Karnataka High Court
M/S Formac Engineering Ltd vs M/S.Bosch Ltd on 14 December, 2023
Author: V Srishananda
Bench: V Srishananda
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RFA No. 2548 of 2007
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
REGULAR FIRST APPEAL NO.2548 OF 2007 (MON)
BETWEEN:
M/S. FORMAC ENGINEERING LTD.,
A COMPANY REGISTERED UNDER THE,
COMPANIES ACT, 1956 AND HAVING,
ITS REGISTERED OFFICE AT KANJUR(EAST),
BOMBAY - 400 076.
...APPELLANT
(BY SRI. BHAVANA G. K., ADVOCATE)
AND:
M/S. BOSCH LTD.,
A COMPANY REGISTERED UNDER THE,
COMPANIES ACT, 1956 AND HAVING,
ITS REGISTERED OFFICE AT HOSUR ROAD,
ADUGODI,
BANGALORE - 560 030.
REPRESENTED HERE IN BY ITS,
Digitally
DIVISIONAL MANAGER (LAW) AND,
signed by R COMPANY SECRETARY : MR. B. S. IYER.
MANJUNATHA
...RESPONDENT
Location:
HIGH COURT
OF (BY SRI.NITIN PRASAD ADVOCATE FOR SRI.VINAY GIRI.,
KARNATAKA ADVOCATE)
THIS RFA IS FILED UNDER SECTION 96 AND ORDER 41
RULE 1 OF THE CODE OF CIVIL PROCEDURE AGAINST THE
JUDGMENT AND DECREE DT.3.8.2007 PASSED IN
O.S.NO.2451/1993 ON THE FILE OF THE XXXI ADDL. CITY
CIVIL JUDGE, BANGALORE, DECREEING THE SUIT FOR
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RFA No. 2548 of 2007
RECOVERY OF ADVANCE MONEY PAID BASED ON THE
CONTENTION OF BREACH OF CONTRACT.
THIS APPEAL, COMING ON FOR HEARING, THIS DAY, THE
COURT DELIVERED THE FOLLOWING:
JUDGMENT
Present appeal is filed challenging the validity of the
judgment and decree passed in O.S.No.2451/1993 dated
03.08.2007 on the file of Additional City Civil Judge
Bengaluru City (CCH - 14).
2. Parties are referred to as plaintiff and defendant
for the sake of convenience as per their original ranking
before the Trial Court.
3. It is here and there alone, necessary that name
of the plaintiff has been changed from M/s. Motor
Industries Company Limited to M/s. Bosch Limited and
necessary amendment has been carried out in the appeal
memorandum.
4. Case of the plaintiff is that plaintiff had placed
orders for special purpose machinery to be supplied to the
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plaintiff by defendant as per the drawings provided by the
plaintiff. It is a tailor-made equipment and therefore,
defendant had to cater to the needs of the plaintiff as per
the drawings precisely.
5. As per the contract between the plaintiff and
defendant, defendant prepared three special purpose
machinery as per the drawing and supplied to the plaintiff,
which was accepted by the plaintiff. However, in respect of
two machineries, out of the total sum that was payable to
defendant by plaintiff, a sum of Rs.82,805/- and 85,500/-
respectively were retained by the plaintiff as retention
money for the satisfaction of the proper working of the
special purpose machinery supplied by the defendant to
plaintiff.
6. In respect of the third specialized machinery,
there was no retention money. In respect of fourth
specialized machinery, when the defendant was about to
manufacture the same as per the drawings made by the
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plaintiff, there were some differences between the plaintiff
and defendant.
7. According to the defendant, when the
machinery was being manufactured, the plaintiff changed
the drawing and therefore, defendant was unable to
complete the manufacturing of the special purpose
machinery as required by the plaintiff and plaintiff also
taking note of the delay in getting the special purpose
machinery delivered to the plaintiff, terminated the
contract only in respect of fourth specialized machinery.
The correspondence between the parties has to establish
the same and therefore, plaintiff sought for return of
entire sum of Rs.3,31,800/- which was given to defendant
for the purpose of manufacture of special purpose
machinery in respect of fourth specialized machinery.
8. Defendant refuted the claim and also sought for
set of in the suit claim by filing detailed written statement
by contending that retention money of Rs.82,805/- and
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Rs.85,500/- needs to be deducted, while adjudicating the
claim of the plaintiff and sought for dismissal of the suit.
Therefore, learned Trial Judge framed following issues:
"1. Does plaintiff proves that defendant
failed and neglected to deliver the machine
as per plaintiff's order inspite of extension of
time as contended in para-3 to 5 of the
plaint?
2. Does plaintiff prove that plaintiff cancelled
orders demanded refund of advance amount
of Rs.3,31,800/- with 20% interest per
annum as per para-5 of the plaint?
3. Does defendant prove that the delay is
due to plaintiff for not making the funds
available as per para-6 of the written
statement?
4. Does defendant prove that this court has
no jurisdiction to try the suit as per para-11
of the written statement?
5. Whether there is cause of action to this
suit?
6. Whether the plaintiff has paid proper
court fee?
7. Whether the plaintiff is entitled for the
suit reliefs?
8. If so under what order or decree?"
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9. In order to prove the case of plaintiff,
Sri.S.Nagaraj, one of his officers got examined as P.W.1
and relied on 06 documents which are exhibited and
marked as Ex.P.1 to Ex.P.6 comprising of copy of the order
dated 10.08.1999 at Ex.P.1, minutes of meeting dated
08.05.1990 at Ex.P.2, letter dated 07.11.1991 at Ex.P.3,
postal acknowledgment at Ex.P.4, reply letter dated
20.12.1991 at Ex.P.5 and copy of the rejoinder dated
08.02.1992.
10. As against the evidence placed on record by the
plaintiff, on behalf of defendant Sri.Shahpur Phiropze Rao
is examined as D.W.1 and relied on 25 documents which
are exhibited and marked as Ex.D.1 to Ex.D.25 comprising
of purchase order dated 22.04.1987 at Ex.D.1, purchase
order dated 13.11.1988 at Ex.D.2, invoice dated
22.04.1987 at Ex.D.3, copy of minutes of meeting dated
08.05.1990 at Ex.D.4, balance confirmation dated
21.10.1991 at Ex.D.5, letter dated 27.04.1994 at Ex.D.6,
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letter dated 13.03.1993 at Ex.D.7, purchase order dated
10.08.1998 at Ex.D.8, standard format of terms and
conditions at Ex.D.9, copies of letters at Exs.D.10 to 15,
copy of deliver note dated 05.03.1999 at Ex.D.16, packing
list dated 02.03.1990 at Ex.D.17, copy of letter dated
27.03.1990 at Ex.D.18, copy of debit note dated 31/-
1.1992 at Ex.D.19, statement of account at Ex.D.20,
status reports at Exs.D.21 to 23, copy of delivery note
dated 22.05.1989 at Ex.D.24 and copy of invoice dated
29.05.1989 at Ex.D.25.
11. On conclusion of recording of the evidence,
learned Trial Judge heard the parties in detail and on
cumulative consideration of oral and documentary
evidence on record, decreed the suit of the plaintiff as
under:
"For foregoing reasons, suit of the plaintiff
stands decreed with costs in the following
terms:
The plaintiff is held entitled to recover
a sum of Rs.4,65,349-50 together with
interest over the principal amount of
Rs.3,31,800/- from the date of the suit till
this day at the rate of 9% per annum and
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thereafter, at the rate of 6% per annum till
realization; from the defendant."
12. Being aggrieved by the same, defendant has
preferred the present appeal on the following grounds:
The trial court without appreciating the very
relevant aspect of the terms and conditions for
supply of special purpose machine has decreed
the suit. Further the trial court also failed to
take into consideration of the following
admitted relevant facts that:
(i)There was an enormous delay in
making advance payment,
(ii) Finalizing the drawings and adjusting
the advance as against the earlier supply,
(iii) Non payment of dues as against
other supplies,
(iv) Mischief recruiting and of appointing
an expert sent by the defendant to the
plaintiff company for commissioning of
the machine, before coming to the
conclusion that the defendants owe to the
plaintiff. Though there was no specific
contract for supply and purchase of the
machine, the purchase order, terms and
conditions furnished by the defendant for
supply of special purpose machine and
invoice raised by the defendant constitute
an agreement between the parties. As
per the understanding the plaintiff was
required to pay advance intime and
furnish drawings. Further the same was
required to be approved and thereafter
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special designing will be implemented by
the defendant. In the present case the
plaintiff has totally failed in all respects.
Therefore the defendant is entitled to
forfeit the belated payment.
The trial court failed to note that the defendant
has commenced the manufacturing of the
machine and has spent about Rs.2,25,000/- for
design approval prints and for securing raw
materials and for manufacturing of
components, moulds and for other related
works. The plaintiff has not paid for the earlier
supplies and for work done between August,
1988 and March, 1990. Therefore the
defendant has every right to withhold the
amount. Non compliance by the plaintiff
resulted in breach and thereby the defendant
is not liable to pay any amount. The same has
not been appreciated by the trial court.
The trial court failed to note that PW-1 has no
authority to represent the company.
Admittedly there is no Board resolution
authorizing PW-1 to give evidence. He has
been working in the Department since April,
1994 subsequent filing of the suit. He is totally
ignorant about the factual aspects. His
deposition is based on the records is the
statement of the witness. PW-1, on the face of
it, has made false statement that they have
paid 30% of purchase value of Rs. 16,59,000/-
as advance which comes to Rs. 4,97,700/-.
Infact, admittedly the amount paid is Rs.
3,31,800/- (i.e. about 20%). The Trial Court
has not taken note off the very relevant fact
that PW-1 is most unreliable witness. Hence
the trial court ought to have discarded the
evidence of PW-1.
The DW-1 is the person who has dealt with the
plaintiff company from the inception. He has
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categorically stated about all the three
transactions. He has also made clear that there
was no delay on their part in supplying the first
machine. The plaintiff illegally appropriated the
advance payment made as against the second
machine towards discharge of the dues of the
first machine and thereby violated the terms
and caused delay in manufacturing of second
machine. The reduced advance was paid for
the second machine after the joint meeting.
But there was enormous delay in sending the
plans and designs and also for approval. It is
on record and also admitted by PW-1. It is not
in dispute that the machine to be
manufactured is a special purpose machine for
which separate terms and conditions were
given to the plaintiff. One of the terms of Ex.D-
9 reads thus:
"CANCELLATION: In the event that an
order with advance payment for
machinery or equipment is cancelled by
a customer, we reserve the right to
forfeit the advance, as well as to recover
from the customer the Value of all the
work completed and in process."
The defendant has exercised the right under
Ex.D-9 and forfeited the advance. The Plaintiff
has not denied the terms of Ex.D-9 and there
is no Cross-Examination in respect of the said
document. Therefore the trial court ought to
have relied upon the terms of Ex.D9 and
dismissed the suit.
The learned trial judge while answering Issue
no.4 has opined that though the defendants
are at Mumbai and all the transactions are
concluded at Mumbai, the payment has to be
made from Bangalore and goods has to be
supplied at Bangalore and therefore the court
at Bangalore has jurisdiction and answered
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issue No.4 in the affirmative. The said view is
incorrect. It is an admitted fact that the
Defendant Company is situated at Mumbai and
orders were placed at Mumbai, payment
received at Mumbai and machinery was
manufactured at Mumbai. The inspection of
machinery has to be at Mumbai as per Clause
3.3 of Purchaser Order Ex. P-1. Therefore
contract concluded at Mumbai. The supply of
machine to Bangalore is only a consequence
pursuant to the concluded contract. The
learned Judge is of the view that ultimately
machine has to be commissioned at Bangalore
and therefore the Court at Bangalore has
jurisdiction. Even if such view is accepted, it is
clear that the cause of action has arisen both
at Bangalore as well as at Mumbai. Exhibit D-9
is clear that in an eventuality the Court at
Mumbai is having jurisdiction. Therefore the
court at Bangalore has no jurisdiction. The said
aspect has not been considered by the trial
court.
The plaintiff has prayed for return of the
advance amount of Rs.3,31,800/- with interest
on the plea that the defendant has not
honoured the commitment of supply of
machinery worth Rs. 16,59,000/-. Unless the
declaration is given to the effect that the
Defendant has not honoured the commitment
the refund cannot be ordered. In the present
case the trial court has framed Issue No.1 and
answered in the affirmative declaring that the
defendant has honoured the commitment.
Therefore court fee has to be paid on the value
of the purchase order under Section 24 (d) of
the Karnataka Court Fee and Suits Valuation
Act. Hence the reasoning on Issue No.6 is
incorrect.
The trial court declined to take note of the
pleading and the evidence of the defendant
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regarding the extra amount spent for importing
rotary table to the extent of Rs.2,00,000/- and
the balance amount payable in respect of
supply made to their Nasik branch amount to
Rs.82,805.54 on the ground that the defendant
has not made any counter claim. The said view
is contrary to law. The trial court ought to have
taken note of the justification for withholding
the advance amount by the defendant and
dismissed the suit holding that the plaintiff is
not entitled to claim the refund. The counter
claim is not required when the amount
demanded is in respect of related transaction.
Hence the view is bad.
The trial court failed to take note of the liability
of the plaintiff in respect of the 3rd purchase
order of their Nasik branch on the ground that
it is a concluded contract. The said view is
contrary to the entire transaction. It is an
admitted fact that the plaintiff used to
purchase special purpose machineries from the
defendant since 1980. It is also on record that
advance paid for the 2nd purchase order is
adjusted against the payment of 1 machine.
Therefore the transactions are interlinked and
defendants are entitled to adjust the amount
as and when they receive on account of the
plaintiff. The same is also evidenced by Ex. D-
20. Hence the approach of the trial court is
bad.
The approach of the trial court that the
adjustment of advance paid for manufacturing
of 2hd purchase order as against supply of
machine under 1st purchase order is
inconsequential since the entire amount for the
1st purchase order is discharged, is contrary to
terms of the contract and business principle.
The advance paid for the manufacturing of
machinery under 2nd purchase order cannot be
adjusted against the supply of the machinery
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under 1st purchase order since it violates the
supply conditions and the said violation is very
much relevant to answer Issue No.1 regarding
justification of not refunding the amount.
The trial court wrongly understood the
sequence of events while answering Issue No.3
along with other issues. It is an admitted fact
that the PW-1 had no personal knowledge
regarding the entire transaction. It is also an
admitted fact that the 2nd purchase order
Ex.P.2 (Ex.D-4) is dated 10/8/1988. As per the
terms advance was supposed to be paid and
the advance paid has been adjusted towards
supply.
and answered in favour of the Plaintiff. The
learned judge ought not to have clubbed Issue
No.3 along with Issue No.1, 2, 5 & 7. The
appreciation of evidence while answering
issues was not properly considered, which
resulted in non- consideration of facts in issue.
Hence the approach for the learned judge is
bad.
The trial court has not properly appreciated
Issue No.3 with reference to documents and
pleadings of the parties. It is an admitted fact
that the machinery is a special purpose
machine, which require distinctive skill in
designing and preparing the drawings. The
special purpose type of machineries will be
manufactured only against the purchase order,
provided designs and drawings are furnished
and finalised with reference the acceptable
technical specifications. In the present case it
is very much on record that the purchase order
in dispute (Purchase Order No.86715) was
placed on 10/8/1988. As per the terms 10%
was supposed to be paid along with purchase
order. The advance paid was illegally adjusted
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as against the payment for supply of first
purchase order vide No.86624 dated
22/4/1987. An advance of Rs.3,31,800/- was
paid on 7/5/1990 after about 1 year 9 months.
It is also an admitted fact that there was an
enormous delay in sending approved drawings.
Without any justification order was cancelled
on 7/11/1991 within 1 year 6 months of
payment of advance. The DW-1 has
categorically stated that they have purchased
raw materials and also designed the
machineries investing about Rs.2,25,000/-.
The same cannot be used for any other
purpose. It is also on record that they could
not manufacture due to non-availability of
funds and finalization of drawings. There is no
acceptable explanation by the plaintiff
justifying their action of not paying the amount
in time. Therefore the trial court ought to have
answered Issue No.3 in the affirmative.
Therefore the defendant, the Appellant herein
has every right to forfeit the advance as per
Ex.D-9. The said aspect has not been referred
and considered by the trial court.
The trial court clubbed the pleadings and
evidence of the parties out of context and
answered Issue No.1 and 2 in favour of the
plaintiff. The extension of time is not in
conformity with the delay caused by them. The
trial court has lost sight of the fact that the
plaintiffs have unilaterally adjusted the amount
paid as advance towards the payment as
against the supply made by the defendant in
respect of the first purchase order without
reference to the defendant. The advance was
paid much after the commitment dated. Under
the circumstances the delay is solely due to
non payment of advance in time and not
furnishing the approved drawings. Therefore
the trial court wrongly answered Issue No.1.
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The trial court failed to note that the plaintiff
has not right to cancel the order since the
purchase order placed is in respect of special
purpose machine which will be manufactured
only on the basis of the purchase order and
with reference to the specifications. The only
consequences follows if the purchased order is
cancelled is to forfeit the advance in
accordance with the terms and condition
stipulated for specials purpose machine. The
said aspect has been totally overlooked by the
trial court.
The trial court failed to note that the plaintiff
has sought the relief for refund of the advance
amount on the ground that they have
cancelled the purchase order for non
performance of the contract by the defendant.
Unless there is a relief sought for declaration
that the purchase order placed by them is not
acted upon they are not entitled for the relief
of refund of advance. Hence there was no
cause of action for the plaintiff to seek the
prayer which is consequential in nature. Hence
trial court ought to have dismissed the suit.
The trial court has not take note of the
contents of the Ex.P2 wherein the plaintiff has
specifically admitted that they will retain 5% of
the cost of the machine supplied under first
purchase order that works out to Rs.82,805/-
till the second machine is commissioned. The
said term in Ex.P.2 clearly indicates that all the
purchase orders are interlinked. Ex.P.20 -
Statement of Accounts which is not in dispute
indicate the same. Therefore view of the trial
court that the first purchase order is nothing to
do with the second purchase order is contrary
to the pleadings, evidence and to the records.
The trial court ought to have taken note of all
the purchase orders, account statement with
reference to supply and payment before
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coming to the conclusion whether the
defendant was justified in forfeiting the
amount. Hence the judgement is bad in law.
The learned judge has wrongly understood the
statement made by DW-1 in para 7 which he
has quoted in the judgement. The answer
given was with reference to the question -
"whether the defendant can produce the
document to substantiate his statement?" The
witness meant that he was not knowing such a
question will be asked to bring the documents
and to produce then and there. The statement
was read out of context. If the deposition is
read in toto it will not give the meaning which
the learned judge has understood.
The trial court has not appreciated the nature
of work undertaken by the defendant in
response to the purchase order placed by the
plaintiff. The very nature of the machine is
special purpose machine which require the
service of technical experts. Admittedly Mr.
Shamsundar is a trained Engineer of the
defendant. The plaintiff encouraged the said
person to leave the job of the defendant and
recruited him when the second machine was to
be manufactured. At the crucial point of time
the services of an expert was deprived. The
said aspect is very much on record.
The trial court failed to note that the design
and drawings were finalised in consultation
with the experts of the defendant and the work
about to be implemented, the cancellation
order was sent. The approved design is in the
custody of the plaintiff they made use of the
said design to complete the process and got
the machinery through some other agency and
made unreasonable claim against the
defendant. The Ex.P.20 is very clear that the
Advance for second machine was paid in 2
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parts. They have not paid for the first machine
in time. Instead they have adjusted the said
advance against the supply of first machine.
Only thereafter they paid advance of about
20% i.e. 5% less than the amount payable as
per the terms. Further they have also not paid
5% fallen due on the first machine. They have
also not paid the dues towards the supply
made to Nasik branch. These aspects though
noticed by the trial court has not been
appreciated in the proper perspective. Hence
the judgement is bad.
The trial court totally misconstrued Ex.D-9.
Ex.D9 is a general terms and conditions for all
special purpose machine. The terms and
conditions has not been denied by the Plaintiff.
Therefore there was no reason for the trial
court to decline to appreciate the terms and
apply the same to the case. Instead the trial
court refused to take note of a specific clause
only on the ground that the plaintiff is not a
party for the said terms. The said view is
incorrect, because once purchased order is
issued the acceptance is always subject to the
said general terms and conditions. Therefore it
is a clear case of non application of mind.
The Trial Court is of the view that the
Defendant has not taken any action against Mr.
Sham Sunder when he has left the service
presupposes that the same has no effect on
implementation of the work. The said view has
no basis. Infact, it is the case of the Defendant
that the Plaintiff has induced the said person to
leave the employment of the Defendant and
they recruited in their roll and even now he is
working with Plaintiff. The Defendant could do
nothing against an employee who has left the
service since they are protected under law. The
said person has not been examined by the
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Plaintiff. These facts have not been taken note
off by the Trial Court.
The Ex. P-2 is the minutes of the Meeting
dated 8.5.1980 in which they reduced the
payment of advance much after the approval
of the drawings and made the Defendant to
invest their skill and money on the drawings.
There is no clause reserving their right to seek
refund of amount in case of non-supply of
machines within time. The reason for non-
inclusion is that the machine is a special
purpose machine and it is controlled by a
specific terms and conditions which was
understood by the parties. The said minute is
in continuation of Ex. D-9. The same has not
been taken note of.
The judgement and decree is also bad on
various other grounds which will be pointed out
at the time of hearing.
13. Smt.Bhavana G.K., learned counsel for the
appellant, reiterating the grounds urged in the appeal
memorandum vehemently contended that the trial Court
has grossly erred in decreeing the suit of the plaintiff,
inasmuch as, the special purpose machinery was made to
order by the defendant was commenced by the defendant
and because of the modification in the drawing, in the
interregnum, the defendant has put to loss and the raw
materials that has been procured for the manufacture of
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special purpose machinery in pursuance of the purchase
order issued by the plaintiff, the defendant is not obliged
to make any payment.
14. He also contended that in the event of Court
coming to the conclusion that defendant has to make a
payment of sum of Rs.3,31,800/-, a sum of Rs.1,68,305/-
retained by the plaintiff in respect of two specialized
machinery, which has been supplied by defendant to
plaintiff and satisfaction has been recorded by the plaintiff
needs to be set off and for the remaining amount, suit is
to be decreed without any interest. In the absence of any
contract to the contrary, sought for allowing the appeal to
that extent.
15. Per contra, Sri.Nithin Prasad, learned counsel
for Sri.Vinay Giri representing the respondent contended
that there cannot be any set off with regard to sum of
Rs.1,68,305/-, inasmuch as, there was no claim made by
the defendant for return of the retention money and the
amount was retained by plaintiff for the satisfactory
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working of the specialized machinery that was supplied by
the defendant to plaintiff as per the contract. Therefore,
such a plea cannot be entertained by this Court that too in
the appeal stage.
16. Further, he contended that sum of
Rs.3,31,800/- was paid for the fourth specialized
machinery and if defendant failed to supply the said
machinery in time, the same would result in terminating
the contract only with regard to supply of fourth
specialized machinery. Therefore, the said aspect of the
matter has been rightly appreciated by learned Trial judge
in the impugned judgment while decreeing the suit of the
plaintiff in toto and sought for dismissal of the appeal.
17. In view of the rival contentions of the parties,
this Court perused the material on record meticulously, on
such perusal of material on record, following points would
arise for consideration:
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1) Whether the appellant has made out a case that it
is not liable to pay a sum of Rs.3,31,800/- with
interest as claimed in the suit?
2) If not, whether the appellant is entitled for
seeking set off in a sum of Rs.1,68,305/- from the
suit claim?
3) Whether the interest as ordered by the trial Court
is justified?
4) Whether the impugned judgment is suffering from
legal infirmity or perversity and thus calls for
interference of this Court?
5) What order?
Reg. Point Nos.1 to 4:
18. In the case on hand, there is no dispute that
there was a contract between the plaintiff and defendant
with regard to supply of fourth specialized machinery. In
respect of the said contract, amounts were also paid by
the plaintiff to defendant.
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19. The defendant manufactured three specialized
machinery and delivered it to the plaintiff and same is
accepted by the plaintiff and there is a satisfaction as to
the working of the special purpose machinery as per the
designs provided by the plaintiff. However, the plaintiff
retained a sum of Rs.82,805/- in respect of one special
purpose machinery and a sum of Rs.85,500/- in respect of
another special purpose machinery as retention money for
satisfactory working of those special purpose machinery.
Further, with regard to last special purpose machinery, the
parties were on logger heads, inasmuch as, according to
defendant, they have commenced the manufacture of the
special purpose machine as per the original drawing and in
the interregnum, plaintiff unilaterally changed the drawing
resulting in loss of defendant and they could not supply
the machinery in time, ultimately, resulting in termination
of the contract in part only with regard to fourth
specialized machinery. All these aspects of the matter are
borne out on record by both oral and documentary
evidence on record. Therefore, the task of the Court is to
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find out whether the termination of the fourth contract was
justified. Learned Trial Judge has bestowed its attention
and taking note of the notice, reply and rejoinder, has
come to the conclusion that plaintiff was entitled to
terminate the contract in respect of fourth specialized
machinery as the same was not delivered in time.
20. The oral testimony in this regard is to be
considered as only oath against oath and without there
being any documentary proof thereon, the plaintiff has
exercised its right of termination as per the original
contract.
21. Defendant has also admitted that the fourth
specialized machinery could not be delivered in time.
However, according to defendant the explanation for the
delay is the modification in the original drawing.
22. In this regard, there is no specific material
available on record to show that delay is attributable only
to conduct of the plaintiff. Therefore, the finding recorded
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by learned Trial Judge that plaintiff was entitled to
terminate the contract in part in respect of supply of the
fourth specialized machinery, is just and proper. Having
said so, the plaintiff having paid a sum of Rs.3,31,800/- to
the defendant in respect of fourth specialized machinery is
entitled for the refund of the same with interest.
23. The defendant cannot retain a sum of
Rs.3,31,800/- inasmuch as, it has failed to prove that
termination is on account of the modification in the
drawing by the plaintiff whereby, plaintiff could not have
terminated the contract unilaterally. Under such
circumstances, the amount of Rs.3,31,800/- retained by
the defendant in respect of fourth specialized machinery
would be treated as unjust enrichment as per Section 72
of the Indian Contract Act, 1872.
24. Therefore, defendant is bound to repay sum of
Rs.3,31,800/-. Accordingly point No.1 is to be answered
in negative.
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REG.POINT NOS.2 TO 4:
25. Having said so, the material evidence available
on record especially, the cross-examination of P.W.1, which
has been found that sum of Rs.1,68,305/- is retained by
the plaintiff, was actually payable to defendant as
retention money in respect of supply of two specialized
machinery.
26. Admittedly, retention money is retained by the
plaintiff for the successful working of the two special
purpose machinery. There is no whisper in the plaint or
any correspondence made by the plaintiff that two of the
specialized machinery are not working properly nor it is
precised to the drawings, complied by the plaintiff. Under
such circumstances, plaintiff is bound to repay sum of
Rs.1,68,305/- retained by it on the same logic of 'Doctrine
of Unjust Enrichment'.
27. Taking note of these peculiar aspects of the
matter and amount of Rs.1,68,305/- being retained and
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not paid in time, it should also carry interest and in the
absence of any contract to the contrary, a sum of
Rs.1,68,305/- is to be given retention out of sum of
Rs.3,31,800/- and the defendant is bound to pay a sum of
Rs.1,63,495/-.
28. However, in the absence of any contract to the
contrary, ordered interest at the rate of 9% would act as
false on the part of defendant in repaying the amount.
29. Modifying the interest at the rate of 6% at sum
of Rs.1,63,495/- from 14.05.1990 till its realization would
meet ends of justice. Accordingly, point Nos.2 to 4 are
answered in affirmative.
REG. POINT No.5:
30. In view of the findings of this Court on point
Nos.1 to 4 as above, following:
ORDER
(i) Appeal is allowed in part.
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(ii) Decree of the Trial Court is modified as under:
Plaintiff is entitled to a sum of
Rs.1,63,495/- from the defendant at the
rate of 6% from 14.05.1990 till its
realization.
(iii) Office is directed to pass modified decree.
(iv) No order as to costs.
Sd/-
JUDGE
KAV
