Karnataka High Court
M/S Win Medicare Pvt Ltd vs Smt K Janhavi M Shenoy on 31 July, 2024
Author: V Srishananda
Bench: V Srishananda
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RFA No. 81 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF JULY, 2024
BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
REGULAR FIRST APPEAL NO. 81 OF 2015 (MON)
BETWEEN:
M/S. WIN MEDICARE PVT. LTD.,
PERSONAL CARE DIVISION, NO.1309
MEDI TOWER, NO.98, NEHRU PALACE
NEW DELHI-110 019
A BODY CORPORATE CONSTITUTED
UNDER COMPANIES ACT
REPRESENTED BY ITS
DIRECTOR
...APPELLANT
(BY SRI. MALLIKARJUN REDDY K.S, ADVOCATE)
AND:
SMT. K. JANHAVI M. SHENOY
Digitally W/O SRILKARKALA MUKUNDA SHENOY
signed by AGED ABOUT 45 YEARS
MALATESH PROPRIETOR:M/S MANJUNISHADBS
KC NO.15, 25TH MAIN,BTM 2ND STAGE
Location: KUVEMPUNAGAR
HIGH BANGALORE-560 076
COURT OF ...RESPONDENT
KARNATAKA
(VIDE ORDER DTD.26.10.2023 RESPONDENT
SERVED BY WAY OF PAPER PUBLICATION
AND REMAIN UNREPRESENTED)
THIS RFA IS FILED UNDER SEC.96 R/W ORDER XLI RULE
1 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
15.9.2014 PASSED IN O.S.NO.26674/2007 ON THE FILE OF
THE XXVI ADDL. CITY CIVIL JUDGE, MAYOHALL, BENGALURU,
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RFA No. 81 of 2015
(CCH 20), PARTLY DECREEING THE SUIT FOR RECOVERY OF
MONEY.
THIS APPEAL, COMING ON FOR HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE V SRISHANANDA
ORAL JUDGMENT
Heard Sri Mallikarjun Reddy K.S., learned counsel for the
appellant.
2. The defendant who suffered a judgment and decree
passed in O.S.No.26674/2007, dated 15th September, 2014, on
the file of XXVI Additional City Civil and Sessions Judge,
Bengaluru, directed to pay sum of Rs.2,77,886/- with interest
at 10% p.a., has questioned the validity of the said judgment
and decree in this appeal.
3. Facts in brief which are utmost necessary for
disposal of the present appeal are as under:
A suit came to be filed by the plaintiff against the
defendant for recovery of sum of Rs.3,10,152/- with 18%
interest per annum and Court costs.
4. Basis for claim of the plaintiff is that a business
concern was there in the name of the plaintiff. Defendant who
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is a franchisee for health care products approached the plaintiff
in his office at Bengaluru, during April 2005 through the
Director namely; Sri Sanjeev Kapoor and after due discussions,
the defendant appointed the plaintiff as a distributor to
distribute the defendant health care products in and around the
State as per the order of the defendant's agents.
5. The plaintiff was selling the products sent by the
defendant. In the process, products sent by the defendant to
plaintiff vide invoice dated 31.05.2005, 04.06.2005,
28.06.2005, 05.07.2005, 07.07.2005, 07.09.2005 and
30.09.2005 remained with the plaintiff, as he could not
marketed since the agents appointed by the defendant could
not bring any orders for sale of those products.
6. The value of those products was to the tune of
Rs.3,10,152/- which was paid by the plaintiff to the defendant.
Since, there was no successful marketing by the agents
appointed by the defendant, as the products were inferior
quality, the same remained with the plaintiff.
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7. The said fact was brought to the notice of the
defendant company by the plaintiff several times with a request
to take back the goods and return the value of the goods paid
by the plaintiff to the defendant.
8. Despite such repeated request, defendant failed to
take back the products and repay the amount covered there
under.
9. The plaintiff had made several attempts to return
the product and get back the money paid by him and ultimately
there was a legal notice issued on 15.07.2007.
10. Legal notice was replied, but there was no
compliance to the callings of the legal notice, necessitating the
plaintiff to file the suit.
11. In pursuance to the suit summons, defendant
appeared before the Court and denied the plaint averments in
toto.
12. Defendant contended that plaintiff has suppressed
the material facts and not approached the Court with clean
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hands and contended that the relationship between the plaintiff
and defendant is that of principal to principal basis and when
once the goods purchased by the plaintiff, there was no
agreement to take back the property and return the value of
the property and therefore, there was no obligation on the part
of the defendant to comply the callings of legal notice and thus
sought for dismissal of the suit.
13. Based on the rival contentions, the Trial Court
raised the following issues:
"1. Whether plaintiff proves that products sent to
plaintiff by defendant under 7 invoices remained with
plaintiff on the fault of defendant and having been of
inferior quality?
2. Whether the plaintiff proves that he is entitled for
value of the said products of Rs.3,10,152/-?
3. Whether plaintiff is entitled for interest at 18%?
4. Whether plaintiff is entitled for relief sought for?
5. What order or decree?"
14. In order to establish the case of the plaintiff, power
of attorney of the plaintiff by name Karkala Mukund Shenoy got
examined himself as P.W.1, who is none other than the
husband of the plaintiff. Plaintiff placed on record 27 documents
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which were exhibited and marked as Exs.P.1 to P.27 comprising
of General Power of Attorney as Ex.P.1, Notice dated
15.07.2007 as Ex.P.2, UCP as Ex.P.3, Courior consignment
copy acknowledgement as Ex.P.4, copy of letter dated
19.06.2007 as Ex.P.5, money receipt dated 17.08.2007 as
Ex.P.7, credit note advice as Ex.P.8, debit note advice as
Ex.P.9, another credit note advice as Ex.P.10, Copy of letter
dated 22.01.2007 as Ex.P.11, letter dated 22.01.2007 as
Ex.P.12, copy of letter dated 03.08.2006 as Ex.P.13, copy of
letter dated 23.06.2006 as Ex.P.14, copy of letter dated
23.06.2006 as Ex.P.15, debit note copy as Ex.P.16 and copy of
tax invoices as Exs.P.17 to P.27.
15. As against the evidence that is placed on record by
the plaintiff, officer of the company by name Sri Rajeev Behl
got examined as D.W.1 and placed on record four documents
which were exhibited and marked as Exs.D.1 to D.4,
comprising of certified copy of the power of attorney, clearing
and forwarding agreement, letter dated 31.08.2005, copy of
the reply notice dated 30.10.2007.
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16. Thereafter learned Trial Judge heard the parties in
detail and on cumulative consideration of the oral and
documentary evidence placed on record, decreed the suit in
part as referred to supra.
17. Being aggrieved by the same, defendant is in
appeal before this Court on the following grounds:
"The Order passed by the trial court is contrary to law
and natural justice. The trial court has not appreciated
the case with proper perspective and has failed to apply
its mind pertaining to the facts and pleadings of the
case.
The order of the Trial court is illegal, capricious and
perverse and is not sustainable in the eye of law.
The Judgment and Decree passed is otherwise opposed
to facts, law and the pleadings of the case.
The Learned Trial Court Judge has failed to appreciate
that there is no whisper about the Respondent / Plaintiff
anywhere in the Plaint and as to how she is entitled to
maintain a claim against the Appellant / Defendant.
The Judgment is erroneous as the Respondent / Plaintiff
has not made out a cause of action for the institution of
the suit, taking into consideration that during the
pendency of the said suit bearing O.S.No.26674/2007,
the cause title of the said suit was changed and
nowhere in the antecedent documents or
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communications, was the Respondent/Plaintiff name
ever mentioned anywhere.
The Judgment of the Trial Court is not sustainable as
the Learned Trial Court Judge failed to notice that there
were no documents or any other evidence on record to
demonstrate that the relation between the Appellant /
Defendant and the Respondent / Plaintiff was that of
Principal and Agent. The relationship between the
parties was purely that of Principal to Principal as
Manjunisha dbs was only a Distributor of products and
was not an Agent of the Appellant.
The Trial Court's order is also bad in law as the Learned
Trial Court failed to understand the relationship between
the parties which was purely that of on a Principal to
Principal basis.
The Hon'ble Trial Court grossly erred when the
Respondent / Plaintiff completely failed to prove that
any unsold goods had to be re- purchased by the
Appellant/Defendant.
The averment made by the Respondent / Plaintiff that
"it was the duty of the Appellant / Defendant to market
the goods purchased from it" was made without basis
and there was no proof, either documentary or oral to
that effect.
The Judgment passed in O.S.No.26674/2007 is perverse
since the Hon'ble Trial Court failed to take into
consideration the business relation of the Appellant and
Plaintiff which was purely on Principal to Principal basis.
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The Learned Trial Court Judge was in error when
misunderstanding the facts of the case wherein the
Clearing and Forwarding Agency Agreement (CFA
Agreement for brevity) with M/s Srinivasa dbs was
terminated by the Appellant/Defendant and that the
same was accepted and acquiesced by the Proprietor of
CFA. Further all legal matters and the finances dealings
with the CFA Agents were clearly settled and who in any
event did not have any cause of action against the
Appellant / Defendant.
The Legal notice caused to be sent to the Appellant /
Defendant by Mr Karkala Mukunda Shenoy claiming
himself as the proprietor of Manjunisha dbs is bad in
law and as such, he had no locus standi to file the said
suit in the first instance.
The Learned Trial Court Judge has grossly erred on
giving a finding on the point as to whether the
termination of CFA Agreement was valid or not
especially when neither of the parties had taken a
contention on this ground."
18. Sri K.S. Mallikarjuna Reddy, learned counsel
representing the appellant, reiterating the grounds urged in the
appeal memorandum contended that the Trial Judge has not
properly appreciated the material evidence on record and has
misunderstood the case of the parties and wrongly decreed the
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suit, resulting in miscarriage of justice and sought for allowing
the appeal.
19. He further emphasized that the relationship
between the plaintiff and the defendant is that of principal to
principal basis and once there is a outright sale made by the
defendant in favour of the plaintiff, there was no obligation on
the part of the defendant to take back the goods and return the
amount and therefore, the claim of the plaintiff is illusory and
which could not have been allowed by the learned Trial Judge
and sought for allowing the appeal and dismissal of the suit.
20. He further emphasized that the evidentiary value of
Ex.D.2 coupled with the reply notice vide Ex.D.4 is not properly
appreciated by the learned Trial Judge, whereby, it is crystal
clear that when the product is sold to the plaintiff, at no stretch
of imagination, the same would be returned by the plaintiff in
favour of the defendant and as per the value of the product and
the learned Trial Judge has not considered these aspects of the
matter in its right perspective and wrongly decreed the suit and
sought for allowing the appeal.
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21. Respondent though served with the notice remained
absent.
22. In the light of the arguments put forth on behalf of
the appellant, this Court perused the material on record
meticulously.
23. On such perusal of the material on record, following
points would arise for consideration:
1) Whether the plaintiff has successfully established that
the goods supplied under the invoice Nos.250105
dated 04.06.2005, 25095 dated 31.05.2005, 250111
dated 28.06.2005, 250113 dated 05.07.2005 and
250117 dated 07.07.2005, by the defendant would not
be sold on account of its inferior quality by the agents
appointed by the defendant and thereby plaintiff was
entitled to refund of the money as claimed in the suit?
2) Whether the impugned judgment is suffering from
legal infirmity and perversity and thus calls for
interference?
3) What order or decree?
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24. In the case on hand, the sale of products by the
defendant in favour of the plaintiff vide invoice referred to
supra is not in dispute.
25. Agreement marked at Ex.D.2 would depict the
terms and conditions. The contents of reply notice are
extracted here under for ready reference:
"Dear Sir,
We are under the instructions of M/s.Win Modicare Pvt. Ltd.,
a company duly Incorporated and registered under the
Companies Act, 1956 and having its registered office at
1400, Modi Tower, 98 Nehru Place, New Dalhi 19. That our
client has placed before us your notice dated 15.07.2007
which was received by our client on 30.07.2007 and has
instructed us to deal with the said notice.
That at the outset we state that all averments, assertions
and statements as contained in your notice under
consideration are hereby denied unless specifically admitted
herein within the body of the present reply. The Parawise
reply to your said notice is given hereunder:
1. That the Para 1 of the Notice under reply is admitted to
the extent that our client is engaged in the distribution of
Natures Bounty Healthcare Products. That the remaining
portion of the said para is denied being false and fictitious.
That it is wrong and denied that our client's representatives
ever approached your client seeking to appoint your client as
a distributor of our client's products in Karnataka.
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Conversely, it was your client who had expressed his desire
to be associated with a brand name of the stature of our
client, and hence applied to be appointed as a distributor for
the products of our client. Our client found your client's
proposal to be in order and hence appointed your client as a
distributor. However it is pertinent to mention herein that
your client is one of the many distributors of our client in the
state of Karnataka. It is also mentionworthy that the
relationship of your client with our client was always on a
Principle to Principle basis.
2. That it is admitted that your client in the course of
business was purchasing goods from our client for further
selling it. That it is further admitted that your client
purchased the goods as mentioned in your notice and made
a payment of an amount of Rs.3,10,152/- (Rupees Three
Lakhs Ten Thousand One Hundred and Fifty Two Only)
towards the purchase of the said goods. It is further mention
worthy that till date your client has purchased goods worth
Rs.5,63,106/- (Rupees Five Lakhs Sixty Three Thousand One
Hundred and Six Only) from our client. It is wrong and
denied that our client has not been marketing or advertising
the said goods or that the same are of inferior quality. It is
stated that once your client has purchased the said goods
from our client it is your client who is responsible for the
further sale of the same or is at free will to utilize the said
goods as your client deems fit. The nature of the relationship
of your client and our client being that of a principle to
principle after the outright purchase of the said goods your
client is under no obligation to further sell the products and
our client similarly is under no obligation of your client and
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has no responsibility to ensure the further sale of the goods.
Your client it appears is trying to fasten the lack of your
client's salesmanship on our client which is completely
baseless and is denied. It is further denied that our client is
under any obligation to take back unsold goods from your
client as the relationship, as mentioned herein above, being
shared between your client and ours is strictly principle to
principle. The remaining portion of the para under reply is
denied.
3. That the Para 3 of the Notice under reply is wrong and
baseless and is hence denied in toto. That it is wrong and
denied that your client has made repeated requests for the
collection of the said goods. Even otherwise our client is not
under any obligation to take back the said goods or to pay
back the amount paid by your Client for the purchase of the
said goods. It is once again reiterarated that once your client
has purchased the said goods from our client it is your client
who is responsible for the further sale of the same or is at
free will to utilize the said goods as your client deems fit. The
nature of the relationship of your client and our client being
that of a principle to principle after the outright purchase of
the said goods your client is under no obligation of our client
and our client similarly is under no obligation of your client
and has no responsibility to ensure the further sale of the
goods. That without prejudice it is further stated that loss, if
any, faced by your client is due to a lack of salesmanship for
which no liability can be fastened on our client.
4. That Para 4 & 5 of the notice under reply are wrong and
are hence denied. That in view of the above stated facts and
circumstances we state that our client is under no obligation
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to take back the goods once sold and hence there is no
accrued liability towards our client which needs to be cleared
in your client's favor. in view of the same you are called upon
to immediately withdraw the present notice and to advice
your client not to initiate any frivolous litigation against our
client, however in case your client does undertake the same
our client would defend the same and the costs,
consequences and risks thereof shall be attributable entirely
to your client and your client would be solely responsible for
the same."
26. On careful perusal of contents of Ex.D.4, it is crystal
clear that the plaintiff is appointed as the distributor by the
defendant.
27. When once the plaintiff is appointed as a
distributor, may be because of the arrangement that the
plaintiff and defendants have entered into, plaintiff was
required to pay the value of the goods and stock it in the
plaintiff place which could be further sold to the prospective
customers for which the orders have to be procured by the
agents appointed by the defendant themselves.
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28. The agreement marked at Ex.D.2 makes it crystal
clear in this regard. No doubt the said agreement is entered
into in the name of the husband of the plaintiff.
29. The stock that has been purchased by the plaintiff
for value was kept in the plaintiff to be sold to the prospective
purchasers as against the orders that are to be procured by the
agents appointed by the defendant.
30. The products which were purchased by the plaintiff
under the above referred invoices remained with the plaintiff as
the agents of the defendant could not procure any further
orders on account of the inferior quality of the products that
has been supplied by the defendant. Therefore, the plaintiff
rightly claim to take back the product and return the amount
covered under the product.
31. Admittedly, the distributorship of the plaintiff did
not cast their responsibility on the plaintiff to sell the product at
any cost inasmuch as for the sale of the product, the defendant
has appointed an agent by themselves.
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32. What the plaintiff was required to do under the
agreement and the arrangement that has been entered into by
the plaintiff and defendant was to procure the product by
paying the full cost, keep the margin as a problem for the
distributorship and thereafter distribute the products to the
agents appointed by the defendant and sell the same in the
market. If the sale of the product is not possible on account of
non-procuring the orders by the agents appointed by the
defendant, plaintiff cannot be penalized.
33. Therefore, the claim of the plaintiff has been rightly
appreciated by the learned Trial Judge in the impugned
judgment, if not in so many words and by assigning the proper
reasons.
34. This Court being the Court of first appeal, while
concurring with the finding of the Trial Court can always
supplement the additional reasons.
35. In this regard, this Court bestowed its attention to
the Ex.P.2 agreement as well as the contents of the reply
notice - Ex.D.4.
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36. It is pertinent to note that in the reply notice,
though the contents of the legal notice issued by the plaintiff is
denied, but there is a clear admission that the plaintiff was
appointed as a distributor by the defendant.
37. No doubt the sale of the product is evidenced by
the invoices and the very plaintiff himself admits that he has
paid the value of goods. That does not mean that the plaintiff
was constrained to sell the products or keep it for herself.
38. Therefore, the arrangement between the plaintiff
and the defendant was in the nature of the plaintiff to purchase
the goods and keep it with the plaintiff for the distribution in
and around the area for the order that would be procured by
the agents appointed by the defendant.
39. Further the contents of the reply notice would also
go to show that it is the poor knowledge or lack of salesmen
ship that resulted in not selling the products to the prospective
customers. Such a responsibility was not cast on the plaintiff
at all, because the agents were appointed by the defendant
company for procuring the order to sell the products. All that
the plaintiff was required is to purchase the goods and keep the
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same and distribute the same as against the order procured by
the agents appointed by the defendant.
40. As such, the defendant cannot now turn around and
then contend that when once the sale is made in favour of the
plaintiff, they were not duty bound to take back the goods
which are of the inferior quality and return the amount.
41. Under such circumstances, decreeing of the suit
partly by considering that one of the products was already
opened and tried to be meddled with by the plaintiff and
decreeing the suit in a sum of Rs.2,77,886/- with the interest
at 10% p.a., from the date of suit till realization is just and
proper.
Accordingly, point No.1 is answered in affirmative and
point No.2 in the Negative.
42. Regarding point No.3: In view of finding of
this Court on point Nos.1 and 2 above, following order is
passed:
ORDER
Appeal is meritless and hereby dismissed.
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No order as to costs.
Amount in deposit shall continue to be in deposit for
the plaintiff to withdraw the same as against the decree
passed by the Trial Court.
Sd/-
(V SRISHANANDA)
JUDGE
MR
