Kapco Arts Pvt. Ltd. vs World Expo & Conventions ...
2011 Latest Caselaw 2463 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                      Judgment Reserved on: 29th April, 2011
                       Judgment Pronounced on: 9th May, 2011

+           CS(OS) No. 1353/1999

            KAPCO ARTS PVT. LTD.                .....Plaintiff

                             - versus -

            WORLD EXPO & CONVENTIONS
            MANAGEMENT LTD. & ORS.   .....Defendants

Advocates who appeared in this case:
For the Plaintiff: Ms. Shantha Devi, Advocate
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 in Digest? Yes.

V.K. JAIN, J

1. This is a suit for recovery of Rs.33,97,247/-. The

plaintiff company is engaged in business of providing

various exhibition related services including consultancy

technical and architectural services to the organizers and

participants. Defendant No.1 company is engaged in

business of organizing the exhibitions at different places.

Defendant No.2 is the Chairman of Defendant No.1 whereas

Defendants No.3 & 4 are its Directors. Defendant No.5 is

the Vice President of Defendant No.1. Pursuant to

discussions between the parties, Defendant No.1 issued a

letter of intent dated 30.5.1998 which was followed by a

General Purchase Order (GPO) dated 20.6.1998 for

construction of hangars and shells scheme stalls for various

exhibitions scheduled to be held between July, 1998 and

April, 1999. The contract awarded to the plaintiff company

was in respect of 06 exhibitions, first of which was to be

held at Chennai from 22nd July, 1998 to 26th July, 1998. As

per the terms of the contract Defendant No.1 was to be paid

an advance amounting to 20% of the total expenditure, one

month prior to the exhibition. The next 25% payment was

to be made at erection of hangars and satisfactory

installation of air-conditioners and other facilities whereas

the balance payment was to be paid within 45 days of

completion of exhibitions. It is alleged that the plaintiff

company constructed 2880 sq. m. of air-conditioned and

1071 sq. m. of non air-conditioned tentages. As per the

terms of GPO and subsequent correspondence, the plaintiff

company sent performa invoices of amount of

Rs.36,72,247/- split into three bills. It is alleged that the

defendant company cancelled the contract relating to other

exhibitions and awarded the same to another company. It

is claimed that by that time the plaintiff company had

already incurred expenditure to the tune of Rs.7 lac for the

exhibitions BangaloreIT.com-1998. The case of the plaintiff

is that an amount of Rs.33,97,247/- is still due to it and

this includes Rs.7 lac spent by it in respect of exhibitions

which were scheduled to be held subsequent to the

exhibition at Chennai.

2. The defendants filed WS contesting the suit and

took a preliminary objection that the suit has not been

instituted, and has not been verified and signed by a

competent person. Another preliminary objection taken by

the defendants is that the suit is bad for misjoinder of

causes of action as the plaintiff has wrongly joined the claim

on account of Bangalore exhibition with its claim in respect

of Chennai exhibition. On merits, the defendants admitted

having issued a GPO dated 20.6.1998 for construction of

hangars/shell scheme stalls for various exhibitions to be

organized by defendant no.1. It is alleged that the plaintiff

could not fulfill its obligations as envisaged under the GPO

and major discrepancies were found in the arrangement

made by it. It is claimed that malfunctioning was detected

in air-conditioning and hangars were not made water proof.

According to the defendants, the plaintiff was intimated that

a) there was shortage of about 25-30 tons of air-

conditioners b) Cloth sides had been provided in non air-

conditioned tentages which was not as per standard

practice in international exhibitions and is practically

unsafe c) water leakage was observed at many points and d)

air-conditioners were found to be tripping due to

unbalanced load on generators. It is alleged that the air-

conditioners were not tested for their effective operations

nor the thermometers and phychometers were available

with the plaintiff. It has been alleged that out of 26 air-

conditioners installed by the plaintiff company only 03 were

found operational. It is further alleged that cable supplying

the electricity had become very hot due to uneven

distribution of load and had resulted in snapping of wires

and disruption of supply to hall No. F, which was forced to

shut down during exhibition hours, for replacement of the

cable. It is also alleged that it was agreed between the

parties that the most appreciable way of doing air-

conditioning was through a packaged air-conditioner of 7.5-

10 tons or by ducting. It is also claimed that on account of

breach by the plaintiff the goodwill and reputation of

defendant suffered heavily and the popularity of the

exhibition dwindled over the years, both in terms of total

collection as well as the number of exhibitors. This is also

the case of the defendant that all the deficiencies found in

the work executed by the plaintiff were agreed to by Mr.

Tilak Raj, a Director of the company in meeting held on

26.7.1998. It is also claimed that as per standard practice

the area of the passage is 35-40% of the total exhibition

area and therefore area of air-conditioning of hangars works

out to be about 2600 sq. m. whereas the non air-

conditioned hangars works out to be 825 sq. m. It is

however admitted that it was the defendant company which

had provided generators for Autofest 1998. It is also

claimed by the defendant that though the exhibition was to

commence from 23.7.1998 the work was in progress upto

2.30 pm on the previous day.

3. As regards expenditure related to BangaloreIT-

.com-1998, the case of the defendants is that as per the

GPO the plaintiff company was to provide architectural

assistance for plan lay out on complimentary basis and

therefore cannot claim any compensation for lay-out plant

of Bangalore exhibition and in any case the GPO was

cancelled before the work for Bangalore exhibition was to be

taken up.

4. The following issues were framed on the pleadings

of the parties:

1. Whether the suit has been instituted, plaint

signed and verified by duly authorized person? -

OPD

2. Whether the suit is bad for mis-joinder of cause

of action? - OPD

3. Whether the agreement dated 20.06.1998 was

altered and/or modified by the corrigendum

dated 7th July, 1998 executed between the

parties? If so, what is its effect? - OPP

4. Whether the defendant had failed to provide the

electricity supply in terms of the agreement? If

so, what is its effect on the claim of the plaintiff?

- OPP

5. Whether the defendant committed the breach of

the terms of the agreement entitling the plaintiff

to claim the amount in this suit? - OPP

6. Whether the plaintiff had failed to provide air-

conditioning system for the entire complex for

exhibition and the defendant had terminated the

contract for that reason in terms of the

agreement? - OPD

7. What amount including the rate of interest, if

any, the plaintiff is entitled to? - OPP

Issue No.1

5. The plaint has been signed, verified and instituted

by Shri Ajay Kapoor, Director of the plaintiff company. Exh.

PW-1/A is the copy of the resolution passed by the Board of

Directors of the plaintiff company in its meeting held on

15.5.1999 authorizing Mr. Kapoor to institute the suit and

sign and verify the documents. Even otherwise in view of

provisions contained in Order 29 Rule 1 of Code of Civil

Procedure (CPC), in a suit by a company, pleadings can be

signed and verified by Secretary/Director or other Principal

Officer of the company. The suit therefore has been

instituted, and the plaint signed and verified by a competent

person. The issue is decided against the defendants and in

favour of the plaintiff.

Issue No.2

6. Order 2 Rule 3 of the Code of Civil Procedure to the

extent it is relevant provides that a plaintiff may unite in the

same suit several cause of action against the defendant or

the same defendants jointly. Hence, the plaintiff company

could have joined the cause of action in respect of its dues

for Chennai exhibition as well as its claim for the expenses

alleged to have been incurred in connection with Bangalore

exhibition in the same suit. The issue is decided against the

defendants and in favour of the plaintiff.

Issues No. 3-6

These issues are inter connected and can be decided

together.

7. The plaintiff has examined five witnesses. The

defendants filed affidavit of one witness viz. Mr. Mukesh

Arora by way of evidence but did not produce him for cross

examination and therefore the affidavit cannot be taken into

consideration.

8. In his affidavit by way of evidence Mr. Vijay Kapoor

(PW-4) stated that there was no deficiency in providing

services on the part of the plaintiff. He has further stated

that it was for the defendant company to provide power

supply but the supply provided by the defendant was

neither proper nor adequate. He has claimed that the

defendant company has illegally withheld the balance

payment for the work done for it by the plaintiff company.

9. PW-5 Mr. Ashok Chitkara was an employee of the

plaintiff company and supervising the general work at the

site during Autofest-1998 organized by the defendant

company. In his affidavit he has stated that the

requirement of power was sent to the defendant company

vide letter Exh. PW-1/D and the plaintiff company had

completed its part of the contract for the above show in all

respects, without there being any inefficiency or deficiency.

According to him there was no adequate/efficient power

supply at the site due to which some air-conditioners were

not functioning.

10. PW-2 Mr. Rakesh Gaind is the consultant who was

engaged by the plaintiff company for air-conditioning of the

exhibition. He has stated that they completed their job but

there were some deficiencies. According to him they had

completed the entire job of fixing the air-conditioners but

the same could not be tested since there was no power

supply and whatever supply was available, its voltage was

not proper. According to him while staying at Chennai from

16.7.1998 to 26.7.1998 he had brought these difficulties

and drawbacks in relation to the power supply to the notice

of the plaintiff as well to the defendant and Exh. PW- 2/1 is

the report which he had submitted to the plaintiff company

with respect to the work. During cross examination, he

stated that they had made arrangement for 2500 sq. m. of

area for which 400 tons of air-conditioners was required

and the air-conditioners provided by the plaintiff were of

good quality. According to him different voltage was require

for different air-conditioners, some of which required 220 V

while others required 440 V. He has stated that 10

generators were supplied to them which were giving 40-45

Kws. He stated that though the labels on the generators

indicated 60 Kws, during testing by his persons in his

presence, the outcome was found to be 40-45 Kws and

these generators were capable of giving 440 V. According to

him the total power was 500 Kws as against required of 900

Kws and therefore the power provided was not sufficient to

run 400 tons of air-conditioners. During cross examination,

he admitted that in one of the halls, the air-conditioners

had to be shut down because of heating up of wires but

this, according to him, might have happened because there

were too many halogens lamps. He stated that the plaintiff

as well as exhibitors was told that excess halogen lamps

should not be put in the exhibition. He has claimed that

installation of air-conditioners was complete in the night of

21.7.1998 but the air-conditioners were not tried since full

power load was not available. He admitted that temperature

in halls was not comfortable since air-conditioners were not

functioning properly.

11. PW-3 Shri J.C.Bhalla was working with the

plaintiff company from June, 1998 to June 2003 and was

Manager In-charge for the work at the site of Autofest-1998.

He was supervising the general work from 11.7.1998 to

26.7.1998. He has stated that the plaintiff company had

completed its part of the work in all respects and there was

no inefficiency or deficiency of any kind in work provided by

the plaintiff company, though there was

inadequate/insufficient power supply at the site which was

the responsibility of the defendant company. PW-4 Mr.

Vijay Kapoor is another Director of the plaintiff company.

He has stated that he was controlling the affairs of Autofest-

1998 work and was the Director In-charge at the site from

13.7.1998 to 24.7.1998. He also maintained that there was

no deficiency in service in part of the plaintiff company and

it was the defendant company which did not provide

sufficient power supply to run the air-conditioners.

12. A perusal of Exh. P-2 which is the GPO dated

20.6.1998 would show that as per the agreed rates between

the parties the plaintiff company was to be paid as follows:

Sheds/Tentages with Air-condition Rs.750/- per sq.m

Sheds/Tentages without Air-condition Rs.550/- per sq.m

Standard Shell Scheme Rs.400/- per sq. m

Synthetic Gangway Carpet-New Rs.90/- per sq. m

Synthetic Gangway carpet - Old Rs.65/- per sq. m

13. Exh. PW-4/A (colly) are the invoices by the plaintiff

company on the defendant company for the work done for

Autofest-1998. A perusal of invoices would show that the

plaintiff company raised invoices for 2880 sq. m. AC

Tentages, 1071 sq. m. Non-AC Tentages, 892 Sq. m for

Exhibitors' Area, 145.5 sq. m for Organiser's office, business

lounge and 1535.42 sq. m for Gangway Carpet area making

of total sum of Rs.32,34,752.30. The plaintiff company also

raised invoices of Rs.2,72,495/- for the furniture,

TV/VCR/Refrigerator etc. and for the carpet and additional

panels. The plaintiff company raised another invoice of

Rs.1,65,000/- for erection of welcome gate, main gate,

sponsored tower, ramp at entry gate in parking area, special

pillar fabrication in Bajaj Auto Stand and general lighting

near main gate, lily pond area etc. This is not the case of

the defendants that the plaintiff company had not provided

tentages for the quantity mentioned in the invoices dated

4.8.1998 nor do they claim that the plaintiff company did

not provide stand construction and gangway carpet as

claimed in this invoice. Similarly this is not the case of the

defendants that chairs and other materials mentioned in the

invoice for Rs.2,72,495/- were not provided by plaintiff

company. They also do not claim that the work charges for

which have been claimed in the invoices for Rs.1,65,000/-

were not executed by the plaintiff company. The entire

defence taken by the defendants is that there were gross

deficiencies in the work executed by the plaintiff company

and in particular adequate air-conditioning was not

provided which resulted in discomfort to the visitors and

had the consequences on goodwill and reputation of the

Defendant Company besides resulting in reduction in

number of exhibitors and visitors. This is also the case of

the defendants that instead of laminated panels, cloth

panels in non air-conditioned tentages were provided by the

plaintiff company. The third deficiency claimed by the

defendants is that water leakage was observed at a number

of points though very light shower had occurred during the

night and early morning. No evidence has however been led

by the defendants to prove the alleged deficiencies. As

regards air-conditioning the deposition of Mr. Rakesh Gaind

(PW-2) corroborated by testimonies of Mr. J.C.Bhalla and

Mr. Ashok Chitkara would show that the electricity was to

be provided by the defendant company and not by the

plaintiff and the supply provided at the site was grossly

inadequate the same being only 440 Kws as against

requirement of 900 Kws. The generators at the site were

provided by the defendant company as is evident from the

WS wherein this fact has been expressly admitted as also

from Exh. PW-5/A, which are the minutes of the meeting

held with Mr. Ashok Chitkara of the plaintiff company. A

perusal of the bill dated 25th July, 1998 raised by Bharathi

Electrical on Mr. Mukesh Arora, President of the defendant

company; a copy of which has been filed by the defendant

and therefore can be read against it, would show that only

one generator was provided for three hours on 19.7.1998,

three generators; one for twelve hours, the second for three

hours and the third for three hours were provided on

20.7.1998 and ten generators; four for thirteen hours each,

one for twelve hours, three for ten hours each and two for

14 hours each were provided on 21.7.1998. Thus, adequate

generators were not provided in time. In the absence of

generators, air-conditioning could not have been checked

prior to 21.7.1998. The deposition of Mr. Gaind and other

witnesses would show that the generators provided by the

defendant company were capable of giving only 440 V

whereas some of the air-conditioners required generators

capable of giving 220 V. It is evident from his deposition

and the report Exh. PW-2/1 furnished by him that had the

defendant company provided adequate power supply and

had the generators been provided on time, in sufficient

number and been giving required voltage the air-

conditioners could have been tested well in time and would

also have properly functioned during the festival. There is

no evidence on record to prove that the air-conditioners

provided by the defendant company were inadequate for the

air-conditioning of tentages provided by it and/or were not

of good quality. If some of the air-conditioners could not

function or were malfunctioning due to non-availability of

power and the generators being of inadequate capacity and

not capable of giving required voltage the plaintiff company

cannot be faulted for the air-conditioned tentages not being

comfortable and temperature therein being rather high. No

doubt the temperature in hall was not comfortable and the

air-conditioners were not functioning properly as admitted

by Mr. Gaind but the responsibility for this malfunctioning

cannot be attributed to the plaintiff company.

14. It has come in the deposition of Mr. Gaind that

some air-conditioners had to be shut down because of

heating up of wires this however according to the witness

might have happened on account of how many halogen

lamps have been put in the halls despite the exhibitors

having been told that excess halogen lamps could not be

put. There is no evidence before the Court to indicate that

heating up of the wires could not have been on account of

excess number of halogen lamps. It has come in the

evidence of the plaintiff that extra halogen lamps were put

in the hall. There is no evidence to indicate that the

halogen lamps put in the halls were not in excess quantity.

Therefore, shutting down of air-conditioning in one of the

halls cannot be attributed to the plaintiff company.

15. As regards, partitions in tentages area being of

cloth instead of being laminated there is no evidence to

prove the alleged deficiency. The plaintiff has claimed that

the partitions were not of fabric. Moreover, there is no

evidence of the exhibitors or visitors facing any discomfort

in non air-conditioned tentanges on account of the

partitions being of fabric instead of being made of laminates.

Regarding alleged water leakage, again there is no evidence

to prove the alleged leakage or its extent as well as the

points from where the water is alleged to have leaked.

16. The main defence taken by the defendants seems

to be that Mr. Tilakraj, a Director of the plaintiff company in

a meeting held on 26.7.1998 had admitted the deficiencies

claimed by the defendants. A perusal of the minutes would

show that on 19.7.1998 it was found that the air-

conditioners had not been tested for their effective

operations and the air-conditioners were tripping after some

time and the defendant was asked to check the effectiveness

of the air-conditioning system. As noted earlier, neither

delay in testing the efficiency of air-conditioners nor their

tripping can be attributed to the plaintiff company. These

minutes also show that on 26.7.1998, it was found that air-

conditioners had not been put into operation except in Hall

A, where 10% of the air-conditioners were operational and

the representatives of the plaintiff were asked to take all

possible efforts to ensure that the air-conditioners were in

working condition with proper load distribution. As noted

earlier the deficiency in air-conditioning was attributable to

failure of the defendant to provide adequate power and is

not attributable to the plaintiff company. There is an

observation recorded in these minutes that the wires had

become very hot. It has come in evidence that this was due

to excess number of halogen lamps having been put in the

hall. There is no material to indicate that this was

attributable to any deficiency on the part of the plaintiff

company. It has been noted in these minutes that Mr. Tilak

Raj affirmed that he also had come to know that the

temperature inside the hangars could not be brought down

to a comfortable condition and at certain places equipment

had to be replaced and he further confirmed that air-

conditioning was not satisfactory, despite all possible efforts

and right system of doing air-conditioning would have been

through packaged air-conditioners of 7.5 to 10 tons or by

ducting. It was further noted in these minutes that the side

walls of non air-conditioned hangars had been covered by

cloth which was torn at many places and as a result the

hangars could not be closed. It is also noted that Mr. Tilak

Raj agreed that it would have been better, if they had made

electrical load diagram so that uneven distribution and

overloading at certain points could have been avoided. In

his affidavit by way of evidence Mr. Tilak Raj has stated that

he was not concerned with Autofest at Chennai and had no

connection or coordination with the defendants in this

regard. According to him during the casual visit on

26.7.1998 Mr. Mukesh Arora of the defendant compelled

him to sign the minutes in spite of the fact that other

General Manager, Dy. General Manager and other officials

of the plaintiff company were present at the site. He has

stated that no other official of the plaintiff company present

at the site was allowed to enter into the cabin where the

minutes were signed and he was threatened by Mr. Mukesh

Arora that if he did not sign the minutes, the plaintiff

company would not be allowed to remove the goods placed

at the site. He has further stated that on repeated requests

Mr. Mukesh Arora allowed him to call Mr. Ajay Kapoor who

told him that goods lying at the site worth crores of rupees

and non-removal of those goods from the site after specified

time would attract penalty of Rs.75,000/- per day in terms

of the GPO and therefore he signed those minutes on the

advice of Mr. Kapoor. Thus, according to him these minutes

were signed by him under coercion and duress. The

deposition of Mr. Tilak Raj finds corroboration from the

deposition of Mr. J.C.Bhalla and Mr. Ashok Chitkara. The

defendants have not come forward to produce any evidence

and therefore the aforesaid deposition of Mr. Tilak Raj

corroborated by testimonies of Mr. Ashok Chitkara and Mr.

J.C.Bhalla remains uncontroverted and unchallenged. I,

therefore see no reason to disbelieve the plea and

accordingly hold that these minutes were not agreed by

Tilak Raj of his free consent and he was made to sign under

coercion since without Mr. Tilak Raj signing the minutes,

the plaintiff would not have been allowed to remove its

goods worth crores of rupees from the site and also would

have been liable to pay damages amounting to Rs.75,000/-

per day for not removing them from the exhibition site.

17. Exh. D-2 is a bill of Rs.38,500/- raised by

Bharathi Electrical on the plaintiff company in respect of

electrical services and hiring of fans whereas Exh. D-3 is a

letter addressed by Mr. Tilak Raj of the plaintiff company to

Bharathi Electrical agreeing to pay a sum of Rs.1,20,000/-

towards additional generators and cable etc. The case of the

plaintiff is that this letter was also obtained under coercion

when the minutes dated 26.7.1998 were got signed from Mr.

Tilak Raj. The expression used in this letter coupled with

the date which appears on it, tend to support the case of the

plaintiff in this regard. Ordinarily, there would be no reason

for the plaintiff company to write such a letter to Bharathi

Electrical and give it to the defendant, in case the additional

generators were hired by the plaintiff company. Moreover,

as noted earlier the defendant has admitted that the

generators were to be provided by the defendant company

and this is also borne out by Exh. PW-5/A i.e. minutes of

the meeting with Mr. Ashok Chitkara. Also, there is no

evidence on record to prove that requirement of additional

generators arose on account of some deficiency on the part

of the plaintiff company in providing services for Autofest-

1998 therefore, nothing really turns on these documents.

18. Admittedly the invoices raised by the plaintiff

company in respect of Autofest-1998 were of total sum of

Rs.36,72,247/- out of which a sum of Rs.9,75,000/- stands

paid to the plaintiff company leaving a balance of

Rs.26,97,247/- which remained payable to the plaintiff

company in connection with Autofest-1998. The plaintiff

company has also claimed a sum of Rs.7 lac in connection

with the exhibition which was scheduled to be held at

Bangalore. This comprises a sum of Rs. 2 lac as advance as

per lay out and another sum of Rs.5 lac for making

arrangements of material site visits, site measurements etc.

for Bangalore exhibition. A perusal of the payment terms

contained in GPO dated 20.6.1998 would show that 20%

advance payment was to be made one month prior to

exhibition. Had the plaintiff company actually executed the

Bangalore exhibition, this advance payment if made by the

defendant company, would have been adjusted in the bill of

the plaintiff company. Therefore, since the work was not

actually executed, the plaintiff company is not entitled to

this amount. Assuming that there was a breach on the part

of the defendant company when it cancelled the GPO, the

plaintiff company would be entitled only for compensation of

the actual loss, if any, suffered by it on account of

cancellation of work in respect of other exhibitions. No

evidence has been led by the plaintiff company to prove that

it had incurred expenditure of Rs.2 lac on preparation of lay

out plan. Similarly, no evidence has been led by the

plaintiff company to prove that it had incurred expenditure

of Rs.5 lac for arrangement of material and on site

visits/site measurements etc., in absence of such evidence,

the plaintiff company is not entitled to any amount on

account of cancellation of the purchase order. The issues

are decided accordingly.

ORDER

19. For the reasons given in the preceding paragraphs

a decree of Rs. 26,97,247/- with proportionate costs and

pendent lite and future interest @ 12% p.a. is passed only

against defendant no. 1, as the contract was only between

plaintiff company and defendant no.1 company. The

plaintiff is not entitled to recover any amount from the other

defendants. The suit against defendants no. 2 to 5 is

therefore dismissed with no orders as to costs.

Decree Sheet be prepared accordingly.

(V.K. JAIN) JUDGE MAY 09, 2011 vn