M/S Galaxy Rubber Products vs V. Janardhan Rao
2022 Latest Caselaw 2678 Tel

             THE HON'BLE SMT. JUSTICE M.G.PRIYADARSINI

                           A.S.NO.3579 OF 2004

                                 JUDGMENT

The appellant, which is a partnership firm, is the plaintiff. The

respondent No.1 is also a firm, and the 2nd respondent is its Managing

Director. The respondents are defendants in the suit.

2. The plaintiff filed suit O.S.No.340 of 1996 for recovery of an

amount of Rs.1,61,299-32 ps. against the defendants on the file of

I Additional Senior Civil Judge, Ranga Reddy District at L.B.Nagar.

3. The trial court vide judgment and decree dated 09.06.2003

dismissed the suit. Assailing the same, the plaintiff filed the present appeal.

4. For the sake of convenience, the parties will be referred to as per

their array in the suit.

5. The case of the plaintiff is that it is engaged in the manufacture of

quality tread rubber and allied products and has been supplying to various

companies. It supplied material to defendant No.1 - firm starting from

6.11.1993 to 10.02.1994, and bills were raised totaling to Rs.1,17,285-70

ps. Out of the said amount, defendant No.1 paid an amount of

Rs.20,390-98 ps vide two cheques on 27.12.1993 and 2.2.1994, and the

outstanding balance, which is required to be paid is Rs.96,894-72 ps. But

the same remained unpaid despite repeated demands. The defendant No.1

vide letter dated 28.03.1994 promised to clear the outstanding dues at the

earliest. But to the surprise of the plaintiff, the defendant No.1 started

sending rejection letters from 25.04.1994 stating that various material

supplied by the plaintiff are defective.

6. The grievance of the plaintiff is that after a period of three months

from the date of supply, the defendant No.1 has raised objection stating that

the material supplied were defective, and this is only to avoid payment.

7. The plaintiff addressed a letter dated 14.05.1994 to the

1st defendant rejecting their contention, and demanding payment for the

material supplied. Since there was no response, the plaintiff issued legal

notice dated 08.05.1995 demanding payment, which was replied by the

defendants with false contentions.

8. As per the ordinance issued by the Central Government, the

plaintiff being small scale industry is entitled to interest on the delayed

payment. Thus, the plaintiff is entitled to Rs.96,894-75 ps towards principle

and Rs.64,404-32 ps. towards interest at the rate of 21.5% per annum.

9. With these averments, the plaintiff filed the suit for recovery of the

amount.

10. Defendants filed written statement and admitted that the

defendants placed purchase order with the plaintiff and the said purchase

order specifically stipulated that if the material supplied is found to be

defective at the time of manufacturing, the same will be rejected. It is

further stated inter alia that the defendants, during the course of the use of

the material supplied by the plaintiff, came across several defects and

complaints from its customers, and the same was informed to the plaintiff,

and though it initially agreed for the same, as a counter blast started making

several unsustainable claims. Therefore, the defendants addressed letter to

the plaintiff, and the plaintiff knowing fully well of the facts, refused to take

delivery of the said notice and rejected the material on the ground that they

are rejected at a belated stage, and issued legal notice dated 8.5.1995,

making several unsustainable claims, and the same was replied stating that

the material sent by the plaintiff was of poor quality and that they are willing

to pay the actual dues for accepted and used material and that it is not

entitled to claim Rs.1,61,299-30. The plaintiff instead of settling the matter

by deliberations, approached the court claiming amounts, which are not due

to it.

11. It is further stated that the quality of the material would be

ascertained only at the time of usage of the same. The defendant sent RIR

No.1305, dated 1.2.1994, RIR No.1290 dated 25.01.1994 and RIRF

amendment Nos.408 dated 23.03.1994 and 337 dated 22.3.1994 bringing to

the notice of the plaintiff about the rejection of the material sent by it.

12. That as per clause No.9 of the terms and conditions of purchaser

order, the material can be rejected only after putting the same in use either

by the defendant No.1, or the subsequent use at the customers' end. As the

material supplied by the plaintiff was defective, the same was rejected and

such rejection is genuine and there were no mala fidies on the part of the

defendants.

13. That the person who signed the plaint has no locus standi, and as

per clause 10 of the Transfer and Purchaser Order, only the courts at

Hyderabad have jurisdiction.

14. With these averments, the suit was sought to be dismissed.

15. Based on the above averments, the trial court framed the

following issues for trial:

1. Whether the plaintiff is entitled to recover the suit claim of Rs.1,61,299-22 ps. from D-1 and D-2 as prayed for?

2. To what relief?

16. In support of the case of the plaintiff, the Managing Partner by

name P.Raghu was examined as P.W.1, and Exs.A-1 to A-29 were got

marked. On behalf of the defendants Managing Director of the 1st defendant

was examined as D.W.1, and Exs.B-1 to B-4 were marked.

17. Appreciating the entire evidence, both oral and documentary, the

trial court dismissed the suit. Assailing the same, the plaintiffs filed the

present appeal.

18. Learned counsel appearing for the appellant / plaintiff submits

that there is no dispute that the plaintiff had supplied the material to the

defendant - firm worth Rs.1,17,285-70 during the period from 6.11.1993 to

10.02.1994 and that part payment of Rs.20,390-98 was made. That the

claim of the defendants is that the material supplied was defective. If that is

so, the defendant would not have made part payment, and vide letter dated

28.03.1994, which is marked as Ex.A-20, the defendant No.1 promised to

make the outstanding dues, but however it failed to make the payment.

19. That the supplies were made during the period from 6.11.1993 to

10.02.1994, but the alleged complaint of the defendant No.1 that the

material supplied was defective was belatedly after a period of about three

months i.e., vide letter date 25.04.1994.

20. The allegation of the defendant No.1 is that the material supplied

was defective. Except the allegation, the defendant has not produced any

material evidence in support of the same, and further while the

manufacturing process was going on, the quality department person of

defendant No.1 visited the plaintiff, checked the products and submitted

acceptance report to the plaintiff. These circumstances show that the

allegation has been made only to deny the payments to the plaintiff.

21. The defendant promised to make the balance payment vide

Ex.A-20. This Ex.A-20 has not been specifically denied by the defendant

No.1 in the written statement, and only during the arguments, they have

come up with the plea that the same is forged, as the same does not find

reference in Exs.A-21 and A-24, which are the subsequent letter written by

the plaintiff to the defendants, and the legal notice issued by the plaintiff.

Learned counsel submits that when the defendant No.1 has not specifically

denied Ex.A-20 in the written statement, there is no justification on the part

of the trial court to undertake the exercise of comparison of signature of

author in Ex.A-20 with that of in Exs.A-1 to A-9, and A-16 to A-19, which

are the purchase orders of the 1st defendant.

22. With these contentions, learned counsel for the plaintiff /

appellant submits that the suit is liable to be decreed and as there is delay

in payment, and as the plaintiff is a small scale industry, as per Section 3 of

the Interest on Delayed Payments to Small Scale and Ancillary Industrial

Undertakings Act, 1993, it is entitled to interest from the defendant No.1,

which is a buyer, for the delayed payments.

23. On the other hand, learned counsel appearing for the

respondents / defendants supported the impugned judgment and decree of

the trial court, and sought for dismissal of the appeal.

24. Having regard to the facts and circumstances of the case and the

rival submissions of the counsel, the issue that arises for consideration is,

"whether the impugned order warrants any interference"?

25. The claim of the plaintiff is that it supplied material to

defendant No.1 during the period from 20.09.1993 to 31.01.1994 under

Exs.A-1 to A-19 and this has been testified by examining P.W.1, who is the

Managing Partner of the plaintiff, and the supply of the material has also

been accepted by the defendant No.1, but its complaint is that the material

supplied is defective, and this has been sought to be proved by examining

D.W.1, who is the Managing Director of the defendant No.1 - firm.

26. From the material evidence on record it could be seen that

immediately after supply of the material under Ex.A-19 dated 31.01.1994,

the defendant No.1 had sent Exs.B-1 and B-2 letters dated 22.4.1994 and

30.04.1994 respectively, informing the plaintiff that they are sending the

receipt cum inspection report, and that the rejected material will be sent in a

couple of days. This shows that immediately after supply under Ex.A-19

dated 31.01.1994, the defendant No.1 has complained that the material

supplied was defective, and this shows that there is no delay on the part of

the defendant No.1 in brining to the notice of the plaintiff about the defect in

the material supplied.

27. Further as per condition No.6 of the purchaser order, the

defendant is entitled to reject the material if it is not of the contracted

quality, and is not in accordance with the specifications required by the

company. As per condition No.9 of the terms of the purchaser order, the

material can be rejected only after putting the same in use either by the

defendant No.1 or the subsequent use by the customers. This shows that no

time limit is prescribed. But as noted above, immediately after supply under

Ex.A-19, the defendants vide letter dated 22.4.1994 and 30.04.1994

informed the plaintiff about the defect in the material supplied by it.

28. The plaintiff however replied under Ex.A-21 dated 14.05.1994

denying the allegation of the defendant, but thereafter issued legal notice

only on 08.05.1995 i.e., after a period of one year.

29. The further case of the plaintiff is that defendant No.1 under

Ex.A-20 letter dated 28.03.1993 promised to make the payment. Though

the defendant No.1 had not specifically denied this letter in the written

statement, but have stated that it is not due any amount, as the material

supplied was defective. But however during the trial, it is sought to be

contended that the said letter is a forged one, as it does not find reference in

Ex.A-21 and A-24.

30. One A.S.R.Prasad, representing the 1st defendant - firm signed

Exs.A-1 to A-9, A-16 and A-19 which are the purchase orders placed by the

1st defendant - firm, and the claim of the plaintiff is that under Ex.A-20,

signed by A.S.R.Prasad, it promised to clear the outstanding arrears at the

earliest. This has been denied by the defendant No.1 during the course of

trial. Under Section 73 of the Indian Evidence Act, 1872, the Court is

entitled to compare the disputed signature with that of the admitted

signature. In light of this denial, the court has exercised its jurisdiction

under Section 73 of the said Act, and compared the admitted signature of

A.S.R. Prasad in purchaser orders placed by the 1st defendant under Exs.A-1

to A-9 and A-16 and A-19, with that of the signature in Ex.A-20. On such

comparison, the trial court found that it is not tallying.

31. The above conclusion arrived at by the trial court is further

strengthened by considering Exs.A-21 and A-24. Ex.A-21 is dated

14.05.1994 which is the letter written by the plaintiff demanding the 1st

defendant to make payment. If really the defendant No.1 has promised to

clear the outstanding dues under Ex.A-20 dated 28.03.1994, definitely the

plaintiff would have referred to this letter in Ex.A-21, which is addressed

subsequent to Ex.A-20, but there is no reference of this letter. The plaintiff

also issued legal notice under Ex.A-24 dated 08.05.1995 and in this also,

there is no reference to Ex.A-20 letter. These circumstances throw any

amount of doubt on Ex.A-20 letter stated to have been addressed by

defendant No.1 to the plaintiff.

32. Further, the plaintiff issued legal notice on 08.05.1995 and filed

suit on 4.7.1996, which is nearly after two years, for which there is no

proper explanation.

33. Considering all these facts and circumstances, the trial court by

recording cogent and convincing reasons, and after considering all aspects

held that the plaintiff failed to prove its claim and accordingly dismissed the

suit.

34. For the foregoing reasons, I do not find any reason to interfere

with the impugned order and decree passed by the trial court. The appeal is

devoid of any merits and is liable to be dismissed, and the issue framed is

answered accordingly.

35. In the result the appeal is dismissed.

36. Interlocutory Applications pending, if any, shall stand closed. No

order as to costs.

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M.G.PRIYADARSINI,J DATE: 14--06--2022 avs