M/S. Bigdot Advertising & ... vs Union Of India And Anr.
2012 Latest Caselaw 6767 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI


+                           CS(OS) No.226/2000

%                                                    27th November, 2012

M/S. BIGDOT ADVERTISING & COMMUNICATIONS PVT. LTD.
                                         ...... Plaintiff
                  Through: Mr. K.R. Chawla, Advocate with Mr.
                            Sunil Verma, Advocate.

                            VERSUS


UNION OF INDIA AND ANR.                              ...... Defendants
                  Through:               Mr. B.V. Niren, CGSC for the
                                         defendant No.1.
                                         Mr. P.K. Bansal, Advocate for
                                         defendant No.2.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?     Yes


VALMIKI J. MEHTA, J (ORAL)


1.

This is a suit filed by the plaintiff company M/s BIGDOT

Advertising & Communications Pvt. Ltd. for recovery of `3,16,39,009.64/-

against Union of India through Secretary, Department of

Telecommunications/defendant no.1 and Telecommunications Consultants

India Ltd. (TCIL)/defendant no.2. The amount claimed is stated to be the

balance payment due for advertisements which were got published by the

plaintiff for the defendant no.2.

2(i) The facts of the case are that the plaintiff received a letter dated

4.10.1995 (Ex.P1) from the defendant no.1 through one Mr.Umesh Verma,

Director in the Department of Telecommunications (DOT) that the

advertisements in various publications for DOT‟s full page advertisement

captioned "Indian Telecommunications-Opening upto the World" have been

approved by the Minister of State for Communications, and that the

advertisements should be inserted as early as possible without waiting for a

formal order from TCIL, and on whose behalf the advertisements were to be

issued. Alongwith the letter Ex.P1 dated 4.10.1995 there were the lists of

114 newspapers and 20 magazines in which advertisements were to be

published throughout the country. With respect to changing some of the

publications, i.e numbering 8, a letter dated 5.10.1995/Ex.P3 was thereafter

received by the plaintiff from the defendant no.1 through the said Mr.

Umesh Verma, Director. The plaintiff in terms of these letters Ex.P1 and

Ex.P3 coordinated with the defendant no.2/TCIL on the aspect of release of

the advertisements. Major part of the advertisements (advertisements in the

newspapers) were published by the plaintiff from 6.10.1995 to 8.11.1995.

The advertisements which were issued in this period were the

advertisements only in the newspapers. So far as the advertisements in the

magazines are concerned, called „double spread advertisements‟, the same

were issued in the issues of the magazines for the months of December 1995

and January 1996.

(ii) The plaintiff simultaneous to the issuing of the first batch of

advertisements wrote its letter dated 12.10.1995/Ex.P31 to the defendant

no.2 informing the total cost of the advertisements to be approximately `201

lakhs. The plaintiff also asked for release of the formal work order by

Ex.P31.

(iii) With respect to the advertisements inserted in the newspapers,

the plaintiff vide its letter dated 8.11.1995/ Ex.P66 submitted its invoice for

a sum of Rs.1,59,37,410/- for payment to the defendant no.2. Alongwith the

letter Ex.P66 dated 8.11.1995, 350 copies of the tear sheets of the

publications were annexed. The invoice contains the names of the

newspapers, sizes of the advertisement and the discounts given by the

concerned newspapers wherever applicable.

(iv) The plaintiff further avers in the plaint that at an earlier point of

time, i.e on 6.10.1995, the plaintiff had received a communication from the

defendant no.2/TCIL whereby TCIL had asked the plaintiff to inform the

cost of the publication of the advertisements so that the defendant no.2 is

enabled for early release of the work order. Plaintiff had given the necessary

reply vide Ex.P-31 dated 12.10.95. The plaintiff‟s case further is that the

formal work order was not issued as the Managing Director of the defendant

no.2, Sh.A.S. Bansal was out of the country, and that when Sh. A.S. Bansal

returned back, the plaintiff addressed its communication dated

19.10.1995/Ex.P65 requesting for release of the work order.

(v) Since the plaintiff‟s bill dated 8.11.1995 for `1,59,37,410/- was

not being released by the defendant no.2, the plaintiff addressed its

communication dated 13.11.1995/Ex.P80 to the Managing Director of the

defendant no.2 for expediting the payments. This was followed by the

plaintiff‟s letter dated 24.11.1995/Ex.P81 reiterating the same subject. The

plaintiff has then relied upon an undated letter/Ex. P-82 of the Joint

Secretary, Sh.S.D.Chaturvedi of the defendant no.1 (copy marked to

plaintiff) clarifying to the Managing Director of defendant no.2 that it is the

defendant no.2/ TCIL who has to make the payments and this has been so

opined by the Member (Finance) of the Department of Telecommunications.

By this letter Ex.P82, the defendant no.1 through its Joint Secretary asked

the defendant no.2 that the payments should be released to the plaintiff

without any further delay.

(vi) After insertion of the double spread advertisements in the

magazines during the months of December, 1995 and January, 1996, the

plaintiff sent its letter dated 5.2.1996/Ex.P83 annexing therewith the invoice

with respect to the advertisements in the magazines. Alongwith this invoice

the copies of the magazines were annexed. The invoice with respect to the

advertisements inserted in the magazines was for a sum of `36,46,500/-.

(vii) The plaintiff has then averred in the plaint that defendant No.2

was chased for payment, but the defendant No.2 postponed the payment

because it was informed to the plaintiff that there was a financial stringency

as a result of which payment was not being released. Another reason given

for not making the payment was that defendant no.2 was a small company

and it had asked the Ministry/defendant no.1 for moneys, and when the

moneys would be received by the defendant no.2 from the defendant no.1,

then payments would be made to the plaintiff.

(viii) On account of non-payment of the dues by the plaintiff to the

Indian Newspaper Society (INS), and which had accumulated as plaintiff

failed to clear the charges for advertisements which were got published, the

membership of the plaintiff with INS was cancelled w.e.f. 1.6.1996. It is on

account of the plaintiff being a member of INS, that the plaintiff is able to

get advertisements published with various newspapers for the PSUs such as

the defendant no.2. The benefit to the plaintiff for being a member of INS

includes the fact that it is entitled to 60 days grace period for payment to the

various newspapers and other publications. There are said to be only

five/six accredited agencies of INS, and of which plaintiff was one such.

(ix) Plaintiff further pleads that ultimately the defendant No.2 made

a part payment of Rs. 59,82,166.80/-. Out of the amount of Rs.

59,82,166.80, an amount of Rs. 59,822/- was by giving of a TDS certificate

by the defendant no.2 to the plaintiff, and the balance amount of

Rs.59,22,344.80/- was by a cheque dated 8.1.1997 which was handed over

on 30.1.1997. The plaintiff states that this part payment was made because

the defendant No.2 claimed that payments which can be made to the plaintiff

were only at DAVP rates i.e rates fixed by the Directorate of Advertising

and Visual Publicity and not the actual rates which were charged by the

newspapers/magazines.

(x) The plaintiff further pleads to have been harassed unnecessarily

with respect to non-payment for advertisements which were issued, and

therefore, it is argued that it was left with no other alternative except to send

a legal notice under Section 80 CPC dated 20.9.1999 claiming the principal

amount with interest which on the date of notice was said to be Rs.

3,06,06,122.63/-. The suit ultimately came to be filed for Rs.

3,16,39,009.64/- of which the balance principal amount due is Rs.

1,36,01,743.20/-.

3(i)          Both the defendants have appeared and filed their written

statements.       The      Union        of      India,      Department         of

Telecommunications/defendant No.1 pleads that it is not liable because it

has no privity of contract with the plaintiff. It is also pleaded that payments

which can be made to the plaintiff are only at DAVP rates and not the

commercial rates at which advertisements have been got published by the

plaintiff in 114 newspapers and 20 magazines.

(ii) The defendant No.2 in its written statement has similarly

pleaded lack of privity of contract as no formal order was said to be issued to

the plaintiff. The defendant No.2 on account of lack of privity of contract

pleads that it is therefore neither a necessary nor a proper party inasmuch as

whatever advertisements which were released on behalf of the defendant

No.2 were of the defendant no.1/DOT and did not related to the defendant

No.2 and therefore it was only the defendant No.1 which was liable to make

the payment. Defendant No.2 has also taken up a plea of the suit being

barred by limitation.

The defendant No.2 in para 17 of its written statement states that the

defendant No.2-company is a 100% government PSU and fully controlled by

the defendant no.1/ Department of Telecommunications, and that therefore it

is obliged to carry out the directions of the Department of

Telecommunications. It is pleaded that only because of the directions of the

defendant no.1 that the defendant No.2 made the part payment to the

plaintiff of Rs. 59,82,166.80/-, however, the subject payment cannot fasten

the defendant No.2 with any liability.

4(i) Issues were framed in this case on 2.4.2003 and which read as

under:-

"1. Whether the suit of the plaintiff is barred by limitation as alleged by defdt. no.2? OPD

2. Whether there was a valid contract between the parties in terms of Article 299 of the Constitution of India and whether the same is hit by Article 299? OPP

3. Whether the plaintiff was entitled only on DAVP rates? OPD

4. Whether the plaintiff has not been paid for the work done? OPP

5. Whether the plaintiff is entitled to interest, if so from which period and at what rate?"

(ii) Issues framed on 2.4.2003 were modified vide order dated

13.9.2004 whereby issue No.2 was recast by deleting the same and framing

three issues bearing Nos.2, 2(a) and 2(b) as also another issue pertaining to

damages and which read as under:-

"2. Whether there was any concluded contract between the parties for the job executed by the plaintiff for the defendant? OPP 2(a) If the above issue is answered in affirmative, whether the said contract is hit by the Article 299 of the Constitution of India? OPD 2(b) If issue No.2 is answered in affirmative whether the defendants are estopped from raising the plea of invalidity of the contract after having got the work executed from the plaintiff? OPp The following additional issue also needs to be framed: Whether the plaintiff is entitled to any damages? OPP"

Issue Nos. 2, 2(a) and 2(b)

5. Though there is no specific issue with respect to defendant No.2

not being liable because there is no privity of contract with the defendant

No.2 (and which is the case of the defendant No.2), however, since there

exists the requisite pleading, I am including this aspect in issue No.2 as

framed on 13.9.2004. Basically both the defendants plead that there is no

contract of the plaintiff with them. Each of the defendants is basically

throwing the ball in the court of the other defendant, although it is not

disputed by either of the defendants that in fact a payment of Rs.

59,82,166.80/- was made to the plaintiff for the advertisements which were

got published by the plaintiff. The aspect therefore to be decided is as to

who is liable i.e whether it is the defendant No.1, or it is the defendant No.2,

or that both the defendants are liable jointly and severally.

(6) The liability of either the defendant No.1, or the defendant

No.2, or both, in the facts of the present case can necessarily exist only if the

plaintiff has a privity of contract with any or both of them. Only that

defendant will be liable with whom the plaintiff had a privity of contract i.e

such defendant for whom the plaintiff issued the advertisements, because, in

law, liability in a case such as the present can only be of the person with

whom the contract has been entered into more so because the plaintiff

specifically claims that its entitlement arises because of a contract entered

into, and pursuant to which it issued advertisements in various newspapers

and magazines. The determination of the aspect of privity of contract, i.e

whether there is privity of contract with defendant no.1/Union of India or

with defendant No.2/TCIL, is compounded by the fact that not only there is

no specific written contract, but also because the correspondence which

exists in this case of both the defendants inter se as also their correspondence

with the plaintiff, and which correspondence seems to suggest that liability

could be either of the defendant No.1 or the defendant No.2 or both.

7. On an in-depth examination of the facts of the case and the

documents on record I am of the opinion that in the present case contract of

the plaintiff is with the defendant No.2 and not with the defendant No.1. My

reasons for holding that plaintiff‟s contract is only with the defendant No.2

and not with the defendant No.1, are as under:-

(i) Both the covering letters dated 8.11.1995/Ex.P66 (annexing

invoice details as per Ex.P67 to Ex.P79) and 15.2.1996/Ex.P83 (annexing

invoice details as per Ex.P84 to Ex.P89) were sent not to the defendant No.1,

but to the defendant No.2.

(ii) The defendant No.2 at no point of time after receiving of the

letters with the annexures, i.e Ex.P66 to Ex.P79 and Ex.P83 to Ex.P89, ever

wrote to the plaintiff that these covering letters and invoices have been

wrongly addressed to the defendant No.2 on the ground that there is no

contract with the defendant No.2 and that these documents should be

addressed and sent to the defendant No.1. The defendant No.2 by its such

action impliedly accepted that it was the defendant No.2 with whom the

plaintiff had the contract, otherwise the defendant No.2 would have

vehemently objected on receipt of the aforesaid covering letters with

invoices, and would have asked that the covering letters and invoices be sent

to the defendant No.1.

(iii) It is the defendant No.2 which had made the payment of Rs.

59,82,166.80/- to the plaintiff. Merely because the receipt by which the

plaintiff accepted this payment, Ex.P113 dated 30.1.1997, states that

payment has been received from defendant No.2 on behalf of the defendant

No.1 will not make any difference inasmuch as out of the total payment of

Rs. 59,82,166.80/-, a part amount was by means of a TDS certificate of Rs.

59,822/- issued by none else than the defendant No.2, i.e the total payment

made of Rs. 59,82,166.80/- is comprised of two parts, one of the cheque paid

of Rs. 59,22,344.80/- (vide cheque No.52348 dated 8.1.1997) and second of

the amount of Rs. 59,822/- which was not a payment but only a TDS

certificate issued by the defendant No.2. A TDS certificate is only issued by

a person who is liable to make the payment. It is the person who issues the

TDS certificate, gets the benefit and thus the defendant No.2 who has issued

the TDS certificate is quite clearly the contracting party. What is the

internal arrangement between the defendants is not or need not be the

concern of the plaintiff, and which I am observing inasmuch as there is

certain correspondence inter se the defendants that the liability should be

apportioned between the Ministry/defendant No.1 and the company-

TCIL/defendant No.2.

Though the defendant No.2 has written its letter dated

21.5.1998/Ex.P119 ( i.e well after all the advertisements were completed by

February, 1996) and which letter states that payment is being processed and

shall be made by DOT, really the same is only a matter of internal

arrangement inter se the defendants, once we take into account the fact that

bills/invoices have been raised upon the defendant No.2 to which no

objection was raised and the TDS certificate has been issued by the

defendant No.2.

(iv) Plaintiff has proved on record the note (date illegible)

Ex.DW2/P3 which was put up by the defendant No.2 to its Board of

Directors for making of the payment by the defendant No.2 to the plaintiff.

Even if we take the fact that this note did not translate into the Board

resolution, this note is signed by as many as three highest ranking persons in

the defendant no.2, and who are none other than the Managing Director and

the Directors (Technical and Finance) of the defendant No.2. This note Ex.

DW2/P3 shows an admission that it is the defendant No.2 who is liable to

pay, although as per the note since defendant No.2 was a small organization

it was to take reimbursement from the defendant No.1/Department of

Telecommunications- the parent Ministry of defendant No.2. At this stage,

I must reiterate that as per para 17 of the written statement filed by the

defendant No.2 there is a clear admission that the defendant No.2 is

controlled and governed by the defendant no.1/Department of

Telecommunications, and the defendant No.2 is obliged to carry out any

directions of the defendant No.1.

(v) The plaintiff has also proved on record the letter dated

24.11.1995 sent by it to the Chairman and Managing Director of the

defendant No.2 as Ex.DW2/P12, and which document contains an

endorsement in the handwriting and signatures of the Managing Director of

the defendant No.2 stating "Sr. Mgr. (L & T): Please settle Old: I do not like

to hold any money of contractor who has worked. I have spoken to J.S.

Please pursue." The J.S. which is referred to in this letter dated 24.11.1995

is the Joint Secretary of the defendant No.1. In fact, the Joint Secretary vide

his letter dated 28.11.1995/Ex.PX1 had asked the Managing Director of

defendant No.2 to release all pending payments and debit the same to the

defendant No.1/Department of Telecommunications. Also, by a letter of the

same date of the endorsement i.e 28.11.1995, the Managing Director of the

defendant No.2 vide Ex.PX2 had written to the Joint Secretary that payment

should be released by the defendant No.1 to the defendant No.2 and

thereafter on the very next date thereof payment will be released by the

defendant No.2 to the plaintiff. All that is stated in this letter Ex.PX2 is that

defendant No.2 is a small company which does not have liquid amount to

pay Rs.2 crores, however, in this letter there is no issue ever raised by the

defendant No.2 that payments have not to be made by defendant No.2 to the

plaintiff for various advertisements which were issued.

8(i). The aforesaid shows that on a preponderance of probabilities,

the contract of the plaintiff was with the defendant No.2, though really the

controlling entity qua the contract (including issuing of various directions

from time to time) was the defendant No.1. The requirement of publishing

the advertisements without a formal order possibly was because as urged on

behalf of the plaintiff that the concerned Minister was to go to a Telecom

Conference at Geneva in a short period of time and had to carry the

published advertisements which showed opening of telecommunication

sector in India to the world. I may note that in the cross-examination of the

witness of the defendant No.1, namely Sh. L.T. Tlulanga/DW-1 (Deputy

Secretary, DOT) the plaintiff put specific questions as to the World

Telecommunications Exhibition taking place in Geneva and all the Ministers

and the Ministerial staff going to Geneva. Though, this witness expressed

ignorance as to whether the advertisement material was taken by the

Minister to Geneva, however, the witness admitted that the World

Telecommunications Exhibition took place in Geneva in October, 1995 i.e

the month in which major part of the advertisements were published. This

part of the cross-examination of the DW-1 when taken with the letter dated

4.10.1995/Ex.P1 from the defendant No.1 to the plaintiff, leaves no manner

of doubt that there was great urgency in getting the advertisements published

because the said advertisements were really the advertisements not of the

defendant No.2 but of the defendant No.1 as to the opening of the

telecommunication sector in India to the world, and which were required to

be shown at the exhibition in Geneva which took place in October, 1995.

This letter Ex.P1 specifically states "....since the advertisement is required

to be inserted as early as possible, you may go ahead with the release of the

same pending receipt of formal order from TCIL.....".

(ii) Also, though there is no material on record, possibly the

advertisements of the defendant No.1 were got inserted on behalf of the

defendant No.2 for two reasons. First reasons is and as has been argued on

behalf of the plaintiff is that, defendant No.1 being a Government

department would have been hidebound (required to follow certain

procedures including of getting the advertisements issued through DAVP at

DAVP rates) and since time was short for the Minister to visit the exhibition

in Genvea, therefore, the route which was adopted for issue of the

advertisements was not through DAVP but through the defendant No.2, a

PSU which is not bound to issue advertisements only through DAVP. The

second reason is that DAVP has contracts only with the limited publications

and quite a few of the publications in which advertisements were published

were not in the approved list of DAVP.

I may at this stage itself note that the witnesses of the defendant

No.2, namely, Sh. Shashi Chawla/DW-2 in his cross-examination dated

22.10.2007 and Sh. A.K. Chandrashekhar/DW-3 in his cross-examination

dated 8.7.2008, in so many terms admitted that when advertisements are

issued by the defendant No.2 they are issued through various advertising

agencies at commercial rates, and not necessarily through DAVP, and that

one such advertising agency through whom advertisements are issued was

the plaintiff. It is admitted by these witnesses in categorical terms that

payments for advertisements published are to be made to the advertising

agency at commercial rates i.e not DAVP rates and which aspect will be

material as will be seen in the later part of this judgment.

9. The conclusions which thus emerge from the above discussion

are that on account of shortage of time the plaintiff was asked to go ahead

with the publication of the advertisements without waiting for formal order;

at no point of time either the defendant No.1 or the defendant No.2 even

indirectly informed the plaintiff that issuance of advertisements was illegal;

there is correspondence numbering about half a dozen inter se the defendants

with respect to payments to be made to the plaintiff and of apportioning of

the quantum to be paid between the defendant No.1 and the defendant No.2;

there did take place an exhibition in Geneva in October, 1995 which the then

Minister visited; and finally that the defendant No.2 is not bound to only

issue advertisements through DAVP and it has in the past been issuing the

advertisements through advertising agencies and paying the advertising

agencies at commercial rates and not DAVP rates.

10. Therefore, I hold that it is the defendant No.2 who is liable

inasmuch as the privity of contract of the plaintiff was with the defendant

No.2, though the advertisements which were issued were of the Department

of Telecommunications/defendant No.1. The witness of the defendant No.2,

DW3, in his cross-examination dated 1.10.2008 has admitted that though the

advertisements were of defendant No.1, defendant No.2 being a telecom

company also got the benefit thereof. The contract of the plaintiff is

therefore held to be with the defendant No.2 to whom the bills/invoices were

issued; which entity made the payment including the TDS certificate; and

also has in its file had a note signed on 1.5.1996 not only by its Managing

Director but also by two other Directors (Technical and Finance) that

payment to the plaintiff had to be made.

11. Though, I have held only the defendant No.2 as liable on

account of aforesaid facts, I must point out a disconcerting fact that the

correspondence inter se the defendants on record shows that the plaintiff

probably has been made to run from pillar to post for its payments on

account of tussle between the defendant No.1 and defendant No.2.

Defendant No.2 is a 100% owned government company, and as per its own

admission was working in accordance with the directions of the defendant

No.1, and because of various reasons including the most important one of

financial stringency of the defendant No.2, payment was not made to the

plaintiff initially. Thereafter, part payment of Rs. 59,82,166.80/- was made

but the plaintiff was made to chase the defendants for balance payment, and

ultimately was forced to file the present suit for recovery of balance amount.

I must also observe that the counsel for the defendant No.1 at one stage did

try to take up a case that action has been taken against the author of the

letters Ex.P1 and Ex.P3 (Sh. Umesh Verma, Director of the Department of

Telecommunications) as also the author of the letter Ex.P82 and Ex.PX1(Sh.

S.D. Chaturvedi, Joint Secretary), however, there is nothing on record to

buttress this fact. Even assuming, I accept this argument that the defendant

No.1 has taken action against two of its officers, however, why should the

plaintiff who got the advertisements published, be penalized by non-

payment when the plaintiff has already been blacklisted/deaccredited by the

INS causing it to go out of business.

(ii) Though the defendant No.1 also pleaded the defence of Article

299 of the Constitution of India, I need not go into that aspect since I have

held that only the defendant No.2, with whom there is privity of contract, is

liable. I am however of the opinion that both in facts and law, the defence of

the defendant No.1 may not be justified (besides lacking bonafides) for the

reason that the Supreme Court in the Constitution Bench judgment in the

case of State of West Bengal Vs. B.K. Mondal & Sons AIR 1962 SC 779

has held that once the government takes benefit of services, then, although

there is no contract as per Article 299, yet, on the principles of Section 70 of

the Contract Act, 1872, government is liable to make payment of the dues.

This Constitution Bench judgment was delivered possibly so as to avoid

injustice to a person who provides services to the Union of India, incurs

expenditure and whereafter such person is stonewalled for payment by the

UOI on account of bar contained under Article 299 of the Constitution of

India. I need not say anything further inasmuch as I am not holding the UOI

liable in the facts of the present case, and as stated above it is the defendant

No.2 which is liable to make the payment on account of its privity of

contract with the plaintiff.

12. In view of the above, issue Nos.2, 2(a) and 2(b) are decided by

holding that it is the defendant No.2 which will be liable to the plaintiff for

the amount which is being decreed in the subject suit.

Issue Nos.3, 4 and additional issue framed on 13.9.2004

13(i). That now takes us to the issue as to whether the defendant No.2

is liable to pay to the plaintiff only at DAVP rates or is defendant No.2 liable

to pay to the plaintiff the commercial rates which the plaintiff has to pay to

the various publications. I note that the advertisements were got issued by

the plaintiff with the publications as a member of INS, and which members

of INS get discounted rates from the publications.

(ii) Before proceeding on this issue as to what are the rates at which

the plaintiff has to be compensated, i.e whether a DAVP rates or commercial

rates, there are two aspects which I must strongly bring into note.

(iii) The first aspect is that the stand of the defendants that payments

had to be made at DAVP rates goes totally against the stand of these

defendants that there was no contract with the plaintiff and therefore was of

the defendants to make the payment. Once it is accepted that part payment

of Rs. 59,82,166.80/- was made to the plaintiff, I really fail to understand

as to how the defendants could have kept on harping that there is no contract

with the plaintiff and that plaintiff was not entitled to payment because none

of the defendants had any contract with the plaintiff.

(iv) The second aspect, and an important one which has persuaded

me to decree the suit of the plaintiff against the defendant No.2, is that a

statement is made before me on behalf of the plaintiff that plaintiff receives

no great benefit out of the advertisements issued at commercial rates,

because the plaintiff only gets 15% commission out of the total payment,

and, in furtherance of this bonafide intention of the plaintiff, counsel for the

plaintiff on instruction from the plaintiff has agreed that whatever amount is

decreed against the defendant No.2 can be deposited in the Court so that the

payments can be first released directly to different newspapers and

magazines whose dues have to be paid, and only after payment of the dues

of the publications (and which will be negotiated by the plaintiff) that

balance amount left in Court be paid to the plaintiff. It is agreed on behalf of

the plaintiff that a Receiver be appointed to act for making the payments of

the negotiated amounts of the dues (principal plus interest) of the

newspapers and magazines. The plaintiff also agrees that plaintiff will

directly negotiate with the newspapers and magazines with respect to the

dues which would be payable to such newspapers and magazines inasmuch

as such newspapers and magazines besides claiming the principal amount

may also claim certain other compensation towards interest. In any case, the

counsel for the plaintiff states that no amount which is deposited by the

defendant No.2 in this Court will be taken by the plaintiff till the dues of

each of the publications i.e the newspapers and magazines are cleared. I

may note that plaintiff has already received a sum of Rs. 59,82,166.80/-, and

it was not clear as to whether some payments from this amount already

received has been made by the plaintiff to any of the publications, however

during the hearing, counsel for the plaintiff on instructions from Sh. Satyapal

Anand, Managing Director of the plaintiff, has made it clear that the plaintiff

had made certain payments to the publications and which payments are duly

appearing in its audited accounts. Details of such audited accounts including

balance sheets and profit and loss account are agreed to be filed in the Court

so that Receiver has the information as to the different payments which have

been made to different publications and the balances due.

(v) It is on the basis of the aforesaid two aspects that I am now

proceeding to decide whether the plaintiff has to be compensated at

commercial rates qua advertisements issued or only at DAVP rates as

claimed by the defendants.

14. I have already adverted to in some detail above the aspect that

the defendant No.2 has in past got advertisements issued not through DAVP

only, but also through other accredited commercial agencies with the INS.

Certain portions of the cross-examination of DW-3/Sh. A.K.

Chandrashekhar on behalf of defendant No.2 are relevant in this regard, and

the same read as under:-

"Q. How many years you served in TCIL?

Ans. I served for 12 years from 1995 till 2007.

Q. Did TCIL during your tenure ever got advertisement done through DAVP?

Ans. No. Q. During your tenure TCIL had been getting the advertisement done in various newspapers and magazine and if so from whom? Ans. From multiple agencies from whom we take quotations. Q. I put it to you that this advertisements in the various agencies was on the commercial rates and not on DAVP rates. What have you to say?

Ans. It is correct.

Q. Is it correct that the TCIL will always get advertisement done through Accredited Advertisement Agencies only? Ans. We go by multiple agencies irrespective of whether they have direct accreditation or not from Newspapers.

Q. Can you give any example when TCIL had gone to a Non Accreditated Advertisement Agency?

Ans. This information can be taken from TCIL as I am no more an employee with TCIL.

Ex.P.X.1 and P.X.2 appear to be correct. Ex.P.X.2 has been certified as a true copy by our Company Secretary whose signature I identify.

xxxx xxxx xxxx xxxx

Ques. Is it correct that DAVP rates are applicable only when Government advertisements are published through DAVP? Ans. I am not aware.

Ques. Is it correct that TCIL had been giving advertisements through other agencies and as well through the plaintiff prior to this advertisement?

Ans. TCIL had been giving the advertisements to other agencies as well as the plaintiff only TCIL's own advertisements. Ques. I put it to you that advertisement TCIL had been giving only through INS Accredited Advertising Agencies. What have you to say?

Ans. No. Ques. Is it correct that the rates to those agencies were paid on commercial basis and not on DAVP rates?

Ans. Whenever TCIL had released their own advertisements through any agency which is paid on commercial rates as PSU's are not entitled on DAVP rates. It is only the Government who are entitled for DAVP rates and TCIL had released only their own advertisement.

      xxxx                  xxxx              xxxx           xxxx
      Q:       Is it correct that any advertisement got done by TCIL
      was paid only on commercial rates?
      Ans: Yes. As I understand as per my office it is on
      commercial rates.

It is correct that if the government get the advertisement done through DAVP, the government pays to them (DAVP) at DAVP rates.

xxxx xxxx xxxx xxxx"

15. One thing is very clear that it is only through an accredited

agency (with INS) such as the plaintiff that the advertisements can be

published through the various publications and also that the discounted rates

are those which are clearly specified by INS i.e rates are not nebulous.

Further, the defendant No.2 was not hidebound to get advertisements issued

only through DAVP, and it had got advertisements issued in the past through

accredited agencies of INS such as the plaintiff and had paid for the

advertisements at commercial rates. Also, there are publications which are

covered and have a contract with DAVP, but, there are other publications

with which DAVP has no contract, and therefore, since the list of

publications ( i.e both newspapers and magazines) in which the plaintiff had

to issue the advertisements included certain newspapers and magazines

which did not have DAVP contracts, it was necessary for advertisements to

be issued not directly by the defendant No.1 but through the defendant

No.2/PSU which was not bound to get the advertisements issued only

through DAVP approved publications and at DAVP rates. On account of the

short period of time in which the publications were to be issued, inasmuch as

the Minister was visiting the exhibition in Geneva in October 1995 and had

to carry the advertisement material with him which showed opening of the

telecommunication sector in India to the world, the plaintiff was directed to

go ahead in issuing the advertisements without waiting for a formal order.

The plaintiff got the advertisements published in good faith, and for the

same it became liable to pay amount of over Rs. 2 crores to the publications.

Failure to pay the publications resulted in deaccredition of the plaintiff from

INS. Also, at no point of time, did any of the defendants ever write a letter

to the plaintiff before the advertisements were got published from October,

1995 to January, 1996 that the plaintiff will only be paid at DAVP rates.

Therefore, the defendants having taken the benefit of the services of getting

the advertisements issued in various publications at commercial rates must

pay for them. The defendant No.2 therefore on the principle contained in

Section 70 of the Contract Act, 1872 is bound to pay the plaintiff at the

commercial rates, and which rates were admittedly being paid by the

defendant No.2 as per past practice to other commercial advertising agencies

who are accredited with INS, the plaintiff being one such accredited agency.

16. I note that counsel for the defendant No.2 wanted this Court to

give a finding that there should be an apportionment of liability of payment

inter se the defendant Nos.1 and 2, however, that dispute is a dispute inter se

the defendant Nos.1 and 2, and surely the defendant No.1 being the parent

Ministry will look into the aspect, however, since there is no counter claim

filed before me by the defendant No.2 against the defendant No.1, I cannot

pass any decree asking the defendant No.1 to take over the liability or

apportion the liability which is the subject matter of the present suit.

17. I refuse to grant any damages as claimed by the plaintiff

inasmuch as this is a case of non-payment of dues, and under issues of

contract, there can only be a requirement of payment of balance dues with

interest, and no damages arise in contractual matters de hors the aspect of

payment of balance dues. Also, the plaintiff has failed to lead any credible

evidence whatsoever on the aspect of any alleged damages which have been

suffered by him, and which further persuades me to decline the claim of

damages.

18. Accordingly issue Nos.3 and 4 are decided in favour of the

plaintiff and against the defendant No.2 by holding that the plaintiff will be

entitled to the balance principal amount of Rs. 1,36,01,743.20/- from the

defendant No.2.

So far as additional issue as framed on 13.9.2004, the same is

decided against the plaintiff holding that plaintiff is not entitled to any

damages as claimed by it.

Issue No.1

19. This issue of limitation arises because the invoices are of

November, 1995 and February, 1996 whereas the suit is filed on 25.1.2000

i.e beyond three years. The suit is however within limitation as a part

payment of Rs. 59,82,166.80/- was made to the plaintiff on 30.1.1997, and

which part payment by cheque extends limitation under Section 19 of the

Limitation Act, 1963 by three years upto 30.1.2000. The suit filed on

25.1.2000 is thus not time-barred and I hold accordingly.

Issue No.5

20. This issue is that whether the plaintiff is entitled to interest, if

so for what period and at what rate. This aspect will cover two parts i.e pre-

suit interest and the pendente lite and future interest.

21. Considering the facts of the present case where there is in a way

some lapse on the part of the plaintiff in getting a proper contract signed, and

which really is the cause of disputes, I am inclined to grant pre-suit interest

only @ 6% per annum simple. This rate of interest will be payable from

1.2.1997 inasmuch as part payment of Rs. 59,22,344.80/- was made by a

cheque which was handed over on 30.1.1997. Thus, pre-suit interest which

would be payable would be at 6% per annum simple on the balance principal

amount of Rs. 1,36,01,743.20/- from 1.2.1997 till the date of filing of the

suit. I am also of the opinion that even pendente lite and future interest till

payment should also be granted at the same rate of 6% per annum simple.

While granting interest at the rate of 6% per annum simple, I have duly

factored in the position that really the plaintiff will only be entitled to 15%

of the total amount payable as commission alongwith the interest thereon.

Since there are further intricacies with respect to payment of amounts to the

different publications with interest and the entitlement of the plaintiff,

considering that some amount of balancing will be required, interest of

justice will be met on the plaintiff being granted interest @ 6% per annum

simple pre suit, pendente lite and future.

Relief

22. In view of the above, suit of the plaintiff is decreed for a sum of

Rs. 1,36,01,743.20/- alongwith interest from 1.2.1997 till the filing of the

suit @ 6% per annum simple and also pendente lite and future interest @ 6%

per annum simple till payment. Parties are left to bear their own costs.

Decree sheet be prepared.

I reiterate that the amount which would be payable by the

defendant No.2 to the plaintiff, on this judgment becoming final, will

necessarily be deposited only in this Court and will not be released to the

plaintiff unless the negotiated dues of the different publications in which

advertisements were done by the plaintiff are first cleared.

I appoint Mr. Prasouk Jain, Advocate, office at:459, Old Block,

Delhi High Court, New Delhi-110003, Mobile No.9899314700 as a

Receiver in this case for taking all actions for distributing the decretal

amount which would be deposited in this Court on the present judgment

becoming final to the respective publications which are the subject matter of

Ex.P66 to Ex.P79 and Ex.P84 to Ex.P89. I may state that counsel for the

plaintiff has no objection to appointment of Mr. Prasouk Jain, Advocate as a

Receiver in this case although he is associated with Mr. B.V. Niren, counsel

appearing for UOI. Fees of the Receiver are fixed at Rs. 1 lakh for the work

to be done by him under the present judgment including taking all necessary

steps and also communicating with the different publications for payment of

their respective dues. The Receiver will be entitled to all out of pocket

miscellaneous expenses in addition to his fees. Also, if so requested by the

plaintiff, the Receiver can after payment of the dues of the publications

correspond with the INS on behalf of the plaintiff.

The suit is decreed and disposed of with the aforesaid

observations.

VALMIKI J. MEHTA, J NOVEMBER 27, 2012 Ne