Delhi High Court

M/S Adi Hitech Textiles (P) Ltd. vs M/S Sawhney Brothers on 16 November, 2011

Author: Valmiki J. Mehta

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          RFA 575/2002

%                                                  16th November, 2011

M/S ADI HITECH TEXTILES (P) LTD.                       ..... Appellant
                      Through : Mr. Rajat Katyal, Advocate.
                     versus

M/S SAWHNEY BROTHERS                                      ..... Respondent

Through : None.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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

2. To be referred to the Reporter or not?

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

VALMIKI J. MEHTA, J (ORAL)

1. This appeal is on the Regular Board of this Court since 4 th July,

2011. Today, the appeal is effective item No. 6 in the Regular Matters.

Nobody appears on behalf of the respondent, although, it is 3:30 p.m.

I have, therefore, heard the learned counsel for the appellant and after

perusing the record, am proceeding to dispose of the appeal.

2. The challenge by means of this Regular First Appeal filed under

Section 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned

judgment of the Trial Court dated 24th July, 2002. By the impugned

judgment, the trial Court disposed of, by a common judgment, two

suits. One suit was filed by the appellant against the respondent

(being the subject matter of connected RFA 573/2007 being suit

No.6/1998 claiming payments with respect to two bills dated 31 st

October, 1994 and 11th November, 1994 Ex. PW1/D1 and PW1/D2 and

which suit was held to be time barred and hence dismissed. The

second suit which was disposed of by the impugned judgment, and

which is the subject matter of this RFA was a suit No. 155/1996 filed by

the respondent against the appellant claiming damages from the

appellant allegedly on account of loss caused to the respondent by

defective goods being labels supplied by the appellant. This suit

155/1996 was filed for recovery of Rs.3,97,600/- which included an

amount of Rs.2,80,000/- towards losses suffered on account of

defective labels supplied. The other amount claimed was towards

interest @ 24% amounting to Rs.1,17,600/-. The alleged defective

labels which were supplied by the appellant to the respondent were

said to have been fixed by the respondent on garments which it

exported abroad.

3. The trial Court by the impugned judgment has decreed the suit

No.155/1996 of the respondent/plaintiff by holding that the letters

Ex.PW1/2 to PW1/5 showed that labels supplied were defective and

consequently it was held that loss was caused to the

respondent/plaintiff. Trial Court has also referred to a realization

certificate of the banker of the respondent namely, M/s Indian Bank

dated 22nd September, 1999 Ex.PW2/1, showing that the amount

realised from the importer of the goods in Pannama (to whom the

goods were sold by the respondent) was after allowing reduction in

invoice value @10%. The date of realization of the amount was 7th

March, 1995.

4. Learned counsel for the appellant has argued that a reading of

the plaint shows that the cause of action is basically contained in paras

6 and 7 thereof which plead the facts of the exported goods being

rejected by the customers and thereafter, in paras 8 and 9 of the plaint

reference is made to the two disputed bills dated 31st October, 1994

and 11th November, 1994, Ex. PW1/D1 and PW1/D2 with respect to

which it was stated that payments were not made as the labels

supplied under these bills were stated to be defective. It is argued that

these two bills were not the subject matters of the present suit No.

155/1996. Learned counsel for the appellant also drew the attention of

this Court to the cross-examination of the witness of the respondent,

Sh. Trilok Singh Swahney who was a partner of the respondent and

who deposed as PW1 and which deposition showed that in the cross-

examination this witness admits that the labels supplied by the two

disputed bills were not used by the respondent and no consignment

using of these labels was sent to the importer. Infact, witness PW1

admits that no consignment using labels under the bills Ex.PW1/D1 and

PW1/D2 was sent to the importer, and in fact the defective

consignment of the labels under these bills was re-sent to the

appellant herein.

5. The basic thrust and the main substance of the argument on

behalf of the appellant by its counsel, is that with respect to the

alleged loss claimed of Rs. 2,80,000/- there is not a single document

filed by the respondent whether it be a letter to the appellant

mentioning that these labels were defective or any document/letter of

the alleged buyer abroad stating that the exported garments were to

be paid @10% less because the labels were defective. It is argued that

the bank certificate merely refers to 10% received less for the invoice

No.6084 without giving any reason why such lesser payment is given.

It is argued that after all such lesser payment well may have been

given due to reasons which could have included delay in supply,

defective garments and so on.

6. In my opinion, the arguments as raised by learned counsel for

the appellant are well merited and therefore the appeal deserves to be

allowed. From a reading of the plaint and the cross-examination of

PW1, there is no doubt that the labels which were supplied with the

invoices dated 31st October, 1994 and 11th November, 1994 Ex.PW1/D1

and PW1/D2 were never used by affixing them on garments.

Admittedly, these labels were never used on the exported garments

and were infact admitted to have been returned by the respondent.

This fact also becomes clear from the letters written by the respondent

to the appellant being Ex.PW1/2 to PW1/5 which are dated 16th

February, 1995, 28th July, 1995, 5th December, 1995 and 1st January,

1996 respectively. So far as these letters are concerned the contents

thereof make it quite clear that they do not in any manner establish

that supplies prior to Ex.PW1/D1 and Ex.PW1/D2 of labels by the

appellant to the respondent are defective as reference in these letters

are only qua labels supplied vide Ex.PW1/D1 and Ex.PW1/D2. Except a

self serving statement, both as regards the defective nature of the

labels and with regard to quantification of loss at Rs.2,80,000/-, there

is nothing in the trial Court record to substantiate the defectiveness of

the labels or quantification of loss for which the subject suit was filed

and which pertained to labels supplied prior to the bills Ex.PW1/D1 and

Ex.PW1/D2.

7. In my opinion, there is strength in the argument as raised by

learned counsel for the appellant that the suit was filed by the

respondent only to deny the payment of the bills Ex.PW/D1 and PW/D2

to the appellant, inasmuch as the so called defective labels under

these two invoices were sent back to the appellant as alleged by

respondent only during the pendency of the suit.

8. It is necessary that there has to be reasonable evidence which

brings about preponderance of probabilities to support the case of the

respondent/plaintiff. Since the case of the respondent/plaintiff was

that labels supplied by the appellant were defective and which were

supplied prior to those mentioned in Ex. PW1/D1 and Ex.PW1/D2, it was

therefore necessary to file correspondence inter se between the

parties or correspondence inter se the buyer abroad and the

respondent to show that the said earlier labels were defective. As

stated above, there is not a single document on record to show

defectiveness of the labels supplied prior to Ex.PW1/D1 and

Ex.PW1/D2. So far as the quantification of loss is concerned except

filing the bank certificate Ex.PW2/1 there is nothing on record to show

as to how the loss of Rs.2,80,000/- as claimed in the plaint has been

caused on account of the alleged defective labels supplied. I agree

with the learned counsel for the appellant that there is no reference of

any nature in the document Ex.PW2/1 being the bank certificate dated

22nd September, 1999 showing that reduction of 10% in invoice value

has been brought about on account of defective labels as was alleged

by the respondent. Since this is the only document which exists in the

trial Court to allegedly show for quantification of loss qua the alleged

defective labels, I would reproduce the same in its entirety and the

same reads as under:-

"FX NEW DELHI MAIN BRANCH P-45/90 Connaught Circus, New Delhi-110001, DT. 22.9.1999 M/S. Sawhney Brothers, A-4 & 6 Nizammuddin West, New Delhi-110013.

Dear Sirs,

Sub: Issue of Realisation of Certificate Regarding Your Invoice No. 6084 Drawee: M/s OKEY INTL. PANAMA.

With reference to your letter no. SB/9/99 dt. 17.9.99 regarding issue of Bank Certificate for Captioned Bills, we inform you that these bills have been realized after allowing reduction in Invoice Value as per details given below.

Your Inv. No. Our REF NO. AMOUNT AMT REDUCTION IN INV

6084 C/511464 USD.83355.75 USD 7500.17 USD.8355.58

AND DT OF REALISATION DT. 7.03.95 (Date of Reduction 29.04.98)

Yours faithfully, MANAGER"

A plain reading of this letter clearly shows that nothing is

mentioned therein about reduction on the value of invoices and a

lesser realization of 10% was on account of defective labels and not

because of any other reason.

9. Therefore, in my opinion, the trial Court has committed a grave

illegality in holding that the respondent/plaintiff proved its case that

the labels were defective or that the quantification of loss was properly

done. There being no evidence whatsoever except the self serving

statement of the respondent/plaintiff, the respondent/plaintiff therefore

had clearly failed to discharge the onus of proving that the labels

supplied by the appellant were defective or that loss was caused on

account of allegedly defective labels amounting to Rs.2,80,000/-.