R.P. Garg vs A.V. Impex
2018 Latest Caselaw 6676 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No. 530/2006


%                                                12th November, 2018


R.P. GARG
                                                         ..... Appellant
                   Through:        Mr. R.M. Sinha and Mr. P.M. Sinha
                                   Advocates (Mobile No. 9811478026).

                          versus

A.V. IMPEX
                                                       ..... Respondent

                   Through:        Mr. Rajesh Manchanda and Mr. Rajat
                                   Manchanda, Advocates.

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

To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1. This Regular First Appeal under Section 96 of the Code

of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit

impugning the judgment of the trial court dated 22.07.2006 by which

the trial court has decreed the suit of the respondent/plaintiff by

passing a money decree for a sum of Rs. 9,15,055/- along with interest

at 8% per annum on account of goods (non-basmati rice) sold by

respondent/plaintiff to the appellant/defendant.

2. The facts of the case are that the respondent/plaintiff filed

the subject suit pleading that the parties had entered into an

Agreement on 10.11.1995/Ex.PW1/3 whereby the respondent/plaintiff

was to supply to the appellant/defendant non-basmati brand „rado‟ rice

of 100 Metric Tonnes (M.T.) @ US$ 0.30 per kg rice was to be

shipped to Kiev in Ukraine. The respondent/plaintiff further pleaded

that payment was to be made within 90 days from the date of the bill

of lading. Respondent/Plaintiff is said to have sent the first shipment

of 40 M.T. vide Bill of Lading dated 25.11.1995/Ex.PW1/4. Both the

parties thereafter vide letter dated 15.12.1995/Ex.PW1/5 agreed to

enhance the rate from US$ 0.30 to US$ 0.37 per kg for the balance

supply of 60 M.T. It is pleaded in the plaint, that on 26.12.1995

another contract Ex.PW1/6 for 20 M.T. of rice was entered into

between the parties at the enhanced rate of US$ 0.37 per kg.

Therefore, at this stage, in total a further supply of 80 M.T. of rice was

to be made by the respondent/plaintiff to the appellant/defendant at

US$ 0.37 per kg. On 29.12.1995 the respondent/plaintiff sent another

shipment of 40 M.T. of rice vide Bill of Lading dated 29.12.1995/

Ex.PW1/7. The last shipment of 40 M.T. of rice was sent by the

respondent/plaintiff to appellant/defendant vide Bill of Lading dated

08.01.1996/Ex.PW1/8. The total value of 120 M.T. of non-basmati

brand „rado‟ rice was US$ 41,600/-. The appellant/defendant paid US$

16,530/- to the respondent/plaintiff on different dates and the balance

payment of US$ 25,070/- remained. The respondent/plaintiff is said to

have written various letters to the appellant/defendant which had no

effect and ultimately the respondent/plaintiff sent a Legal Notice dated

11.03.1997, which also did not yield the desired result, and therefore

the subject suit was filed claiming the balance amount of US$ 25,070

and interest at 30% of US$ 9,930, thus totaling to US$ 35,000/-, and

which converted into Indian Rupee came to Rs.12,77,500/- being the

suit amount.

3. The appellant/defendant contested the suit by filing

written statement. It was pleaded that the respondent/plaintiff was

guilty of concealment of facts because on 10.11.1995, not one but two

contracts were entered into. The first contract was entered into in the

morning which was proved as Ex.DW1/1, and as per this contract the

appellant/defendant was to only provide a godown and office space at

Kiev in Ukraine to the respondent/plaintiff, and out of the sales of rice

stock made by the respondent/plaintiff, the appellant/defendant was to

receive 25% of price as profit. The appellant/defendant was also to

provide accommodation and other facilities to the representatives of

the respondent/plaintiff to be paid by the respondent/plaintiff. It was

pleaded that the subsequent agreement entered into in the evening of

the same date being Ex.PW1/3, being for sale of rice by the

respondent/plaintiff to appellant/defendant was only to facilitate and

effectuate the first agreement. It was pleaded in the written statement

that the appellant/defendant therefore was never a purchaser of the

goods as no goods were sold by the respondent/plaintiff to the

appellant/defendant. Further, it was pleaded in the written statement

that whatever amount was received from sale of the goods after being

credited to the account of the appellant/defendant, was thereafter

credited to the account of the respondent/plaintiff in India. Along with

the written statement counter claim was filed for recovery of a sum of

Rs.1,80,000/- being the 25% profit margin to be paid by the

respondent/plaintiff to the appellant/defendant. Interest was also

claimed at 24% per annum.

4. After the pleadings were complete the trial court framed

the following issues:-

"Issues:-

(i) Whether plaintiff is a registered partnership firm and suit has been filed by a registered partner of the said firm? If not, to what effect?

(ii) Whether the plaintiff had supplied rice to the value of US$ 41,600 to the defendant? If so, to what effect?

(iii) Whether a sum of US$ 25,070/- are still payable by the defendant to the plaintiff towards balance price of the said rice? If so, to what effect?

(iv) Whether the plaintiff is entitled to interest? If so, at what rate and for what period?

(v) Whether the defendant was entitled to commission/service charges @ 25% of the total profits earned by the plaintiff from the sale of non-basmati rice at Ukrain? If so, to what effect?

(vi) To what amount, if any, is the plaintiff entitled as commission/service charges?

(vii) Whether the defendant is entitled to any interest? If so, at what rate and for what period?

(viii) Relief.

6. Vide order dated 01.06.2006, issue no.6 was amended and re-

framed as under:

To what amount, if any, is the defendant entitled as commission/service charges?"

5. Issue nos. 2, 3 and 4 are the relevant issues and these

issues have been decided by the trial court in favor of the

respondent/plaintiff and against the appellant/defendant by holding

that once the first agreement is found to be void, the same is not a

legal agreement which would have bound the parties, and what will

therefore bind the parties is not the first agreement Ex.DW1/1 but the

second agreement of the same date Ex.PW1/3. Trial court also notes

that there is nothing in the second agreement Ex.PW1/3 which shows

that the same is in any manner for effectuating the first agreement

Ex.DW1/1. Trial court has reasoned that it was because the first

agreement was found to be illegal that the second agreement was

entered into for the sale of rice by the respondent/plaintiff to the

appellant/defendant, and it is this second agreement which will bind

the parties. The trial court has also held that the fact that payments of

UD$ 16,500 were received in the account of the appellant/defendant

and this entire amount was transferred to the respondent/plaintiff

without deducting the 25% profit margin as was claimed by the

appellant/defendant. Hence, this showed that the relationship between

the parties was of a buyer (appellant/defendant) and seller

(respondent/plaintiff). The trial court has also observed that it is an

admitted fact that Sh. Virendar Singh was the representative of the

appellant/defendant at Kiev in Ukraine where consignment of the rice

was received, and infact it was so admitted by the witness of the

appellant DW2/Sh. Birender Singh.

6. Learned counsel for the appellant/defendant has very

passionately argued that the second agreement Ex.PW1/3 was only to

effectuate the first agreement and that the respondent/plaintiff has

never proved that the appellant/defendant was given the bills of lading

or that the appellant/defendant ever received the goods from the

respondent/plaintiff. It was argued that the subsequent amendments to

the contract for enhancing the price and for thereafter selling the total

quantity of rice of 120 M.T., was really only in furtherance of the

second agreement Ex.PW1/3, and once PW1/3 was only to effectuate

the first agreement Ex.DW1/1, therefore the relationship between the

parties was not of the appellant/defendant as the buyer and the

respondent/plaintiff as the seller. It was also argued by the learned

counsel for the appellant/defendant that the respondent‟s/plaintiff‟s

partners and their witnesses have admitted that the first agreement

Ex.DW1/1 was found to be illegal agreement not by the

appellant/defendant but by the respondent/plaintiff and its consultants

and therefore it is only for that reason that the second agreement

Ex.PW1/3 was entered into, and therefore, the respondent/plaintiff

cannot claim that the second agreement prevails and not the first

agreement Ex.DW1/1.

7. In my opinion, the arguments urged on behalf of the

appellant/defendant do not have any merit and are liable to be rejected.

This appeal is also therefore liable to be and is accordingly dismissed

for the reasons given hereinafter.

8. In my opinion, once the bills of lading have been proved

as Ex.PW1/4, Ex.PW1/7 and Ex.PW1/8, it has to be held that the

goods in question under these bills of lading have been received by the

appellant/defendant inasmuch as on the two bills of lading i.e.

Ex.PW1/7 and Ex.PW1/8, the consignee is none other than the

appellant/defendant and in the bill of lading Ex.PW1/4 the consignee

is written as Sh. Virendar Singh through the appellant/defendant, and

it is not denied that Sh. Virendar Singh was admittedly the

representative of the appellant/defendant. The customs authority and

port authorities at Kiev in Ukraine would only have handed over the

contents and subject matter of the bills of lading to the consignee

which was the appellant/defendant, and if the appellant/defendant

wanted to successfully contend otherwise that it was not the

appellant/defendant but the respondent/plaintiff itself who had

received the goods through its representatives, it was for the

appellant/defendant to prove so, but except making self-serving

averments, no credible evidence has been led to disbelieve the natural

course of events, that it is only the consignee who would have

received the goods under the bills of lading, with the consignee being

none other than the appellant/defendant. This Court, therefore, rejects

the argument urged on behalf of the appellant/defendant that the

appellant/defendant did not receive the original bills of lading

Ex.PW1/4, Ex.PW1/7 and Ex.PW1/8 and that the appellant/defendant

never received the goods under the three bills of lading.

9. In my opinion, the trial court has rightly arrived at a

finding that if the contractual relationship between the parties was of

the appellant/defendant not being a buyer, but only of receiving the

goods for and on behalf of the respondent/plaintiff at Kiev in Ukraine,

then for the payment already received by the appellant/defendant of

US$ 16,530 in its bank account in Ukraine, this entire amount of US$

16,530 would not have been remitted by the appellant/defendant from

its account at Kiev in Ukraine to the bank account of the

respondent/plaintiff in India inasmuch as, the appellant/defendant

would, in case the case of the appellant/defendant was correct that it

was not the buyer, have in fact first deducted 25% profit margin out of

the amount of sale of rice of the value of US$ 16,530. The trial court

has therefore rightly held that on this ground it has to be held that the

relationship between the parties was of the appellant/defendant as the

buyer and the respondent/plaintiff as the seller.

10. In my opinion, there is another ground for holding that

the appellant/defendant was a buyer of goods and the

respondent/plaintiff was the seller inasmuch as in paras 8 and 9 of the

plaint, the respondent/plaintiff has referred to sending by it to the

appellant/defendant of its Letters dated 13.12.1996 and 07.02.1997

and the Legal Notice dated 11.03.1997 for making the payment of the

due amount. Besides the fact that the respondent/plaintiff has proved

its letters and legal notice along with postal receipts as Ex.PW1/10 to

Ex.PW1/27 (being the letters, legal notice and the postal receipts along

with AD cards), it is seen that the appellant/defendant while replying

to paras 8 and 9 of the plaint in paras 8 and 9 of the written statement

has not denied receiving the Letters dated 13.12.1996 and 07.02.1997

and the Legal Notice dated 11.03.1997 sent by the

respondent/plaintiff, and all that the appellant/defendant has stated in

paras 8 and 9 of the written statement is that the letters and the legal

notice are blatantly false to the knowledge of the appellant/defendant.

Therefore, once the appellant/defendant had received the Letters dated

13.12.1996 and 07.02.1997 written by the respondent/plaintiff asking

for payment of the balance price, as also that appellant/defendant had

received the Legal Notice dated 11.03.1997, and the

appellant/defendant remained silent and did not send any replies by

putting up a defence which has been put up for the first time only in

the written statement-cum-counter claim, there is no reason why an

adverse inference should not be drawn against the appellant/defendant

with respect to the contents of the Letters dated 13.12.1996 and

07.02.1997 written by the respondent/plaintiff to the

appellant/defendant, as also the contents of the Legal Notice dated

11.03.1997 sent by the respondent/plaintiff to the appellant/defendant.

11. In view of the aforesaid discussion, I do not find any

merit in the appeal and the same is hereby dismissed. Whatever

amount has been deposited by the appellant/defendant in this Court be

released to the respondent/plaintiff by the Registry of this Court within

two weeks in appropriate satisfaction of the impugned judgment and

decree.

NOVEMBER 12, 2018                            VALMIKI J. MEHTA, J
AK