Monnet Ispat And Energy Limited vs Rohan Sanghvi
2015 Latest Caselaw 8343 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                      Judgment pronounced on: 4th November, 2015

+                         CS (OS) No.2147/2011

       MONNET ISPAT AND ENERGY LIMITED                ..... Plaintiff
                     Through   Mr. Vikas Aggarwal, Advocate

                          versus

       ROHAN SANGHVI                                   ..... Defendant
                          Through    Ms. Akanksha, Advocate.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

I.A. No.7237/2012 (u/o XXXVII R.3(5) CPC, by defendant)

1. Ms.Akanksha learned counsel for the defendant appeared and made her submissions. The facts are already recorded in my order dated 27th November, 2014. The same is reproduced here as under:-

"The plaintiff filed the suit under Order XXXVII CPC for recovery of Rs.20,26,214/- along with pendent lite and future interest @ 18% per annum. The plaintiff in the year 2007 required conveyor belts of a particular specification for its Sponge Iron Plant at Village Naharpalli, Tehsil Kharsia, District Raigarh, Chattisgarh and was in the process of identifying manufacturer and/or supplier of good quality Conveyor Belts which could be used in the plaintiff's plant. The defendant introduced himself as supplier of CFLEX Brand (China made) Conveyor Belts and approached the plaintiff at their corporate office at Delhi with the offer to supply CFLEX Brand Conveyor Belts to the plaintiff vide Offer No.CBC/WS/070307 dated 3rd July, 2007 and e-mail dated 4th August, 2007. The plaintiff thereafter held technical and commercial discussions with the defendant at their Delhi Corporate Office and after holding discussions on the offer of the defendant issued from their Delhi Corporate Office the Purchase Order No.MIL/HO/PRJ-

3/1970/Spares/2007/PO-03 dated 16th August, 2007 for the supply of five kinds of conveyor belts amounting to a total of 2005 RMts for a basic purchase price of Rs.15,30,740/-. The said purchase order was duly accepted by the defendant by submitting a Corporate Guarantee for Advance Payment and the said purchase order is a written contract between the plaintiff and the defendant and the terms thereof are legally binding upon the parties. As per the terms and conditions of the said purchase order, the delivery was to be made within 8-10 weeks of the purchase order and the payment terms and other relevant clauses were as follow:-

"7. Terms of Payment

7.1 10% advance against submission of Corporate Guarantee for advance payment.

7.2 80% of basic of order value with 100% taxes and duties shall be payable against dispatch documents. You will furnish Proforma Invoice along with Internal Inspection Report after the readiness of material. The cheque will be released against exchange of dispatch documents.

7.3 10% against submission of Performance Bank Guarantee should be valid upto 12 months from the date of commissioning or 18 months from the date of dispatch whichever is earlier.

8. Guarantee

You will furnish a Guarantee Certificate valid for 12 months from the date of commissioning or 18 months from the date of last dispatch whichever is earlier for the manufacturing defect. The material shall be replaced at free of cost during the guarantee period, if any manufacturing defects are found in the material supplied by you."

Today the matter is listed for hearing in the application for leave to defend. Learned counsel for the plaintiff is insisting for hearing of the application. On the other hand, the learned proxy counsel appearing on behalf of the defendant is seeking an adjournment, mainly, on the reason that the arguing counsel is not available. The request for adjournment is opposed by the plaintiff who informed the

Court that let the interim application for leave to defend may be disposed of, with the direction that a sum of Rs.12,38,541/- as admitted by the defendant which is payable to the plaintiff in his letter dated 31st July, 2008 be paid to the plaintiff. For the rest of the disputes raised by the defendant, the leave be granted to contest the suit.

Having gone through the letter dated 31st July, 2008, there is an admission on the part of the defendant for the sum of Rs.12,38,541/-. The leave to defend application to this extent is accordingly dismissed. Thus, the suit of the plaintiff is partly decreed for the sum of Rs.12,38,541/-.

As far as the remaining amount as claimed by the plaintiff is concerned, leave is granted to the defendant to contest the matter.

The application is accordingly disposed of.

The defendant is granted four weeks time to file the written statement, with an advance copy thereof to the learned counsel for the plaintiff who may file the replication within four weeks thereafter.

List the matter before the Joint Registrar on 11th February, 2015."

2. Even this time also, the main counsel did not appear. An adjournment sought by Ms.Akanksha was strongly opposed by the learned counsel appearing on behalf of the plaintiff and thus, she has argued the matter.

3. Learned counsel for the defendant has not disputed the fact that her client has admitted in his letter dated 31st July, 2008 to refund the amount of Rs.11,14,140/- on receipt of all the belts and the original bank guarantee. The extracts from the said letter are reproduced here as under:-

"Ref; CBC/184/08 Date 31st July 2008

Monnet Ispat & Energy Limited Monnet house, 11 Masjid Math,

Greater Kailash Part 11 New Delhi 110048

----------------------------------- K/a Mr. M.D. Mundhra President

Dear sir,

Sub: PO no MIL/HO/PRJ-3/1970/Spares/2007/P0-

03/3044 Dt August 16, 2007.

We refer to the above & the contents of MOM dated 20.6.08 further to which we would like to give you following proposal.

We would have replaced the used belt free of charge even though we are not fully convinced that all the belts in question are ours since most of the belts have no branding, our fear was further highlighted by the fact that your user department has used M24 belts in place of SHR which shows the negligence on your part , however due to abnormal increase in cost of the raw material we are very hard pressed to give free replacement but as part of our company policy & keeping in mind the long business relation prospect for mutual benefit we hereby propose the following which as per us is a fair to both of us.

1) We will refund you the 100% of the basic value of the unused belt after deducting Rs 341817.30 ED & CST.

2) As regards to the used belt 800 mtrs (which is valued at Rs 624,000) from which you have derived 8 months of life hence a 40% of the value of the basic price shall be refunded to you (Rs 249,600.00) balance 60% (Rs 374000.00) is reduced as you have derived 8 months of the belt life.

3) The performance bank guarantee needs to be returned by you in original

4) The belt lengh of 75 mtrs which was wrongly used by you in place of SHR -- cost will be borne by you Rs 42600.00.

All belts should be booked to our warehouse:

CALCUTTA BELT CENTRE (BOMBAY), Ashwamegh Industrial Estate, 40 Sarkhej Bavla Road, Changodar, Chanderdar, Ahemedabad 382213 Gujarat State, India CST no 24191800221 Dt 01.07.02.

Please arrange to rebook rejected as well as unused belts separately on freight paid basis.

Nett : Payable to you on receipt of all the belts & the original bank guarantee we will arrange to refund Rs 111414.00

The above action is being taken in order to ensure we meet your expectation as you have showed a lot of faith in us while placing the order & to highlight the fact that we are no fly by night manufacturers & are very committed & serious about our products.

We hope the above will find your approval & will do the needful , also we hope that this action of ours will be seen as a step towards strengthening our relation & will give us a fair chance in future to prove our quality.

Please do the needful & inform us well in advance.

Thanking you, For Calcutta Belt Centre (Bombay) Sd/-

Rohan Sanghvi"

4. Learned counsel for the plaintiff has referred to the letter dated 1st August, 2008 written to the defendant, the extracts of which are reproduced herein below:-

"Ref.: MIL/HO/PROJ-3/1970/2008/12518 August 1, 2008

M/s Calcutta Belt Centre (Bombay)

207 Janmabhoomi Chambers, Fax No. 022-66104100 Walchand Hirachand Marg, Ballard Estate, Mumbai-400 001.

Ph Nos: 022-66106000, 9820276426 E-mail [email protected]

Kind Attn.: Mr. Rohan Sanghvi.

Sub: Failure of Conveyor Belt supplied by you against our purchase order no. MIL/HO/PRJ- 3/1970/Spares/2007/P0-03 dated 16.08.2007 for CFLEX Brand Conveyor Belting of SHR and M-24 Grade (as per IS Spec. 1891 Part-1 &II latest) for Sponge Iron Plant at Naharpali, Raigarh (Chhattisgarh)

Ref: Your Letter No. CBC/184/08 dated 31.07.2008

Dear Sir,

This has reference to your above letter regarding refund of payment against failure of conveyor belt. In this connection our reply is as under:-

You have mentioned that you are hard-pressed to give free replacement due to increase for belt price and hence propose to refund the money as per basic price of the last year. Please note that the belt prices have gone up by more than 30%, and we shall bear this additional cost of nearby Rs. 4,50,000/- for procurement of the same at our end.

You have to refund 100% of the basic value of the belt conveyor including CST and Freight Charges, after deductions as mentioned below:-

a) The residual life of 800mm belt being used by us should be considered 50% from the date of installation and hence the amount of Rs 1,22,145/- is reduced.

b) We are agree for bearing the cost of Rs. 42,600/- towards 75 mtrs belt used in place of SHR.

We shell send all the used/un-used belts on freight 'to pay' basis. Thus the total amount to be refunded is Rs. 15,36,135/-. You are requested to make payment through demand draft for above value, which you can be exchanged against LR and original Performance Bank Guarantee.

The details of refundable amount are given below:-

- Value of your Invoice No. 287 dt.16.11.07 Rs. 18,72,558.00/-

- Less: Excise Duty Rs. 2,09,528.00/-

Rs. 16,63,030.00/-

- Add: Freight Charges Rs.37850.00/-

(copy enclosed)

Rs.17,00,880.00/-

- Less: 50% value of 800 mm belt Rs.1,22,145.00/-

Rs.15,78,735.00/-

        -   Less: Cost of 75 mtr. belt used in
                  place of SHR                     Rs.42,600.00/-

            Net Refundable Amount                  Rs.15,36,135.00/-

            Thanking you,
            Yours faithfully
            For MONNET ISPAT & ENERGY LTD.

                 Sd/-
            (Vijay Kumar)
            Vice President (Projects)

            CCto:      Sh. M.D.Mundhra, President
                       Sh.S.K.Jain, CEO,MIEL Raigarh

Sh. Sunil Gupta, Sr.V.P. (Commercial), MIEL, Raigarh"

5. In reply to the plaintiff's letter, the defendant had written the letter dated 5th August, 2008 admitting the refund of a sum of Rs.12,38,541/-. The same reads as under:-

"REF : CBC/190/08-09 DT : 05/08/2008

M/s. Monet Ispat & Energy Limited Mohta Building, 3rd Fl., 4 Bhikaji Cama Place, NEW DELHI-110 066

Kind Attn: Mr. Vijay Kumar (Vice President-Projects)

Sub : Your Order No.MIL/HO/PRJ-3/1970/Spares/2007/PO-

03 dt : 16.08.2007 Your Inv. No.287 Dt : 16/11.07 Rs.18,72,550.00 and Your Letter No.NIL/HO/PROJ-3/1970/2008/12518 DT : 01/08/2008

Dear Sir,

With reference to the above, further to which may be once again highlight the fact that we are ready to refund you the amount mentioned in our Letter No.CBC/184/08 dated 31.07.2008 (INR 1238541.00) even though we are not fully convenienced that belts in question are supplied by us.

Moreover your good self is also aware that usually when such complains is lodged the right way to analyses the matter is to first look at the installation data to find out is the belt selected by you is correct but we did not want to be looked at someone looking for excuse, therefore to ensure we have a long business relation we decided on refunding the amount based on calculation mentioned in our Letter No.CBC/184/08 dt : 31/07/2008.

You are requested to kindly accept our proposal as that is the only way forward.

Thanking you, For Calcutta Belt Centre (Bombay)

Sd/-

Rohan Sanghvi"

6. On 9th August, 2008, the said proposal was accepted by the plaintiff who was also agreeable to return the original Bank Performance Bank Guarantee along with return of used/unused belts on freight 'to pay' basis. The said letter is reproduced here as under:-

"Ref.: MIL/HO/PROJ-3/1970/2008 August 9, 2008

M/s Calcutta Belt Centre (Bombay) 207 Janmabhoomi Chambers, Fax No. 022-66104100 Walchand Hirachand Marg, 66106000 Ballard Estate, Mumbai-400 001.

Ph Nos: 022-66106000, 9820276426 E-mail [email protected]

Kind Attn.: Mr. Rohan Sanghvi.

Sub: Failure of Conveyor Belt supplied by you against our purchase order no. MIL/HO/PRJ- 3/1970/Spares/2007/P0-03 dated 16.08.2007 for CFLEX Brand Conveyor Belting of SHR and M-24 Grade (as per IS Spec. 1891 Part-1 &II latest) for Sponge Iron Plant at Naharpali, Raigarh (Chhattisgarh)

Ref: Your Letter No. CBC/190/08-09 dated 05.08.2008

Dear Sir,

We are in receipt of your above letter, where in you have proposed for refund of Rs.12,38,541.00 against our Claim of Rs.15,36,135.00 as per our letter no.MIL/HO/PROJ- 3/1970/2008/12518 dated 01.08.2008. In spite of the fact that the poor quality of belt was supplied by you and same was also been agreed by your representative during the joint inspection at our site.

Under the circumstances we are left with no option, but to accept your proposal. You are requested to make payment

through demand draft for above value, which you can exchange against LR and original Performance Bank Guarantee.

We shall send all the used/un-used belts on freight 'to pay' basis.

Thanking you,

Yours faithfully

For MONNET ISPAT & ENERGY LTD.

Sd/-

(Vijay Kumar) Vice President (Projects)"

7. Under these circumstances, the suit is partly decreed for a sum of Rs.12,38,541/-. Counsel for the plaintiff upon instructions has informed that the plaintiff undertakes to this Court, on receipt of the agreed admitted amount, to handover the original Bank Guarantee as well as the belts to the representative of the defendant within one week. The decree be drawn accordingly.

8. For remaining reliefs claimed by the plaintiff, list this matter on 22nd December, 2015 for further directions.

(MANMOHAN SINGH) JUDGE NOVEMBER 4, 2015