1 & 2 by 25.03.2009, but, the

date of delivery was later extended to 20.04.2009 on the

request of defendants No.1 & 2. It is alleged that despite

the plaintiff increasing the price, defendants No.1 & 2 failed

to supply the goods to the plaintiff. The plaintiff has sought

a decree for specific performance directing defendants No.1

& 2 to perform the contract by supplying 100 MT of

aluminium scraps as per ISRI Tense to it, and a decree for

recovery of Rs.21,80,500/- on account of the loss suffered

by it. The plaintiff has sought permanent injunction

restraining defendant No.3 from transferring any amount to

defendants No.1 & 2 to the extent of Rs.21,80,500/-.

2. The defendants were proceeded ex-parte on

10.01.2011.

3. The plaintiff has filed the affidavit of one of its

Directors Mr. Rajkamal Saraogi by way of ex-parte evidence.

In his affidavit, Mr. Saraogi has supported, on oath, the

case set up in the plaint and has stated that the offer dated

27.01.2009 sent by defendants 1 & 2 for supply of 100 MT

of aluminium scraps as per ISRI Tense was accepted by the

plaintiff and a purchase contract dated 28.01.2009 was

accordingly placed. He has further stated that advance

amount of US $ 20,500 was paid by the plaintiff on

04.02.2009. According to him, defendants No.1 & 2,

consequent to a number of reminders from them, informed

them about shipment of two containers containing 20MT

each of the material but later diverted that material to

defendant No.3 - M/s. Ashirwad Steels. He has further

stated that on account of demand of higher price by the

defendants, they had agreed to increase the purchase price

from US $ 1025 per metric ton to US $ 1045 per metric ton.

According to him, despite efforts made by them, defendants

No.1 & 2 have failed to perform the agreed contract.

4. Ex.PW-1/2 is a letter sent by defendant No.1-

M/s.Sharif Metals International LLC to the plaintiff

company on 27.01.2009, agreeing to sell 100MT of

aluminium scraps as per ISRI Tense at the rate of US $

1025 per metric ton. The material was to be loaded from

any Middle East Port was to be discharged at CIF Nhava

Sheva Port in Mumbai. 20% of the sale consideration was

to be paid in advance and the balance was payable in cash

against the documents through Axis Bank Ltd., Statesman

House, 148 Barakhamba Road, New Delhi. Ex.PW-1/3 is

the purchase order dated 28.01.2009 placed by the plaintiff

company on defendant No.1 company, for purchase of

100MT of aluminium scraps as per ISRI Tense at the rate of

US$ 1025 per metric ton. Ex.PW-1/7 is the revised

purchase order issued by the plaintiff company on

18.03.2009. The purchase price was revised to US $ 1045

per metric ton and the date of shipment was changed to

25.03.2009 vide this document.

5. Ex.PW-1/4 is the document evidencing transfer of

US$ 20,500 by Axis Bank Ltd. to JPMORGAN CHASE BANK

N.A., New York. The document shows that the money was

transferred on its behalf from the plaintiff company to

defendant No.1 - M/s.Sharif Metals International LLC.

6. The deposition of Mr. Rajkamal Saraogi coupled

with the documents filed by the plaintiff company shows

that the plaintiff had accepted the offer made by defendant

No.1 for sale of 100MT of aluminium scraps to it on US $

201045 per metric ton and a sum of Rs.20,500/- was

transferred by the plaintiff company to defendant No.1

towards advance money. The documents produced by the

plaintiff also show that defendant No.1 failed to supply the

goods to the plaintiff despite receipt of the advance money.

7. Since this was a contract for supply of material

and the plaintiff company can be adequately compensated

in terms of money on account of the non-performance of the

contract, specific performance of the contract cannot be

directed in view of the prohibition contained in Section

14(1)(a) of Specific Relief Act, 1963 and the only remedy

available to the plaintiff is to seek damages along with

refund of the advance money paid by it to defendant No.1.

8. The advance payment amounting to US$ 20,500

was paid by the plaintiff to defendant No.1. As regards

quantum of damages, the additional affidavit of Mr.

Rajkamal Saraogi shows that in the third week of April,

2009, the rate of the goods in question was US$ 1220 per

MT. A copy of another purchase order which the plaintiff

placed on record with M/s.DUNN BROSS(U.K.) for purchase

of the same material on 17.04.2009 has been referred as

Ex.PW-1/10 in the additional affidavit though the Joint

Registrar did not mark it as exhibited document. The

document is being read in the additional affidavit as Ex.PW-

1/10. The sale contract between the plaintiff and

M/s.Dunn Bross(U.K.) shows that the plaintiff company

agreed to purchase two containers of aluminium scraps

from M/s. DUNN BROSS(U.K.) at the rate of US $ 1220 per

MT.

I see no reason to disbelieve the additional affidavit

filed by Mr. Rajkamal Saraogi coupled with the document

evidencing the purchase contract between the plaintiff

company and M/s. Dunn Bross(U.K.) and, therefore, hold

that the price of the material which defendant No.1 had

agreed to sell to the plaintiff company was US$ 1220 per

MT, on the date defendant No.1 committed breach of the

contract with the plaintiff company by not supplying the

contracted material. The amount of damages, therefore,

comes to US $ 17500/-. The plaintiff is entitled to recover

US $ 20,500/- being the advance paid by it to defendant

No.1 and US $ 17,500 towards damages making a total sum

of US $ 38,000/-. The additional affidavit of Mr. Rajkamal

Saraoji also shows that the rate of US $ on 17.04.2009 was

Rs.50.180. The amount which the plaintiff can recover from

defendant No.1 as principal sum therefore comes to

Rs.19,06,840/-.

9. The plaintiff has also claimed a sum of

Rs.2,51,000/- as interest for the pre-suit period at the rate

of 15% per annum. Admittedly, there is no agreement

between the parties for payment of interest. No usage of

trade for payment of interest has been either pleaded or

proved. However, under Section 3 of Interest Act, 1978, the

Court can award interest at a rate not exceeding the current

rate of interest from the date mentioned in the written

notice given by the plaintiff to defendant No.1 provided,

claim for the interest has been made in the notice. A

perusal of the legal notice sent by the plaintiff to defendant

No.1 on June 2, 2010 which is Ex.PW-1/9 would show that

the plaintiff had claimed amount of US$ 20,500 which it

had paid as to defendant No.1 along with interest thereon at

the rate of 15% per annum, from the date of the payment.

Though the plaintiff also claimed US$ 70,000 towards

damages, there was no demand of interest on the damages.

I, therefore, hold that the plaintiff can be awarded interest

only on the amount of US$ 20,500 which it had paid as

advance money to defendant No.1. The amount of advance

money in Indian currency comes to Rs.10,28,690/-. Under

the facts and circumstances of the case, I award interest to

the plaintiff at the rate of 12% per annum from the date of

payment, on the aforesaid amount. The interest on the

aforesaid amount till the date of filing of this suit comes to

Rs.205053/-. The plaintiff is entitled to recover that

amount from defendant No.1 as interest.

10. For the reasons given in the preceding paragraph,

the decree for Rs.21,11,893/- with proportionate cost,

and pendente lite and future interest at the rate of 10% per

annum is hereby passed against defendant No.1.

11. Defendant No.2 who is director of defendant No.1

is not personally liable for the amount which defendant

No.1 company is required to pay to the plaintiff company

and is in fact an unnecessary party to the suit. The name of

defendant No.2 is, therefore, struck off from the array of

defendants. As against defendant No.3, the case of the

plaintiff is that this company is to make payment to

defendant No.1 for the material which defendant No.1 has

supplied to it. The plaintiff wants an injunction restraining

defendant No.3 from making any payment to defendant

No.1, to the extent of the decretal amount. However, there

being no privity of contract between the plaintiff and

defendant No.3 and the plaintiff company having no legal

right to claim any amount from defendant No.3, the decree

sought by it against defendant No.3 cannot be passed. The

appropriate remedy for the plaintiff company is to seek

execution of the decree which is being passed against

defendant No.1 and in the execution of that decree, it would

be open to plaintiff company to seek attachment of the

amount, if any, payable by defendant No.3 to defendant

No.1. Decree sheet be drawn accordingly.

(V.K. JAIN) JUDGE

MARCH 28, 2011 'sn'