Karnataka High Court

M/S Baba Enterprises vs M/S Karnataka Soaps And ... on 6 January, 2021

Author: S.Sujatha And M.I.Arun

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 6TH DAY OF JANUARY, 2021

                        PRESENT

          THE HON'BLE MRS.JUSTICE S.SUJATHA

                           AND

           THE HON'BLE MR. JUSTICE M.I.ARUN

                   R.F.A.No.437/2012

BETWEEN :

M/s BABA ENTERPRISES
NO.5 & 6, D.DEVARAJA URS ROAD,
MYSORE-570001
REP BY ITS PROPRIETOR
Mr. MOHAMMAD KHASIM
S/O LATE MOHAMMED JAFFER
AGED ABOUT 60 YEARS                             ...APPELLANT

              (BY SRI K.G.SADASHIVAIAH, ADV.)

AND :

M/s KARNATAKA SOAPS & DETERGENTS LTD.,
(GOVERNMENT OF KARNATAKA UNDERTAKING)
BANGALORE, BRANCH NO.307,
18TH CROSS, 6TH MAIN ROAD,
BANGALORE-560055                       ...RESPONDENT

               (BY SRI K.GURUDHATTA, ADV.)

     THIS R.F.A. IS FILED UNDER SECTION 96 R/W ORDER 41
RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE
DATED 02.12.2011 PASSED IN O.S.No.4269/2013 ON THE FILE
OF THE IX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AT
BANGALORE (CCH-5), DECREEING THE SUIT FOR RECOVERY
OF MONEY.
                          -2-

      THIS APPEAL COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:

                    JUDGMENT

This appeal is filed by the defendant challenging

the judgment and decree dated 02.12.2011 passed in

O.S.No.4269/2003 by the IX Addl. City Civil and

Sessions Judge, Bengaluru (CCH-5) ('Trial Court' for

short).

2. For the sake of convenience, the parties are

referred to as per their status before the Trial Court.

3. The plaintiff instituted the suit for recovery

of Rs.10,98,397.89 with interest at 18% per annum

with costs inter-alia seeking for such other reliefs.

4. The plaint averments are that the plaintiff is

the manufacturer and supplier of products like soaps,

detergents, shampoos, talcum powder, facial creams,

agarbathies etc., to the stockiest, dealers, wholesalers

and retailers having their factory at Bengaluru - Pune

Highway, Bengaluru - 55 and place of business is at the

address mentioned in the cause-title. The plaintiff, a

Government of Karnataka undertaking is carrying on

their business under the name and style of

"M/s. Karnataka Soaps and Detergents Limited". It was

averred that the defendant is carrying on business as a

stockiest, dealer, wholesaler and retailer in the name

and style of M/s. Baba Enterprises and also in the

name of another concern namely M/s. Baba Agencies,

both carrying on business at the address mentioned in

the cause-title and Mr. Mohammed Khasim was the

proprietor of both the concerns.

5. It was contended that as per the orders

placed by the defendant, invoices used to be raised and

the goods used to supplied to M/s Baba Enterprises,

but the defendant as per his own convenience used to

give payments from M/s. Baba Agencies by sending

Demand Drafts and Cheques and the same were

accepted by the plaintiff and the amount realized was

adjusted towards the outstanding amount due.

6. It was contended that the plaintiff has

dispatched the goods as per the orders and

requirements of the defendant through "Road Line

Courier Services" which was duly acknowledged by the

defendant. The value of the goods supplied in between

31.01.2002 to 31.03.2002 is in a sum of

Rs.9,67,164.70. The defendant has paid the amount

towards the supply of sandalwood soaps by way of

Demand Drafts and Cheques. But as far as the other

goods supplied during the said relevant period was on

credit basis. The defendant had promised and assured

the plaintiff that he would make payment towards

supply of goods, but failed to do so despite several

requests and demands made. Deducting the value of

supply of sandal wood soaps which was paid, on the

outstanding amount of Rs.8,94,664.48 along with

interest at the rate of 18% per annum upto 31.05.2003,

Rs.10,98,397.89 was the liability which the defendant

failed to pay.

7. It was further contended that the cheques

issued by the defendant for repayment of the

outstanding dues has been dishonoured and despite the

notice issued, neither he has cleared the amount nor

replied the said notice. Hence, a private complaint was

registered against the defendant under Section 138 of

the Negotiable Instruments Act, 1881. On these set of

facts and grounds, the plaintiff prayed for passing of the

judgment and decree against the defendant in favour of

the plaintiff.

8. On issuance of summons, the defendant

appeared and contested the case. Written statement

was filed contending that the suit was barred by

limitation; the Court at Bengaluru, where the suit was

filed has no jurisdiction to entertain the suit. The

primary defence set up was that the defendant was

carrying on the business only in the name and style of

Baba Agencies. There is no business concern known as

Baba Enterprises. Admitting the cheques and demand

drafts taken in the name of Baba Agencies, it was

contended that the goods were supplied not on credit

basis but as against payments. The officials of the

plaintiff used to take responsibility of effecting sales of

the products which was not saleable. The plaintiff has

not given credit to the goods returned to the extent of

Rs.98,071.13. Thus, it was contended that the

defendant is not liable to pay any amount muchless

what was claimed by the plaintiff. Accordingly, sought

for the dismissal of the suit with exemplary costs.

9. Based on the pleadings, the following issues

were framed:-

"1. Whether the Defendant proves that this Court has no territorial jurisdiction to try this suit?

2. Whether the Plaintiff proves the existence of M/s Baba Enterprises and that Mohammad Khasim is its Proprietor?

3. Whether the plaintiff proves that supplies were made to the defendant against the order placed for supply?

4. Whether the Plaintiff further proves that goods worth of Rs.8,94,664-48 were supplied to the Defendant on credit basis?

5. If so, whether the plaintiff is entitled to claim interest at 18%?

6. Whether Defendant proves that

of Para 6 of plaint was against payment?

7. Whether the Plaintiff is entitled for decree for Rs.10,98,397-70?

8. What decree or order?"

10. PW.1 was examined on behalf of the plaintiff

and Exs.P1 to P28 were marked. DW1 was examined on

behalf of the defendant and Exs.D1 to D8 were marked.

11. After considering the oral and documentary

evidence on record, the Trial Court answered the issue

Nos.1 and 6 in the negative and issue Nos.2 to 5 and 7

in the affirmative, decreeing the suit for

Rs.10,98,397.89 with costs. Further, the defendant has

been directed to pay the said amount with interest at

18% per annum on outstanding balance of

Rs.8,94,664.48 from 31.05.2003 till payment.

12. Being aggrieved, the defendant has preferred

the present appeal.

13. Learned counsel appearing for the

appellant/defendant submitted that the judgment and

decree passed by the Trial Court is erroneous for four

reasons. Firstly, the Court had no territorial jurisdiction

to entertain the suit and to adjudicate upon the relief

claimed by the plaintiff. Secondly, the damaged goods

amounting to Rs.98,071.13/- returned to the plaintiff

was not given deduction. Thirdly, there was no privity of

contract for payment of interest in the event of delayed

payment and as such, the Trial Court decreeing the suit

directing the defendant to pay the interest at the rate of

18% per annum on the outstanding amount is

unjustifiable. Fourthly, claim made without deduction is

arbitrary. Elaborating the arguments on these points,

learned counsel submitted that the Trial Court has

failed to appreciate the evidence in a right perspective.

14. Learned counsel for the respondent/plaintiff

submitted that the Trial Court on appreciation of

documentary and ocular evidence has rightly decreed

the suit with interest at the rate of 18% per annum and

the same does not call for any interference by this

Court. It was argued that as per the terms and

conditions of the invoices, it was made clear that

dispute arising out of the said transaction, if any, shall

be subject to Bengaluru jurisdiction. Merely for the

reason that the defendant is resident of Mysuru, the

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jurisdiction of the Court at Bengaluru could not be

ousted, more particularly in view of the expressed

covenant in the invoices raised by the plaintiff and

agreed by the defendant, pursuant to which the

transactions were taken. Learned counsel submitted

that the defendant has miserably failed to establish the

goods returned to the tune of Rs.98,071.13. The

transaction being commercial, the Trial Court has

rightly fixed the rate of interest at 18% per annum on

the outstanding amount due from the defendant.

Having regard to these aspects, the Trial Court has

decreed the suit and the same deserves to be confirmed

by this Court.

15. We have carefully considered the rival

submissions of the learned counsel appearing for the

parties and perused the original records.

16. As regards the objections raised by the

appellant/defendant inasmuch as the territorial

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jurisdiction of the Trial Court to try the suit is

concerned, it is beneficial to refer to issue No.1 and the

reasoning of the Trial Court on the said issue. Exs.P2 to

P13 and P28 are the invoices raised by the plaintiff

under which the goods were supplied to Baba

Enterprises. One of the terms and conditions stipulated

in the said invoices reads thus:

"Disputes arising out of this transaction are subject to Bengaluru jurisdiction".

17. The defendant though has not denied the

transaction but contended that it is the Baba Agencies

which has placed the purchase order. In the cross-

examination, defendant has admitted that his business

carried in the name and style of M/s Baba Enterprises

has been changed to M/s Baba Agencies. It is

demonstrated that the goods supplied by the plaintiff

were received by the defendant under the lorry receipts

marked as Exs.P14 to P22.

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18. Indisputedly, DW1 is the proprietor of M/s

Baba Enterprises. The goods supplied through the

invoices as per Exs.P2 to P13 and P28 to the defendant

being established by the plaintiff, the objection raised to

the territorial jurisdiction of the court to entertain the

suit is wholly untenable and is negated. The terms and

conditions stipulated in these invoices indicate that the

disputes arising out of the transaction are subjected to

Bangalore jurisdiction. The situs of sale and the supply

of goods originally from Bangalore pursuant to the

invoices raised based on the purchase order issued by

the defendant is binding on the defendant and the

jurisdiction to the dispute being clearly agreed as per

the invoices, the defendant cannot raise any dispute

regarding the same. We do not find any infirmity or

illegality in entertaining and adjudicating the matter by

the Trial Court.

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19. As regards the return of goods, it was

contended that the damaged goods handed over to Sri.

Narasimhamurthy and Sri. Raghu who were working as

sales representatives of the plaintiff - Company, to an

extent of Rs.98,071.13 has not been given deduction in

the outstanding amount claimed by the plaintiff, the

Trial Court has held that there is no supporting

evidence to establish the same. On the other hand,

Ex.D1, the accounts maintained by the plaintiff which

was produced in a criminal case would disclose the

transaction of 31.03.2002 where the balance is shown

as Rs.9,44,665.48. The said document further discloses

that the balance as on 27.08.2002 was Rs.8,94,665.48.

It is an admitted fact that the defendant was convicted

in C.C.No.1422/2003 filed by the plaintiff under Section

138 of the Negotiable Instruments Act, 1881 against

which Criminal Appeal No.99/2007 was filed by the

defendant and the same came to be dismissed, further

confirmed by this Court in Crl.R.P.No.254/2009. Thus,

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the Trial Court has rightly negated the contentions of

the defendants in this regard.

20. Though it was vehemently argued by the

learned counsel for the appellant that there was no

privity of contract inasmuch as paying interest, the

same is wholly misconceived. Exs.P2 to P13 and P28,

the invoices clearly shows that the payments received

after due dates will attract interest charges at the

prevailing bank rates. Interest is the compensation fixed

by agreement or allowed by law for deprivation; the

money due, due to the plaintiff was not paid or withheld

by the defendants. This transaction being commercial in

nature the Trial Court has rightly awarded the interest

at the rate of 18% per annum on the outstanding

amount at 18% per annum. Pre-lite interest awarded by

the Trial Court cannot be faulted with. Awarding

interest at 18% p.a., on the outstanding amount of

Rs.8,94,664.48 upto 31.05.2003, suit has been decreed

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for Rs.10,98,397.89 [8,94,664.48 + 2,03,733.41] which

in our opinion cannot be faulted with. But in our

considered view, the rate of interest awarded by the

Trial Court pendent-lite and future rate of interest at

18% per annum from 31.05.2003 however requires re-

consideration having regard to the facts and

circumstances of the case read with Section 34 of CPC,

keeping in mind the interest of justice and equity.

21. Accordingly, we modify the rate of interest

from 31.05.2003 till the date of payment at 7% per

annum confirming the rate of interest at 18% per

annum upto 31.05.2003 on the outstanding amount of

Rs.8,94,664.48.


     22.   Hence, the following

                           ORDER

     i)    The appeal is allowed in part.
                       - 16 -


ii)    The impugned judgment and order passed in

O.S.No.4269/2003 by the IX Addl. City Civil

and Sessions Judge, Bengaluru (CCH-5) is

modified insofar as the direction to pay

interest at the rate of 18% per annum on the

outstanding balance of Rs.8,94,664.48 from

31.05.2003 till its realization, to 7% per

annum.

iii) The amount of Rs.8,25,000/- (Rupees Eight

Lakhs Twenty Five thousand only) deposited

by the appellant/defendant before this Court

and directed to be released in favour of the

respondent/plaintiff in terms of the order of