T L Verma & Co Pvt Ltd. vs Gammon India Ltd.
2013 Latest Caselaw 5049 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       I.A. No. 14953/2012 (O.XXXVII R.3(5) CPC) in CS(OS) 2219/2011
%                                                      Reserved on: 22nd October, 2013
                                                       Decided on: 1st November, 2013

T L VERMA & CO PVT LTD.                                             ..... Plaintiff
                                            Through:     Mr. Sunil Malhotra, Advocate.

                                   versus

GAMMON INDIA LTD.                                                    ..... Defendant
                                            Through:     Mr. Ritesh Agrawal, Advocate.

CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA

I.A. No. 14953/2012 (u/Order XXXVII Rule 3 (5) CPC)

1.

By this application the Defendant seeks leave to defend inter alia on

the ground that the suit filed by the Plaintiff does not disclose any cause of

action within the jurisdiction of this Court. The Plaintiff is based in

Chandigarh, the Defendant has its registered office in Mumbai and

admittedly the goods were supplied at Alwar, Jaisalmer and Jodhpur. The

supply orders were placed and issued by the Defendant Company from its

Mumbai office. Thus no cause of action having arisen in Delhi, this Court

has no jurisdiction to entertain the present suit. Further the present suit

cannot be classified under Order XXXVII CPC as the Defendant has never

raised any invoice or issued a cheque to the Plaintiff and consequently there

was no occasion to return the same as unpaid by the bankers of the

Defendant. The Defendant never admitted its liability. In fact the Plaintiff

Company supplied defective material which was neither as per the IS code

nor the specification informed and thus the same was rejected causing heavy

loss to the Defendant Company. The Plaintiff Company was required to

provide Test Certificate with every consignment as per the purchase order

which were not provided by them. Further in most of the consignments, 20-

30% of the material was found broken and could not be utilized by the

Defendant Company. The Defendant Company has no office, employee or

staff at second floor Ahluwalia Chambers, Sector-16-17 LSC Madangir,

Delhi and the same is only a correspondence address. Thus leave to defend

be granted.

2. Learned counsel for the Plaintiff on the other hand contends that this

Court has territorial jurisdiction to entertain the suit in terms of Section 20

CPC as the Defendant Company is working for gain at Delhi. Further the

defence sought to be raised are moonshine, sham, bogus and no triable issue

is made out. In the plaint, the Plaintiff has clearly stated that the office of the

Defendant is situated in Delhi. The orders were placed from Delhi and even

the cause of action arose at Delhi. The contention of the Defendant that no

invoices were raised is incorrect. The defence now being taken up that the

goods were rejected as being not of proper quality and in broken condition,

is not borne out from the record as no intimation of the rejection of goods

was sent by the Defendant Company to the Plaintiff and thus this plea is

unsustainable. The Defendant has not released payments against any of the

invoices raised by the Plaintiff till date despite communications. It is for the

first time in the leave to defend application, the Defendant is taking the plea

regarding the quality of the material mala fidely and mischievously. Vide

emails dated 26th August, 2009 and 30th October, 2009 the Purchase Officer

of the Defendant admitted and acknowledged the liability to pay the amount

of Rs. 35,89,039/- to the Plaintiff, copy of which email was also endorsed to

the General Manager and Managing Director of the Defendant. Reliance is

placed on Easter Industries Ltd. vs. Vasudevaya Text Pvt. Ltd. and another,

FAO No. 797/2003 decided on 13th November, 2007; Narender Gupta vs.

Reliance Polycrete Ltd. and others, 178 (2011) DLT 196; Modipon Limited

vs. Singhal Transport Corpn, 183 (2011) DLT 195 and Srodeep Polymers

Ltd. vs. SCJ Master Batches, 179 (2011) DLT 595.

3. I have heard learned counsel for the parties.

4. The Plaintiff has filed the present suit under Order XXXVII CPC for

recovery of Rs. 45,65,835/- along with interest. The case of the Plaintiff is

that the Plaintiff Company having its registered office at Chandigarh,

supplies and distributes glasses and plywoods. The Defendant is a civil

engineering construction company executing works pertaining to

construction of bridges, ports, power stations, dams and other civil works in

India and abroad and had undertaken certain works at Jodhpur, Alwar and

Jaisalmer. The Defendant approached the Plaintiff for supply of glass and

related materials for the works to be executed by it at the three places

mentioned above. The Plaintiff agreed to supply the requisite quantity of

material. For the Jodhpur site, the Defendant raised two purchase orders

dated 24th December, 2008 and 27th December, 2008 on the Plaintiff for

supply of plain glasses and figured glasses as per the specifications. The

Plaintiff sent the consignment consisting of eight cases of glass and raised

the invoice dated 25th December, 2008 on the Defendant for an amount of

Rs. 3,48,818/- however, no payment has been made to the Plaintiff against

the invoice dated 25th December, 2008. The Defendant also placed purchase

orders for supply of glasses which were sent vide Lorry Receipt No. 2604

dated 29th December, 2008 and the invoice was raised for an amount of Rs.

4,02,484/-. Another consignment was sent at Jodhpur vide invoice dated 16th

January, 2009 for an amount of Rs. 4,76,990/-. Further materials were sent

vide invoices dated 16th January, 2009 and 2nd March, 2009 to the Defendant

for an amount of Rs. 4,76,990 and Rs. 1,31,036/- however, no payments

have been received. Similarly for the Alwar site materials were supplied

vide invoices dated 2nd January, 2009, 19th January, 2009 , 24th January,

2009, 2nd February, 2009, 6th February, 2009, 2nd March, 2009. For the

Jaisalmer site goods were supplied vide invoices dated 2 nd February, 2009,

27th February, 2009 and 25th March, 2009. Since the Defendant failed to

make the payments, negotiations were entered into. Vide emails dated 26th

August, 2009 and 30th October, 2009 the Defendant admitted and

acknowledged its liability for a payment of amount of Rs. 30,85,039/-. The

email dated 30th October, 2009 was also endorsed to the General Manager

and Managing Director of the Defendant. Further the legal notice dated 2nd

November, 2010 was also sent to the Defendant under the Provisions of

Sections 430 and 433 of the Companies Act however, still the Defendant

failed to make the payment. Thus the Plaintiff filed the present suit for

passing of a decree for an amount of Rs. 30,85,039/- with interest thereon @

24% per annum which makes the total of Rs. 45,65,834/- and also the

interest pendente lite and future.

5. The first and foremost issue which arises is whether this Court has

jurisdiction to entertain the present suit. Admittedly, the Plaintiff is based in

Chandigarh and the Defendant in Mumbai. The goods were supplied at

Rajasthan. However, a perusal of the communications between the Plaintiff

and the Defendant placed on record show that the Defendant had been

placing the purchase orders from its Delhi office, that is, Ahluwalia

Chambers, 16/17, LSC, Madangir, New Delhi-110062. The communications

also give the phone numbers and email address of the Delhi office. Once the

purchase orders have been placed by the Defendant from its office at Delhi

and the Defendant is operating from Delhi it can safely be held that the

Defendant is working for gain at Delhi and thus this Court has jurisdiction to

entertain the present suit. I find no merit in the plea of the learned counsel

for the Defendant that there was no office of the defendant at Delhi and the

same was only a correspondence address.

6. The Plaintiff has placed on record the original invoices issued by the

Plaintiff to the Defendant as noted above. A perusal of the invoices shows

that it contains a clause that 'all disputes subject to Chandigarh jurisdiction

only.' In the present case there is no cause of action which arose in

Chandigarh and it is only the Plaintiff Company which is situated at

Chandigarh. It is well settled that by consent, the parties cannot confer the

jurisdiction on a court which does not have the jurisdiction however, the

parties may subject themselves to one particular Court out of the courts

which have jurisdiction to entertain the suit. As noted above the Court at

Chandigarh has no jurisdiction to entertain the suit as per Section 20 CPC

and in view thereof the parties cannot by agreement confer the jurisdiction

on the court at Chandigarh.

7. The defence now taken by the Defendant is that the goods were

defective as they did not conform to the IS specifications and 20-30% goods

were broken in each consignments however, no material has been placed on

record by the Defendant to show that on receipt of the goods the Defendant

objected to either the inferior quality of the goods or that they were broken.

The goods having been accepted, the Defendant cannot now proceed to take

this defence and thus the same is liable to be rejected being sham and bogus.

The Plaintiff has not only placed the invoices on record but has also placed

on record the emails dated 26th August, 2009 and 30th October, 2009 to show

the acknowledgment of the liability. The Hon'ble Supreme Court in M/s.

Mechelec Engineers & Manufacturers Vs. M/s. Basic Equipment

Corporation (1976) 4 SCC 687 noted with approval the decision in Smt.

Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 , laying

down the following principles applicable to cases covered by Order XXXVII

C.P.C.:

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the Plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.

(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the Plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.

(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the Plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence.

8. In view of the facts noted above, I find no reason to grant leave to

defend to the Defendant.

Application is dismissed.

CS(OS) 2219/2011

In view of the fact that this Court has already declined the leave to

defend to the Defendant, a decree for recovery of a sum of Rs. 30,85,039

along with interest @ 9% from the date of admission, that is, 26th August,

2009 till the realization is passed in favour of the Plaintiff and against the

Defendant. The Plaintiff is also entitled to cost of Rs. 25,000/-.

Suit is accordingly disposed of. The registry shall prepare the decree

sheet accordingly.

(MUKTA GUPTA) JUDGE NOVEMBER 01, 2013 'vn'