Madras High Court
M/S.Dmj Exports vs M/S.Upk International on 2 March, 2021
A.S. No.990 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 02.03.2021
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
and
THE HONOURABLE MR.JUSTICE G.CHANDRASEKHARAN
A.S. No.990 of 2020 and C.M.P. No.14506 of 2020
1.M/s.DMJ Exports,
represented by its Partner
M.Dhandapani,
Pitchampalayam Road,
Tirupur 641 602,
Tirupur District.
2.M.Dhandapani
3.P.Murugesan ... Appellants
-vs-
1.M/s.UPK International,
Proprietrix Mrs.K.Yumarani,
represented by its Power Holder
M.Kalimuthu,
9-Near Srinivasa Theatre,
60 Feet Road, 1st Cross,
Gandhi Nagar (PO),
Tirupur – 641 603,
Tirupur District.
2.M/s.Viram Impex,
represented by its Proprietor,
Rajesh Shah,
23-J.K.Ind.Estate,
Off Mahakali Caves Road,
Andheri (East),
Mumbai 400 093.
1/16
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A.S. No.990 of 2020
3.M/s.Indian Overseas Bank,
represented by its Branch Manager,
Velampalayam Branch,
Tirupur – 641 652,
Tirupur District. ... Respondents
Prayer: Appeal Suit filed under Section 96 of Civil Procedure Code to
set aside the judgment and decree of the II Additional District Judge of
Tiruppur made in O.S. No.203 of 2013 dated 26.08.2020 and allow the
appeal and dismiss the above suit.
For Appellants : Mr.N.Ramesh for
Mr.J.Franklin
For Respondents : Mr.Sriram for
Mr.B.Tirunavukkarasu
JUDGMENT
(Judgment of the Court was made by T.RAJA,J.)
M/s.DMJ Exports, represented by its Partner M.Dhandapani and
others, who are defendants 1 to 3 before the Trial Court, having
suffered the impugned judgment and decree dated 26.08.2020 passed
by the II Additional District Judge, Tiruppur in O.S. No.203 of 2013,
directing defendants 1 to 4 to pay a sum of Rs.18,94,875/- with
subsequent interest at the rate of 12% per annum from the date of
suit till the date of realisation on the principal amount of
Rs.13,95,000/-, have come to this Court by way of filing this appeal.
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A.S. No.990 of 2020
2.Learned counsel appearing for the appellants submitted that
defendants 2 and 3 are the partners of the first defendant and the
fourth defendant is the buying agent. The plaintiff/first respondent
placed a work order to the first defendant firm for the value of
Rs.46,50,000/- by paying Rs.13,95,000/- as an advance on
12.06.2010. After making 30% of the amount towards advance, the
plaintiff/first respondent has breached the condition No.10 mentioned
in the work order with regard to terms of payment of 40% at the time
of shipment and balance 30% by post-dated cheques with covering
letter for payment within 3 - 4 days. Though the terms and conditions
mentioned in the work order dated 12.06.2010 have been accepted by
the plaintiff, he has made only the first advance payment of 30%
namely, a sum of Rs.13,95,000/-, as a result, to execute the orders,
by manufacturing the goods, the appellants spent their own money
namely, Rs.32,55,000/-. Although the plaintiff informed the appellants
that he will come and pay the remaining balance amount and take the
delivery of the goods, he has not come forward to make the further
payment, after seeing the goods in packed condition. When he has
confirmed that he would make the payment of Rs.10,00,000/- and he
would give a cheque for the balance amount, the appellants agreed for
the same, but the plaintiff never turn up with the further payment as
he promised. Though the plaintiff made a promise for the second time
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A.S. No.990 of 2020
stating that he would bring the total payment in 7 days time, the
plaintiff never proved himself with the payment. In view of the delay
caused by the plaintiff and not acted on the terms and conditions
mentioned in the work order, the plaintiff requested for the extension
of the L/C from the fourth defendant and the same was extended till
the end of August 2010. Even after extending the L/C, the plaintiff did
not come forward to make the payment, as a result, the appellants
were put to huge prejudice.
3.Learned counsel appearing for the appellants further submitted
that it was the claim of the appellants that after the work order dated
12.06.2010 was issued, the goods shall be supplied on payment of
balance amount, but the plaintiff, after making 30% of the amount
towards advance, has not come forward to make the payment of 40%
at the time of shipment and the balance amount within 3 - 4 days after
shipment. Without making the payment as per terms and conditions of
the work order, the plaintiff has filed the above suit seeking a direction
to defendants 1 to 4 to pay a sum of Rs.13,95,000/- towards the
advance amount and interest at the rate of 12% per annum and for
further direction.
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A.S. No.990 of 2020
4.Learned counsel appearing for the appellants further submitted
that though a detailed written statement has been filed stating that the
plaintiff sought extension of time citing a reason that they were not
able to make the payment for various reasons and the same could be
evidentially seen from the records, which clearly shows that the delay
had occurred only on the part of the plaintiff, but not on the part of the
appellants, the Trial Court, after taking the matter for trial,
surprisingly, without considering the fact that the time is the essence
of the contract, has wrongly reached a conclusion that the appellants
have failed to act on the terms and conditions mentioned in the work
order dated 12.06.2010. Such findings are wrong, hence, this appeal
deserves to be allowed, it is pleaded.
5.On the other hand, learned counsel appearing for the
respondents, in an effort to affirm the impugned judgment and decree
passed by the Trial Court, pleaded that when it is an admitted case
that the terms and conditions mentioned in the work order dated
12.06.2010 were accepted and adopted by both parties, only two
things are to be fulfilled from the side of the plaintiff. Firstly, the
plaintiff has to make the advance payment of 30% of the contract and
this has been admittedly made by the plaintiff and the same has been
accepted by the appellants. The second issue requires adjudication
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A.S. No.990 of 2020
before the Trial Court was that on receipt of the advance amount of
30% of the contract amount, since the appellants were not ready
within 60 days from the date of the work order and failed to perform
the contract, the Trial Court has rightly gone against the appellants
and decreed the suit in favour of the plaintiff.
6.The Trial Court, on the basis of the above pleadings, framed
the following issues:
'i)Whether the plaintiff is entitled for a decree directing the
defendants 1 to 4 to pay Rs.13,95,000/- to the plaintiff?
ii)Whether the plaintiff is entitled to claim interest on the
amount claimed? If so, what is the rate of interest?
iii)Whether the 5th defendant is a necessary party?
iv)To what relief, the parties are entitled for?'
7.On the side of plaintiff, P.W.1 is examined and Exs.A1 to A14
were marked. On the side of defendants, D.W.1 and D.W.2 were
examined and Exs.B1 to B8 were marked.
8.On a consideration of the oral and documentary evidence, the
Trial Court, on the basis of Exs.B6 and B7 stating that defendants 1 to
4 are claiming that they have sustained loss of Rs.14,95,000/- and
that there is no pleading in the written statement, decreed the suit in
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A.S. No.990 of 2020
favour of the plaintiff. Aggrieved thereby, the present appeal has been
filed.
9.We have heard Mr.N.Ramesh, learned counsel appearing for
the appellants and Mr.Sriram for Mr.B.Tirunavukkarasu, learned
counsel appearing for the respondents. The following points arise for
determination in this appeal:
'1.Whether the impugned judgment and decree passed in
favour of the plaintiff is sustainable.
2.Whether the plaintiff is entitled to claim interest as
ordered by the Trial Court.'
10.It is seen from the records that the plaintiff is the
manufacturer of T-Shirts. Defendants 2 and 3 are the partners of the
first defendant firm. The fourth defendant is M/s.Viram Impex, who are
carrying on business at 23, J.K.Industrial Estate, Andheri, Mumbai. The
fifth defendant is the Indian Overseas Bank. For the sake of
convenience, parties are addressed as they were arrayed before the
Trial Court.
11.The plaintiff received an export order from M/s.SKIVA
INTERNATIONAL, INC through the fourth defendant M/s.Viram Impex
and to that effect, on 13.05.2010 for a value of USD 92,950, they
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A.S. No.990 of 2020
received a letter of credit bearing No.L557647 through Bank of India,
Mumbai and the same has been transferred to the plaintiff on
19.05.2010 by the request of the second defendant with their banker
M/s.Bank of India, Mumbai. Based on the export order received from
the fourth defendant, it was claimed that the plaintiff could not
manufacture the same, due to heavy order was in progress. Therefore,
the same was intimated to the fourth defendant and they received
intimation to place the same as merchant order to one M/s.DMJ
Export, Tirupur i.e. the first defendant herein. The plaintiff placed a
merchant order of contract dated 12.06.2010 with the first defendant
firm, vide purchase order No.VI-004 for Ladies Long SLVS T-Shirt
Styles as per plaintiff's Tech Packs (5 styles) made out of 100% cotton
semi-combed verigated rib as original swatch – 170 GSM with main
lable, wash-care lable, hangtag, polybag. Agreeing to the same, the
plaintiff and the first defendant have signed the order of contract.
12.While so, on 17.06.2010, the plaintiff issued a cheque bearing
No.508542 dated 17.06.2010 drawn on Andhra Bank, Tirupur Branch
for a sum of Rs.13,95,000/- as advance in favour of the first defendant
and the same has been honoured and given credit to the defendants'
account. The Bank statement dated 11.10.2010 for a period from
17.06.2010 to 26.06.2010 reflects that the cheque has been honoured
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A.S. No.990 of 2020
and the cheque amount has been given credit in favour of the 1st
defendant's firm.
13.It is also the claim of the plaintiff before the Trial Court that
after availing the advance facilities, having executed the order, instead
of delivering the goods to the plaintiff, defendants 1 to 3, in
connivance with the fourth defendant, sent the consignment to one
firm by name, M/s.Kewal Impex, Mumbai and the same had been
delivered to the abroad importer M/s.Skiva International Inc. Newyork.
The plaintiff, came to know the fact on perusal of the bill of lading sent
to the buyer in New York. The shipping documents reveal that the
goods were sent to the original buyer, who has opened the letter of
credit in favour of the fourth defendant and in turn, the fourth
defendant transferred the L/C in favour of the plaintiff's firm by
M/s.Kewal Impex at Mumbai. Therefore, it is the claim of the plaintiff
that defendants 1 to 4 played fraud on the plaintiff's firm.
14.It is the further case of the plaintiff that since the first
defendant received the amount i.e. Rs.13,95,000/- under a cheque
dated 17.06.2010 bearing No.508542 drawn on Andhra Bank, Tirupur
Branch and the said transaction between the plaintiff and defendants is
purely a commercial one, defendants 1 to 4 have to repay the advance
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A.S. No.990 of 2020
amount with interest at the rate of 12% per annum. Therefore, a suit
was filed for a direction to defendants 1 to 4 jointly and severally to
pay a sum of Rs.13,95,000/- towards the advance amount and interest
at the rate of 12% per annum and Rs.5,02,200/- from 17.06.2010 to
03.06.2013 totalling a sum of Rs.18,97,200/- with subsequent interest
at the rate of 12% per annum on a sum of Rs.13,95,000/- till the date
of realisation.
15.A Written Statement has been filed by defendants 1 to 4
stating that the plaintiff placed an order to the 1st defendant firm for
the value of Rs.46,50,000/- and as an advance in the said amount, the
plaintiff paid Rs.13,95,000/-. On 12.06.2010, to execute the orders by
manufacturing the goods, defendants 1 to 3 spent their own money of
Rs.32,55,000/- and also as per the terms and conditions of the order,
defendants 1 to 3, completed the order within a time stipulated. At the
time of executing the order, defendants 1 to 3 informed the plaintiff
over the phone and mail to pay the remaining balance amount and
take delivery of the goods. Though the plaintiff visited the first
defendant's firm and seen the goods in packed conditions, he has not
come forward to make payment and also for the delivery of the goods.
Due to non arrangement of funds, the plaintiff requested for the
extension of the L/C from the fourth defendant and the same was
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A.S. No.990 of 2020
extended till the end of August 2010. Even after extending the L/C, the
plaintiff has not paid the amount. It is the case of defendants 1 to 3
that once the L/C was ended, the goods cannot be sent to the same
buyer and the orders placed by the buyer will get cancelled. By the
reasons of non payment, the total goods got hanged and defendants 1
to 3 were pushed to meet the loss of Rs.32,55,000/-.
16.It is an admitted fact by both parties that the plaintiff had
received an export order from M/s.Skiva International through the
fourth defendant and on 13.05.2010 in respect of the same, they have
also received a letter of credit for a value of USD 92,950. It is not in
dispute that the plaintiff placed merchant order of contract dated
12.06.2010 with the first defendant firm wherein defendants 2 and 3
are partners. The plaintiff and the first defendant have signed the
order of contract and agreed to give the consignment as per the
schedule. The plaintiff also admittedly issued a cheque for
Rs.13,95,000/- as advance in favour of the first defendant on
17.06.2010 and the same has also been honoured and given credit to
the first defendant's account. Therefore, when a sum of
Rs.13,95,000/- was paid by the plaintiff and the same was also
received by the first defendant on 17.06.2010 and 60 days time has
been given for making the goods ready by the first defendant, it has to
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A.S. No.990 of 2020
be seen whether the terms and conditions mentioned in the merchant
order dated 12.06.2010 have been fulfilled by both parties. When the
plaintiff said to have made 30% of payment of the contract amount on
17.06.2010 within 60 days, the goods should have been made ready
by the first defendant, but they have not done so. Therefore, the
appellants have committed breach of the terms and conditions
mentioned in the merchant order dated 12.06.2010.
17.It was the claim of the appellants that since the balance
amount as admitted by the plaintiff was not paid within the time
stipulated, they suffered a loss and consequently, they were forced to
sell the goods made ready with them in favour of the third party for
lesser amount. But the same has not been substantiated with any
evidence whatsoever produced before the Trial Court and also before
us. When both the parties let in oral and documentary evidence, P.W.1
has stated about the amount paid by the plaintiff in favour of
defendants 1 to 3. Ex.B1/letter of credit, marked during the cross
examination of P.W.1, shows that as per the conditions mentioned in
the merchant order, the plaintiff has made the payment on
17.06.2010. Further terms of the merchant order shows that the
plaintiff had to make 40% at the time of shipment and the balance
30% within 3-4 days from the date of shipment. When the plaintiff has
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proved the fact that they have made 30% of the contract amount on
17.06.2010, there is no communication or documentary evidence
placed by the appellants before us or before the Trial Court to show
that they have made the goods ready within 60 days.
18.It is an admitted case of the appellants that they have sold
away the goods to third party for lesser amount. Therefore, the Trial
Court, after going through the written statement filed by defendants 1
to 4, found that the goods were sold for a sum of Rs.31,55,000/- and
that they have faced loss of Rs.6,00,000/-. But in the oral evidence, it
has been found that they have suffered a loss of Rs.14,00,000/-. As
per Exs.B6 and B7 namely, the Debit note allegedly given by Kewal
Impex Company, defendants 1 to 3 have suffered a loss of
Rs.14,00,000/-. But to prove the said document, no person connected
with the said documents have been examined. Moreover, the plaintiff
was not a party to Exs.B6 and B7. Therefore, in the absence of proving
Exs.B6 and B7, the Trial Court has not accepted the defence taken by
appellants that they had suffered loss. Such findings, in our considered
opinion, does not call for any interference for the simple reason that in
respect of Exs.B6 and B7/Debit note, there was no pleading made in
the written statement stating that the appellants have sustained loss of
Rs.14,00,000/-. On the other hand in the written statement they had
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pleaded only a loss of Rs.6,00,000/-. Therefore, this Court is able to
see that as per merchant order dated 12.06.2010, the plaintiff has
performed his contract, but the appellants, on receipt of the money
paid by the plaintiff, have not made the goods ready within the
stipulated time. Hence, we are unable to find any infirmity in the
judgment passed by the Trial Court. Accordingly, the appeal fails and
the same is dismissed with costs, thereby the judgment of the Trial
Court is confirmed.
19.With regard to the portion of interest, defendants 1 to 4 are
hereby directed to pay 9% of interest from the date of filing the suit till
the date of decree and to pay 6% of interest from the date of decree
till the date of realisation and 12% interest from the date of
transaction till the date of filing the suit. Consequently, C.M.P.
No.14506 of 2020 is closed.
(TRJ) (GCSJ)
02.03.2021
Index : Yes/No
vga
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A.S. No.990 of 2020
To
1.The II Additional District Judge,
Tiruppur.
2.The Section Officer,
V.R.Section,
High Court, Madras.
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A.S. No.990 of 2020
T.RAJA, J.
and
G.CHANDRASEKHARAN,J.
vga
A.S. No.990 of 2020 and
C.M.P. No.14506 of 2020
02.03.2021
https://www.mhc.tn.gov.in/judis/
