Delhi High Court
Edcil (India) Ltd vs Visesh Infotecnics Ltd on 16 October, 2014
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 484/2012
Decided on 16th October, 2014
EDCIL (INDIA) LTD ..... Appellant
Through : Mr. K.C. Dubey, Adv.
versus
VISESH INFOTECNICS LTD ..... Respondent
Through : Mr. Tarun Kr. Bedi, Adv.
CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK
A.K.PATHAK, J.(ORAL)
1. Appellant - defendant no. 2 was acting as Consultant for defendant
no. 3 - National Institute of Foundry & Forge Technology (NIFFT), Hatia,
District Ranchi, Jharkhand. Government of India through Secretary,
Ministry of Communication and Information Technology was impleaded as
defendant no. 1. However, defendant nos. 1 and 3 have not been impleaded
in the appeal as respondents on the pretext that neither any decree has been
passed against them nor any relief has been pressed in this appeal qua them.
2. Briefly stated facts are that defendant no. 3 requested the appellant to
supply and install desktop computers at the institute of defendant no. 3 at
RFA 484/2012 Page 1 of 6
Hatia, District Ranchi in the State of Jharkhand. In turn, appellant awarded
contract to respondent for supply and installation of desktop computers
along with accessories at the defendant no.3 institute vide purchase order
dated 28th August, 2006. As per the purchase order, respondent was to
supply HP DX 7200 desktop computers. As the said model was not
available in the market at the time of delivery, therefore, specifications were
changed with the consent of appellant and it was agreed that respondent will
supply more advanced model, that is, HP-DC-7600. Respondent completed
the supply and installation of computers by 5 th January, 2007 to the
satisfaction of defendant no.3.
3. As per the purchase order, full supply and installation was to be
completed by November, 2006. There was delay of about two months in
completion of contract. Appellant made payments from time to time but
withheld `4,85,598/- on the ground that penalty @ 2% of the delivery price
for each week, subject to maximum deduction of 8% was to be leviable on
the respondent in terms of Clause 10 of purchase order, on account of
delayed supply and installation of computers. Respondent was aggrieved on
account of withholding of the amount of `4,85,598/- by the appellant,
therefore, approached the trial court by filing the suit for recovery of
RFA 484/2012 Page 2 of 6
`4,85,598/- together with interest @ 18% per annum. It was alleged that
appellant could not have withheld `4,85,598/- towards penalty. Supply and
installation of the computers at the premises of defendant no. 3 was done to
the satisfaction of defendants. Specification was changed with the consent
of defendant no.2 on account of non-availability of the ordered model.
Thus, appellant had no right to withhold the payment of respondent to the
extent of `4,85,598/-.
4. Case, as set up by the appellant before the trial court, was that
`4,82,205/- was withheld on account of liquidated damages. Appellant was
well within its rights to withhold the said payment, in terms of purchase
order, which envisaged that liquidated damages equivalent to 2% of the
delivered price for the delay in delivering the goods for each week was
payable by the respondent, subject to maximum deduction of 8%.
Appellant alleged that respondent had failed to adhere to the time scheduled
for delivery of installation, thus, appellant had rightly withheld the payment.
It was not disputed that purchase order was issued by the appellant. It was
also not disputed that respondent had completed the supply and installation
of the computers to the satisfaction of defendant no. 3 and the appellant by
5th January, 2007.
RFA 484/2012 Page 3 of 6
5. On scrutiny of the evidence adduced by the parties, trial court has
held that facts were not in dispute to the extent that purchase order was
issued for the supply of desktop computers. It was also not in dispute that
supply and installation of computers at the premises of defendant no. 3 was
successfully completed by 5th January, 2007. It was also not disputed that
there was delay in completion of supply and installation of computers.
Installation was to be completed by November, 2006 but was completed on
5th January, 2007. However, trial court has concluded that the amount was
withheld by way of penalty and not on account of pre-estimated liquidated
damages. There was nothing on record to suggest that loss of about 4 lacs
was suffered by the appellant. The penalty was in the nature of in terrorem,
thus, the provision of Section 74 of the Indian Contract Act, 1872, was
attracted and in absence of any evidence on record to indicate actual loss
suffered by the appellant with regard to the delayed supply and installation,
appellant was only entitled to reasonable damages and not to an amount of
`4,82,205/-. Trial court has held that the damages to the extent of `50,000/-
towards penalty would be sufficient.
RFA 484/2012 Page 4 of 6
6. I have heard learned counsel for the parties and perused trial court
record. From the facts narrated above, it is clear that `4,82,205/- was
withheld by way of penalty and not on account of pre-estimated assessed
damages. It is also borne out from the records that HP-DX-7200 model
which was agreed to be supplied, was discontinued. Accordingly, a
proposal was given by the respondent for supplying another model, that is,
HP DC 7600 and some time took place in this process. Ex. PW1/D1 is the
document in respect of permission sought by the respondent for supply of
computers of different model on account of discontinuance of earlier model,
which was agreed to be supplied. It is also borne out from the records that
supply was completed on 5th January, 2007, at the premises of defendant no.
3 that too to the satisfaction of defendant no.3. It is also not in dispute that
appellant has received the entire payment from the defendant no. 3, thus,
question of any loss does not arise. No penalty was imposed by defendant
no. 3 on the appellant in respect of delayed installation, for the reasons
beyond the control of respondent. In view of this, it is clear that `4,82,205/-
was withheld under the garb of Clause 10 by way of penalty and not on
account of pre-estimated liquidated damages. Accordingly, trial court has
RFA 484/2012 Page 5 of 6
not committed any error by holding that appellant was only entitled to
reasonable damages and not the amount calculated as per Clause 10.
7. Trial court has awarded damages to the tune of `50,000/- and has
directed appellant to pay balance withheld amount. I do not find any
illegality in the view taken by the trial court.
8. Appeal is dismissed. Amount lying deposited in this Court together
with interest accrued thereon, if any, be released to respondent.
A.K. PATHAK, J.
OCTOBER 16, 2014
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