Ahaar International (India) Ltd. vs Sifter Project Services & Anr.
2012 Latest Caselaw 6148 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           CS(OS) 1152/1999
%                                                         12th October, 2012

AHAAR INTERNATIONAL (INDIA) LTD.                 ...Plaintiff
                 Through: Mr. Peeyush Kalra and Mr. Omar Siddiqui
                          Advocates.


                            VERSUS

SIFTER PROJECT SERVICES & ANR.                                   ...... Defendants
                   Through:

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

    To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.

The subject suit for recovery of ` 44,62,827.00 has been filed by the

plaintiff/buyer against the defendant which is the seller/supplier of various

machineries and equipments and whose job also included their erection and

commissioning. Machinery was towards the Roller Flour Mill having capacity of

120 MT per day. Recovery is claimed on the ground that entire machinery was not

supplied, entire contract was not performed, and hence, the machinery already

supplied are of no use to the plaintiff and hence the price paid towards machineries

supplied be refunded.

2. The facts as pleaded in the plaint are that the defendant no.1 sent its

quotations dated 19.2.1996 (Ex.PW1/C) to the plaintiff, and which was accepted

by the plaintiff vide its letter dated 21.2.1996 (Ex.PW1/D). Plaintiff claims that

the defendants represented that by installation of the Flour Mill supplied by the

defendant no.1, plaintiff could save over 20 lacs per year, and on installations there

will be a saving of 40-50 lacs. It is also averred in the plaint that it was represented

that the area occupied by this Flour Mill will be 26 ft. in breadth and 60 ft. in

length and 38 ft. in height. It is also pleaded that the defendants had issued a

similar advertisement in a Hindi Newspaper-Vyapar Bharti on 12.9.1996. Plaintiff

pleaded a further representation by the defendants that 100 H.P. electricity

consumption will be saved and as against four to six persons ordinarily required in

older technology to operate the Flour Mill, in new only two persons would be

required. It was further pleaded that the Flour Mill supplied was to be fitted on a

steel structure as per the representation made by the defendants and there shall be a

saving time of six months with respect to the installation of the plant. It is further

pleaded in the plaint that the defendants represented that maintenance on the

machines will be reduced to ` 24,00,000/- per annum. Plaintiff claims that it is on

all these abovestated representations that the plaintiff accepted the quotation of the

defendants dated 19.2.1996. Plaintiff further pleads that it accepted the offer of the

defendants vide its letter dated 21.2.1996 and sent a sum of ` 5,00,000/- alongwith

this letter to the defendants as advance payment. It is pleaded in the plaint that the

defendants failed to perform the contract as agreed, and failed to erect and install

the Roller Flour Mill by the promised date of 30.4.1996. In the meanwhile, the

defendant no.1 had received a sum of ` 23,00,000/- from the plaintiff. Plaintiff

pleads that the machinery supplied by the defendants are lying with the plaintiff

without the same being erected or commissioned and which have not been taken by

the defendants in spite of various communications made to them. There are

further averments in the plaint with respect to the other alleged breaches by the

defendants, and also of a fraud being perpetrated on the plaintiff inasmuch as the

defendants are stated to have misrepresented the facts. The plaintiff, therefore, has

claimed the suit amount of ` 44,62,827/- which is broken up as per para 28 of the

plaint as under:-

"i)    Refund of total amount paid                  Rs.23,00,000-00
ii)    Interest @ 18% per annum from
       16.7.96 to 28.2.99                           Rs.10,86,750-00
iii)   Storing charges                              Rs. 78,750-00
iv)    Damages/Compensation                         Rs. 5,00,000-00
v)     Paid to Mukul Bros. on the
       recommendation of the defendants.            Rs. 1,44,000-00
vi)    Paid to M/s Punjab Engineering Co.
       on account of electric motors on the         Rs. 3,55,327-00
       recommendation of the defendants.            ________________
              Total                                 Rs.44,62,827-00

                                                    ________________"

3. The defendants contested the suit and pleaded that the contract

between the parties was encompassed not in the letter of the plaintiff dated

21.2.1996 (Ex.PW1/D) but in the defendants' letter dated 19.2.1996 (Ex.PW1/C).

It is pleaded that the terms as stated in the letter dated 21.2.1996 were never agreed

between the parties inasmuch as this plaintiff's letter dated 21.2.1996 was never

received by the defendants. It was further pleaded that the letter dated 21.2.1996

refers to the duplicate being signed but the same was never signed showing that the

contract is not contained in the letter dated 21.2.1996 of the plaintiff to the

defendant no.1. The defendants further pleaded that the letter of the plaintiff dated

14.12.1996 (Ex.PW1/D1) making false allegations was sent to the defendants, and

the same was replied to by the defendants in terms of their letter dated 31.12.1996

(Ex.DW1/P1). The defendants further pleaded that it is the plaintiff who is guilty

of breach of contract, and it failed to make payments due. It is further pleaded that

there were no representations as alleged by the plaintiff in para 5 of the plaint. The

defendants further pleaded that the defendants had already supplied goods worth

`24,00,180/- and against which, they have received only a sum of `23,00,000/-

from the plaintiff. Accordingly, it is prayed that the suit be dismissed.

4. The following issues were framed in this suit on 10.9.2001.

1. Whether the suit as framed, is maintainable in its present form as alleged in P.O.No.1?OPD

2. Whether there exists a valid and binding contract between the parties?OPP

3. Whether this Court has territorial jurisdiction to try and entertain the present suit?OPD

4. Whether the suit is bad for non-joinder of parties? OPD

5. Whether the suit is independent of the alleged contract dated 21.2.1996?OPD

6. Whether Shri S.K.Mittal is the authorized signatory to file the present suit? OPP

7. Whether the defendants have supplied machinery worth Rs.24,00180/- against the payment of Rs.23 lakhs as alleged? OPD

8. Whether the consent of the plaintiff for the contract of installation, erection and commissioning of Roller Flour Mill was obtained by the defendants by fraud and mis-representation?

9. Whether the defendant failed to perform the contact as agreed?

10.Whether the plaintiff is entitled to Rs. 44,62,827/- on account of refund of the amount, storing charges, damages/compensation?

11.Whether plaintiff is entitled to interest, if so, at what rate?

12.Relief."

5. Though, the defendants contested the suit and led evidence, at the

stage of final arguments, the defendants were not represented before me inasmuch

as, one proxy counsel Ms. Sunita Tiwari, Advocate appeared on behalf of the main

counsel Sh. Vimal Goel, Advocate and stated that the defendants had taken back

the file from the counsel and therefore counsel could not assist the Court.

Issue No.6

6. This issue pertains to the due filing of the suit, and since the plaintiff

has proved and exhibited the resolution Ex.PW1/A authorizing Sh. S.K.Mittal to

file the suit, it is held that the suit is validly instituted and Sh. S.K.Mittal was the

due authorized signatory of the plaintiff.

Issue No.4.

7. Counsel for the plaintiff states that this issue has been framed qua the

liability of defendant no.2. However, no evidence has been pointed out to me

during the course of arguments by the counsel for the plaintiff as to how the

defendant no.2 is liable for the liability of the defendant no.1. Accordingly, it is

held that there would be no liability of the defendant no.2 and the liability, if any,

can only be of the defendant no.1 with whom the plaintiff alleges that the contract

was entered into.

Issue no.3.

8. This issue pertains to the territorial jurisdiction. Since the defendant

no.1 had agreed to erect and commission the machinery and equipment on the

plaintiff's promises, performance of the contract would be at Delhi and therefore,

this Court has territorial jurisdiction. This issue is decided in favour of the plaintiff

and against the defendants.

9. All these issues which are now being taken up together can be broken

up effectively into the following broad heads:-

(i) Whether the contract between the parties is contained in the defendants'

letter dated 19.2.1996(Ex.PW1/C) or the plaintiff's letter dated 21.2.1996

(Ex.PW1/D), or partly in both and partly in oral representations and also oral

agreements entered into during the performance of the contract?

(ii) Who was guilty of breach of contract i.e the plaintiff or the defendants?

(iii) Even if, the defendants are guilty of breach of contract, what is the relief

which the plaintiff will be entitled to?

10. It is trite that for any contract there has to be consensus ad idem i.e

meeting of minds of both the parties on all the necessary terms and conditions. If

there is no meeting of minds on the relevant terms, there would be no contract

between the parties. In the present case, admittedly, there is no specific written

contract signed by both the parties containing the terms and conditions of the

agreement. Therefore, decision on the issue of consensus ad idem is not easy to

answer.

11. The letter dated 19.2.1996 of the defendant no.1 to the plaintiff was an

offer is not disputed on behalf of the plaintiff. This letter states that it is a quotation

for the various items of machinery and the works as specified in the letter plus cost

of erection. It is also argued on behalf of the plaintiff before me that offer

contained in the letter of the defendants dated 19.2.1996 is accepted by the plaintiff

by the plaintiff's letter dated 21.2.1996, and which letter dated 21.2.1996 is

therefore the contract binding the parties. The letter dated 21.2.1996 is however

not an acceptance as is the meaning of the term under the Contract Act.

Acceptance to be an acceptance in law has to be absolute and unqualified. When

we look at the letter dated 21.2.1996 by the plaintiff to the defendant no.1, the

same does not make absolute and unqualified acceptance of the terms as stated by

the defendant no.1 in its letter dated 19.2.1996. The letter dated 21.2.1996 thus in

fact amounts to a counter offer. As per this counter offer, besides the price being

reduced to `45,00,000/-, the quotation contained in the letter dated 19.2.1996 of

the defendant no.1 has been changed on other aspects including with respect to the

amount of `45,00,000/- being inclusive of all taxes, the job to be performed under

the contract will also be of supply, erection, installation and commissioning of the

Roller Flour Mill, and, that the date for completion of the job would be 30.4.1996.

The aforesaid changed terms are different than as contained in the quotation of the

defendant no.1 dated 19.2.1996. This counter offer of the plaintiff contained in the

letter dated 21.2.1996 specifically in the second last para of page 2 thereof required

the defendants to sign the letter in duplicate as token of acceptance of the terms of

the letter. Admittedly, the defendant no.1 at no point of time ever signed a

duplicate copy of this letter dated 21.2.1996 and sent the same to the plaintiff. In

fact, the witness of the plaintiff Sh. Suresh Kr. Mittal, PW-1 in his cross-

examination dated 1.5.2006, not only categorically admitted that this letter dated

21.2.1996 has not been signed by the defendants, but also the plaintiff never raised

any protest to the defendant no.1-company of not receiving back of duplicate of the

letter dated 21.2.1996 after signing by the defendant no.1 on the said letter. It is

further admitted by Sh. S.K. Mittal PW-1, in his cross-examination that he did not

lodge any protest with the defendant no.1 of not receiving the duplicate of the letter

dated 21.2.1996 signed by the defendant no.1. The defendant no.1 denies the

receiving of the letter dated 21.2.1996 and it is not proved by the plaintiff as to

how the defendant no.1had received this letter. Therefore, it is clear that it cannot

be said that the contract was complete as per the terms contained either in the letter

dated 19.2.1996 or the letter dated 21.2.1996.

12. In fact, that neither of the aforesaid two letters dated 19.2.1996 and

21.2.1996 are embodiment of all the terms of the parties, it becomes clear from the

two subsequent letters, one dated 14.12.1996 (Ex.PW1/D1) of the plaintiff to the

defendant no.1, and the other being the defendants' reply dated 31.12.1996

( Ex.DW-1/P1). When we look at the letter of the plaintiff dated 14.12.1996, the

following salient points come out:-

(i) Though the plaintiff in its earlier letter dated 21.2.1996 wrote the date of

completion as 30.4.1996, however, in this letter dated 14.12.1996 the plaintiff has

written the date of completion to be of a much later date being 15.8.1996.

(ii) The plaintiff has written that the defendants were grabbing monies however,

while reducing the price from ` 53,31,000/- as stated by the defendant no.1 in its

letter dated 19.2.1996 to a sum of ` 45,00,000/- in the letter of the plaintiff dated

21.2.1996, however, the term that 35% will be paid in advance thereunder was not

changed i.e the plaintiff had to pay 35% of the price of `45,00,000/- i.e

`12,25,000/- alongwith letter dated 21.2.1996, however, only a sum of `5,00,000/-

was given.

(iii) Though there is no mention in the letter dated 21.2.1996 of the plaintiff to

the defendant no.1 of whether civil work of the foundation was to be done by

whom, the letter dated 14.12.1996 indicates that there was an alteration of the term

of the foundation from a steel structure as contained in the defendant no.1's letter

dated 19.2.1996 to a cemented/concrete foundation.

(iv) The letter of the defendant no.1 to the plaintiff stated the price at

`53,31,000/- exclusive of all other taxes and which was reduced to `45,00,000/-

inclusive of all taxes by the plaintiff in its letter dated 21.2.1996, however, the

plaintiff, in its letter dated 14.12.1996 admits that the sales tax is to be paid by the

plaintiff and not by the defendant no.1.

(v) The plant and machinery in terms of defendant no.1's letter dated 19.2.1996

was to be of the capacity of 120 MT in one day i.e 24 hours, however, the plaintiff

in its letter dated 14.2.1996 argued that the 120 MT was to be produced not in one

day but in 20 hours and that too with respect to output being 60% Maida, 10%

Suji, 20% Choaker and 10% Atta.

(vi) The plaintiff in its letter dated 14.12.1996 talks of making payment of 10%

of the price only after the machineries are found to be in good working condition at

the plaintiff's premises, and which is not a term which is found in the plaintiff's

letter dated 21.2.1996 to the defendants.

There are other minor changes also as stated in the plaintiff's letter

dated 14.12.1996 than as contained in the two earlier letters dated 19.2.1996 and

21.2.1996.

13. In the reply to the letter dated 14.12.1996 of the plaintiff, the

defendant no.1 vide its letter dated 31.12.1996 did not dispute that the contract was

reduced to ` 45,00,000/- and that too for supply, erection and commissioning,

however, the defendant no.1 stated that it was the plaintiff who was guilty of not

performing the obligations as agreed upon including of delaying and failing in

making of the due payment. In this letter, the defendant no.1 again reiterates that

the capacity of Roller Flour Mill was to be of 120 MT in one day and not in 20

hours as stated by the plaintiff in the letter dated 14.12.1996. Defendant no.1 in

this letter reiterates the fact that the plaintiff has breached the term and condition of

payment of 35% of price as advance.

14. Therefore, we have, in order to understand so called agreed terms

between both the parties i.e plaintiff and defendant no.1, referred to in detail to

four documents being the defendant no.1's letter dated 19.2.1996 (Ex.PW1/C),

plaintiff's reply dated 21.2.1996 (Ex.PW1/D), plaintiff's notice dated 14.12.1996

(Ex.PW1/D1) and defendant no.1's reply dated 31.12.1996 (Ex.DW1/P1). The

total of all the four letters only leads to confusion worse confounded on very

crucial aspects i.e (i) whether the term of advance price of 35% stood between the

parties, and if that be so, the plaintiff has clearly breached its part of the contract; (ii)

whether the sales tax was or was not payable by the plaintiff inasmuch as, though the

plaintiff did say in the letter dated 21.2.1996 that the amount of ` 45,00,000/-

was inclusive of all taxes, in the subsequent letter dated 14.12.1996, it is admitted

that plaintiff will bear the sales tax; (iii)whether the plant had to have capacity of

120 MT in one day or 24 hours as the letter dated 19.2.1996 of the defendant no.1

to the plaintiff states that this capacity agreed was of 120 MT per day or the

production capacity had to be 120 MT in 20 hours as was the contention of the

plaintiff in the letter dated 14.12.1996; (iv)what was the final date for completion

of the contract i.e was it 30.4.1996 as written by the plaintiff in its letter dated

21.2.1996 or it was 15.8.1996 as written by the plaintiff in its subsequent letter

dated 14.12.1996 or that the time of performance whether by the plaintiff or by the

defendants or by both was or was not the essence of the contract. Admittedly, in

law, once time is not found to be the essence of the contract, unless a specific

notice is given specifying a time for performance of the obligation, there does not

arise the issue of breach and it cannot be determined as per the existing evidence

on record that it is the plaintiff or the defendants who clearly is/will be guilty of

breach of contract, however, the plaintiff is atleast guilty of breach of contract qua

the non-payment of the initial price of 35% as also qua the payment of the sales tax

component.

15. In view of the above discussion, I find that the plaintiff has failed to

discharge its onus of proof that it were the defendants who failed to perform their

part of the obligations by failing to perform the various terms and conditions of the

contract including for the reason that the terms themselves are obscure in many

crucial aspects. Further, the plaintiff has also failed to discharge onus that the

defendants gave wide and varied promises as stated in para 5 of the plaint and

which have been detailed in the para 2 of the present judgment. It may be noted at

this stage that the plaintiff relies upon a newspaper advertisement dated 12.9.1996

which is inserted by the defendant no.1 with respect to its plants whereas, the

contract in this case is much earlier of February, 1996 and therefore, one fails to

understand as to how any insertion by the defendants of advertisement much later

of September 1996 can in any manner be taken as encompassing agreed terms and

conditions of a contract which was said to have been entered into in February,

1996. So far as the existence of a valid and binding contract between the parties is

concerned, it cannot be said with total certainty that there was a binding contract in

the sense that there is the requisite clarity with respect to each and every crucial

term. Unless there is a clarity on each and every crucial term and which crucial

terms are detailed above, I am of the opinion that the plaintiff has failed to

discharge onus of proof that there existed a specific binding contract between the

parties and it appears that the parties kept on agreeing, disagreeing, then again

agreeing or changing various crucial terms of the contract. In the present state of

facts, it cannot be said that the defendant no.1 is guilty of alleged fraud or mis-

representation as is the case of the plaintiff. It cannot be said that the defendant

no.1 failed to perform its part of the contract, inasmuch as, not only there is lack of

clarity on the issue of what are the specific terms agreed between the parties, there

is even lack of clarity as to in which manner the reciprocal promises have to be

performed including when payments had to be made by the plaintiff, in what

installments, in what manner/stage and how was the same to be corresponded by

the performance of the obligations by the defendants. I may finally state that

though the plaintiff had claimed damages of ` 5 lacs, even assuming that there was

a contract and complete clarity with regard to all the terms of the contract, and also

that the defendant no.1 breached the contract, the plaintiff has not led credible

evidence as to how the claimed figure of damages is proved or established.

Damages also therefore cannot be awarded as prayed for by the plaintiff. Issue

nos. 1,2,5,7,8 and 9 are decided in favour of the defendants and against the

plaintiff.

16. Once it is held that the plaintiff is not entitled to the principal amount,

the plaintiff will also not be entitled to interest. This issue is decided in favour of

the defendants and against the plaintiff.

Relief:-

17. Before I pronounce finally on the suit, I must state that though the

case of the plaintiff was that that defendants can take away the machinery

whenever it so chooses, however, at the stage of final arguments, if the suit was to

be decreed, there had to be simultaneous and corresponding obligation for the

plaintiff to return back the machinery of ` 23,00,000/- which admittedly was lying

with the plaintiff, but, to a query put by the Court, counsel for the plaintiff states

that at least as of today, the plaintiff cannot return this machinery inasmuch as, this

machinery alongwith the complete premises was taken over by the Bank from

whom the plaintiff had taken a loan. Counsel for the plaintiff, however, states that

the plaintiff has already moved an application before the Debt Recovery Tribunal

where a suit by the Bank has been filed so that machinery which was the subject

matter of the contract with the defendants, can be taken back. To this aspect, I

cannot pronounce upon inasmuch as, there is no application filed by the plaintiff in

this Court alongwith requisite documents, however, one thing is clear that the

plaintiff is not in a position to return the machinery of ` 23,00,000/- and even if,

decree had to be passed in favour of the plaintiff and against the defendants for

recovery, the same had to be necessarily conditional upon the plaintiff returning

the machinery, and which cannot take place as the plaintiff cannot return the

machinery purchased from the defendants.

18. In view of the above, the suit of the plaintiff is accordingly dismissed,

leaving the parties to bear their own costs. Decree sheet be prepared.

OCTOBER 12, 2012                                     VALMIKI J. MEHTA, J.
ib