Delhi High Court

M/S Park Side Limited vs M/S Blues Luxury Impex Pvt Ltd on 21 October, 2013

Author: Mukta Gupta

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      IA No. 8109/2011 in CS(OS) 437/2011
%                                          Reserved on: 26th September, 2013
                                           Decided on: 21th October, 2013
M/S PARK SIDE LIMITED                                       ..... Plaintiff
                   Through:             Mr. Anupam Srivastava, Mr. Anil
                                        Kumar Chandel and Mr. Chandra
                                        Shekhar, Advocates.
                               versus

M/S BLUES LUXURY IMPEX PVT LTD               ..... Defendant
                  Through: Mr. Sidharth Dutta, Advocate.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA

IA No. 8109/2011 (u/Order XXXVII Rule 3 CPC by Defendant)

1.

By this application under Order XXXVII Rule 3 CPC the Defendant

seeks leave to defend.

2. Learned counsel for the Defendant contends that a summary suit under

Order XXXVII CPC can be based only on a written contract and all invoices

cannot be deemed to be a written contract. Invoices relied upon by the

Plaintiff do not have the necessary terms of agreement. The invoice only

gives number of articles and the value thereof. Neither the brand name nor

the quality of the goods is mentioned. Further particulars of sellers, terms of

supply, and place of supply are not mentioned. Thus no terms of contract are

incorporated in the invoices and only term of payment is noted. Being

devoid of terms and conditions of the contract, the invoices cannot be said to

be a binding contract. The decision in M/s Lohmann Rausher Gmbh vs. M/s

Medisphere Marketing Pvt. Ltd, 2005 (80) DRJ 9 relied upon by the Plaintiff

is not applicable to the facts of the present case. Hence the Defendant is

entitled to grant of leave to defend. Reliance is placed on M/s Sunil

Enterprises and another vs. SBI Commercial and International Bank Ltd.,

1998 (5) SCC 354; Bharat Forge Ltd. vs. Onil Gulati, 121 (2005) DLT 357;

A.R. Electronic Pvt. Ltd. vs. R.K. Graphics Pvt. Ltd. 97 (2002) DLT 913; and

Simba F.R.P. (P) Ltd. vs. Department of Tourism, Lucknow, Uttar Pradesh,

1995 (34) DRJ 273.

3. Learned counsel for the Plaintiff submits that all conditions necessary

for the determination of the contract are mentioned in the invoices. Merely

by not mentioning that the disputes will be subject to a particular jurisdiction

would not take the invoices out of the purview of a contract between the

parties. The present case is covered by the decision of this court in Lohman

Rausher Gmbh (supra). Along with the invoices the Plaintiff has also

enclosed the bill of lading. By email dated 18th June, 2009 they agreed to

make part payment and no grievance with regard to the quality of goods was

raised. The Plaintiff and Defendant were in continuous course of

correspondence through emails. Further Sections 41 and 42 of the Sales of

Goods Act are applicable to the facts of the present case. If the goods were

not of the same description the Defendant ought to have returned the same

and not sold them further. The first intimation about the rejection of the

goods was given only after Plaintiff's notice seeking payment was served on

the defendant. The Defendant made part payments and thus was stopped

from disputing the quality of the goods thus no case for leave to defend is

made out and the application be dismissed and the suit be decreed.

4. I have heard learned counsel for the parties.

5. The present suit under Order XXXVII has been filed by the Plaintiff

which is a private limited company incorporated under the laws of the

Republic of Mauritius and engaged in the business of selling fashion garmets

under the name and style of KARL KAISER, NIELS and CERRUTI 1881.

The suit has been filed through its authorized representative Mr. Didier

Camboulives. The Defendant is also a private limited company incorporated

under the Companies Act, 1956 having its corporate office at South

Extension-I, New Delhi and is engaged in the business of retail selling of

high end fashion garments. The Defendant placed orders upon the Plaintiff

vide its invoice dated 16th April, 2009 bearing PK04/2009/454 for the supply

of the following goods.

DESCRIPTION                 QUANTITY   UNIT PRICE          AMOUNT USD
Woolen Jackets              213        60.00               12,780.00
Cotton Trouser              300        14.00               4,200.00
Polo Shirts                 606        08.00               4,848.00
Linen Shirts                500        10.00               5,000.00
Cotton Shirts               2084       10.00               20,840.00
Woolen Suits                1028       100.00              102,800.00
TOTAL                                                      150,468.00

6. It was agreed between the parties that the entire consideration of USD

1,50,468/- was to be paid in four equal installments of USD 36,617/- in the

months of May, 2009, June, 2009, July, 2009 and August, 2009 respectively.

The Plaintiff supplied the consignment of the goods and shipped the same on

9th April, 2009. The goods reached India on or around 20th April, 2009

whereafter they were inspected by the Defendant and the custody of the

consignment was taken after clearing the custom duty. Despite having

accepted the receipt of goods the Defendant did not make the payments as

per the agreed schedule. After great persuasion and follow up, the Plaintiff

received a payment of USD 24,965/- on 11th August, 2009.

7. After the receipt of the goods there were three communications

between the Plaintiff and the Defendant through emails on 18th June, 2009,

25th June, 2009 and 22nd July, 2009. In none of the emails the Defendant

made a grievance regarding the quality or the quantity of the goods received.

Further the Defendant sold the goods to its customers and collected the sale

proceeds. However, despite the same did not make payment to the Plaintiff.

Finally the Plaintiff sent a legal notice dated 6th May, 2010 inter alia

demanding a sum of USD 1,25,468/-. This notice was duly served on the

Defendant. For the first time in the reply dated 25th June, 2010 to the notice

it was stated that upon delivery of the goods it was found that the samples

shown by the Plaintiff's representative in March, 2009 and the goods

actually delivered were not the same and did not meet the minimum quality

standards. It was further stated that the entire deal was based upon the

goodwill enjoyed by the plaintiff in the market and on the basis of quality

assurance standards, guaranteed by the plaintiff and thus terms of such a sale

were not reduced in writing. The Defendant also sought refund of the entire

sum received by the Plaintiff, that is, USD 25,000/- with interest @ 18% per

annum.

8. The invoice dated 16th April, 2009 in the present is reproduced as

under:-

"INVOICE

To,

BLUES LUXURY IMPEX PRIVATE LTD. PK04/2009/454 ST 1 FLOOR, H-64, SOUTH EXTENSION PART-1 NEW DELHI-110049 INDIA Date: 16.04.2009 ATT: MR. DINESH SEHGAL Shipment Date 20.04.2009

DESCRIPTION QTY UNIT AMOUNT PRICE USD USD

Woolen Jackets 213 60.00 12,780.00 Cotton Trouser 300 14.00 4,200.00 Polo Shirts 606 8.00 4,848.00 Linen Shirts 500 10.00 5,000.00 Cotton Shirts 2084 10.00 20,840.00 Woolen Suits 1028 100.00 102,800.00 Total USD 4731 150,468.00

Terms of payment: Payment in 4 installments by T.T.

                               May 09       USD 37,617
                               June, 09     USD 37,617
                               July, 09     USD 37,617
                               Aug, 09      USD 37,617

BANK DETILS; State Bank of Mauritius Ltd., State Bank Tower 1, Queen Elizabeth-II, Avenue Port Louis, Mauritius IBAN : MU93 STCB 1170 0262 0000 5991 0000 00"

9. The present case is clearly covered by the decision of this Court in M/s

Lohmann Rausher Gmbh v. M/s Medisphere Marketing Pvt. Ltd., 2005 (80)

DRJ 9 wherein it was held-

"18. It is not the case of the defendant that the invoices do not conform to the purchase order. As noted, the invoices raised contain the description of the goods, quantity and price. As noted, conditions of payment stand reflected in the invoice. Additionally, delivery address also finds mentioned in the invoice. All features pertaining to a contract of sale of goods are to be reflected in the two invoices. The invoices are a complete contract, required by law, where the contract pertains to sale of goods.

19. The invoices in question would, Therefore, fall within the category of a written contract within the contemplation of Order xxxvII Rule 2 of the Code of Civil Procedure.

20. Section 41 and Section 42 of the Sale of Goods Act reads as under:-

"41. Buyer's right of examining the goods.-

(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

42. Acceptance.- The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."

21. As per the mandate of Section 41 of the Sale of Goods Act, the defendant not having inspected the goods in question prior to delivery, had a right to inspect the case on delivery and report defects within a reasonable time of delivery. If not rejected within reasonable time, mandate of Section 42 stipulates that the defendant would be deemed to have accepted the goods.

22. Undisputably, goods under first invoice were received in the month of May, 2000 and under the second invoice in the month of September, 2000. Defendant, on receipt of the goods, did not indicate to the plaintiff that the goods were defective till as late as 31.12.2001. This was when the plaintiff had served upon the defendant a legal notice in the month of October, 2001.

23. Rejection of the goods predicated on a stand that the goods were sub-standard and defective on 31st December, 2001 is not within a reasonable period of time considering the fact that the goods under the first invoice were received in the month of May, 2000 and under the second invoice were received in the month of September, 2000. Rejection indicated on 31st December, 2001 was after one year and seven months of receipt of goods under the first invoice and one year and three months after receipt of goods under the second invoice. Defendant, as per mandate of Section 42 of the Sale of Goods Act is, Therefore, deemed to have accepted the goods.

24. Three communications from the defendant to the plaintiff being the communications dated 31.1.2001, 30.3.2001 and 3.4.2001 may be noted.

"Dear Dr. Pichler,

-Thanx for your email of 31.01.

-There is no reason to not answer your mail or fax pertaining to the overdue payments, infact when I met you in late Nov' 00 the payment for invoice 1108748 for the amount of DM 35178.14 had already been done to our bankers but it seems that due to delay of this payment beyond 180 days the Reserve Bank of India (R.B.I.) stopped the remittance & advised our bankers to get a 'No interest Charge' certification from the principal company, hence you are advised to send us a certificate to this effect immediately so that we can seek R.B.I.'s permission for release of this payment.

-Anyhow by now the payment of Inv. 1116864 amount DM 41321.- is also due so in order to avoid any further misunderstanding between us we will expedite this payment this month because this can be released immediately as it is well within the R.B.I. Credit guidelines.

-Now, coming back on the subject of 'Help' to reach the Earthquake affected state of Gujarat let me inform you that in the past 2 weeks a lot of Lohmann dressings etc. available ex-stock has already been picked up by the Rescue authorities & sent free of cost to Gujarat. The requirement exists in large numbers for Dressings/Cellacast so if you can rush supplies of whatever is available it will add a lot to the image of Raucher-Lohmann in India plus to this humanitarian cause.

-Yes, whatever payment delays are at our end, needless to worry they are safe & in the process now even though we have contributed a lot as a company to the Country's crisis situation.

-Please let us have your comments on what's available so that we can advise you how & where to ship!

Best regards,

Rajan Bajaj."

"Dear Dr. Pichler,

Please refer your email of 29.3.

Both your payments are awaiting RBI clearance & the necessary 'No Interest Certificate' has been submitted. Due to year ending March 31 there seems to be a delay in processing this approval from RBI. This is not in our hands, we can only follow up with the Government authorities- normally it get cleared- one thing we promise that your money is safe & definitely will be cleared in April' 01.

Because of these delays we had no option but to go ahead & open the L/C for Euro 23,816.84 against your PFI of 15.2.

These goods Along with what we supplied in Jan' 01 are for the Earthquake Relief Fund hospitals run by the State Government & there is a delay in realizing the monies from them at present. In order to secure your monies we opened the L/C but we need more product to complete our orders with the Government to realize our monies.

There is no question of non-payment whether we do business or not, we are an old company & our association is long to think about other activities.

You will be receiving the original L/C this week or early next week if you feel like, please cooperate & send material A.S.A.P. by Air freight to New Delhi on CIF or CNF basis otherwise please send your non-acceptance to the bank with a copy to us.

Add a few brochures Raucher-Lohmann complete booklet Curapore/Opraflex/Cellacast brochures 50 only. Our business with you will get back to normal within the next quarter, I am sure.

Regards, Rajan Bajaj."

"Dear Dr. Pichler,

By the time we were ready to pay your second invoice it had also crossed 180 days & Therefore we had to apply to RBI for clearance & used the same certificate for both the invoices. We do not require another letter from yourselves & assure that during this month these payments will be cleared.

The second invoice was not paid also due to the fact that our payments were stuck with the Government & they only got released on March 31, when the Government ending the fiscal year.

So, please understand the situation that the delays are primarily due to the Government supplies made to the Earthquake areas & money realization took a long time.

Please acknowledge receipt of L/C for Euro 23816.84.

Also you were supposed to visit us this year! What are your plans, once you visit us you will have more confidence in our operations.

Regards, Rajan Bajaj""

10. Even in the decision relied by the defendant in Bharat Forge Ltd. v.

Onil Gulati, AIR 2005 Delhi 369 it was held that an invoice which

incorporates the particulars of seller, purchaser, description of goods, weight,

quantity, rates and price including sale tax and other dues accompanied with

additional terms would be regarded as a written contract on acceptance by

the respondent.

11. In the present case, a perusal of the invoice shows that it specified the

description of the goods, quantity, unit price, final amount, terms of payment

i.e. payment in 4 installments by T.T. on May, 2009, June, 2009, July, 2009

and August, 2009. The bank details with IBAN details were also specified.

Thus, merely because the invoice does not say that the disputes would be

subject to which jurisdiction, it cannot be said that the invoice is not a

concluded contract. Further the defendant for the first time raised objection

with regard to quality of the goods in its reply dated 25 th June, 2010 to the

legal notice dated 6th May, 2010 of the plaintiff after having made part

payments. After receipt of goods there have been correspondences between

the parties which reads as under:-

"Roland Fan Ian

From: Éva Kaiser" [email protected] To: "Roland Fan Ian" [email protected] Sent: Wednesday, July 29, 2009 11:55 AM Subject: FW:payment

Eva Kaiser Managing Director

Karl Kaiser Parkside Ltd.

Longtillbuilding Route Royale Arsenal

Mauritius

Tel: +230 249 22 70 Cell: +230 250 20 37 Mail : [email protected]

-----Original Message------- From : Abhay Gupta [mailto: [email protected].com] Sent: Wednesday, July 22, 2009 12:56 PM To : Eva Kaiser Cc: Ankush aggarwal Subject: Re:payment

Dear eva,

I understand from accounts that documents have been put into the bank. As soon as they have cnfmation, they will mail you directnly. Kind regards, Abay

-----Original Message----- From: Éva Kaiser" <[email protected]> To: "blues abhay" <[email protected]> Sent: Wednesday, July 22, 2009 2:09 PM Subject: Payment

>Dear Abhay, > >Dinesh informed me, that payment of 50% of the merchandise >will be made today.

>Can you plse send me copy of transfer, which I need to >discount the invoice

>as I have an important payment to make tomorrow."

">Eva Kaiser >Managing Director > >Karl Kaiser >Parkside Ltd.

> >Longtillbuilding >Route Royale >Arsenal > >Mauritius > >Tel: +230 249 22 70 >Cell: +230 250 20 37 >mail : [email protected] > >-----Original Message------ >from : Eva Kaiser [mailto: [email protected]] >Sent: Tuesday, June 23, 2009 1:31 PM >To: Abhay Gupta >Cc: didier >Subject: RE:***PROBABLY SPAM*** Re: payment >Importance: High > >Dear Abhay, > >Can you plse inform me whether payment has been effected. >This is now urgent, and I ask you, please, to proceed >immediately with may/june installments >Best regards >eva > >Eva Kaiser >Managing Diretor > >Karl Kaiser

>Parkside Ltd.

> > Longtillbuilding >Route Royale >Arsenal > >Mauritius >Tel: +230 249 22 70 >Cell: +230 250 20 37 >mail: [email protected] > >----Original Message----- >From:Abhay Gupta [mailto: [email protected] >.com] >Sent: Thursday, June 18, 2009 4:47 PM >To : Eva Kaiser"

"Roland Fan Ian

From: Éva Kaiser" [email protected] To: "Roland Fan Ian" [email protected] Sent: Wednesday, July 29, 2009 11:55 AM Subject: FW:***PROBABLY SPAM***Re. ***PROBABLY SPAM***Re:payment Eva Kaiser Managing Director

Karl Kaiser Parkside Ltd.

Longtillbuilding Route Royale Arsenal

Mauritius

Tel: +230 249 22 70

Cell: +230 250 20 37 Mail : [email protected]

-----Original Message------- From : Abhay Gupta [mailto: [email protected]] Sent: Thursday, June 25, 2009 6:02 PM To : Eva Kaiser Subject:***PROBABLY SPAM***Re:***PROBABLY SPAM*** Re:payment

Dear eva,

I have asked DS to advise me the payment schedule since he directly controls finance department. I will advise you as soon as this is done best regards, Abay

-----Original Message----- From: "Éva Kaiser" <[email protected]> To: "blues abhay" <[email protected]> Sent: Thursday, June 25, 2009 4:19 PM Subject: FW:***PROBABLY SPAM***Re:payment

>Dear Abhay, > >Did you receive this email? >Kindly reply >Thank you >Best regards eva >"

12. In none of these emails, the quality of the goods has been objected to.

The goods are deemed to have been accepted as no objection to the quality

has been raised after more than one year of their acceptance. Moreover, the

defendant had got the goods on the basis of reputation and goodwill of the

plaintiff in the market as is also admitted in the reply to the notice and

further admitted that terms of such a sale i.e. assurance of standard were not

recorded in writing. It is thus evident that the defendant admitted the

implied guarantee.

13. In view of aforesaid discussion, I find no reason to grant leave to

defend to the defendant as no triable issue is raised. Application is

consequently dismissed.

CS(OS) No.437/2011