IN THE HIGH COURT OF KARNATAKA
P.S.Dinesh Kumar, T.G.Shivashankare Gowda, JJ.
Stove Kraft Pvt Ltd – Appellant
Versus
Pradeep Stainless Steel – Respondent
R.F.A No. 844 of 2010 (Mon)
Decided On : 23-08-2023
HIGH SEA SALES - Commercial Transactions - Order XXXVII of CPC - The court discussed the applicability of Order XXXVII of the Code of Civil Procedure, 1908, which allows for summary suits based on written contracts. The court interpreted that invoices can constitute written contracts, thus supporting the plaintiff's claim. The court emphasized the importance of the agreements and the defendant's acknowledgment of the transactions, which influenced the decision to uphold the trial court's decree for payment.
Fact of the Case:
The plaintiff, a Private Limited Company, entered into two High Sea Sale agreements with the defendant for the purchase of stainless steel coils. The defendant failed to pay the agreed amounts despite receiving the goods and acknowledging the transactions through debit notes and invoices.
Finding of the Court:
The court found that the suit was maintainable under Order XXXVII of the CPC, as it was based on written contracts evidenced by invoices. The court also noted that the defendant had taken delivery of the goods and had acknowledged the debt through various communications.
Issues: 1. Whether the summary suit under Order XXXVII of the CPC is maintainable? 2. Whether there is privity of contract between the plaintiff and defendant? 3. Whether the trial court's judgment should be interfered with?
Ratio Decidendi: The court held that the summary suit was maintainable as it was based on written contracts (invoices) and that the defendant's acknowledgment of the transactions established the necessary privity of contract, thus supporting the plaintiff's claim for recovery.
Final Decision: The appeal was allowed in part, reducing the amount recoverable by the plaintiff to Rs.20, 67, 067.00 along with interest at 12% from the date of filing the suit until realization.
JUDGMENT
P.S.DINESH KUMAR, J. - This appeal by the defendant is directed against judgment and decree dated January 25, 2010 in O.S. No. 15450/2005 passed XXVI Addl. City Civil and Sessions Judge, Bangalore, decreeing the suit and directing the defendant to pay a sum of Rs.25, 67, 000.00 with interest at 12% p.a.
2. We have heard Shri. H.R. Anantha Krishna Murthy, learned Advocate for the appellant/defendant and Shri. Paras Jain and Shri. G.P.Jagadeesh, learned Advocate for the respondent/plaintiff.
3. For the sake of convenience, parties shall be referred as per their ranking in the Trial Court.
4. Brief facts of the case are, plaintiff is a Private Limited Company. It imports stainless steel and other commodities. Defendant entered into two separate 'High Sea' Sale agreements dtd. 15/7/2002 to purchase steel coils weighing 20.788 MT and 20.478 MT having CIF[Cost, Insurance, and Freight] value of USD 27959.86 and 27542.91. The stainless steel was to be imported from Rio-De-Janeiro, Brazil to Chennai Port. As per the Contract, defendant was required to pay the value of goods within thirty days from the date of invoice. Plaintiff raised a debit note (bearing No.001 dtd. 7/10/2002) for Rs.13, 77, 648.0059 ps. and another debit note (bearing No.002 dtd. 7/10/2002) for Rs.13, 89, 398.0028ps, aggregating to Rs.27, 67, 046.0087ps. Plaintiff demanded the payment and defendant failed to respond to plaintiff's communications. Subsequently, under letter 24/1/2003, defendant sent a demand draft for Rs.10.00 lakhs. Plaintiff got issued a legal notice for remaining amount. On receipt of the notice, defendant approached plaintiff's Advocate for settlement but the settlement did not go through. With these averments, plaintiff has brought the instant summary suit under Order XXXVII Rule 1 of the Code of Civil Procedure, 1908['the CPC' for short] for recovery of Rs.25, 67, 000.00.
5. Defendant sought leave to defend the suit, contending inter alia that the suit was not maintainable; that the suit cannot be tried under Order XXXVII Rule 1 of CPC; that the plaintiff is stranger to the defendant; that plaintiff's claim that it has taken over the assets and liabilities of the dissolved partnership firm is false; that there is no privity of contract between the plaintiff and the defendant.
6. Based on the pleadings, the learned Trial Court has framed following points for consideration:
7. Answering points No.1 and 2 in the affirmative, the Trial Court has decreed the suit.
8. Shri. Anatha Krishna Murthy, learned Advocate for the defendant/appellant, praying to allow the appeal submitted that:
the question whether there is an assignment of debt or not, requires consideration; ? the suit is filed on the basis of two distinct contracts dtd. 15/7/2002. The agreements are entered between the defendant and M/s. Pradeep International (a Partnership firm). Plaintiff is a Private Limited Company. Therefore, there is no privity of contract between the plaintiff and defendant;
the Trial Court has erred in holding that the agreement provides for payment of interest; ? the Trial Court has failed to consider that out of two agreements the Managing Director of the defendant Company has signed only one agreement in respect of 20.788 MT stainless-steel coils; ? the Trial Court has erred in decreeing the suit only on the basis of the debit notes and invoices; ? there is no

AI
Invoices can constitute written contracts under Order XXXVII of the CPC, allowing for summary suits to be maintainable based on such documentation.
The burden of proof lies with the claimant to substantiate claims with credible documentation, and evidence of timely payments to claimants influence recovery judgments.
The main legal point established in the judgment is the requirement of written documents for maintaining a suit under Order XXXVII of the CPC and the principles governing the grant of leave to defend....
Summary suits based on invoices are maintainable when liability is acknowledged, and defenses presented must be genuine and substantial.
Point of law :Suit for recover of amount -In a suit for recovery of money, based on running account, the sum due ultimately crystallize on reconciliation of an account by the transacting parties. In ....
(1) Summary suit (Money suit) – Generally, prayer for leave to defend is to be denied in such cases where defendant has practically no defence and is unable to give out even a semblance of triable is....
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